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Direct Foreign Investments and Productivity Growth in Hungarian Firms, 1992-1999

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  • Jérôme Sgard

    (CERI - Centre de recherches internationales (Sciences Po, CNRS) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

Abstract

The impact of FDI on total factor productivity in Hungary during the 1990s' is assessed with a large enterprise panel. Foreign equity is associated with higher productivity levels and has a substantial, positive spillover effect on aggregate TFP growth. However, this benefit is significant only when associated with export orientation, while inward-looking FDI has negative side effects. Regionally, the north-western area, close to EU borders, benefits much more from FDI, whether foreign-owned or locally-owned private firms are considered. Otherwise, only the later absorb a reduced volume of externalities. Finally, State ownership implies lower levels of productivity, but does not hinder the capacity to respond to market incentives, including FDI induced externalities.

Suggested Citation

  • Jérôme Sgard, 2001. "Direct Foreign Investments and Productivity Growth in Hungarian Firms, 1992-1999," SciencePo Working papers Main hal-01065013, HAL.
    • Handle: RePEc:hal:spmain:hal-01065013
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-01065013
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    References listed on IDEAS

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    1. Brian J. Aitken & Ann E. Harrison, 2022. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," World Scientific Book Chapters, in: Globalization, Firms, and Workers, chapter 6, pages 139-152, World Scientific Publishing Co. Pte. Ltd..
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