Impact of FDI on economic growth, re-industrialisation and regional disparities in emerging Europe - the case of the Hungarian regions

Zoltán Gál and Devesh Singh

International Journal of Business Excellence, 2024, vol. 34, issue 3, 305-334

Abstract: The paper examines the nexus of FDI inflow, the FDI dispersion among companies, and GDP per capita along with the selected socio-economic variables, and re-industrialisation in the Hungarian regions. The paper uses the NUT 3 level data from 2001 to 2018 and employs the generalised method of moments (GMM) in regions characterised by the different phases of industrialisation. The econometric analysis confirms three variations of bidirectional IFDI, GDP growth and FDI dispersion nexus which can be explained by the fact that the positive effect of FDI-driven growth is spatially concentrated according to the different regional patterns of industrialisation. Both the 'FDI-driven growth hypothesis' and the 'GDP growth-driven FDI hypothesis' have been confirmed under certain regional conditions. The results show that the FDI-driven growth model of CEE is not sufficient to ensure the long-term prosperity of regions since the positive effect of FDI-driven economic growth is only short-term and spatially concentrated, further exacerbating territorial inequalities.

Keywords: foreign direct investment; FDI; reindustrialisation; economic growth; regional disparities; Central and Eastern Europe; Hungarian regions; generalised method of moments; GMM. (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijbexc:v:34:y:2024:i:3:p:305-334

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