Made or Invented in Hungary? : Upgrading Possibilities in Light of Global FDI Tendencies

Abstract

This paper analyses industrial upgrading possibilities for the Hungarian economy in light of recent changes in global Foreign Direct Investment activities. The changing economic landscape provides a reason to investigate the impact of the recent developments in Hungary, a country with an open, dependent economy. The study investigates how the front-running sector, the manufacturing industry, performs during the current, turbulent times. Does it upgrade from the earlier assembly-focused positions in global value chains, or are there any signs of deterioration by backshoring certain activities to the headquarters of multinational companies? By using both primary and secondary research and conducting a regional comparison, the study finds that the Hungarian economy still shows the characteristics of a “factory economy”, but progress has been made towards the aspired “knowledge economy” status.