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The FDI-led development model revisited? The case of Hungary

Author

Listed:
  • Miklos Szanyi

    (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)

Abstract
Countries of East-Central Europe underwent fundamental economic and political changes in their transition process. Their economies were restructured and modernized, became integrated part of the world’s most competitive value chains. Although, benefits of the FDI-led development process did not spread spatially evenly, moreover, they might be smaller than what was expected the achieved economic and political results were remarkable. Yet, in some of these countries acknowledgement of benefits have been started to be overshadowed by strong criticism that sometimes queries the advantages of the FDIled development at large. The main question of the paper is if this criticism is reflected in (both positively and negatively) discriminating policies of the Hungarian state towards foreign companies? The main finding of the paper is that the main aim of changing FDI-related policies is not a decisive break with the model, but rather to split the strong networks of multinational business in order to increase the room of selective and arbitrary advantage and disadvantage measures of the government. This means first of all a departure from the concept of “competition state” towards “patronage state”.

Suggested Citation

  • Miklos Szanyi, 2016. "The FDI-led development model revisited? The case of Hungary," IWE Working Papers 220, Institute for World Economics - Centre for Economic and Regional Studies.
    • Handle: RePEc:iwe:workpr:220
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    File URL: https://vgi.krtk.hu/publikacio/no-220-2016-02/
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    Cited by:

    1. Tamas Szigetvari, 2018. "Eastern Europe as investment location for Turkish OFDI," IWE Working Papers 247, Institute for World Economics - Centre for Economic and Regional Studies.

    More about this item

    Keywords

    FDI policy; crony capitalism; patronage state;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • H82 - Public Economics - - Miscellaneous Issues - - - Governmental Property
    • P16 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Capitalist Institutions; Welfare State
    • P31 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions

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