View More View Less
  • 1 Hungarian Academy of Sciences (MTA KRTK KTI) and International Business School Centre for Economic and Regional Studies Budapest Hungary
  • | 2 University of Szeged Faculty of Economics and Business Administration Szeged Hungary
Restricted access

Purchase article

USD  $25.00

1 year subscription (Individual Only)

USD  $700.00

Although industry clusters are major targets of regional economic development in less developed regions as well, we still need a deeper understanding of how the spatial clustering of firms generates dynamics in lagging regions. These latter environments may differ from the typical cluster policy examples that are usually specialised global centres of dynamically growing industries. Using census-type data of Hungarian firms, we test the effect of major cluster indicators — regional specialisation and spatial concentration of industries — and the impact of FDI on regional productivity and employment growth in Hungary. Our results suggest that regional specialisation does not affect regional growth, while the spatial concentration of industries is found to influence productivity and employment growth with an overwhelmingly negative effect. Furthermore, regional employment growth is associated negatively with the initial level of regional specialisation. Results suggest that Hungary has evolved into a dual economy in which previously specialised regions and geographically concentrated industries have lost their pace, while the main factor that favoured regional economic growth was the presence of large foreign companies. Therefore, economic policies fostering regional specialisation and the spatial concentration of industries — such as cluster policy — may have minor effects unless the interaction of foreign-owned and domestic companies is encouraged.

  • Acs, Z.J. - O’Gorman, C. - Szerb, L. - Terjesen, S. (2007): Could the Irish Miracle be Repeated in Hungary? Small Business Economics, 28: 123–142.

    Terjesen S , 'Could the Irish Miracle be Repeated in Hungary? ' (2007 ) 28 Small Business Economics : 123 -142.

    • Search Google Scholar
  • Audretsch, D.B. - Keilbach, M. (2005): Entrepreneurship Capital and Regional Growth. The Annals of Regional Science, 39: 457–469.

    Keilbach M , 'Entrepreneurship Capital and Regional Growth ' (2005 ) 39 The Annals of Regional Science : 457 -469.

    • Search Google Scholar
  • Békés, G. - Kleinert, J. - Toubal, F. (2006): Spillovers from Multinationals to Heterogeneous Domestic Firms: Evidence from Hungary. Discussion Papers, No. 2006/16, Institute of Economics, Hungarian Academy of Sciences.

    Toubal F , '', in Discussion Papers, No. 2006/16 , (2006 ) -.

  • Beugelsdijk, S. - McCann, P. - Mudambi, R. (2010): Introduction: Place, Space and Organization — Economic Geography and the Multinational Enterprise. Journal of Economic Geography, 10: 485–493.

    Mudambi R , 'Introduction: Place, Space and Organization — Economic Geography and the Multinational Enterprise ' (2010 ) 10 Journal of Economic Geography : 485 -493.

    • Search Google Scholar
  • Boschma, R.A. (2005): Proximity and Innovation: A Critical Assessment. Regional Studies, 39: 61–74.

    Boschma RA , 'Proximity and Innovation: A Critical Assessment ' (2005 ) 39 Regional Studies : 61 -74.

    • Search Google Scholar
  • Capello, R. (2009a): Space, Growth and Development. In: Capello, R. - Nijkamp, P. (eds): Handbook of Regional Growth and Development Theories. Cheltenham: Edward Elgar, pp. 33–52.

    Capello R , '', in Handbook of Regional Growth and Development Theories , (2009 ) -.

  • Capello, R. (2009b): Spatial Spillovers and Regional Growth: A Cognitive Approach. European Planning Studies, 17: 639–658.

    Capello R , 'Spatial Spillovers and Regional Growth: A Cognitive Approach ' (2009 ) 17 European Planning Studies : 639 -658.

    • Search Google Scholar
  • EC (2011): Regional Policy for Smart Growth in Europe 2020. Brussels.

    '', in Regional Policy for Smart Growth in Europe 2020 , (2011 ) -.

  • Farkas, P. (2000): The Effects of Foreign Direct Investment on R&D and Innovation in Hungary. IWE Working Papers, No. 108, Institute for World Economics, Hungarian Academy of Sciences.

    Farkas P , '', in IWE Working Papers, No. 108 , (2000 ) -.

  • Glaeser, E. (2000): The New Economics of Urban and Regional Growth. In: Clark, G.L. - Gertler, M.S. - Feldman, M.P. (eds): The Oxford Handbook of Economic Geography. Oxford: Oxford University Press, pp. 83–98.

    Glaeser E , '', in The Oxford Handbook of Economic Geography , (2000 ) -.

  • Glaeser, E. - Kallal, H.D. - Scheinkman, J.D. - Shleifer, A. (1992): Growth in Cities. Journal of Political Economy, 100: 1126–1152.

    Shleifer A , 'Growth in Cities ' (1992 ) 100 Journal of Political Economy : 1126 -1152.

  • Gordon, I.R. - McCann, P. (2000): Industrial Clusters: Complexes, Agglomeration and/or Social Networks? Urban Studies, 37: 513–532.

    McCann P , 'Industrial Clusters: Complexes, Agglomeration and/or Social Networks? ' (2000 ) 37 Urban Studies : 513 -532.

    • Search Google Scholar
  • Gordon, I.R. - McCann, P. (2005): Innovation, Agglomeration, and Regional Development. Journal of Economic Geography, 5: 523–543.

    McCann P , 'Innovation, Agglomeration, and Regional Development ' (2005 ) 5 Journal of Economic Geography : 523 -543.

    • Search Google Scholar
  • Grosz, A. (2006): Clusterization Processes in the Automotive Industry. Discussion Papers, No. 52, Centre for Regional Studies, Hungarian Academy of Sciences.

    Grosz A , '', in Discussion Papers, No. 52 , (2006 ) -.

  • Halpern, L. - Muraközy, B. (2007): Does Distance Matter in Spillover? Economics of Transition, 15: 781–805.

    Muraközy B , 'Does Distance Matter in Spillover? ' (2007 ) 15 Economics of Transition : 781 -805.

    • Search Google Scholar
  • Henderson, J.V. - Kuncoro, A. - Turner, M. (1995): Industrial Development in Cities. Journal of Political Economy, 103: 1067–1085.

    Turner M , 'Industrial Development in Cities ' (1995 ) 103 Journal of Political Economy : 1067 -1085.

    • Search Google Scholar
  • Iammarino, S. - McCann, P. (2006): The Structure and Evolution of Industrial Clusters: Transactions, Technology and Knowledge Spillovers. Research Policy, 35: 1018–1036.

    McCann P , 'The Structure and Evolution of Industrial Clusters: Transactions, Technology and Knowledge Spillovers ' (2006 ) 35 Research Policy : 1018 -1036.

    • Search Google Scholar
  • Isard, W. (1956): Location and Space Economy. Cambridge, MA: The Technology Press of Massachusetts Institute of Technology.

    Isard W , '', in Location and Space Economy , (1956 ) -.

  • Iwasaki, I. (2007): Corporate Restructuring and the Role of Foreign Direct Investment in Hungary. In: Dallago, B. - Iwasaki, I. (eds): Corporate Restructuring and Governance in Transition Economies. Basingstoke: Palgrave Macmillan, pp. 178–210.

    Iwasaki I , '', in Corporate Restructuring and Governance in Transition Economies , (2007 ) -.

  • Iwasaki, I. - Csizmadia, P. - Illéssy, M. - Makó, Cs. - Szanyi, M. (2009): The Concentric-Circle Model of FDI Spillover Effects: Estimation Using Hungarian Panel Data. IER Discussion Paper A521, Institute of Economic Research, Hitotsubashi University.

    Szanyi M , '', in IER Discussion Paper A521 , (2009 ) -.

  • Jacobs, J. (1969): The Economy of Cities. New York: Random House.

    Jacobs J , '', in The Economy of Cities , (1969 ) -.

  • Ketels, C. - Sölvell, Ö. (2005): Clusters in the EU 10 New Member Countries. Europe INNOVA, Center for Strategy and Competitiveness, Stockholm.

    Sölvell , '', in Clusters in the EU 10 New Member Countries , (2005 ) -.

  • Krugman, P. (1991): Geography and Trade. Cambridge, MA: MIT Press.

    Krugman P , '', in Geography and Trade , (1991 ) -.

  • Lengyel, B. - Cadil, V. (2009): Innovation Policy Challenges in Transition Countries: Foreign Business R&D in the Czech Republic and Hungary. Transition Studies Review, 16: 174–188.

    Cadil V , 'Innovation Policy Challenges in Transition Countries: Foreign Business R&D in the Czech Republic and Hungary ' (2009 ) 16 Transition Studies Review : 174 -188.

    • Search Google Scholar
  • Lengyel, B. - Iwasaki, I. - Szanyi, M. (2010): Industrial Clusters and Regional Economic Growth: Evidence from Hungary. Hitotsubashi Journal of Economics, 51: 149–167.

    Szanyi M , 'Industrial Clusters and Regional Economic Growth: Evidence from Hungary ' (2010 ) 51 Hitotsubashi Journal of Economics : 149 -167.

    • Search Google Scholar
  • Lengyel, B. - Leydesdorff, L. (2011): Regional Innovation Systems in Hungary: The Failing Synergy at the National Level. Regional Studies, 45: 677–693.

    Leydesdorff L , 'Regional Innovation Systems in Hungary: The Failing Synergy at the National Level ' (2011 ) 45 Regional Studies : 677 -693.

    • Search Google Scholar
  • Lengyel, I. (2003): The Pyramid Model: Enhancing Regional Competitiveness in Hungary. Acta Oeconomica, 53(4): 323–342.

    Lengyel I , 'The Pyramid Model: Enhancing Regional Competitiveness in Hungary ' (2003 ) 53 Acta Oeconomica : 323 -342.

    • Search Google Scholar
  • Lengyel, I. (2011): Types of Competitiveness of Hungarian Micro-Regions: Empirical Testing of the Regional Competitiveness Function. Paper prepared for the workshop on ‘Regional Innovation and Growth: Theory, Empirics, and Policy Analysis’. 30th March–1st April, 2011, Pécs, Hungary.

    Lengyel I , '', in Types of Competitiveness of Hungarian Micro-Regions: Empirical Testing of the Regional Competitiveness Function , (2011 ) -.

  • Lorenzen, M. - Mahnke, V. (2002): Global Strategy and the Acquisition of Local Knowledge: How MNCs Enter Regional Knowledge Clusters. DRUID Working Paper, 02-08, Danish Research Unit for Industrial Dynamics, Copenhagen.

    Mahnke V , '', in DRUID Working Paper, 02-08 , (2002 ) -.

  • Marshall, A. (1890): Principles of Economics. London: Macmillan.

    Marshall A , '', in Principles of Economics , (1890 ) -.

  • Mates, J. (2010): Innovation in Multinational Enterprises: Organisational, International and Regional Dilemmas. Frankfurt - London: Peter Lang.

    Mates J , '', in Innovation in Multinational Enterprises: Organisational, International and Regional Dilemmas , (2010 ) -.

  • McCann, P. - Arita, T. - Gordon, I.R. (2002): Industrial Clusters, Transaction Costs and Institutional Determinants of MNE Location Behaviour. International Business Review, 11: 647–663.

    Gordon IR , 'Industrial Clusters, Transaction Costs and Institutional Determinants of MNE Location Behaviour ' (2002 ) 11 International Business Review : 647 -663.

    • Search Google Scholar
  • Nakamura, R. - Morrison, P.C.J. (2009): Measuring Agglomeration. In: Capello, R. - Nijkamp, P. (eds): Handbook of Regional Growth and Development Theories. Cheltenham-Northampton: Edward-Elgar, pp. 305–328.

    Morrison PCJ , '', in Handbook of Regional Growth and Development Theories , (2009 ) -.

  • Nobel, R. - Birkinshaw, J. (1998): Innovation in Multinational Corporations: Control and Communication Patterns in International R&D Operations. Strategic Management Journal, 19: 479–496.

    Birkinshaw J , 'Innovation in Multinational Corporations: Control and Communication Patterns in International R&D Operations ' (1998 ) 19 Strategic Management Journal : 479 -496.

    • Search Google Scholar
  • van Oort, F. - van Soest, D. P. - Gerking, S.D. (2005): Dynamic Information Externalities and Employment Growth in the Netherlands. In: Boschma, R.A. - Kloosterman, R.C. (eds): Learning from Clusters: A Critical Assessment from an Economic-Geographical Perspective. Dordrecht: Springer, pp. 303–332.

    Gerking SD , '', in Learning from Clusters: A Critical Assessment from an Economic-Geographical Perspective , (2005 ) -.

  • Parr, J.B. (2002): Missing Elements in the Analysis of Agglomeration Economies. International Regional Science Review, 25: 151–168.

    Parr JB , 'Missing Elements in the Analysis of Agglomeration Economies ' (2002 ) 25 International Regional Science Review : 151 -168.

    • Search Google Scholar
  • Pavlinek, P. - Smith, A. (1998): Internationalization and Embeddedness in East-Central European Transition: The Contrasting Geographies of Inward Investment in the Czech and Slovak Republics. Regional Studies, 32: 619–638.

    Smith A , 'Internationalization and Embeddedness in East-Central European Transition: The Contrasting Geographies of Inward Investment in the Czech and Slovak Republics ' (1998 ) 32 Regional Studies : 619 -638.

    • Search Google Scholar
  • Petrakos, G. (2001): Patterns of Regional Inequality in Transition Economies. European Planning Studies, 9: 359–383.

    Petrakos G , 'Patterns of Regional Inequality in Transition Economies ' (2001 ) 9 European Planning Studies : 359 -383.

    • Search Google Scholar
  • Phelps, N.A. (2004): Clusters, Dispersion and the Spaces in between: For an Economic Geography of the Banal. Urban Studies, 41: 971–989.

    Phelps NA , 'Clusters, Dispersion and the Spaces in between: For an Economic Geography of the Banal ' (2004 ) 41 Urban Studies : 971 -989.

    • Search Google Scholar
  • Phelps, N.A. (2008): Cluster or Capture? Manufacturing Foreign Direct Investment, External Economies and Agglomeration. Regional Studies, 42: 457–473.

    Phelps NA , 'Cluster or Capture? Manufacturing Foreign Direct Investment, External Economies and Agglomeration ' (2008 ) 42 Regional Studies : 457 -473.

    • Search Google Scholar
  • Porter, M. (1990): The Competitive Advantage of Nations. New York: The Free Press.

    Porter M , '', in The Competitive Advantage of Nations , (1990 ) -.

  • Porter, M. (2003): The Economic Performance of Regions. Regional Studies, 37: 549–578.

    Porter M , 'The Economic Performance of Regions ' (2003 ) 37 Regional Studies : 549 -578.

  • Radosevic, S. (2002): Regional Innovation Systems in Central and Eastern Europe: Determinants, Organizers and Alignments. Journal of Technology Transfer, 27: 87–96.

    Radosevic S , 'Regional Innovation Systems in Central and Eastern Europe: Determinants, Organizers and Alignments ' (2002 ) 27 Journal of Technology Transfer : 87 -96.

    • Search Google Scholar
  • Ratanawaraha, A. - Polenske, K.R. (2007): Measuring the Geography of Innovation: A Literature Review. In: Polenske, K.R. (ed): The Economic Geography of Innovation. Cambridge: Cambridge University Press, pp. 30–59.

    Polenske KR , '', in The Economic Geography of Innovation , (2007 ) -.

  • Romer, P. (1986): Increasing Returns and Long-Run Growth. Journal of Political Economy, 94: 1002–1037.

    Romer P , 'Increasing Returns and Long-Run Growth ' (1986 ) 94 Journal of Political Economy : 1002 -1037.

    • Search Google Scholar
  • Sjöholm, F. (1999): Productivity Growth in Indonesia: The Role of Regional Characteristics and Direct Foreign Investment. Economic Development and Cultural Change, 47: 559–584.

    Sjöholm F , 'Productivity Growth in Indonesia: The Role of Regional Characteristics and Direct Foreign Investment ' (1999 ) 47 Economic Development and Cultural Change : 559 -584.

    • Search Google Scholar
  • Szanyi, M. (2003): An FDI-Based Development Model for Hungary — New Challenges? Working Paper, 141, Institute for World Economics, Hungarian Academy of Sciences.

    Szanyi M , '', in Working Paper, 141 , (2003 ) -.

  • Szanyi, M. - Iwasaki, I. - Csizmadia, P. - Illésy, M. - Makó, Cs. (2011): Cluster Development in Hungary: Searching for a ‘Critical Mass’ of Business via Cluster Mapping. In: Dallago, B. - Guglielmetti, C. (eds): Local Economies and Global Competitiveness. Basingstoke: Palgrave Macmillan, pp. 113–133.

    Makó Cs , '', in Local Economies and Global Competitiveness , (2011 ) -.

  • UNCTAD (2005): World Investment Report 2005: Transnational Corporations and the Internationalization of R&D. New York - Geneva: United Nations.

    '', in World Investment Report 2005: Transnational Corporations and the Internationalization of R&D , (2005 ) -.

  • Varga, A. (2007): Localized Knowledge Inputs and Innovation: The Role of Spatially Mediated Knowledge Spillovers in Hungary. Acta Oeconomica, 57(1): 1–20.

    Varga A , 'Localized Knowledge Inputs and Innovation: The Role of Spatially Mediated Knowledge Spillovers in Hungary ' (2007 ) 57 Acta Oeconomica : 1 -20.

    • Search Google Scholar
  • Varga, A. - Schalk, H.J. (2004): Knowledge Spillovers, Agglomeration and Macroeconomic Growth: An Empirical Approach. Regional Studies, 38: 977–989.

    Schalk HJ , 'Knowledge Spillovers, Agglomeration and Macroeconomic Growth: An Empirical Approach ' (2004 ) 38 Regional Studies : 977 -989.

    • Search Google Scholar
  • Weterings, A. (2005): The Spatial Clustering of Knowledge-Intensive Services: Computing Services in the Netherlands. In: Boschma, R.A. - Kloosterman, R.C. (eds): Learning from Clusters: A Critical Assessment from an Economic-Geographical Perspective. Dordrecht: Springer, pp. 275–302.

    Weterings A , '', in Learning from Clusters: A Critical Assessment from an Economic-Geographical Perspective , (2005 ) -.

  • Young, S. - Hood, N. - Peters, E. (1994): Multinational Enterprises and Regional Economic Development. Regional Studies, 28: 657–677.

    Peters E , 'Multinational Enterprises and Regional Economic Development ' (1994 ) 28 Regional Studies : 657 -677.

    • Search Google Scholar