Infrastructure networks and the competitiveness of the economy

This paper aims to examine how technical infrastructure networks may contribute to improving the competitiveness of the Hungarian economy. Consequently, our main question will be to establish how certain networks or sectors can promote competitiveness of the entire economy rather than how they could be more competitive in their own field. In the macroeconomic or regional sense competitiveness is interpreted as the entirety of safeguards and preconditions that provide a long term basis for success in a competitive market environment. The review of the economic, social, institutional and facility preconditions of competitiveness has highlighted that practically every component must be backed by a good system of relations: both strong, balanced internal relations promoting co-operation and external relations to assure outward linkages. Despite the above correlation, it would be a fallacy to assume that infrastructure networks as linking elements in general are factors per se improving competitiveness. In accordance with the level of development of the economy, the key forms of activity and the realistically attainable objectives, different linkages and service needs become key for the development of the economy in different stages

The Political Implications of Norway’s Sovereign Wealth Fund investments in Eastern and Central Europe

Although there has been vivid academic debate as to what extent Sovereign Wealth Funds (SWFs) are motivated by political reasons, it is rather clear that countries can use state-owned investment funds as a tool of their foreign policy. Even Barack Obama, during his initial presidential campaign in 2008 commented: “I am obviously concerned if these… sovereign wealth funds are motivated by more than just market consideration and that’s obviously a possibility”. This book looks at SWF activities in Central and Eastern Europe (CEE) to determine the main motives for SWF presence in CEE. Are the potential financial gains the only reason behind their investments? Are SWF activities in the region dangerous for the stability and security of the CEE countries? The book is pioneering analyses of SWFs behaviour in the region, based on empirical data collected from the Sovereign Wealth Fund Institute Transaction Database, arguably the most comprehensive and authoritative resource tracking SWF investment behaviour globally.Rozdział pochodzi z książki: Political Players? Sovereign Wealth Funds’ Investments in Central and Eastern Europe, T. Kamiński (ed.), Wydawnictwo Uniwersytetu Łódzkiego, Łódź 2017.The main goal of this chapter is to analyze investment policy of this state-controlled entity and provide the picture of its portfolio investment in Eastern and Central Europe Countries. For this purpose, the remainder of the chapter is organized in the following manner: in the next part facts and figures about the fund are presented, than the investment policy of the fund is described, after that the holdings of GPFG in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia are analyzed, and finally the political implications of these investments are discussed with particular emphasis on the issue of risks. The chapter ends with conclusions.This book was published in frames of project “Political significance of the Sovereign Wealth Funds’ investments in the Central and Eastern Europe”. The project was financed by the Polish National Science Centre (Decision no. DEC-2012/07/B/HS5/03797)

Competitiveness and industrial renewal via production relocation by global multinational networks

Electrical industry is regarded as the backbone of the ICT branch’s hard-ware production. The international settlement of this industry is therefore of paramount interest for developed economies and emerging market economies as well. They all compete for investments in this sector. This study analysis the development of Hungarian electrical industry from the early years of transition when output performance was at the deepest level and when this sector along with the automotive branch became the primary source of eco-nomic expansion. The sector’s performance is compared with data from other CEE countries and with other Hungarian industries in order to illus-trate the widespread modernization effects of foreign investments in this sec-tor. The question of activities ’ relocation from more developed countries to Hungary, and in most recent years from Hungary to less developed regions is also dealt with. Relocations are regarded in this paper from the Hungar-ian viewpoint as necessary and positive developments. Relocated activities give room for other, more sophisticated and more income generating activi-ties

The electronics industry in central and eastern Europe: an emerging production location in the alignment of networks perspective

This paper analyses the emergence of central Europe as a new location for the production of electronics. The main factors that drive integration in the region into global production networks are also analysed, as well as prospects for upgrading the industry by using network alignment perspectives. Foreign investment is the primary vehicle of integration of CEE electronics firms into global production networks, and Hungary has moved furthest along this path, positioning itself as a major low-cost supply base in the region. Czech and Polish electronics industries are connected, in smaller, but increasing, degrees to international electronics production networks. Networks that are being built in CEE in electronics are usually confined to subsidiaries with still limited local subcontracting; they are export-oriented and are expanding. Local subsidiaries have mastered production capabilities and several subsidiaries in Hungary are European mandate suppliers in their respective lines of business. EU demand is the main pull factor, which gives cohesion to the actions of MNCs as well as to the action of local and national governments in CEE. The layer of local firms is still very weak with very limited capabilities in core technologies. This is the key weakness which prevents further alignment of networks in CEE electronics. Local governments play an important role in working jointly with foreign investors in establishing industrial parks and new capacities

Exchange Rate Developments and Stock Market Dynamics in Transition Countries: Theory and Empirical Analysis

We present new theoretical approaches to exchange rate determination and stock market price dynamics as well as first empirical results for selected transition countries. The exchange rate is considered as reflecting both the interest parity - with a specific formulation for exchange rate expectations - and impulses from purchasing power parity which in turn is related to a modified monetary approach to exchange rate determination; the modification concerns the role of stock market prices in the demand for money. Our main focus is on the nominal exchange rate. The empirical results for the dollar exchange rate presented, based on quarterly data, are two-stage and three-stage least squares estimations. The three stage estimation reflects - which is a superior approach to the two-stage estimates in terms of exploiting the information in the data of the sample - the theoretical basis, namely that exchange rate dynamics and stock market prices are interdependent. The estimations for Hungary, the Czech Republic and Poland show significant coefficients for the lagged exchange rate, the stock market price and US GDP as well as other variables which are significant only in some of the countries considered. The in-sample forecast is excellent for all three countries so that anticipation of future exchange rate changes seems to be possible: this is not only relevant for economic actors but also for the issue of Euro area membership. Moreover, the considerable impact of stock market prices on the nominal exchange rate suggest that problems of stock market bubbles in the US might strongly contribute to unstable exchange rates in Europe.Transition Countries, Exchange Rate Determination, Stock Markets.