COMPETITIVENESS AND ECONOMIC POLICIES RELATED TO FOREIGN DIRECT INVESTMENT
Foreign direct investment may improve productivity through technology
transfer on the one hand, and it may also have other positive external effects through
corporate linkages (e.g. market access, or improved terms of financing) on the other
hand, thus promoting economic growth. These beneficial effects are not automatic,
though. Until the mid-nineties Hungary had played a leading role within the region
in attracting investments. After 1999, however, the country started accumulating
increasing competitive disadvantages as compared to its competitors. Even though
stock data adjusted for reinvested profits show less of a lag, the post-1999 figures still
indicate a...