Production Technology and Competitiveness In the Hungarian Manufacturing Industry

Following the big transformations of the 1990s, enterprise structure and technological level seem to have become stabilised in Hungary. Under these circumstances it is especially interesting to identify the elements responsible for competitiveness in general, and the role technology plays in development in particular, according to managers experienced in production and marketing. This empirical study – based on in-depth interviews and field research – summarises characteristics of the technological level in the sectors examined, role of technology and labour in production, effects of foreign direct investment, relations between competition and firm-level factors determining competitiveness, and concludes by summing up those most frequently mentioned proposals that should be incorporated into economic policy according to managers. Main findings indicate that more qualified, more intensive and cheaper labour can be substituted for high technology. The competitiveness of an enterprise is not determined by technology alone, but rather by a combination of technology, the parameters of available labour and the costs of investment increasing productivity. The insufficiency of inter-company relations, together with a shortage of available assets necessary for investment constitute the major threat undermining the competitiveness of enterprises in present-day Hungary

Foreign Direct Investments in Business Services: Transforming the Visegrád Four Region into a Knowledge-based Economy?

Foreign direct investments (FDIs) in the service sector are widely attributed an important role in bringing more skill-intensive activities into the Visegrad Four (V4). This region—comprising Poland, the Czech Republic, Hungary and Slovakia—relied heavily on FDIs in manufacturing, which was often found to generate activities with limited skill content. This contribution deconstructs the chaotic concept of “business services” by analysing the actual nature of service sector activities outsourced and offshored to the V4. Using the knowledge-based economy (KBE) as a benchmark, the paper assesses the potential of service sector outsourcing in contributing to regional competitiveness by increasing the innovative capacity. It also discusses the role of state policies towards service sector FDI (SFDI). The analysis combines data obtained from case studies undertaken in service sector outsourcing projects in V4 countries. Moreover, it draws on interviews with senior employees of investment promotion agencies and publicly available data and statistics on activities within the service sector in the region. It argues that the recent inward investments in business services in the V4 mainly utilize existing local human capital resources, and their contribution to the development of the KBE is limited to employment creation and demand for skilled labour

European Policy Lessons in the Process of Regional Transformation in Hungary

The applicability of selected aspects of the European regional policy approach to Hungary is analysed in the present paper. The balanced approach of European regional development - one combining structural change with performance improvement of existing actors - is contrasted with the one-sided Hungarian approach - one restricting modernisation efforts to facilitating structural change and attracting new economic actors. The paper - funded by the INCO-Copernicus - argues that in order to achieve the required regional transformation, besides institution building, strengthening, i.e. “empowering”, existing regional development institutions is also necessary

Structural transformation of the capital stock and capital-saving technical change

We argue that the information technology revolution has brought about the differentiation of secular capital-using and labour-saving direction of technical change. Based on the example of the US manufacturing industry, asset and sector specific differences in the bias of technical change are documented. While the clear ICT- and intangible capital-using bias of technical change is well-documented in the literature, this paper provides evidence for the non-ICT capital-saving bias of technical change in the fifth Kondratieff cycle. In the past decade the US manufacturing sector displayed a noticeable deceleration of capital accumulation and capital intensity increase, a trend that diverges from the one observed in the other two sectors of the economy: in agriculture and in services. Non-ICT capital-saving technical change provokes increasing divergence between the development strategies of technological followers (characterised by tangible investment-led growth, and increasing capital-output ratios), and of technological leaders (marked by increasing intangible capital-intensity and diminishing tangible capital-intensity)

Transformation and catching-up issues in Hungary — From a network alignment perspective

Awareness about the growing role of networks in economic activity keeps rapidly increasing as reflected by the number of publications in international academic literature. This literature is, however, concerned with the advantages of network-based cooperation, while analyses of network failure and inferior-to-expectations outcomes remain scarce. This paper adds to the accumulating evidence that network formation and network integration are no panacea: similarly to the much-researched and analysed phenomena of market failure or government (state) failure, there is such thing as network failure .Combining theoretical arguments with Hungarian fieldwork experience originating from the author’s past investigations, cases of network failure and network misalignment both within the innovation system and within producer networks are examined. Another focus of this paper is institutional and policy (mis)alignment, i.e. the question, how the institutional set-up facilitates or works against achieving developmental goals in Hungary. We claim that though networks have an impact on development outcomes, the effectiveness of networks, i.e. their developmental role and the value of network ties are continuously shaped by network actors’ capabilities and behaviour