Changing economic positions of the regions during the post-crisis decade in Hungary

Abstract

Most Central and Eastern European countries converged to the EU average in terms of per capita GDP over the post-crisis decade, which was mostly fueled by the increase of employment. At the same time, labour productivity increased at a significantly slower pace, or it even decreased in some years or areas in real terms, which was also the case in Hungary. The most successful regions were not definitely the capital regions, but those that relied heavily on FDI inflow. However, in the last few years of the previous decade, as a result of the high-pressure economy, economic dynamism reappeared in the central region of Hungary and it regained its leading position. We intend to study the regional dynamics of the growth factors over the period after the global financial and economic crisis in Hungary; and to assess the importance of FDI in determining these growth trends. We use explorative statistical methods to analyze the decade-long economic trends regarding the most important labour-market and output indicators at the NUTS3 level provided by the Hungarian Central Statistical Office. The main message of our paper is that for regions with a high degree of FDI their sectoral structure ensures economic stability, while the central region is more vulnerable to the fluctuations of demand-side pressure. At the same time, backward regions are stagnating due to the lack of positive spatial spillover effects