Abstract
Abstract In the following paper, I examine the considerable impact of the recent world-economic shift that has determined the circumstances of Hungarian suppliers' value-chain integration. I argue that as a result of the specialized positions they occupied in the value-chain after the collapse of the Comecon market, Hungarian enterprises in export-oriented industries faced a dilemma—a trade-off between obtaining the most advanced technologies (and thus access to world-market niches) and retaining ownership in the hands of domestic capital. When company managers opted to protect ownership with the help of the state, they exposed themselves to greater risk of downgrading their position in the value chain. If they managed to get access to advanced technologies (and the requisite funding), they were more likely to lose control over their company's assets, either as a result of a hostile takeover or becoming part of the larger partner's merger-and-acquisition plans. This paper is a discussion of some of the particular characteristics of this dilemma, as well as a comparison with the experience of Hungarian service providers who implemented a different strategy. This paper is also a critical assessment of some of the chief characteristics of the world-economic evolution that has been underway since 2009, such as German automotive value chains' expansion in the CEE region and the growing role of Chinese capital in regional infrastructural projects.
Highlights
Hungary’s position in the world economy shifted radically after the Council for Mutual Economic Assistance (Comecon) disintegrated in 1991
The following study is an analysis of the effects these important changes in the international environment have had on the strategic dilemma that Hungarian enterprises have faced as a result of the reconfiguration of the world economy
Hungarian enterprises have typically specialized in export sectors in which the so-called global overproduction crisis has driven down corporate profits worldwide (Sturgeon – Biesebroeck 2010; Gereffi 2014), forcing firms to outsource at least part of their production networks to the global semi-periphery in order to maintain their profit margins (Bernaciak – Scepanovic 2010; Barta 2012)
Summary
Hungary’s position in the world economy shifted radically after the Council for Mutual Economic Assistance (Comecon) disintegrated in 1991. The resultant value-chain specializations of Hungarian firms have been determined by their positions in these regional production networks, and in this context, they are confronted by a strategic dilemma characteristic of the semi-periphery, namely whether to maintain ownership or to seek access to the most advanced technologies available on the world market. This means that Hungarian companies—since the system change of 1989—have been faced with a mutually exclusive substitution or trade-off between retaining ownership of domestic enterprises and acquiring cutting-edge technology, in sectors which produce tradable products and services globally (and are able to export directly onto the world market). Policy since 2010, and I will analyze Hungary’s current economic circumstances with an emphasis on the growing role of Chinese capital there, before concluding with a brief summary
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