Direct Foreign Investments and Productivity Growth in Hungarian Firms, 1992-1999

Jérôme Sgard (1)

1 CERI - Centre de recherches internationales (Sciences Po, CNRS)

The impact of FDI on total factor productivity in Hungary during the 1990s' is assessed with a large enterprise panel. Foreign equity is associated with higher productivity levels and has a substantial, positive spillover effect on aggregate TFP growth. However, this benefit is significant only when associated with export orientation, while inward-looking FDI has negative side effects. Regionally, the north-western area, close to EU borders, benefits much more from FDI, whether foreign-owned or locally-owned private firms are considered. Otherwise, only the later absorb a reduced volume of externalities. Finally, State ownership implies lower levels of productivity, but does not hinder the capacity to respond to market incentives, including FDI induced externalities.

Mots clés: Foreign Direct Investment; property rights; Productivity; Hungary; Transition; Panel

Domaines: Economies et finances

Jérôme Sgard. Direct Foreign Investments and Productivity Growth in Hungarian Firms, 1992-1999. 2001. ⟨hal-01065013⟩