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Regional economic growth in Hungary 1998–2005: What does really matter in clusters?

Author

Listed:
  • Balázs Lengyel

    (Hungarian Academy of Sciences (MTA KRTK KTI) and International Business School Centre for Economic and Regional Studies, Budapest, Hungary)

  • Izabella Szakálné Kanó

    (University of Szeged, Faculty of Economics and Business Administration, Szeged, Hungary)

Abstract

Although industry clusters are major targets of regional economic development in less developed regions as well, we still need a deeper understanding of how the spatial clustering of firms generates dynamics in lagging regions. These latter environments may differ from the typical cluster policy examples that are usually specialised global centres of dynamically growing industries. Using census-type data of Hungarian firms, we test the effect of major cluster indicators — regional specialisation and spatial concentration of industries — and the impact of FDI on regional productivity and employment growth in Hungary. Our results suggest that regional specialisation does not affect regional growth, while the spatial concentration of industries is found to influence productivity and employment growth with an overwhelmingly negative effect. Furthermore, regional employment growth is associated negatively with the initial level of regional specialisation. Results suggest that Hungary has evolved into a dual economy in which previously specialised regions and geographically concentrated industries have lost their pace, while the main factor that favoured regional economic growth was the presence of large foreign companies. Therefore, economic policies fostering regional specialisation and the spatial concentration of industries — such as cluster policy — may have minor effects unless the interaction of foreign-owned and domestic companies is encouraged.

Suggested Citation

  • Balázs Lengyel & Izabella Szakálné Kanó, 2014. "Regional economic growth in Hungary 1998–2005: What does really matter in clusters?," Acta Oeconomica, Akadémiai Kiadó, Hungary, vol. 64(3), pages 257-285, September.
    • Handle: RePEc:aka:aoecon:v:64:y:2014:i:3:p:257-285
    Note: Balázs Lengyel acknowledges financial support received from the Hungarian Scientific Research Fund (PD106290). The work of Izabella Szakálné Kanó was supported by the European Union and co-funded by the European Social Fund under the TÁMOP-4.1.1.C-12/1/KONV-2012-0005 project entitled “Preparation of the concerned sectors for educational and R&D activities related to the Hungarian ELI Project”. The authors would like to express their special thanks to Ichiro Iwasaki and Miklós Szanyi for their support, comments, and suggestions that greatly contributed to formulating previous versions of this paper. Additional comments have been received from Zoltán Bajmócy, Imre Lengyel, and László Szerb. The authors gratefully acknowledge the useful comments of three anonymous referees. All remaining errors are the authors’ responsibility.
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    Citations

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    Cited by:

    1. Zoltán Elekes & Balázs Lengyel, 2016. "Related trade linkages, foreign firms, and employment growth in less developed regions," Papers in Evolutionary Economic Geography (PEEG) 1620, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Aug 2016.
    2. Izabella Szakálné Kanóa, Balázs Lengyel, Zoltán Elekes, Imre Lengyel & Balázs Lengyel & Zoltán Elekes & Imre Lengyel, 2016. "Related variety, ownership, and firm dynamics in transition economies: the case of Hungarian city regions 1996-2012," Papers in Evolutionary Economic Geography (PEEG) 1612, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised May 2016.
    3. Elekes, Zoltán, 2016. "A regionális növekedés új tényezői az evolúciós gazdaságföldrajzi kutatásokban. A változatosság és a technológiai közelség [The new factors of regional growth in research into evolutionary economic," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(3), pages 307-329.

    More about this item

    Keywords

    agglomeration economies; industry clusters; foreign direct investment; regional productivity growth; regional employment growth; Hungary;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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