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The FDI-led development model revisited? The case of Hungary

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

No 220, IWE Working Papers from Institute for World Economics - Centre for Economic and Regional Studies

Abstract: Countries of East-Central Europe underwent fundamental economic and political changes in their transition process. Their economies were restructured and modernized, became integrated part of the world’s most competitive value chains. Although, benefits of the FDI-led development process did not spread spatially evenly, moreover, they might be smaller than what was expected the achieved economic and political results were remarkable. Yet, in some of these countries acknowledgement of benefits have been started to be overshadowed by strong criticism that sometimes queries the advantages of the FDIled development at large. The main question of the paper is if this criticism is reflected in (both positively and negatively) discriminating policies of the Hungarian state towards foreign companies? The main finding of the paper is that the main aim of changing FDI-related policies is not a decisive break with the model, but rather to split the strong networks of multinational business in order to increase the room of selective and arbitrary advantage and disadvantage measures of the government. This means first of all a departure from the concept of “competition state” towards “patronage state”.

Keywords: FDI policy; crony capitalism; patronage state (search for similar items in EconPapers)
JEL-codes: D72 H82 P16 P31 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2016-02
New Economics Papers: this item is included in nep-int, nep-pke and nep-tra
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