Title: Impact of FDI on economic growth, re-industrialisation and regional disparities in emerging Europe - the case of the Hungarian regions

Authors: Zoltán Gál; Devesh Singh

Addresses: Centre for Economic & Regional Studies, Regional Research Institute, Pécs, Papnövelde u. 22. H-7621, Hungary; Faculty of Economics and Business, University of Pécs, Pécs, Rákóczi út 80, H-7622, Hungary ' Institute of Regional and Agrarian Economics, Kaposvár University, Kaposvár, Guba Sandor, Utca-40, Somogy County, 7400, Hungary

Abstract: The paper examines the nexus of FDI inflow, the FDI dispersion among companies, and GDP per capita along with the selected socio-economic variables, and re-industrialisation in the Hungarian regions. The paper uses the NUT 3 level data from 2001 to 2018 and employs the generalised method of moments (GMM) in regions characterised by the different phases of industrialisation. The econometric analysis confirms three variations of bidirectional IFDI, GDP growth and FDI dispersion nexus which can be explained by the fact that the positive effect of FDI-driven growth is spatially concentrated according to the different regional patterns of industrialisation. Both the 'FDI-driven growth hypothesis' and the 'GDP growth-driven FDI hypothesis' have been confirmed under certain regional conditions. The results show that the FDI-driven growth model of CEE is not sufficient to ensure the long-term prosperity of regions since the positive effect of FDI-driven economic growth is only short-term and spatially concentrated, further exacerbating territorial inequalities.

Keywords: foreign direct investment; FDI; reindustrialisation; economic growth; regional disparities; Central and Eastern Europe; Hungarian regions; generalised method of moments; GMM.

DOI: 10.1504/IJBEX.2024.143195

International Journal of Business Excellence, 2024 Vol.34 No.3, pp.305 - 334

Received: 28 Nov 2020
Accepted: 13 May 2021
Published online: 09 Dec 2024 *

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