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FDI promotion of the Visegrád countries in the era of global value chains

Andrea Éltető () and Katalin Antaloczy ()
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Andrea Éltető: Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences
Katalin Antaloczy: Faculty of International Management and Business, Budapest Business School

No 229, IWE Working Papers from Institute for World Economics - Centre for Economic and Regional Studies

Abstract: Investments (FDI) have become more connected to the global value chains (GVCs) in the past decated. As known, the Visegrád countries intensively participate in GVCs and have collected considerable stock of FDI. The purpose of the paper is to analyse how governmental investment promotion policies of these countries reacted to these phenomena. Investment can be promoted in a wide sense – creating stabile business environment – and in a narrow sense (grants, tax allowances, etc). Narrow sense FDI incentives serve in most cases large multinationals. The Visegrád countries have applied several type of state incentives on a large scale. Based on official data and press information we provide insight into the narrow sense FDI promotion steps, from grants to special industrial zones. Using international surveys and indices we show that several factors that favourable for FDI in a wide sense, have deteriorated recently. Legal stability has been shaken, corruption increased and education indices declined. The shortage of qualified labour force became acute. Visegrád countries continue competing for large investments, therefore costly, tailored grants for foreign firms (narrow tools) will be more and more important. However, this cannot endlessly compensate for worsening business climate (wide tools).

Keywords: global value chains; FDI; state aid (search for similar items in EconPapers)
JEL-codes: F13 F14 P52 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2017-05
New Economics Papers: this item is included in nep-int
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