Sage Journals: Discover world-class research

Abstract

This paper draws industrial policy lessons for small Central and Eastern European states through a critical evaluation of recent Irish and Hungarian experiences. The paper outlines a ‘holistic view’ of industrial policy before exploring the experiences of the two economies. Whilst both have managed to ‘do’ policy well in some regards, substantial challenges remain in making foreign direct investment attraction the centrepiece of industrial policy, as has been highlighted recently. Overall, the paper suggests that wholesale emulation of the Irish and Hungarian approach is problematic for small open Central and Eastern Europe states, and that more balanced approaches to development – and hence industrial policy – are warranted.

Keywords

Central and Eastern Europe Hungary industrial policy Ireland foreign direct investment policy evaluation

Get full access to this article

View all access options for this article.

References

Acs

O’Gorman

Szerb

(2007) Could the Irish miracle be repeated in Hungary? Small Business Economics 28: 123–142.

Aiginger

(2007) Industrial policy: A dying breed or a re-emerging phoenix. Journal of Industry, Competition and Trade 7(3&4): 297–323.

Andreosso-O’Callaghan

Lenihan

(2006) Is Ireland a role model for SME development in the new member states? Journal of European Integration 28(3): 277–303.

Andreosso-O’Callaghan

Lenihan

Reidy

(2014) The development and growth of the software industry in Ireland: An institutionalised relationship approach. European Planning Studies 23(5): 1–22.

Arora

Gambardella

(2005) The globalization of the software industry: Perspectives and opportunities for developed and developing countries. Innovation Policy and the Economy 5: 1–32.

Bailey

(1995) Transnationals and the Transition: The Role of Foreign Direct Investment in Hungary’s Economic Transformation, Occasional Papers in Industrial Strategy. Issue 32. Birmingham: Research Centre for Industrial Strategy.

Bailey

De Ruyter

(2007) Globalisation, economic freedom and strategic decision-making: A role for industrial policy? Policy Studies 28(4): 383–398.

Bailey

De Ruyter

Kavanagh

(2007) Lisbon, Sapir and industrial policy: Evaluating the Irish experience. International Review of Applied Economics 21(3): 453–467.

Bailey

Lenihan

(2015) A critical reflection on Irish industrial policy: A strategic choice approach. International Journal of the Economics of Business 22(1): 47–72.

10.

Bailey

Lenihan

Singh

(2009) Lessons for African economies from Irish and East Asian industrial policy. Journal of Industry Competition and Trade 4(9): 357–382.

11.

Bailey

Tomlinson

Cowling

(2015) Introduction: New perspectives on industrial policy for a modern Britain. In: Bailey

Tomlinson

Cowling

(eds) New Perspectives on Industrial Policy for a Modern Britain, Oxford: Oxford University Press, pp. 1–15.

12.

Barry

(2008) Foreign Direct Investment, Industrial Policy and the Emergence of an Irish Indigenous Software Cluster, Dublin: Trinity College.

13.

Barry

Van Egeraat

(2008) The Decline of the Computer Hardware Sector: How Ireland Adjusted, Quarterly Economic Commentary, Dublin: ESRI.

14.

Begley

Delany

O’Gorman

(2005) Ireland at a crossroads: Still a magnet for corporate investment? Organizational Dynamics 34(3): 202–217.

15.

Bekes G (2005) Location of Manufacturing FDI in Hungary: How Important Are Inter-company Relationships? MNB Working Papers, 2005/7. Budapest: Magyar Nemzeti Bank.

16.

Bielenberg

Ryan

(2013) An Economic History of Ireland Since Independence, Abingdon: Routledge.

17.

Buckley

Leddin

Lenihan

(2006) An Assessment of the Contribution of MNEs to the Irish Economy, Logrono, La Rioja, Spain: ILL Foro de Economia Regional, FPRG Economico de la Rioja.

18.

Buckley

Ruane

(2006) Foreign direct investment in Ireland: Policy implications for emerging economics. The World Economy 29(11): 1611–1628.

19.

Coates

(2007) The rise and fall of Japan as a model of ‘progressive capitalism’. In: Bailey

Coffey

Tomlinson

(eds) Crisis or Recovery in Japan? State and Industrial Economy, Cheltenham: Edward Elgar, pp. 179–196.

20.

Collins

Grimes

(2008) Ireland’s foreign-owned technology sector: Evolving towards sustainability? Growth and Change 39(3): 436–463.

21.

Collins

Grimes

(2011) Cost competitive places: Shifting fortunes and the closure of Dell’s manufacturing facility in Ireland. European Urban and Regional Studies 18(4): 406–426.

22.

Cowling

Sugden

(1999) The wealth of localities, regions and nations: Developing multinational economies. New Political Economy 4(3): 361–378.

23.

CSO (2004) Statistical Year Book, Dublin: Central Statistics Office.

24.

CSO (2005) Foreign Direct Investment, Dublin: Central Statistics Office.

25.

CSO (2008) Foreign Direct Investment, Dublin: Central Statistics Office.

26.

CSO (2012) Business in Ireland, 2010, Dublin: Central Statistics Office.

27.

Culliton

(1992) A time for change: Industrial policy for the 1990s. Report of the industrial policy review group. Dublin: The Stationery Office.

28.

Department of Enterprise, Jobs and Innovation (2012) Action Plan for Jobs. Available at: www.djei.ie/enterprise/apj.htm (accessed 14 October 2016).

29.

Department of Enterprise, Jobs and Innovation (2013) Action Plan for Jobs. Available at: www.djei.ie/enterprise/apj.htm (accessed 14 October 2016).

30.

Department of Enterprise, Trade and Innovation (2010) Trading and Investing in a Smart Economy: A Strategy and Action Plan for Irish Trade, Tourism and Investment to 2015, Dublin: The Stationery Office.

31.

Department of Jobs, Enterprise and Innovation (2003) Review of Industrial Performance and Policy, Dublin: The Stationery Office.

32.

Dörrenbächer

(2007) Challenges for foreign owned subsidiaries in FDI-led Modernisation strategies: The case of Hungary. Competition & Change 11(2): 179–197.

33.

EBRD (1994) Transition Report, European Bank for Reconstruction and Development, London: EBRD.

34.

EBRD (1998) Transition Report, European Bank for Reconstruction and Development, London: EBRD.

35.

ERM (European Restructuring Monitor) (2012) European Monitoring Centre on Change. Available at: www.eurofound.europa.eu/emcc/erm/index.htm (accessed 14 October 2016).

36.

ESRI (2013) Irish Economy, Dublin: Economic and Social Research Institute.

37.

European Commission (2015) Commission Staff Working Document. Country Report Hungary 2015. COM(2015)85 Final. Brussels: European Commission.

38.

Eurostat (2007a) Euro Area Unemployment Down to 7%, Euro-Indicators News Release 93/2007, Brussels: Eurostat.

39.

Eurostat (2007b) Foreign Direct Investment, Brussels: Eurostat.

40.

Eurostat (2008a) Eurostat News-Release, August 2008: Euro Area Unemployment up to 7.5% (EU27 Stable at 6.9%), Brussels: Eurostat.

41.

Eurostat (2008b) GDP Per Capita in PPS, Brussels: Eurostat.

42.

EUROSTAT (2010a) February 2010: Euro area unemployment rate at 10.0%. Brussels: Eurostat.

43.

EUROSTAT (2010b) Unemployment Rate by Gender. Brussels: Eurostat.

44.

EUROSTAT (2013) September 2013, Euro area unemployment rate at 12.2%. Brussels: Eurostat.

45.

Eurostat (2016) Unemployment Statistics. Brussels: Eurostat. Available at: www.ec.europa.eu/eurostat/statistics-explained/index.php/Unemployment_statistics (accessed 14 October 2016).

46.

Fazekas

(2005) Effects of FDI inflows on regional labour markets in Hungary. Economie Internationale 102: 83–105.

47.

FDI Intelligence (2016) Hungary: The Forgotten FDI Destination. Available at: www.fdiintelligence.com/Locations/Europe/Hungary/Hungary-the-forgotten-FDI-destination (accessed 14 October 2016).

48.

Fink

(2006) FDI-led growth and rising polarisations in Hungary: Quantity at the expense of quality. New Political Economy 11(1): 47–72.

49.

Forfás (2004) Innovation Networks, Dublin: Forfás.

50.

Gal

(2013) New Bangalores? The role of Central and Eastern Europe in business and IT services offshoring. Journal of Economic Development, Environment and People 2(3): 77–100.

51.

Görg

Ruane

(2001) Multinational companies and linkages: Panel-data evidence for the Irish electronics sector. International Journal of the Economics of Business 8(1): 1–18.

52.

Görg

Strobl

(2003a) Multinational companies, technology spillovers and plant survival. Scandinavian Journal of Economics 105(4): 581–595.

53.

Government of Ireland (2008) Building Ireland’s Smart Economy: A Framework for Sustainable Economic Renewal, Dublin: Department of the Taoiseach.

54.

Heanue

Jacobson

(2003) Low Tech Policy, PILOT-Newsletter 1, May, Dublin: Dublin City University.

55.

Hunya G (2014) Regional Policy and FDI Location – An Overview of the Larger New EU Member States. Wiiw Research Report, number 393. Vienna: The Vienna Institute for International Economic Studies.

56.

Hymer

(1975) The multinational corporation and the law of uneven development. In: Radice

(ed.) International Firms and Modern Imperialism, Handsworth: Penguin, pp. 13–140.

57.

IDA (2011) Annual Report 2011, Dublin: IDA.

58.

Innes A (2012) In Hungary Viktor Orban adds the EU to his lengthening list of ‘enemies of the state’. LSE Blogs. Available at: www.blogs.lse.ac.uk/europpblog/2012/04/05/hungary-viktor-orban/ (accessed 14 October 2016).

59.

Killeen

(1975) A symposium on increasing employment in Ireland–Dublin. Journal of the Statistical and Social Inquiry Society of Ireland 23: 50–64.

60.

Krueger

(1990) Government failures in development. Journal of Economic Perspectives 4(3): 9–23.

61.

Lall

(2006) Industrial policy in developing countries: What can we learn from East Asia? In: Bianchi

Labory

(eds) International Handbook on Industrial Policy, Cheltenham: Edward Elgar, pp. 79–97.

62.

Lenihan H and Bailey D (2009) Op-Ed: Intervention essential for those who lose Dell jobs. Irish Times, 27 November.

63.

Lenihan H, Hart M and Roper S (2005) Developing an Evaluative Framework for Industrial Policy in Ireland: Fulfilling the Audit Trail or an Aid to Policy Development. Quarterly Economic Commentary, Summer 2005. Dublin: Economic and Social Research Institute, pp. 16–85.

64.

Mabbett

Schelke

(2007) Bringing macroeconomics back into the political economy of reform: The Lisbon agenda and the fiscal philosophy of EMU. Journal of Common Market Studies 45(1): 81–103.

65.

O’Riain

(2004) The politics of mobility in technology-driven commodity chains: Developmental coalitions in the Irish software industry. International Journal of Urban and Regional Research 28(3): 642–663.

66.

Plank L and Staritz C (2013) ‘Precarious upgrading’ in electronics global production networks in Central and Eastern Europe: The cases of Hungary and Romania, Capturing the Gains 2013: Working Paper 31. Available at: www.ssrn.com/abstract=2259671 (accessed 14 October 2016).

67.

Ruane F (December 3, 2001) Reflections on linkage policy in Irish manufacturing-policy chasing a moving target. In: Paper presented at the UNECE/ERBD Expert Meeting-Financing for Development, Geneva.

68.

Sapir

(2006) Globalization and the reform of European social models. Journal of Common Market Studies 44(2): 369–390.

69.

Sapir A, Aghion P, Bertola G, et al. (2003) An agenda for a growing Europe: Making the EU economic system deliver. Report for the president of the European commission. Brussels: European Commission.

70.

The Sapir Group (2005) An agenda for a growing Europe: The Sapir Report. Regional Studies 39(7): 958–965.

71.

Sass M and Kalotay K (2012) ‘Inward FDI in Hungary and its policy context’ Columbia University Academic Commons. Available at: www.hdl.handle.net/10022/AC:P:15271 (accessed 14 October 2016).

72.

Small Business Forum (2006) Small Business Is Big Business: Report of the Small Business Forum, Dublin: Small Business Forum.

73.

Sokol

(2001) Central and Eastern Europe a decade after the fall of state-socialism: Regional dimensions of transition processes. Regional Studies 35(7): 645–655.

74.

Stein

(2010) Financial liberalisation, institutional transformation and credit allocation in developing countries: The World Bank and the internationalisation of banking. Cambridge Journal of Economics 34(2): 257–273.

75.

Szalavetz

(2013) Innovation in Hungary – The Impact of EU accession and integration into global value chains. International Journal of Management and Economics 42: 40–59.

76.

Teague P (2009) Developing Ireland: Committing to Economic Openness and Building Domestic Institutional Capabilities. UNU-Wider Research Paper No. 2009/24. United Nations University, World Institute for Development Economics Research.

77.

Telesis Consultancy Group (1982) A Review of Industrial Policy. NESC Report No. 64. Dublin: Telesis Consultancy Group.

78.

The Economist (1997) Europe’s shining light, 17 May, 15.

79.

The Economist (1988) Poorest of the rich: A survey of the Republic of Ireland, 16 January, 13.

80.

Török A, Csuka G, Kovács B, et al. (2013) The “resurrection” of industrial policy in the European Union and its impact on industrial policy in the New Member Countries, WWW for Europe Working Paper Number 26, Available at: www.foreurope.eu/fileadmin/documents/pdf/Workingpapers/wwwforEurope_WPS_no026_MS69.pdf (accessed 14 October 2016).

81.

Ugur A and Ruane F (2004) Export Platform FDI and dualistic development. Institute for International Integration Studies Discussion Paper, No 28/July 2004.

82.

Varro

(2010) Re-politicising the analysis of “new state spaces” in Hungary and beyond: Towards an effective engagement with “actually existing neoliberalism”. Antipode 42(5): 1253–1278.

83.

Walsh

(2010) The economic and fiscal contribution of US investment in Ireland. Journal of the Statistical and Social Inquiry Society of Ireland 40: 33–59.

84.

White

(2004) Inward investment, firm embeddedness and place: An assessment of Ireland’s multinational software sector. European Urban and Regional Studies 11(3): 243–260.

85.

World Economic Forum (2016) Global Competitiveness Report. Available at: www.weforum.org/reports/the-global-competitiveness-report-2016-2017-1/ (accessed 14 October 2016).

A cautionary tale of two ‘tigers’: Industrial policy ‘lessons’ from Ireland and Hungary?

Abstract

Keywords

Get full access to this article

References