Meeting the New Foreign Direct Investment Challenge in East and Central Europe: Place-Marketing Strategies in Hungary

Abstract

The attraction of foreign direct investment (FDI) has become a major economic development goal of the postsocialist countries of East and Central Europe (ECE). ECE countries have rapidly adopted ‘Western’-style place-marketing policies to attract FDI. However, little is known about place marketing under postsocialism, and particularly in the context of an enlarged European Union; hence the author presents an analysis of the supply-side policies which Hungary has developed in response to its rapidly changing position with regard to FDI. In particular, he examines the strategies developed by two key agencies responsible for attracting inward investment, the Ministry of Economy and Transport and the Hungarian Investment and Trade Development Agency. Hungary's current position in respect to patterns of attracting FDI is evaluated and, through outlining the key changes in the nature of FDI, a set of key issues which must be addressed in any place-marketing strategy in ECE is developed. The author then analyses how these two key agencies have responded to this new FDI context. The author assesses how Hungary has been able to address the new FDI context and also considers how FDI and attempts to attract it is reshaping supply-side policies, and postsocialist states themselves.