12th General Conference of EADI, Geneva, 24-28 June, 2008 South-South FDI: the case of Hungary Katalin Antalóczy, Finance Research Ltd., Budapest, Hungary.

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Presentation transcript:

12th General Conference of EADI, Geneva, June, 2008 South-South FDI: the case of Hungary Katalin Antalóczy, Finance Research Ltd., Budapest, Hungary Magdolna Sass, Institute of Economics of HAS, Budapest, Hungary

12th General Conference of EADI, Geneva, June, 2008 Hungary as a leading outward investor among Visegrad countries Graph 1 FDI outward stock (USD millions) Graph 2 FDI outward stock per capita (2006, USD)

12th General Conference of EADI, Geneva, June, 2008 Host country and sector distribution of Hungarian OFDI Graph 3 FDI outward stock by countries, 2005 (%) Graph 4 FDI outward stock by sector (Millions of Euro) Graph 5 FDI outward stock in manufacturing by sector

12th General Conference of EADI, Geneva, June, 2008 Analysis of OFDI from Hungary Methodology: because of the concentrated nature: company level investigation, based on detailed company case studies Groups of companies investing abroad: distinctive features – based on these: 4 company groups Group 2 and 1 represent the overwhelming majority of Hungarian OFDI

12th General Conference of EADI, Geneva, June, 2008 Comparison of the 4 groups of companies investing abroad 1 Group 1Group 2Group 3Group 4 Controlling owner Foreign owned Dispersed (stock exchange) Hungarian SizeUsually bigBigMedium to bigSmall- medium Geographical target of FDI Close/neigh- bouring, in a few cases far away Close/neigh- bouring SectorVarious (product spec.) Financial services, petrochemicals, pharmaceuticals, hotels dominate Manu- facturing Manu- facturing and services Mode of entryGreenfield, M&A Privatisation- related M&A, few greenfield M&A, greenfield M&A, greenfield, JV

12th General Conference of EADI, Geneva, June, 2008 Comparison of the 4 groups of companies investing abroad 2 Group 1Group 2Group 3Group 4 Stage in corporate life EarlyRelatively early Technological or organisational innovation? TechnologicalOrganisationalOrganisational (few technological) Main motiveMarket seeking (few efficiency) Market seeking (strengthening of the company’s position) Efficiency (few market) Efficiency and market Strategy influenced by home country business environment In some cases (no investment opportunities) YesYes (rising labour costs) Yes (rising labour costs, shortage of labour, tax burden)

12th General Conference of EADI, Geneva, June, 2008 Special cases? Outward FDI and relocations from Hungary Limited up till now (in OFDI) Share negligible in total OFDI Mainly groups 3 and 4 Relocation of the most labour intensive activities abroad in order to reduce costs and improve competitiveness Example in the paper’s case studies: Videoton (certain activities to Bulgaria)

12th General Conference of EADI, Geneva, June, 2008 Thank you for your attention!