Work

The role of FDI in regional economic growth in Central & Eastern Europe: the case of the Hungarian regions

Year: 2025

Type: article

Abstract: FDI has been a key driver of economic transformation in Central and Eastern Europe (CEE). However, its long-term impact on GDP growth is limited, with benefits often concentrated in more developed regions, exacerbating regional disparities. This paper examines the relationship between FDI inflows, GDP growth, and gross fixed capital formation (GFCF) in Hungarian regions from 2000 to 2018 using panel econometric methods. Panel granger causality tests, and panel regression models (using first difference effect) are conducted controlling for GFCF, employment, R&D and the global financial crisis. Findings reveal that FDI does not significantly drive regional GDP growth, highlighting the importance of endogenous growth factors and local entrepreneurial ecosystems. The study critiques the FDI-led model, linking its shortcomings to economic nationalism and regional disintegration.

Source: Eastern Journal of European Studies

DOI: 10.47743/ejes-2025-0113

Authors: Zoltán Gál, András Gyimesi

Institution: University of Pecs

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: diamond

Funder: Nemzeti Kutatási, Fejlesztési és Innovaciós Alap