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In economics literature, a number of authors emphasize the need to study both domestic and foreign enterprises in order to properly grasp the effect of foreign direct investment on the local economy. Differences between foreign and domestic enterprises stem from the fact that multinational enterprises operate in a global network extending into many countries, which most certainly exerts influence on all aspects of their production activity. This paper presents a comparative analysis of performance of domestic and three types of foreign enterprises in Hungary. Total-factor pro- ductivity, factor intensity, wages, export intensity, profitability, as well as the effective rate of tax are examined by the combined tools of comparison, regression analysis and Wilcoxon test for data of the whole economy of Hungary. While foreign firms are found to contribute to the revitalization of the economy as far as capital intensity, productivity, export performance and level of wages are concerned, they do not yet seem to produce profitably.

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The study deals with theoretical questions of the Hungarian privatization law. It clarifies the differences between the economic and legal concept of privatization, the various interpretations of privatization. The Hungarian privatization was the earliest and at the same time-after the German-the quickest completed privatization in the former socialist countries. It reviews the so-called spontaneous privatization between 1988–1990, and the privatization legislature of 1992 and 1995 as well. As a conclusion the study deals with the evaluation of the privatization law, and with the consequences of privatization with regards to social politics.

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This paper addresses the experiences and challenges of Hungary’s monetary policy during the period 1995–2000 and in view of the progress toward EU and EMU membership. The structure of relative prices changed markedly in the past and is expected to continue to change in the future. The reason, in addition to a possible Balassa–Samuelson effect, was the elimination of subsidies and introduction of turnover taxes in the past, and a future convergence toward a price structure prevalent in the EU. In the 1995–2000 period, the resulting gap between CPI and PPI led to massive foreign capital inflows. While the policy of sterilised interventions by the National Bank of Hungary was probably the right answer, it was inevitably costly, and was made costlier than necessary by the way it was carried out. Continued adjustments in the price structure in the future will confront monetary policy with the same dilemmas and, resulting in an inflation floor, will complicate the country’s conditions of joining EMU within a reasonable time frame after EU accession.

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For a long period, Southeast Asian economies have been export-oriented, mostly to Europe and North America. To earn foreign exchanges and speed their economic growth, ASEAN countries have moved to combine foreign and national capital to promote indigenous industrial development and native economic growth. For this purpose, ASEAN countries have set up enormous foreign investment incentives to attract foreign capital and enacted related foreign investment regulations many times to catch more foreign investors’ eyes. However, the dissimilar economic developmental levels and the different political backgrounds, ASEAN countries have varied investment environment and regulations. Since both the formation of ASEAN and ASEAN members themselves are more focused on attracting foreign investment, one may ask what differences of foreign investment environment and regulations ASEAN member states have? The article hopes to analyze ASEAN member’s investment environment and selected members’ investment regulations in order to examine the interactions between national developmental demands and foreign investment regulations through a comparative study of ASEAN member states’ laws on foreign investment.

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The article examines the significance of institutional quality for economic performance during transition. Institutions are the rules of the game. In any economy the most important institutions are the legal system, the state, the structure of the financial system and the system of international relations. The process of economic transition in Central and Eastern Europe was mainly a process of massive institutional changes which were spurred by economic causes and also themselves had significant economic consequences. The article examines the institutional changes in transition economies and shows that institutions matter. The first decade of transition gave the impression that it is important to build as good institutional framework as possible and as fast as possible. But today, with the quick growth of some South Eastern European economies, it seems not to hold that the better the institutions the better the economic performance, but rather to (at least) establish some satisfactory level of institutional quality is important to resume growth, which can also be assisted by foreign capital.

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In this article, the authors give a rich-in-data account of Hungary's structural transition to a market economy between 1993 and 1998. Although the availability of statistics also puts constraint on which period to study, these years may as well be later termed the first phase of post-socialist transition. The article has three main parts. In the first, structural changes of the whole economy are presented; the structural shifts in output, value added, and investments are analysed. The diffusion of private ownership and foreign capital and the process of decentralisation and concentration are also discussed. In the second part, the manufacturing industries are in focus. With an interesting analytical tool – the growth matrix – the authors present a possible approach of studying sectoral development. By distinguishing the factor needs of the manufacturing industries, the factor intensities of production are also easy to understand and yet reasonable for studying the adjustment to modernisation trends. In the third part, the structural changes of foreign trade are shown: export orientation, import dependency, the relationship between export and technology are the main concerns of analysis. The impact of FDI on the manufacturing industries' foreign trade and performance close the third part of the article.

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Acta Oeconomica
Authors: Pál Czeglédi and Tibor Kárpáti

References Benedek , T. ( 2001 ): Foreign Capital Investment in the Context of Regional Differences . Vezetéstudomány, Vol. 32 , No. 5 : pp. 17 – 26

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. Prasad, E. — Rogoff, K. — Wei, S. — Kose, M. (2003): Effects of Financial Globalization on Developing Countries . Occasional Paper No. 220, IMF. Rana, P. B. (1987): Foreign capital, savings and growth in the Asian region

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. Baharumshah , A. Z. – Thanoon , M. A. ( 2006 ): Foreign Capital Flows and Economic Growth in East Asian Countries . China Economic Review 17 : 70 – 83 . Baharumshah , A. Z

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Transformation Studies, No. 6. Diczházi, B. (1998): A külföldi tőke szerepe a privatizációban [The role of foreign capital in the privatisation]. Budapest: ÁPV Rt. A külföldi tőke

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