R&D-based integration and upgrading in Hungary

Sass, Magdolna and Szalavetz, Andrea (2014) R&D-based integration and upgrading in Hungary. Acta Oeconomica, 64 (Supple). pp. 153-180. ISSN 0001-6373

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Abstract

The Hungarian economy is highly integrated in global value chains (GVC). Upgrading within GVCs is a key factor of sustaining the initial developmental push GVC participation provides. The article concentrates on R&D-based upgrading opportunities and their practical implementation by multinationals’ Hungarian subsidiaries in the automotive and electronics sectors. The content and the development of R&D activities; Hungary’s locational advantages for R&D projects, and their local impact are analysed based on interviews with twenty foreign-owned companies in the two selected sectors. We show that local R&D units’ activity is multifaceted, though they feature similar upgrading trajectories. Investors’ motivations: the knowledge- and efficiency-seeking nature of their projects and the related locational advantages are examined. We demonstrate that local R&D-intensive subsidiaries have a limited local impact except for the intensive contacts with local universities — with varying content and motives on the side of the R&D units. Drawing on our findings we formulate economic policy recommendations about the ways to foster and enhance R&D-based upgrading.

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