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The structural and regional implications of the new economy in transition economies


  • Andrea Szalavetz

    () (Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences)


The industrial transformation that revolutionized the economic and business models of former state-owned enterprises has barely reached an advanced stage before the transforming economies face a new type of industrial revolution. The ‘new economy’ is hammering on their doors. There is a policy-making challenge of a structural and regional character, besides the conventional one of closing the object and idea gaps between Hungary and the developed economies in this field, by promoting investment in the diffusion and absorption of information and communication technologies. Hungary’s incorporation into the global structure of world manufacturing brought about a spectacular increase in the share of high-tech products in total output and in exports. Can it be concluded that the country is facing up to the challenges of the new economy? The paper analyses the lessons to be drawn from the theses of the economics of networks and the characteristics of the new economy’s business models. This puts the apparently positive structural-transformation record of Hungarian manufacturing industry in a different perspective. The paper also examines the opportunities and limits of supply and demandbased regional development-policy methods, to find out whether regionaldevelopment can be grounded on promoting an FDI-based shift from the old to the new economy, also in backward regions.

Suggested Citation

  • Andrea Szalavetz, 2001. "The structural and regional implications of the new economy in transition economies," IWE Working Papers 113, Institute for World Economics - Centre for Economic and Regional Studies- Hungarian Academy of Sciences.
  • Handle: RePEc:iwe:workpr:113

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    References listed on IDEAS

    1. Julian Birkinshaw, 1996. "How Multinational Subsidiary Mandates are Gained and Lost," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(3), pages 467-495, September.
    2. Romer, Paul, 1993. "Idea gaps and object gaps in economic development," Journal of Monetary Economics, Elsevier, vol. 32(3), pages 543-573, December.
    3. Carlin, Wendy & Landesmann, Michael, 1997. "From Theory into Practice? Restructuring and Dynamism in Transition Economies," Oxford Review of Economic Policy, Oxford University Press, vol. 13(2), pages 77-105, Summer.
    4. Markusen, James R. & Venables, Anthony J., 1999. "Foreign direct investment as a catalyst for industrial development," European Economic Review, Elsevier, vol. 43(2), pages 335-356, February.
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    6. Lilach Nachum, 2000. "Economic Geography and the Location of TNCs: Financial and Professional Service FDI to the USA," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 31(3), pages 367-385, September.
    7. Philippe Martin, 1999. "Are European regional policies delivering?," Sciences Po publications info:hdl:2441/9343, Sciences Po.
    8. John H Dunning, 1995. "Reappraising the Eclectic Paradigm in an Age of Alliance Capitalism," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(3), pages 461-491, September.
    9. Joel Mokyr, 1997. "Are we living in the middle of an Industrial Revolution?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 31-43.
    10. repec:spo:wpecon:info:hdl:2441/9343 is not listed on IDEAS
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