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Impact of FDI on economic growth, re-industrialisation and regional disparities in emerging Europe - the case of the Hungarian regions

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  • Zoltán Gál
  • Devesh Singh

Abstract

The paper examines the nexus of FDI inflow, the FDI dispersion among companies, and GDP per capita along with the selected socio-economic variables, and re-industrialisation in the Hungarian regions. The paper uses the NUT 3 level data from 2001 to 2018 and employs the generalised method of moments (GMM) in regions characterised by the different phases of industrialisation. The econometric analysis confirms three variations of bidirectional IFDI, GDP growth and FDI dispersion nexus which can be explained by the fact that the positive effect of FDI-driven growth is spatially concentrated according to the different regional patterns of industrialisation. Both the 'FDI-driven growth hypothesis' and the 'GDP growth-driven FDI hypothesis' have been confirmed under certain regional conditions. The results show that the FDI-driven growth model of CEE is not sufficient to ensure the long-term prosperity of regions since the positive effect of FDI-driven economic growth is only short-term and spatially concentrated, further exacerbating territorial inequalities.

Suggested Citation

  • Zoltán Gál & Devesh Singh, 2024. "Impact of FDI on economic growth, re-industrialisation and regional disparities in emerging Europe - the case of the Hungarian regions," International Journal of Business Excellence, Inderscience Enterprises Ltd, vol. 34(3), pages 305-334.
    • Handle: RePEc:ids:ijbexc:v:34:y:2024:i:3:p:305-334
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