Small Business Economics

, Volume 28, Issue 2–3, pp 123–142 | Cite as

Could the Irish Miracle be Repeated in Hungary?

  • Zoltan J. Acs
  • Colm O’Gorman
  • Laszlo Szerb
  • Siri Terjesen
Article

Abstract

It is widely recognized that Foreign Direct Investment (FDI) plays an important role in economic development. However, its impact on entrepreneurial activity has not been well researched. Internalization theory is used to explore how inward FDI impacts entrepreneurial activity. Using data from Global Entrepreneurship Monitor (GEM), we find significant differences in entrepreneurial activity between Ireland and Hungary in both the type of people starting businesses and the opportunities pursued. Economic development policies should focus on increasing human capital, promoting enterprise development, and upgrading the quality of FDI.

Key words

Entrepreneurial activity economic development foreign direct investment knowledge spillovers Ireland Hungary 

JEL Classifications

L26 M13 F23 O57 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Acs Z. J., Arenius P., Hay M., Minniti M. (2005) Global Entrepreneurship Monitor – Executive Report. 2004. Wellsley, London: Babson College and London Business School.Google Scholar
  2. Acs Z. J., Varga A. (2005) Entrepreneurship, Agglomeration and Technological Change. Small Business Economics 24(3):323–334.CrossRefGoogle Scholar
  3. Barry F. (2004) Export-platform Foreign Direct Investment: the Irish Experience. European Investment Bank Papers 9(2):8–37.Google Scholar
  4. Békés, G. 2005, Location of Manufacturing FDI in Hungary: How Important are Inter-company Relationships? Accessed at 10.10.2005. www.mnb.hu/Resource.aspx?ResourceID = mnbfile&resourcename = bekes0503.Google Scholar
  5. Begley T. M., Delaney E., O’Gorman C. (2005) Ireland at the Crossroads: Still a Magnet for Corporate Investment. Organizational Dynamics 34(3):202–217.CrossRefGoogle Scholar
  6. Breznitz, D., 2007, Innovation and the State, New Haven, Yale University PressGoogle Scholar
  7. Buckley P., Newbould G., Thurwell J. (1988) Foreign Direct Investment by Smaller UK Firms. London: Macmillan.Google Scholar
  8. Clarke, A. 1995, Software Support Programme: Final Report. Dublin: EU Structural Funds Operational Programme for Industrial Development Evaluation Unit.Google Scholar
  9. Garvin T., (2004) Preventing the Future: Why Was Ireland so Poor for so Long? London: Gill and McMillan.Google Scholar
  10. Grög H., Ruane F. (2001) Multinational Companies and Linkages: Panel-Data Evidence from the Irish Electronics Industry. International Journal of the Economics of Business 8(1):1–18.CrossRefGoogle Scholar
  11. Grög H., Strobl E. (2002) Multinational Companies and Indigenous Development: An Empirical Analysis. European Economic Review 46: 1305–1322.CrossRefGoogle Scholar
  12. Heston, A., R. Summers and B. Alen, 2002, Penn World Table Version 6.1, Center for International Comparison at the University of Pennsylvania (CICUP), October 2002.Google Scholar
  13. Hisrich R., Szirmai P. (1993) Developing a Market Oriented Economy: A Hungarian Perspective. Entrepreneurship and Regional Development 5(1):1–71.Google Scholar
  14. Hungarian Central Statistics Office (HCSO). 2002, Foreign Direct Investment 1999–2000. Budapest, Hungarian Central Statistical Office.Google Scholar
  15. Inzelt A. (2000) Foreign Direct Investment in R&D: Skin-deep and Soul-deep Cooperation. Science and Public Policy 27(4):241–251.Google Scholar
  16. Inzelt A., Szerb L. (2004) `The Innovation Activity in a Stagnating Country of Hungary', Acta Oeconomica 56(3), 279–299.CrossRefGoogle Scholar
  17. ITD Hungary (ITDH), 2004, Electronics Industry in Hungary. Pamphlet.Google Scholar
  18. ITD Hungary (ITDH), 2005, Doing Business in Hungary, http://www.itdh.hu/index.ivy?public.lang=en-US accessed: January 31.Google Scholar
  19. Kalotay K., Hunya G. (2000) Privatisation and FDI in Central and Eastern Europe. Transnational Corporations 9(1):39–66.Google Scholar
  20. Lucas R. (1993) Making a Miracle. Econometrica 61(2):251–272.CrossRefGoogle Scholar
  21. Morck R., Yeung B. (1991) Why Investors Value Multinationality. Journal of Business 64:165–187.CrossRefGoogle Scholar
  22. Morck R., Yeung B. (1992) Internalization: An Event Study Test. Journal of International Economics 33: 41–56.CrossRefGoogle Scholar
  23. Murphy, A. and F. Ruane, 2004, Foreign Direct Investment in Ireland: An Updated Assessment, in Central Bank and Financial Services Authority Annual Report 2003, Dublin, Ireland.Google Scholar
  24. National Economic and Social Council (NESC) (2003) An Investment in Quality: Services, Inclusion and Enterprise, Government Publications Office, Dublin.Google Scholar
  25. Naveretti, G. B. and A. Venables, 2004, ‚FDI and the Host Economy: A Case Study of Ireland’, in J. Haaland and A.␣Venables (eds.), Multinational Firms in the World Economy, Princeton University Press, 187–216.Google Scholar
  26. Novak, C. 2002, Hatekonyasgnovekedes es kulfoldi tulajdon a Magyar feldolgozoiparban (Efficiency growth and foreign ownership in Hungarian manufacturing.). Kulgazdasag, (LXVI:5): 41–52.Google Scholar
  27. Novak, C. 2003, A Kulfoldi mokodotoke es a technolgiai tovagyorozes Magzarorszagon. FDI & technology spillovers in Hungary. MTA VKI M_helytanulmanyok. No. 50. October.Google Scholar
  28. Organization for Economic Co-operation and Development (OECD). 2005, FDI Database. http://www.oecd.org/dataoecd/14/3/8264806.xls. Last accessed November 10, 2005.Google Scholar
  29. O’Gorman C., Terjesen S. (2006) Financing the Celtic Tigress: Venture Financing and Informal Investment in Ireland. Venture Capital 8(1):69–88.CrossRefGoogle Scholar
  30. O’Malley E. (1989) Industry and Economic Development: the Challenges for the Latecomer. Dublin: Gill and Macmillan.Google Scholar
  31. O’Malley E. 2004, ‚Competitive Performance in Irish Industry’, Quarterly Economic Commentary, Winter.Google Scholar
  32. O’Malley E., O’Gorman C. (2001) Competitive Advantage in the Irish Indigenous Software Industry and the Role of Inward FDI. European Planning Studies 9(3):303–321.CrossRefGoogle Scholar
  33. Reynolds P., Bosma N., Aution E., Hunt S., de Bono N., Servais I., Lopez Garacia P., Chin N. (2005) Global Entrepreneurship Monitor: Data Collection Design and Implementation 1998–1003. Small Business Economics 24(3):205–231.CrossRefGoogle Scholar
  34. Rocha, H., and R. Sternberg. (2005) ‚Entrepreneurship: The Role of Clusters, Theoretical Perspectives and Empirical Evidence from Germany’, Small Business Economics 25(3), 267–292.Google Scholar
  35. Ruane F., Görg H. (1996) Aspects of Foreign Direct Investment in Irish Manufacturing since 1973: Policy and Performance. Journal of the Statistical and Social Inquiry Society of Ireland XXVII(IV):1–51.Google Scholar
  36. Sass, M. 1997, Beszallitok Magyarorszagon. Egy kerdoives felmeres eredmenyei. Suppliers in Hungary. The results of a questionnaire survey. IWE HAS Budapest. Manuscript.Google Scholar
  37. Sass M. (2003) FDI in Hungary: The First Mover’s Advantage and Disadvantage. EIB Papers 9(2):62–90.Google Scholar
  38. Spiegel, 2005, `Assault on our Competitiveness', Spiegel, 205(7), pp. 74–77Google Scholar
  39. Sternberg R., Wennekers S. (2005) Determinants and Effects of new Business Creation Using Global Entrepreneurship Monitor Data. Small Business Economics 24(3):193–203.CrossRefGoogle Scholar
  40. Szerb, L., G. Rappai, Z. Makra, and S. Terjesen, 2007, ‚Informal Investments in Transition: Motivations, Characteristics and Classifications in Eastern Europe’, Small Business Economics (this issue).Google Scholar
  41. UNCTAD, 2005, World Investment Report. Transnational Corporations and the Internationalization of R&D.Google Scholar
  42. Varga A., Schalk H. J. (2004) Knowledge Spillovers, Agglomeration and Macroeconomic Growth. Regional Studies 38(8):977–989.CrossRefGoogle Scholar
  43. Young S., Hood N., Peters E. (1994) Multinational Enterprises and Regional Economic Development. Regional Studies 28(7):657–679.Google Scholar

Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • Zoltan J. Acs
    • 1
    • 2
  • Colm O’Gorman
    • 3
  • Laszlo Szerb
    • 4
  • Siri Terjesen
    • 2
    • 5
  1. 1.School of Public PolicyGeorge Mason UniversityFairfaxUSA
  2. 2.Max Planck Institute of EconomicsJenaGermany
  3. 3.UCD School of BusinessUniversity College DublinDublinIreland
  4. 4.Faculty of Business and EconomicsUniversity of PecsPecsHungary
  5. 5.Brisbane Graduate School of BusinessQueensland University of TechnologyBrisbaneAustralia

Personalised recommendations