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Social Indicators Research
Published in: Social Indicators Research 3/2017

04-07-2016

Social Support, Industrial Parks and FDI Location Choice Across Hungarian Counties

Authors: Elina De Simone, Marcella D’Uva

Published in: Social Indicators Research | Issue 3/2017

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Abstract

This study analyses the determinants of foreign direct investments in Hungarian counties in the period 2001–2011. Unlike previous studies, the role of local public policies was also tested. To this end, local government social welfare expenditures and special economic regulations are considered in the econometric model. The results highlight the importance of local government interventions in creating a favourable environment to attract FDI to Hungarian counties. Furthermore, market size, labour skills and agglomeration economies significantly influence FDI location choices.
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Footnotes
1
Budapest districts are marked in the maps as Pest county.
 
2
Disparities can also be found at sub-regional level, because most of the projects are located in larger towns. Hence, in 2009, the government launched the ‘Investor-friendly settlements programme’ to improve investment attractiveness at municipal and micro-regional level by directly supporting the activity of local authorities (Hunya 2014).
 
3
The choice of panel data model is particularly suitable for our study. Panel estimation controls for individual heterogeneity and minimizes the risk of biased results as the specification include more information, variability, efficiency and degrees of freedom as well as less collinearity compared to pure cross-sectional or time-series data (Hsiao 2014).
 
4
All variables are expressed in logarithms.
 
5
This measure could also be affected by the county size. This effect is controlled by the inclusion of GDP and POP variables in the model.
 
6
Investigating determinants of FDI, we implicitly assume that FDI is beneficial to economic development, through the transmission of superior technology, according to Romer’s (1986) theoretical structure.
 
7
The lack of data may therefore cause overestimation of coefficients.
 
8
None of the time dummies are significant so we will present the results of the model without time dummies to avoid overfitting (the results are disposable upon request).
 
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Metadata
Title
Social Support, Industrial Parks and FDI Location Choice Across Hungarian Counties
Authors
Elina De Simone
Marcella D’Uva
Publication date
04-07-2016
Publisher
Springer Netherlands
Published in
Social Indicators Research / Issue 3/2017
Print ISSN: 0303-8300
Electronic ISSN: 1573-0921
DOI
https://doi.org/10.1007/s11205-016-1403-5

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