Tracking Russian FDI in Hungary

In: Deák, András (ed.): The End of an Era in Eurasia? Conflict in Eastern Ukraine and Economic Downturn in the Post-Soviet Space. East European Studies, No. 6. Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Budapest, pp. 120–168, 2015

54 Pages Posted: 15 Sep 2016

See all articles by Csaba Weiner

Csaba Weiner

Hungarian Academy of Sciences (HAS) - Institute of World Economics

Date Written: December 2015

Abstract

There is a growing body of literature that deals with outward foreign direct investment (OFDI) from Russia and the international activities of Russian multinational enterprises (MNEs). However, despite the significant public attention devoted to Russia, and relatively widespread fears of Russian capital, there is very little academic research on the presence of Russian capital in Central and East Europe. Only a few studies have examined in detail the entire region or even parts of it (Pelto et al., 2004; Weiner, 2006; Chetverikova, 2010; Kalotay et al., 2014). Moreover, only a few CEE country studies have been conducted, including studies on Bulgaria (Zashev, 2005a), Hungary (Weiner, 2011a, 2011b, 2013), Poland (Liuhto, 2002; Runiewicz, 2005), Latvia (Zashev, 2005b) and Lithuania (Zashev, 2004). Although Hungary is among the exceptions, an English-language study has yet to be published. This paper has two main purposes. The first is to review what the various official statistics tell us about Russian FDI in Hungary (Section 2). The other is to arrive at a more comprehensive understanding of major Russian FDI projects in Hungary, by analysing company data in meticulous detail (Section 3). In these case studies, we consider the main characteristics of Russian investments in Hungary, including, among other things, (1) the industries targeted by Russian investors; (2) the way in which Russian investors enter the market (greenfield projects, acquisitions or joint ventures); (3) the motivations behind investment decisions; (4) the failure or success of investment projects; (5) the ownership structures of the investing entities (with special attention to potential links to the Russian government); (6) the Russian share in the investment; (7) the role of indirect FDI/trans-shipment (investment through a third country). We investigate whether the top Russian non-financial MNEs are present in Hungary, and whether there are significant FDI projects on the horizon. We only briefly touch on the prevailing Hungarian attitude towards Russian investments.

Keywords: Multinational enterprises, Foreign direct investment, Russia, Hungary

JEL Classification: D22, F23, M16, O52

Suggested Citation

Weiner, Csaba, Tracking Russian FDI in Hungary (December 2015). In: Deák, András (ed.): The End of an Era in Eurasia? Conflict in Eastern Ukraine and Economic Downturn in the Post-Soviet Space. East European Studies, No. 6. Institute of World Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences, Budapest, pp. 120–168, 2015, Available at SSRN: https://ssrn.com/abstract=2837232

Csaba Weiner (Contact Author)

Hungarian Academy of Sciences (HAS) - Institute of World Economics ( email )

Tóth Kálmán utca 4
Budapest, 1097
Hungary

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