R&D-based integration and upgrading in Hungary

Magdolna Sass and Andrea Szalavetz ()
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Andrea Szalavetz: Hungarian Academy of Sciences Institute for World Economics, Centre for Economic and Regional Studies, Budapest, Hungary

Acta Oeconomica, 2014, vol. 64, issue supplement1, 153-180

Abstract: The Hungarian economy is highly integrated in global value chains (GVC). Upgrading within GVCs is a key factor of sustaining the initial developmental push GVC participation provides. The article concentrates on R&D-based upgrading opportunities and their practical implementation by multinationals’ Hungarian subsidiaries in the automotive and electronics sectors. The content and the development of R&D activities; Hungary’s locational advantages for R&D projects, and their local impact are analysed based on interviews with twenty foreign-owned companies in the two selected sectors. We show that local R&D units’ activity is multifaceted, though they feature similar upgrading trajectories. Investors’ motivations: the knowledge- and efficiency-seeking nature of their projects and the related locational advantages are examined. We demonstrate that local R&D-intensive subsidiaries have a limited local impact except for the intensive contacts with local universities — with varying content and motives on the side of the R&D units. Drawing on our findings we formulate economic policy recommendations about the ways to foster and enhance R&D-based upgrading.

Keywords: research and development; global value chains; upgrading; Hungary (search for similar items in EconPapers)
JEL-codes: F21 F23 O32 (search for similar items in EconPapers)
Date: 2014
Note: The authors gratefully acknowledge the support of European Union’s Seventh Framework Programme (FP7/2007-2013) under grant agreement “Growth-Innovation-Competitiveness: Fostering Cohesion in Central and Eastern Europe” (GRINCOH) and of the Hungarian National Scientific and Research Fund (K83982). The authors are grateful to Péter Mihályi and to participants of the 2013 EAEPE conference for their comments on an earlier version of the article. Two anonymous referees provided valuable remarks and suggestions.
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