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Foreign Direct Investments and Relocations in Business Services – What are the Locational Factors? The Case of Hungary

Sass, Magdolna (2010) Foreign Direct Investments and Relocations in Business Services – What are the Locational Factors? The Case of Hungary. [Working Paper or Technical Report]

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Abstract

Hungary became host to various business services through relocations of these activities from other,
higher cost locations, especially from Western Europe and through opening up new capacities. Locational
advantages determine which countries are chosen as hosts to new or relocated service centres.
For the case of Hungary, the analysis is carried out on the basis of eight detailed company case studies
(this number is expected to increase to ten). The majority of these is vertical FDI (close to 100 % of
export/sales ratio), and two companies represent a confluential case of vertical and horizontal (domestic
market oriented) FDI, where sales to the domestic market are also important, though not dominating.
The paper’s main aim is to make an attempt at contributing to filling some gaps in the literature, in
terms of analysing locational advantages for vertical FDI in services, specifically in business services. It
shows that locational advantages, taken into consideration by vertical and horizontal FDI differ from
each other to a great extent. It identifies the various elements of locational advantages connected to the
different elements of investment motives, in terms of cost reduction, reducing costs of disintegration of
production, reducing other costs, and motives arising from the confluence of vertical and horizontal
FDI, and the paper relates these elements to the specificities of the business services sector.

Item Type:Working Paper or Technical Report
Uncontrolled Keywords:Offshore outsourcing, Business services, Locational advantages, Hungary, East Central Europe.
Subjects:Social sciences > Economics > Economic integration
Social sciences > Economics > World economy
Social sciences > Economics > Industrial organization
Series Name:Working Papers
Volume:UNSPECIFIED
Number:03/10
ID Code:10380
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Deposited On:26 Mar 2010 08:20
Last Modified:06 Feb 2014 08:42

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