Papers in Evolutionary Economic Geography

May 27, 2016

# 16.12 Related variety, ownership, and firm dynamics in transition economies: the case of Hungarian city regions 1996-2012

Izabella Szakálné Kanóa, Balázs Lengyel, Zoltán Elekes, Imre Lengyel

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We investigate the effect of related variety on the entry and exit patterns of domestic and foreign firms in Hungarian city regions from 1996-2012. In order to characterize the archetypes of interaction between domestic and foreign firms, we introduce three alternative models to calculate the related variety. The best fit is provided by the model, in which no interaction among foreign and domestic firms is presumed. Related variety in the foreign subset tends to accelerate firm entry and decelerate firm exit in a much earlier stage of economic transition than related variety across domestic firms.

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