The mathematics of functional differentiation under conservation constraint

The mathematics of K-conserving functional differentiation, with K being the integral of some invertible function of the functional variable, is clarified. The most general form for constrained functional derivatives is derived from the requirement that two functionals that are equal over a restricted domain have equal derivatives over that domain. It is shown that the K-conserving derivative formula is the one that yields no effect of K-conservation on the differentiation of K-independent functionals, which gives the basis for its generalization for multiple constraints. Connections with the derivative with respect to the shape of the functional variable and with the shape-conserving derivative, together with their use in the density-functional theory of many-electron systems, are discussed. Yielding an intuitive interpretation of K-conserving functional derivatives, it is also shown that K-conserving derivatives emerge as directional derivatives along K-conserving paths, which is achieved via a generalization of the Gateaux derivative for that kind of paths. These results constitute the background for the practical application of K-conserving differentiation.Comment: final version, published in J Math Chem; with an Appendix with the proof of (17) added, and some errata to [1] inserte

Challenges of regionalism: Development and spatial structure of the hungarian banking system section: Financial issues

KEY WORDS: Hungarian banking system, transitional financial markets, banking network, global-local dichotomy, and uneven regional development. ABSTRACT: The growing literature on regional finance suggests that credit allocation in regional banking system and the different national banking systems are different according to their stage of development, and frictions also exist across regions within national economies, resulting in different availability of capital. Less developed banking systems – including regional banks as well – have a lesser capacity to promote their economic development and might experience certain disadvantage as a result of the financial integration in Europe. Despite regional and local banks can serve local economic interests better than financial-centre banks whose priorities relate more to the single European and global markets, less advanced banking systems can be controlled more easily by the large universal banks of the financial core areas. This latter argument is refers very much to the accessing countries of Central and Eastern Europe, such as Poland, Czech Republic, Slovenia, Slovakia and Hungary which followed their reintegration into the world financial market in the early 1990s. They not only have to adopt new technologies and the financial behaviour it accommodates, but also have to cope with a legacy of bad debts and a lack of experience in credit risk assessment. Central –Eastern European banking systems are accelerating through some features of the stages of development as a result of competition with more advanced systems and state encouragement of banking development. As European Union membership approaches in Central Europe’s more advanced economies, Western European banks are ‘aggressively’ moving to expand into what will soon be a home market for them. The result is the increasing pressure on margins, as more banks compete for relatively little business. This results in a reversal process of concentration than in the EU, namely the growing number of institutions. Making matters worse for the locals, the foreign banks often boast deeper pockets, greater expertise and more solid reputation. All these challenges which are to be faced are common in these countries, but what could be varied from country to country is the spatial and institutional structure of the national banking systems. The paper is concerned with the spatial characteristics of the Hungarian banking system. Financial services became the key sector in the processes of economic transformation and differentiated by uneven regional development. The spatial structure of the banking sector is characterised by a large-scale concentration in Budapest, but the foundation boom of branch offices is also typical in the regions, as the necessity of presence on the local markets, as well as the competition for the retail market stimulate banks to expand their branch networks. Commercial banks, which have their headquarters exclusively in Budapest, largely concentrate only on the collections of deposits in their national network, resulting in capital drainage and net capital loss in most of the regions. The presence of the centralised capital market and the lack of decentralised regional financial system can restrain and slow down regional development in the long run. In this paper I would like to give an overview of the institutional and spatial structure and the development tendencies of the Hungarian banking which occurred during the first decade of two-tier banking. Allocation of branches of the banking institutions plays an important role, not only in the development of the national economy as a whole, but in the development of the local and regional economy, in innovation and, last but not least, in the organisation of production and service sectors. The elements of the banking network connect to regional development as the supply section of the business services therefore the density and the number of banks and their branches are an important indicator of regional economic development. The Hungarian banking system unlike its Polish counterpart is almost exclusively based on national branch-banking system, which means the lack of the regionally based independent universal banks. This very centralised structure of the national banking system and the growth of competition following the further liberalisation and decreasing barriers of the national market (e.g. cross-border banking and branching which primarily targeting corporate, but not the retail sector) might result to reduce credit availability for SMEs situated in the Hungarian regions remote from the capital city and from the European financial centres. In this respect, there may will be a case for creating regional banks in the forming regions of Hungary in order to protect local economy and facilitate to channel and mediate the EU regional development funds in the future. Larger countries in Europe (Germany, Poland, Italy etc.%29 show the rise of strong regional centres, based upon independent regional banks or decentralised back-office functions in certain provincial centres holding firm positions in large regional markets or based upon specialisation and complementarity. In contrast to this, the Hungarian banking exemplifies a pre-eminent position of the national financial centre partly due to Hungary’s much smaller market size and the weakness of the regional economies. It seems plausible that there is no place for such strong regional financial centres in a small domestic market and the small geographical areas of the created regions, but to find the right way of certain decentralisation in the banking sector is inevitable. The paper is organised as follows. After the introductory section the spatial and structural characteristics and polarisation of the Hungarian banking system is discussed in the light of its progress made in the last ten years. This is followed by an analysis of a possible reorganisation and decentralisation (regionalisation) of the spatial structure of banking at regional level without questioning the pre-eminent role of the national banking centre, but contributing to a more efficient operation of the network. In the last instance, I will raise the question becomes whether the national banking system is ready to be fully liberalised and able to withstand increasing competition (with the introduction of the cross-border banking) within the European Union. This analysis rests on data, which are usually published with certain delay, coming from the Annual Report of the Bank and Capital Market Advisory Board, Regional Statistical Yearbook and from the Hungarian Almanac of Financial and Capital Markets. Most of these sources as well as publication in economics still neglect to consider geographical issues of the financial sector making more difficult the research efforts. From the geographical point of view, to survey the rapidly changing banking network in expansion phase make rather difficult to demonstrate accurate spatial structure of banking services.

Is It Necessary to Regulate Local Governments’ Borrowing?

The international literature specifies four models to the rule of the local governmental indebtedness. The „regulated by the market model” and the „rule based model” are able to be in force in the Hungarian local governmental crediting market considering the Hungarian legal environment. The Hungarian empirical researches obtained the result that the Hungarian market follows the „regulated by the market model” from the models of Ter – Minassian – Craig. The essence of the market regulated model—that for the players of the subnational level the raising of external funds is determined by money and capital market developments and mechanisms—examining the domestic market by itself, cannot be substantiated. The success of the market regulated model is also hindered by the fact that market participants are not perfectly informed. Based upon my empirical researches and supplementing the models found in technical literature, I have established that at the Hungarian local governmental crediting market the regulation of indebtedness can be deemed a model “based on incurring risk”. The study tries to verify this thesis.indebtedness, bank, crediting market, local government, risk

Unfavourable investment data – risks to economic growth?

Future potential economic growth is a factor of key importance in judging the expected output gap and the inflationary pressure it entails. One important element of potential growth is the level and growth of real capital, which is materialized via investment. The tendency of investments thus provides an indication on the future potential growth. On the other hand, investments in the economy are part of aggregate demand, and thus in addition to its impact in the future, it also affects the present output gap and inflationary pressure. Finally, investments also offer insight into the expectations of economic actors regarding future prospects. The decline in the volume of investment registered in 2006, unprecedented in the last ten years, thus has particular significance from the central banks' perspective. This decline was experienced in a wide range of breakdowns: among the types of investment assets (construction, machinery purchases) as well as in corporate and household sector private investment. The drop in the household and non-tradable corporate sectors is in line with weak domestic demand resulting from the fiscal adjustment. But the fall of investment in the tradable sector is surprising in light of the favourable current state of and outlook for European economic activity. Although there was a modest correction in this trend in the first quarter of 2007, a lasting weakness in capital expansion may indicate the long-term presence of a disadvantageous investment climate in Hungary.investment, growth, competitiveness.

Innovation network building in the Hungarian region of South Transdanubia

The economic attraction of the regions depends on the spatially balanced network-based co-operation of different research bases, SMEs and organisations involved in innovation development these days. The research on regional innovation examines the correlation between regional innovation development, innovation potential and the innovation networks. This study summarises the research trends on the innovation network theory and introduces experiences of the European network building in order to gain best practice in the introduction of network-oriented regional innovation development for the Hungarian region of South Transdanubian . After the introduction of the innovation endowments of the region I discuss the database of the potential network actors and organisations, the possible phases of the regional network building and the preparatory works of the regional innovation strategy under implementation.

Future Bangalores? The increasing role of Central and Eastern Europe in the global services offshoring market: evidence from trade statistics

Many Central and Eastern European countries invigorated by EU enlargement became important locations for offshored service centres. Building on the region’s nearshoring advantages such as geographical-cultural proximity and on its multilingual graduate supply, CEE is likely to utilise more value added and quality-driven services. Trade statistics support the assumption that an expanding export in other business and ICT services has been associated with offshoring services in the six NMS analysed in detail in the paper. The service export data adopted from the Balance of Payments statistics gives a good approximation to indentify those sections of service trade, which can be regarded as offshorable. The paper summarises the additional factors favouring nearshoring (as in CEE locations) over offshoring (e.g. India) and lists several factors besides size why CEE countries cannot outpace India’s market potential.offshoring; nearshoring; service trade; balance of payments statistics; offshorable services; Central and Eastern Europe; new member states; India; offshoring advantages

Integrated Process Simulation and Die Design in Sheet Metal Forming

During the recent 10-15 years, Computer Aided Process Planning and Die Design evolved as one of the most important engineering tools in sheet metal forming, particularly in the automotive industry. This emerging role is strongly emphasized by the rapid development of Finite Element Modelling, as well. The purpose of this paper is to give a general overview about the recent achievements in this very important field of sheet metal forming and to introduce some special results in this development activity. Therefore, in this paper, an integrated process simulation and die design system developed at the University of Miskolc, Department of Mechanical Engineering will be analysed. The proposed integrated solutions have great practical importance to improve the global competitiveness of sheet metal forming in the very important segment of industry. The concept described in this paper may have specific value both for process planning and die design engineers