International Co-operative Agreements in Hungary in the mid-1990s: Evolution, organisational forms and industry characteristics

Havas, Attila (1998): International Co-operative Agreements in Hungary in the mid-1990s: Evolution, organisational forms and industry characteristics.

Abstract

As the legislation on foreign direct investment (FDI) in Hungary has been probably the most liberal in Central and Eastern Europe since the mid-1980s, FDI is the primary form chosen by Western firms to enter the Hungarian market. The major channels of FDI include the privatisation of former state-owned enterprises and green-field investment projects. Portfolio investment and non-equity forms of co-operation can also be found in Hungary, yet, their significance is almost negligible compared to FDI. A number of advantages, most importantly the highly skilled, experienced, yet, extremely cheap labour, and the geographical and cultural proximity to Western Europe give the Central European countries a certain competitive edge compared to other transition economies. On top of this, Hungary has opted for a unique approach to privatisation, i.e. sales of assets rather than voucher schemes, and offered a fairly liberal economic environment. Due to these factors, it has attracted roughly 45-50 per cent of the total amount of foreign capital invested in Central and Eastern Europe. These developments require a more detailed analysis. Major characteristics of the privatisation process, strictly defined, and the expansion of the private sector, including green-field investment projects, are discussed in Section 2. Sections 3-7 present the most important findings of sector studies, and identify major issues for further analysis.

• Item Type: MPRA Paper
• Language: English
• Keywords: Privatisation, Foreign direct investment (FDI), Impacts of FDI, Telecom equipment manufacturing, Automotive industry, Software engineering, Electronics industry, Videoton, Pharmaceuticals, Technological innovations, Organisational and managerial innovations, Export-led growth, Hungary
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms ; International Business; F - International Economics > F6 - Economic Impacts of Globalization > F61 - Microeconomic Impacts; F - International Economics > F6 - Economic Impacts of Globalization > F62 - Macroeconomic Impacts; F - International Economics > F6 - Economic Impacts of Globalization > F63 - Economic Development; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope; L - Industrial Organization > L5 - Regulation and Industrial Policy > L53 - Enterprise Policy; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L62 - Automobiles ; Other Transportation Equipment ; Related Parts and Equipment; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L63 - Microelectronics ; Computers ; Communications Equipment; L - Industrial Organization > L6 - Industry Studies: Manufacturing > L65 - Chemicals ; Rubber ; Drugs ; Biotechnology; L - Industrial Organization > L8 - Industry Studies: Services > L86 - Information and Internet Services ; Computer Software; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O10 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O33 - Technological Change: Choices and Consequences ; Diffusion Processes; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe; P - Economic Systems > P2 - Socialist Systems and Transitional Economies; P - Economic Systems > P3 - Socialist Institutions and Their Transitions > P31 - Socialist Enterprises and Their Transitions; Z - Other Special Topics > Z1 - Cultural Economics ; Economic Sociology ; Economic Anthropology > Z13 - Economic Sociology ; Economic Anthropology ; Social and Economic Stratification

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