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The impact of foreign direct investment inflows on regional labour markets in Hungary

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Author Info
Karoly Fazekas () (Institute of Economics, Hungarian Academy of Sciences)
Abstract

The objective of this paper is to examine the nature and determinants of the regional distribution of foreign investment enterprise (FIE) employment in Hungary. Factors explaining the spatial concentration of foreign direct investment (FDI) inflows are investigated and the impact of regional FDI inflows on the performance of regional labour markets is measured. The main conclusion is that the regional distribution of FDI inflows is strongly influenced by the educational level of the local population, the externalities of urban agglomerations and the geographical location of regions. Additional advantages are identified in the case of those regions adjoining the Western-Slovakian, Austrian and Slovenian borders. A self-reinforcing process can be observed here: FDI is attracted to regions where unemployment is lower due to better educational levels and geographical advantages, while an increase in FDI in turn creates new job opportunities. We believe, however, that education and geographical location are in large part merely symptomatic of other, underlying factors. Uncovering these underlying factors has obvious policy implications: location as such cannot be changed, for example, but these background variables could be modified by changes in regional policy.

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Paper provided by Institute of Economics, Hungarian Academy of Sciences in its series Budapest Working Papers on the Labour Market with number 0008.

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Length: 35 pages
Date of creation: Nov 2000
Date of revision:
Handle: RePEc:has:bworkp:0008

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Gabor Kertesi & Janos Kollo, 1999. "Unemployment, Wage Push and the Labour Cost Competitiveness of Regions - The Case of Hungary, 1986-1996," Budapest Working Papers on the Labour Market 9905, Institute of Economics, Hungarian Academy of Sciences. [Downloadable!]
  2. Ottaviano, Gianmarco Ireo Paolo & Puga, Diego, 1997. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," CEPR Discussion Papers 1699, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Ronald W. Jones, 1965. "The Structure of Simple General Equilibrium Models," Journal of Political Economy, University of Chicago Press, vol. 73, pages 557. [Downloadable!] (restricted)
  4. Martín, Carmela & Velazquez, Francisco J, 1997. "The Determining Factors of Foreign Direct Investment in Spain and the rest of the OECD: Lessons for CEECs," CEPR Discussion Papers 1637, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  5. James R. Markusen, 1990. "First Mover Advantages, Blockaded Entry, And the Economics of Uneven Development," NBER Working Papers 3284, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Laura Resmini, 2000. "The Determinants of Foreign Direct Investment in the CEECs: New evidence from sectoral patterns," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(3), pages 665-689, November. [Downloadable!] (restricted)
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  7. Stephen Hill & Max Munday, 1992. "The UK Regional Distribution of Foreign Direct Investment: Analysis and Determinants," Regional Studies, Taylor and Francis Journals, vol. 26(6), pages 535-544, January. [Downloadable!] (restricted)
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  1. Csengödi, Sándor / Urban, Dieter M., 2008. "Foreign Takeovers and Wage Dispersion in Hungary," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  2. Sándor Csengödi & Rolf Jungnickel & Dieter M. Urban, 2008. "Foreign Takeovers and Wages in Hungary," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 144(1), pages 55-82, April. [Downloadable!] (restricted)
  3. Anna Maria Ferragina & Francesco Pastore, 2005. "Mind the Gap: Unemployment in the New EU Regions," IZA Discussion Papers 1565, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  4. Sándor Csengodi & Rolf Jungnickel & Dieter Urban, 2005. "Foreign Taleovers and Wages: Theory and Evidence from Hungary," Development Working Papers 208, Centro Studi Luca d\'Agliano, University of Milano. [Downloadable!]
    Other versions:
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