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Location of manufacturing FDI in Hungary: How important are inter-company relationships?

Author

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  • Gábor Békés

    () (Institute of Economics - Hungarian Academy of Sciences and Central European University)

Abstract

In a new economic geography framework with input-output linkages, this study analyses decisions made by foreign firms about their location within Hungary. These firm-to-firm contacts are modelled by creating several corporate customer and supplier access measures for all new foreign corporations. In order to see the impact of these variables other forces of agglomeration such as distance to Western European markets and dispersion forces such as high wages are taken into account. Investigation is carried out on a small-to-medium sized European economy that has just gone through economic transition involving almost unprecedented rapid market liberalisation. A rich dataset of corporate tax returns of Hungarian firms between 1992 and 2002 as well as annual labor surveys are used to get location, sales and wage data. Various econometric specifications of both discrete choice and count data models are applied to provide robustness of results that may be crucial when working with firm level data.

Suggested Citation

  • Gábor Békés, 2005. "Location of manufacturing FDI in Hungary: How important are inter-company relationships?," MNB Working Papers 2005/07, Magyar Nemzeti Bank (Central Bank of Hungary).
  • Handle: RePEc:mnb:wpaper:2005/07
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    File URL: http://www.mnb.hu/letoltes/wp2005-7.pdf
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    Citations

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    Cited by:

    1. Riedl, Aleksandra, 2008. "Contrasting the dynamic patterns of manufacturing and service FDI: Evidence from transition economies," Department of Economics Working Paper Series 1550, WU Vienna University of Economics and Business.
    2. Christian Hilber & Ioan Voicu, 2010. "Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania," Regional Studies, Taylor & Francis Journals, vol. 44(3), pages 355-371.
    3. Hecht, Veronika, 2015. "Location choice of German multinationals in the Czech Republic : the importance of agglomeration economies," IAB Discussion Paper 201519, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    4. Bellak, Christian & Leibrecht, Markus & Riedl, Aleksandra, 2008. "Labour costs and FDI flows into Central and Eastern European Countries: A survey of the literature and empirical evidence," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 17-37, March.

    More about this item

    Keywords

    economic geography; industrial location; FDI; regional policy; discrete choice models;

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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