There has been an increase in outward foreign direct investment (FDI) and in the number of locally-owned or controlled multinationals in the Czech Republic and Hungary. However, data problems hinder to determine accurately the underlying trends and the main factors behind the changes. Data on outward FDI contain investment realised by all locally operational firms, regardless of their ownership. We rely on newly available balance of payments manual 6 (BPM) data and on company case studies. We show that outward investment by Czech firms must be much higher than what balance of payments data show. Hungary's case is the opposite. The leading Czech and Hungarian foreign investor firms can be categorised as “virtual indirect” foreign investors: they are in majority foreign ownership, but under domestic control. The reason for this special type of firms dominating in outward foreign direct investments can be found in the privatisation technique applied in these countries during the transition process.
This paper deals with the possible existence of political budget cycles (PBCs) within the European Union (EU). I use panel data for 28 EU countries from 1995 to 2016 and provide estimates based on dynamic panel regressions. I employ a system-GMM estimator complemented by the Principal Component Analysis (PCA) to limit the number of instruments. The specifications include structural budget balances related to the potential GDP, thereby limiting the initial endogeneity. These measures capture the true motivation behind fiscal policies. The results suggest that the EU member states exhibit PBCs: (i) the intervention occurs in the year before elections and (ii) the structural budget balance to the potential GDP ratio is lower by −0.41 percentage points a year before elections. In addition, I have investigated the EU fragmentation in terms of the PBCs and selected 8 countries’ characteristics correlating to the existence of these cycles. These include lower GDP per capita, post-communist background, low tax burden, high perceived corruption, low levels of media freedom and internet usage, lower number of directly voted-in legislative officials, and a low parliamentary voter turnout.
The paper aims to analyse state-owned enterprises (SOEs) in 11 post-socialist Central-Eastern European (CEE) countries. Based on the individual data of large non-financial companies, we estimated the real state share in the years 2014 and 2015. We consider both direct and indirect state ownership and apply an explicit classification of companies as majority and minority state-owned, which is neglected in a lot of research. The countries with the highest values of the ‘Country SOE index’ were Slovenia and Latvia, while the lowest were Lithuania and Hungary. State ownership is dominant in transportation and storage and energy supply. The lower return on assets (ROA), return on equity (ROE) and return on capital employed (ROCE) ratios of SOEs imply that capital in this group of companies is used less efficiently. Furthermore, they are characterised by higher wage costs. At the same time, SOEs have higher earnings before interest, taxes, depreciation and amortization (EBITDA) margins and better ability to turn operating revenue into cash than their privately-owned counterparts.
The length, the composition, the quality and the characteristics of value chains essentially determine the corporate as well as the macroeconomic performance of the economic sectors and industries. Hungary has a strong tradition in the pharmaceutical industry but its dynamising impact seems to be limited on the economy. The aim of this paper is to detect and reveal the specialties of the Hungarian pharmaceutical industry both in space and time by a value chain analysis. Our method is partly quantitative, we use an input-output analysis; and partly qualitative, relying on interviews with the representatives of pharmaceutical companies. We found that the Hungarian pharma value chain is really special, having relatively short backward and forward linkages with mainly indirect value-added contribution as well as high import content of exports. However, our company interviews revealed the fundamental differences between original and generic value chains – i.e. again a pharma industry-specific distinction. Having relatively little original and more substantial generic production in Hungary explains much of the value chain specialties, which leaves its mark on the limited impact of the industry on the national economy.
The paper aims to explore how factors of regional competitiveness are associated with the location of car manufacturing companies in the EU. Although the European automotive market can be characterized by an intense dynamics in terms of location choices, literature offers little empirical guidance on how regional factors influence the location of car manufacturers in the EU. This paper aims to fill this gap by combining regional competitiveness data on 276 EU regions with the actual location of all 269 production units of car manufacturing companies currently present in the EU. Logistic regression is used to discover significant relationships, while the comparative analysis of clusters of regions is meant to offer a more detailed understanding of the role of different location factors. Results of the analysis show that the most influential location factor is related to infrastructural development, but other competitiveness factors, such as regional innovation capabilities or labour market efficiency, might also play an important role.
The paper looks at the life situation of Czech and Slovak seniors between 2005 and 2016. The aim is to analyze data from the national standardized surveys (EU-SILC) and, based on the analyzed data, describe living conditions (an objectively measured standard of living and poverty rate) and subjective life satisfaction with an emphasis on seniors living in single-person households. The results show a large increase in the number of single-person households. The analysis of Czech households' income situation showed that the per-member monthly income for the whole population was similar to the average per-member income in households of seniors, while the group of the elderly living in single-person households appeared to be the most vulnerable one in terms of income. The differences between the seniors' incomes and expenditures indicated that about 40% of this data segment's members lived near the poverty line, while the most endangered segment members were seniors from single-person households.
In 2011 Hungary's water supply and sanitation sector was characterized by a multitude of utilities, a fragmented market with widely differing tariffs and no centralized regulation, resulting in often inefficient and unsustainable operational and market conditions. In 2011 the Hungarian government introduced the Act CCIX of 2011 on Water Utility Services which resulted in significant market consolidations. In this article we present the results of a qualitative survey carried out in 2015 to examine the opinion of top managers of utilities on the short and midterm effects of the realization of the objectives set by the Act. The interviews focused on examining the efficiency changes experienced by 15 CEOs of different water utility service provider companies since the integration. The paper also examines their expectations for the future across a multitude of technical and economic fields and factors. This qualitative research aimed to study whether the recent changes in policy and market structure led to economies of scale and to the perceptible increase of technical and economic efficiency levels. It was concluded that efficiency benefits of economies of scale prevailed in most cases, however, these were perceived only to a limited extent at the time of the survey, approximately midway through the ongoing integration processes.
When calculating different profitability measures for a life insurance company, one of the most important parameters to know is the probability of a policy being in force at any given time after the start of risk bearing. These probabilities are given by the survival function. In this paper, we examine data from a Hungarian insurance company, in order to build models for the survival functions of two life insurance products. For survival function estimation based on the unique parameters of a new policy, Cox regression is used. However, not all parameters of a new policy are relevant in estimating the survival function. Therefore, application of model selection algorithms is needed. Furthermore, if the exact effects of the policy parameters for the survival function can be determined, the insurance company can direct its sales team to acquire policies with positive technical results. When traditional model selection techniques proposed by the literature (such as best subset, stepwise and regularization methods) are applied on our data, we find that the effect of the selected predictors for survival cannot be determined, as there is a harmful degree of multicollinearity. In order to tackle this problem, we propose adding the hybrid metaheuristic from Láng et al. (2017) to the Cox regression in order to eliminate multicollinearity from the final model. On the test sets, performance of the models from the metaheuristic rivals those of the traditional algorithms with the use of noticeably less predictors. These predictors are not significantly correlated and are significant for survival, as well. It is shown in the paper that with the application of metaheuristics, we could produce a model with good predicting capabilities and interpretable predictor effects. These predictor effects can be used to direct the sales activities of the insurance company.
In the past few years in many countries people have experienced the erosion of trust in the main pillars of democracy, the voting and election systems. Many authors envisage the blockchain technology as a tool for restoration of trust (Tapscott 2016; Swislow 2016; Shin 2016). Our research is aimed at the potential use of blockchain technology in social systems for enhancing trust and increasing participation. We aim to explore whether the blockchain technology is suitable for voting or elections in large communities and the issues to be addressed for real world applications to leverage democratic rights. Our final conclusion is that there are both theoretical and practical obstacles in the way of such direct applications.
The study examines the possibilities of the digital transformation of the Hungarian banking industry through the “One Week Sprint” method, derived from general design thinking methodology. In our research, we cooperated with two domestic banks and focused on real estate related opportunities and SME offerings. The methodological focus was on how to use customer journeys and personas for supporting digital efforts, as design thinking places a great emphasis on these elements. The paper has two goals: 1) present the findings of this innovative project with the two banks using design thinking; 2) describe our experience with customer journeys and personas in consumer- and corporate-facing innovation projects in the two banks. To our knowledge, there is no practical experience in the literature regarding the usage of these tools. We found that the usage of customer journeys and personas are much easier and evident if the project tries to develop consumer products or solutions. If the solutions are for corporate use, personas lose the added value of empathy (without the human connection) and the creation of customer journeys needs deeper experience from consultants.