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Effects of foreign direct investment on the performance of local labour markets - The case of Hungary

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  • Karoly Fazekas

    (Institute of Economics, Hungarian Academy of Sciences)

Abstract

Post transitional labour markets of the CEE countries have been characterised by marked regional differences. Since labour market differences were mainly generated by demand side factors the paper will concentrate on the spatial pattern of job creation determined mostly by the allocation decisions of foreign investors. Thus, the success or failure of local economies or local labour markets were largely determined by the attractiveness of the individual regions towards FDI. Posttransitional winners of local labour markets can boast of high doses of FDI inflows, while high unemployment regions have been suffering a persistent lack of outside investments. Our analysis intends to identify the winners and losers of transitional local labour markets and to calculate the possible effects of EU-accession on local labour markets in Hungary. Based on micro regional data sets the paper describes the regional distribution of foreign and domestic employment. The first section of the paper discusses the time path of regional labour market differences in Hungary between 1990 - 2001 and identifies the winners and losers of transition. The second chapter analyses the spatial distribution of FDI and domestic firm's employment and identifies the most important explanatory factors of their regional distribution.

Suggested Citation

  • Karoly Fazekas, 2003. "Effects of foreign direct investment on the performance of local labour markets - The case of Hungary," Budapest Working Papers on the Labour Market 0303, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:bworkp:0303
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    Cited by:

    1. Anna Maria Ferragina & Francesco Pastore, 2008. "Mind The Gap: Unemployment In The New Eu Regions," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 73-113, February.
    2. Elina De Simone & Marcella D’Uva, 2017. "Social Support, Industrial Parks and FDI Location Choice Across Hungarian Counties," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 133(3), pages 1031-1045, September.
    3. Laura Resmini, 2003. "Economic integration and regional patterns of industry location in transition countries," ERSA conference papers ersa03p399, European Regional Science Association.
    4. Klara Foti, 2005. "The impact of changes in competitiveness on labour market and human resource development, the case of Hungary," IWE Working Papers 154, Institute for World Economics - Centre for Economic and Regional Studies.
    5. Pierella Paci & Erwin R. Tiongson & Mateusz Walewski & Jacek Liwinski & Maria M. Stoilkova, 2007. "Internal Labor Mobility in Central Europe and the Baltic Region," World Bank Publications - Books, The World Bank Group, number 6598.
    6. Hajnalka Tarjani, 2005. "Estimating some labour market implications of skill biased technology change and imports in Hungary," CERS-IE WORKING PAPERS 0508, Institute of Economics, Centre for Economic and Regional Studies.
    7. Anna Iara, 2005. "Regional growth in Hungary - The impact of European economic integration," ERSA conference papers ersa05p342, European Regional Science Association.
    8. George Petrakos & Lefteris Topaloglou, 2005. "Tracing the new economic geography of borders in Europe," ERSA conference papers ersa05p424, European Regional Science Association.
    9. Sass, Magdolna, 2004. "FDI in Hungary - the first mover's advantage and disadvantage," EIB Papers 8/2004, European Investment Bank, Economics Department.
    10. Thiess Büttner & Peter Egger & Peter Huber & Anna Iara & Michael Pfaffermayr & Johannes Rincke & Yvonne Wolfmayr, 2004. "The Impact of Integration on Wages and Employment in Border Regions," WIFO Studies, WIFO, number 25326.
    11. Károly Attila SOÓS, 2013. "The Role of Intra-Industry Trade in the Industrial Upgrading of the 10 CEECs New Members of the European Union," KIER Working Papers 868, Kyoto University, Institute of Economic Research.

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    More about this item

    Keywords

    local labour markets; FDI; transition economies; Hungary;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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