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

  • Karoly Fazekas

    ()

    (Institute of Economics, Hungarian Academy of Sciences)

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.

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Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series Budapest Working Papers on the Labour Market with number 0303.

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Length: 32 pages
Date of creation: May 2003
Date of revision:
Handle: RePEc:has:bworkp:0303
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  1. Henry Overman & Diego Puga, 1999. "Unemployment Clusters Across European Regions and Countries," CEP Discussion Papers dp0434, Centre for Economic Performance, LSE.
  2. Jozef Konings, 1999. "The Effect of Direct Foreign Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies," LICOS Discussion Papers 8699, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  3. Giovanni Peri & Alejandro Cunat, 2001. "Job Creation in Italy: Geography, Determinants and Perspectives," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 60(1), pages 43-74, June.
  4. Kertesi, Gábor, 2000. "A cigány foglalkoztatás leépülése és szerkezeti átalakulása 1984 és 1994 között. Munkatörténeti elemzés
    [The decline and structural transformation of Gypsy employment between 1984 and 1994]
    ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(5), pages 406-443.
  5. Yuko Kinoshita & Nauro F. Campos, 2003. "Why Does Fdi Go Where It Goes? New Evidence From The Transition Economies," William Davidson Institute Working Papers Series 2003-573, William Davidson Institute at the University of Michigan.
  6. Krugman, Paul, 1991. "History and Industry Location: The Case of the Manufacturing Belt," American Economic Review, American Economic Association, vol. 81(2), pages 80-83, May.
  7. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  8. Boeri, Tito & Scarpetta, Stefano, 1996. "Regional mismatch and the transition to a market economy," Labour Economics, Elsevier, vol. 3(3), pages 233-254, October.
  9. Ray Barrell & Dawn Holland, 2000. "Foreign Direct Investment and Enterprise Restructuring in Central Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 8(2), pages 477-504, July.
  10. Markusen, James R. & Venables, Anthony J., 1998. "Multinational firms and the new trade theory," Journal of International Economics, Elsevier, vol. 46(2), pages 183-203, December.
  11. K. Schoors & B. Van Der Tol, 2002. "Foreign direct investment spillovers within and between sectors: Evidence from Hungarian data," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 02/157, Ghent University, Faculty of Economics and Business Administration.
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