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Direct Foreign Investments And Productivity Growth In Hungarian Firms, 1992-1999

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  • J??r??me Sgard

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

  • J??r??me Sgard, 2001. "Direct Foreign Investments And Productivity Growth In Hungarian Firms, 1992-1999," William Davidson Institute Working Papers Series 425, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2001-425
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    More about this item

    Keywords

    foreign direct investment; productivity; Hungary; transition; panel; localization; property rights;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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