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FDI in Hungary - the first mover's advantage and disadvantage

Author

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  • Sass, Magdolna

    (Hungarian Academy of Sciences)

Abstract

Presenting a case study of FDI in Hungary, this paper first reviews the characteristics of FDI in Hungary since the outset of transition. It then examines the determinants of FDI in Hungary, finding that early and comprehensive privatisation and the creation of a generally business-friendly policy environment played key roles in making Hungary an early leader in FDI flows to countries in Central and Eastern Europe. But the paper also observes that some of Hungary's first-mover advantage has been eroded in recent years as other countries have provided increasingly friendly environments for FDI, often combined with lower labour costs. The paper then proceeds to assess the influence of FDI on Hungary's economy. It concludes that FDI has had, on balance, a positive impact on economic performance although hard evidence of spillovers to indigenous firms is difficult to find.

Suggested Citation

  • Sass, Magdolna, 2004. "FDI in Hungary - the first mover's advantage and disadvantage," EIB Papers 8/2004, European Investment Bank, Economics Department.
    • Handle: RePEc:ris:eibpap:2004_008
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    References listed on IDEAS

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    Cited by:

    1. Leonhard Plank & Cornelia Staritz, 2013. "‘Precarious upgrading’ in electronics global production networks in Central and Eastern Europe: the cases of Hungary and Romania," Global Development Institute Working Paper Series ctg-2013-31, GDI, The University of Manchester.
    2. David L. Ellison, 2007. "Subnational regionalism in a supranational context: the case of Hungary," IWE Working Papers 177, Institute for World Economics - Centre for Economic and Regional Studies.
    3. Popescu Liviu & Brostescu Simina & Sitnikov Catalina & Vasilescu Laura, 2023. "Determinants of FDI Stock in Some Central European Countries," JRFM, MDPI, vol. 16(3), pages 1-31, March.
    4. David L. Ellison, 2005. "Divide and conquer: the EU enlargement's successful conclusion?," IWE Working Papers 161, Institute for World Economics - Centre for Economic and Regional Studies.
    5. Zoltán J. Ács & Colm O'Gorman & László Szerb & Siri Terjesen, 2015. "Could the Irish Miracle be Repeated in Hungary?," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 30, pages 584-603, Edward Elgar Publishing.
    6. Plank, Leonhard & Staritz, Cornelia, 2013. ""Precarious upgrading" in electronics global production networks in Central and Eastern Europe: The cases of Hungary and Romania," Working Papers 41, Austrian Foundation for Development Research (ÖFSE).
    7. Miklos Szanyi & Magdolna Sass & Peter Csizmadia & Miklos Illessy & Ichiro Iwasaki & Csaba Mako, 2009. "Clusters and the development of supplier networks for transnational companies," IWE Working Papers 187, Institute for World Economics - Centre for Economic and Regional Studies.
    8. David L. Ellison, 2005. "Competitiveness strategies, resource struggles and national interest in the new Europe," IWE Working Papers 159, Institute for World Economics - Centre for Economic and Regional Studies.
    9. Krzysztof Gwosdz & Woyciech Jarczewski & Maciej Huculak & Krzysztof Wiederman, 2008. "Polish Special Economic Zones: Idea versus Practice," Environment and Planning C, , vol. 26(4), pages 824-840, August.

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    More about this item

    Keywords

    Hungary; foreign direct investment;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O24 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Trade Policy; Factor Movement; Foreign Exchange Policy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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