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Spillover effects and business linkages of foreign-owned firms in Hungary

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

No 126, IWE Working Papers from Institute for World Economics - Centre for Economic and Regional Studies- Hungarian Academy of Sciences

Abstract: The supplier links of foreign-investment enterprises (FIEs) started to develop as soon as they commenced operations in Hungary. Thus, their interest in developing local roots was already clear. Empirical evidence has shown that some FIEs outsourced only a few services, while others tried to outsource as much of the production as they could.The analysis of the Hungarian linkage promotion package showed that the early years of operation did not bring a breakthrough and the new system is still under development. It was therefore difficult to find matching case-study evidence, i.e. case studies that contain some information about the usage of this particular development programme. However, there is plenty of evidence about linkages where the research is case-study based. Empirical surveys agree that Hungarian suppliers play an appreciable, if fairly small role in FIE activity. The scale of the contribution lags far behind what is found in developed countries, especially if foreign-owned suppliers are ignored. On the other hand, it is markedly higher than in the developing countries. The studies also agree that there is an increasing tendency, although the barriers on the side of Hungarian would-be suppliers are considerable, especially for SMEs.

Keywords: Hungary; suppliers; foreign-owned firms; foreign-investment enterprises; outsourcing; SMEs; developing countries (search for similar items in EconPapers)
Date: 2002-05
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