The Hungarian automotive sector - a comparative CEE perspective with special emphasis on structural change

Andrea Szalavetz
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Andrea Szalavetz: Europäisches Institut für Internationale Wirtschaftsbeziehungen (EIIW)

No disbei182, EIIW Discussion paper from Universitätsbibliothek Wuppertal, University Library

Abstract: Based on the example of the automotive sector the paper investigates some quantity and quality aspects of FDI-driven upgrading and analyzes in a comparative perspective - with the help of industry level data - selected aspects of competitiveness in Central and Eastern Europe. The first group of the surveyed quality indicators includes the evolution of value added over output, and changes in the product mix: we examine whether these two indicators are suitable proxies to assess the extent of quality upgrading with. We conclude that the second group of our surveyed indicators: the import intensity of local production; labor productivity; and the skill content of local activities are more relevant to evaluate quality-type upgrading. Since the broadening of local business functions is a good proxy for quality upgrading, we also tackle this issue in our regional comparisons. The countries covered are Hungary, the Czech Republic, Slovakia, Poland and in some cases also Romania, Bulgaria and Slovenia. Analyzing selected aspects of upgrading, we compare CEE data with the ones of a benchmark country: Germany. We conclude that in spite of several subsequent foreign direct investment deals, which has produced non-negligible expansion and structural upgrading, and irrespective of the fact that local actors have all stepped on the path of slow quality upgrading, CEE automotive actors have been stuck in cost-based competition. The Czech Republic is a partial exception in this respect. We develop predictions about the industry's regional perspectives following the global financial crisis.

Keywords: Structural change in CEE; Automotive Sector; Innovation Policy (search for similar items in EconPapers)
JEL-codes: L62 N74 O31 O32 (search for similar items in EconPapers)
Pages: 38 Pages
Date: 2010-08
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