Budapest in Warsaw: Central European Business Elites and the Rise of Economic Patriotism Since the Crisis

Abstract

After the collapse of communism, political elites in Central and Eastern Europe (CEE) implemented economic reforms that were largely inspired by the prevailing neoliberal paradigm. One of the consequences of these reforms was that the region’s economies became very open to foreign direct investment and their growth became increasingly dependent on the capital and technologies brought by foreign multinational companies. This developmental path has been gradually challenged since the global financial crisis. CEE policy-makers have indeed started introducing policies that give special advantages to firms controlled by domestic private capital or by the state. While conventional wisdom would have it that such strategies of ‘economic patriotism’ should be primarily promoted by political parties with a nationalist ideology, this paper argues that – whether governments have developed an explicitly nationalist discourse or not – the driving force behind these developments has been the political mobilization and growing influence of CEE domestic entrepreneurial and managerial elites. The argument is assessed with a comparative historical analysis of corporate governance reform in Hungary and Poland since the late 2000s.

Keywords: economic nationalism, business groups, managers, lobbying, political parties, corporate governance, multinational companies, Hungary, Poland

JEL Classification: D21, D23, D78, E22, F21, F22, G21, G28, K22, L22, M13, O10, O52, P12, P16, P20, P21, P26