استراتژی شرکت های چند ملیتی، سرمایه گذاری مستقیم خارجی و توسعه اقتصادی: مورد صنعت بانکداری در مجارستان

This paper examines foreign direct investment (FDI) in the Hungarian economy in the period of post-Communist transition since 1989. Hungary took a quite aggressive approach in welcoming foreign investment during this period and as a result had the highest per capita FDI in the region as of 2001. We discuss the impact of FDI in terms of strategic intent, i.e., market serving and resource seeking FDI. The effect of these two kinds of FDI is contrasted by examining the impact of resource seeking FDI in manufacturing sectors and market serving FDI in service industries. In the case of transition economies, we argue that due to the strategic intent, resource seeking FDI can imply a short-term impact on economic development whereas market serving FDI strategically implies a long-term presence with increased benefits for the economic development of a transition economy. Our focus is that of market serving FDI in the Hungarian banking sector, which has brought improved service and products to multinational and Hungarian firms. This has been accompanied by the introduction of innovative financial products to the Hungarian consumer, in particular consumer credit including mortgage financing. However, the latter remains an underserved segment with much growth potential. For public policy in Hungary and other transition economies, we conclude that policymakers should consider the strategic intent of FDI in order to maximize its benefits in their economies.

It is claimed in the literature (Dunning, 1993, Porter, 1990 and Vernon, 1966) that foreign direct investment (FDI) and multinational enterprise (MNE) activity contribute to the economic development of an emerging economy through numerous channels. These include employment creation (and associated rising incomes), technology transfer and general upgrading of industrial standards to world levels. Furthermore, it is possible to draw a contrast between FDI that is fundamentally resource seeking and FDI in services which is market serving (Birkinshaw & Hood, 1998). This allows us to focus on the strategic intent of FDI. The dramatic changes that occurred in 1989 in central and eastern Europe (CEE) created an ideal setting for an empirical appraisal of these claims. With the collapse of state socialism, there was a desperate need to move towards a market-led enterprise economy. One of the most frequent policy prescriptions for transition economies was to liberalize their industrial sectors by encouraging FDI and foreign ownership. Among the CEE economies, Hungary has led the way in adopting this development strategy. At the same time as the 1989 changes, increasing economic integration at a global and regional level has significantly strengthened the role of MNEs in the economic development of countries in general. The first few years of the arrival of FDI in Hungary were heralded as a significant step forward in the modernization of the Hungarian economy. Old, obsolete capital was replaced with new, efficient plant and machinery. New business practices were introduced with a commercial, market focus. Those areas of excellence in Hungary that were regarded as world class have been supported by injections of new capital. Above all, unemployment caused by the collapse of the state socialist planned economy has been partially solved by employment created by MNEs. In international organizations and governments around the world, Hungary has been lauded for undertaking the necessary liberalization of its economy. Today, over 50% of Hungarian GDP is produced by MNEs and a staggering 80% of Hungary’s exports is produced by MNEs. Most modern western European economies were based on the activities of small national firms created in an era of closed economies and which would later grow and become multinationals through the course of the twentieth century. But in the globalized economy post-1989 this model of development via the creation of a national entrepreneurial structure was not available to the transition countries of Central and Eastern Europe (Inotai, 2000). Therefore, the MNEs have become the engine of economic development for this region. As long as the Hungarian economy continues to grow, one can expect to see foreign companies remaining active, particularly in the emerging service sectors. The objective of this study is to trace the development and effects of foreign direct investment in Hungary, one of the leading transitional economies of Central Europe and which in 2004 will attain EU accession. Given the broad and extensive nature of this topic, we wish to pursue that branch of FDI known as market serving investment (as opposed to the export-driven or resource seeking variety), and concentrate on the role played by FDI in one key market serving sector in particular, that of banking, regarded as being central to the sound development of an economy. In doing so, we will attempt to determine if some of the claims made in the literature regarding the effects of FDI on transitional economies hold true in the case of the Hungarian banking sector during the post-Communist period. The paper is organized as follows: Section 2 provides a conceptual framework for the impact of FDI in a transition economy. Section 3 gives an overview of FDI in Hungary. It presents aggregate data on FDI and presents a general picture of the state of MNE involvement in Hungary. Section 4 focuses on FDI in the Hungarian banking sector as a case study of the role of FDI in service industries. Section 5 is a concluding section.

This paper has analyzed the development of FDI in the post-Communist transition process in Hungary, in particular in the market serving financial sector. The starting point was based on the claim that FDI plays an important role in economic development in general. Our case study was Hungary as this allowed us to examine a number of the key issues. First, Hungary is the largest per capita recipient of inward-FDI in the region (see Table 4) and is a small economy of ten million people. In the case of Hungary, service sector FDI has been, naturally, predominantly market serving. Within the service sector, we chose banking, which has been subject to significant flows of inward investment such that most companies are wholly or partially foreign-owned. We argued that as incomes rise, MNEs based in service sectors are more likely to remain in the market given the positive correlation between rising income and demand for consumer services. This is because they are using market serving strategies. Our study in Hungary does indicate, however, that a number of these initial foreign entrants may eventually disappear from the market non-voluntarily, through the classic shakeout or consolidation process as a market can indeed become “overbanked.” Nevertheless, as an indicator of financial health noted earlier, the credit ratings of foreign banks are still much superior overall to their domestic owned competitors. From our evaluation of the role played by foreign banks in the Hungarian banking sector, one can draw some other conclusions. First, FDI played an important role in restructuring the sector at a time when there was insufficient local capital to achieve these ends. This experience is in marked contrast to that of the Czech Republic and Poland. It appears that the Hungarian strategy of immediately opening the financial sector to foreign investors was sound, when compared to the early unsatisfactory experience of neighbors such as Czech Republic which initially tried voucher privatization schemes. Within a few years, these neighboring countries had followed Hungary’s lead in opening the financial sector to FDI. In capital-poor countries in the early stages of transition from state socialism, there was simply too little capital and financial service expertise to address the urgent need for an efficient and modern financial system. Second, while important structural changes were achieved by inward-FDI, problems remain. In the banking sector, foreign banks have not taken the most aggressive role in providing capital to the retail and domestic real-estate sector. These segments, particularly home mortgage lending, are still underserved in spite of significant FDI. The reasons for this are complex but the dominance of OTP, the former state savings bank, in the retail sector has held back the growth of foreign banks in this critical area. But at the same time, the presence of foreign competition has been a significant incentive for OTP to offer new and innovative financial services to Hungarian households, so here the indirect effect of FDI on retail banking has been positive by motivating this domestic owned bank. Still, the mortgage culture in Hungary is not fully developed and there is insufficient retail lending, aggravated by the need for further legal reforms to protect mortgage lenders, as discussed in the previous section. Finally, there is often an inadequate level of income to secure loans; this problem is being mitigated by recently created government mortgage interest subsidy programs offered in conjunction with the banks, which are making home purchase affordable for a wider segment of the population. In the future, this should be a significant stimulant to first home purchase. Another conclusion here, supported by a BIS study on the subject of bank privatization, is that there is little evidence in Hungary or elsewhere in the region, that FDI has made local banks unsound (witness the success of OTP Bank), siphoned off domestic deposits, or crowded out small borrowers (Hawkins & Mihaljek, 2001). On the contrary, foreign banks have adequately demonstrated the service seeking motives of FDI. They exist to acquire profitable market share and have significantly improved the quality of technology, products and services provided in all areas of banking. The modernization of the Hungarian banking sector in the past decade offers abundant proof of this. Moreover, in spite of some impending consolidation, the strategies of the foreign banks seem to be based around long-term presence as they anticipate growth in per capita income will increase demand for their services over the medium term. This predicted increase in demand is enhanced by a degree of competition between banks in the sector and the development of a modern, competitive financial system in the country. The evidence from the Hungarian banking sector is thus consistent with Buch’s (1997) argument that foreign bank entry improves the production of financial services, promotes competition (with such benefits to the consumer as reduced interest rate spread), facilitates the privatization of domestic banks and transfers technology to host countries. The above observations are in line with the relationship between service sector growth and income growth in small economies. As incomes rise in such economies, the quantitative and qualitative demand for services rise. As small economies are unlikely to be able to find sufficient domestic capital to supply these services, it is likely that FDI will serve this purpose. Moreover, there is less of a danger of FDI departure as relative factor costs rise because the strategy of service based FDI is different from manufacturing FDI. This implies that FDI for the purposes of service provision can have significant long-term beneficial impact on the economic development of transition economies. As a final comment here, the financial system is one component (albeit a quite significant one) of the larger economy and society of contemporary Hungary. There are noticeable signs of development in all regions, in spite of the difficulty of home mortgage financing noted in this study.4 Budapest is awash in scaffolding and construction projects which are updating and renovating the city. Even rural regions in the poorer eastern counties feature new housing developments and retail shopping centers of all types (in cities such as Nyiregyhaza or Kisvarda, for example, in the traditionally poorest region of the country, which after accession will be just inside the new eastern border of the EU). It appears that the transition process in Hungary has been an overall successful one, in part due to reasonable policy implementation which includes welcoming foreign direct investment.