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Voting for staying. Why didn’t the foreign-owned automotive component suppliers relocate their activity from Hungary to lower-wage countries as a response to the economic crisis?

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  • Eric Rugraff
  • Magdolna Sass

Abstract

On the basis of interviews with 10 foreign-owned automobile component suppliers in Hungary and the collection of indirect information, this article explains why the multinationals did not relocate their activity from Hungary to lower-wage countries as a response to the economic crisis. We suggest that the four ‘keep factors of location’ – additional investments of the automobile manufacturers, unchanged labour market regulation, changes in government policy and the existence of few alternative sites of relocation – were more dominant than the two main ‘push factors of relocation’ – relatively low sunk costs and low dependence on the local environment.

Suggested Citation

  • Eric Rugraff & Magdolna Sass, 2016. "Voting for staying. Why didn’t the foreign-owned automotive component suppliers relocate their activity from Hungary to lower-wage countries as a response to the economic crisis?," Post-Communist Economies, Taylor & Francis Journals, vol. 28(1), pages 16-33, January.
  • Handle: RePEc:taf:pocoec:v:28:y:2016:i:1:p:16-33
    DOI: 10.1080/14631377.2015.1124552
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    References listed on IDEAS

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    1. repec:dgr:rugsom:02d31 is not listed on IDEAS
    2. Isabel Grilo & Tito Cordella, 1998. "“Globalization” and Relocation in a Vertically Differentiated Industry," IMF Working Papers 1998/048, International Monetary Fund.
    3. Gabor Hunya & Magdolna Sass, 2005. "Coming and Going: Gains and Losses from Relocations Affecting Hungary," wiiw Research Reports 323, The Vienna Institute for International Economic Studies, wiiw.
    4. Joris Knoben, 2008. "Firm Mobility and Organizational Networks," Books, Edward Elgar Publishing, number 12712.
    5. Joris Knoben & Leon Oerlemans, 2005. "The effects of firm relocation on firm performance - A literature review," ERSA conference papers ersa05p324, European Regional Science Association.
    6. Cordella, Tito & Grilo, Isabel, 1998. "'Globalization' and Relocation in a Vertically Differentiated Industry," CEPR Discussion Papers 1863, C.E.P.R. Discussion Papers.
    7. Lampón, Jesús F. & Lago-Peñas, Santiago, 2013. "Factors behind international relocation and changes in production geography in the European automobile components industry," MPRA Paper 45659, University Library of Munich, Germany.
    8. Miklos Szanyi, 2006. "Competitiveness and industrial renewal via production relocation by global multinational networks," IWE Working Papers 166, Institute for World Economics - Centre for Economic and Regional Studies- Hungarian Academy of Sciences.
    9. Pellenbarg, P.H. & Wissen, L.J.G. van & Dijk, J. van, 2002. "Firm relocation: state of the art and research prospects," Research Report 02D31, University of Groningen, Research Institute SOM (Systems, Organisations and Management).
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