The ELKH Centre for Economic and Regional Studies, Institute of World Economics (IWE) organized its first Visegrad conference on June 3 and 4. One of the main research areas of the institute is the comparative analysis of the economies, economic development paths and economic policies of the V4. They are convinced Hungarian developments can be better understood in the context of the Visegrad countries. The other ”excuse” for the organization of the conference was the 30th birthday of the Visegrad cooperation.
The invited speakers discussed the main topics of the conference in four sessions. These main topics were in line with the research areas of IWE and focused on the role of emerging multinationals in the region, the specialties and future of the FDI-based development path of the V4-countries, the role of the V4 in the European Union and their energy and climate policies. The two keynote speakers analyzed Visegrad cooperation in political and economic areas.
Characteristics and role of emerging-market multinational companies in the Visegrad Four
In the session, speakers examined the role of emerging-market multinational companies’ (EMNCs) investments in the Visegrad Four from three different angles over three presentations. First, Kálmán Kalotay (UNCTAD) outlined the main trends in the global activities of EMNCs in recent years, with special emphasis on the consequences of the pandemic. He concluded that statistics are characterized by significant volatility, with no clear similarities between the individual actors, however, China has undeniably become an increasingly significant player, despite the pandemic.
Following this macro perspective, Ágnes Szunomár, senior researcher at IWE CERS, presented the rise of emerging-market multinational companies in Central and Eastern Europe, with a special focus on the trends and characteristics observed in the Visegrad Four. Research results have shown that the majority of EMNCs are influenced not only by macroeconomic factors (such as relatively cheaper, skilled labour) but also by institutional factors and various benefits (such as tax incentives) when searching for potential host countries. In addition, the level of political relations is of paramount importance: if the diplomatic/political relationship is more balanced between the home and the host countries, more investment flows to the host country, especially in the case of Chinese and Russian investors.
The third presentation, by Agnieszka McCaleb (Warsaw School of Economics), focused on the investments of Chinese companies in Poland. It covered the main sectors – including electronics, IT, chemical industry – and the ownership background of the investing Chinese companies. Ms. McCaleb concluded that Chinese actors seem to be increasingly interested in infrastructure projects in the region (including in Poland), as a result of which more activity is expected in this area in the coming period.
The keynote speech on June 3 was given by Christopher Walsch (Corvinus University) and analyzed the characteristics and development over time of the Visegrad cooperation. He indicated that the cooperation worked well during the discussions on the EU budget, but in other areas – though the cooperation is progressing and strengthening – the four countries act rather individually. As an example, he mentioned that regional cooperation is at a low level with regards to multinational companies investing or intending to invest in the V4, particularly China or Russia, and economic policy coordination, though increasing, is still negligible.
FDI-based development path
In this session, the four presentations took different approaches to the topic. Miklós Szanyi (IWE) showed that this development path is not without historical precedence in the region, because certain elements of it were already present at the turn of the previous century.
Ryszard Rapacki (Warsaw School of Economics) analyzed the characteristics of the capitalism in the region, which has developed as a result of the FDI-based development path. He indicated that a kind of patchwork capitalism has been created in the region, whereby formal and informal institutions have weak connections.
Tomás Dudás (Pan-European University) and Martin Grancay (Slovak University of Technology in Bratislava) examined the recent economic development of Slovakia. They emphasized the strong specialization on the automotive industry related to the strong presence of foreign-owned multinational companies. They showed that this development path has resulted in high growth rates in its first ten years, up till 2010, but the limits of the model have since become apparent, due to which Slovakia showed much slower economic growth in recent years, thus falling into a kind of middle income trap.
Martin Myant (ETUI, Brussels) drew conclusions based on the analysis of successful and unsuccessful Czech companies. In his summation, successful locally-owned companies have not been helped by foreign direct investments, because their success is unrelated to supplier relations or partnerships with foreign-owned companies. Thus, he showed an important limit of the FDI-based development path.
The Visegrad countries and the European Union
The panel on the EU-V4 relations was held on the morning of June 4 and contained two politological and two economic presentations. Professor Ladislav Cabada (Metropolitan University Prague) analyzed the role of the V4 group in promoting integration by presenting the relevant narratives (“motor” or “toxic group”) and also the political tendencies of other neighbouring countries. In the second presentation, Karen Henderson (Comenius University Bratislava) analyzed solidarity and diversity in the V4 group, discussing topics where cooperation is present (energy, budget and enlargement) and problems. The first economic presentation was held by Professor Adam Ambroziak (Warsaw School of Economics) and dealt with the external trade of the EU and the trends within the V4 that are similar to EU patterns. Norbert Szijártó, a researcher from the IWE CERS spoke about the V4 nations joining the Eurozone, and the introduction of the euro in the V4. He concluded that those countries that are not yet eurozone members are practically ready to join in economic and monetary terms, but there is no political will for this step.
Jan Drahokoupil’s (ETUI, Brussels) keynote speech addressed the history, advantages and disadvantages of the FDI-based development path of East-Central Europe. He showed that the development of the region – especially in comparison to developed countries – has not shown considerable convergence, and its development was not outstanding. However, the V4 fundamentally had the potential to catch up to the mid-developed Mediterranean countries, and the resilience of the V4 also exceeds that of the Mediterranean region. He also analyzed the integration of the V4 economies in global value chains, organized and managed by multinational companies, and the related prospects.
Energy and climate policy cooperation
Four researchers participated in the panel focused on energy- and climate-related cooperation alongside the moderator, John Szabó from the Institute of World Economics, Centre for Economic and Regional Studies. Áron Buzogány, University of Natural Resources and Life Sciences, Vienna, examined the form of the energy transition in the V4 by drawing on the ‘varieties of capitalism’ theoretical framework. He underlined that the region’s countries are generally dependent market economies, which means their performance during such technological shifts is generally weak, the role of the central government is limited, and their ability to use new technologies is dependent on their access to the supply chains of multinational corporations. Martin Jirusek, Masaryk University, Brno, analyzed the V4 cooperation in the field of energy security. Although, the community’s positions towards Russia have typically been divided, many specific cases have led their stances to converge and allow for the continuation of the cooperation. The presentation by András Deák, Institute of World Economics, Centre for Economic and Regional Studies, focused on the macro trends in the region, which he assessed in a broader historical context. Finally, Margarita Balmaceda, Seton Hall University, NJ, USA, and Petro Jacyk Distinguished Fellow in Ukrainian Studies at the Harvard Ukrainian Research Institute, Cambridge MA, provided her comments and notes as an outside observer of the V4’s energy relations.