Papers in Evolutionary Economic Geography

March 6, 2018

# 18.12 Foreign-owned firms as agents of structural change in regions: the case of Hungary 2000-2009

Zoltán Elekes and Ron Boschma and Balázs Lengyel

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Abstract: A growing body of literature shows that related diversification in regions is more common but unrelated diversification also happens. However, we have little understanding of what types of firms induce related and unrelated diversification in regions. We investigate the extent to which foreign-owned firms induce structural change in the capability base of 67 regions in Hungary between 2000 and 2009. Doing so, we aim to connect more tightly the disparate literatures of Evolutionary Economic Geography and International Business. Using novel methodology developed by Neffke et al. (2018), we find that foreign-owned firms show a higher deviation from the region’s average capability match than domestic firms, and therefore, tend to contribute more to structural change in regions.

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