The Role of Foreign Capital in Developing the Spatial Structure of the Processing Industry in the Budapest Agglomeration Belt

Abstract

Until 1998 17 billion US dollars has come into Hungary as foreign direct investments (FDI). FDI has had an important influence on the economic spatial structure in Hungary including the processing industry. The territorial disparity of the FDI increased the existent divergence on the economic spatial structure. This phenomenon is provable between the macro-regions. In the smaller territorial units – for example in the examined Budapest agglomeration ring – its effect isn't one-way on the structure of processing industry.

It's obvious, that the quantity of FDI and the output of foreign firms are outstanding in the more developed areas that were already in a better position when the projects had been realized. Foreign firms also have an important role in the local labour market. The lack of FDI is understandable in the most undeveloped south-east sector. This distribution is an analogy of the divergence between the macro-regions.

On the other hand the appearance and effects of the FDI is observable in the moderately-developed eastern sector (the area of Gödöll ő) and the traditional industrial micro-regions like the northern and eastern sectors. The territorial equilibrant function of FDI is unambiguous here. This process on the territorial levei of the macro-regions has been starting for some years, though it is still in its infancy. The placing of the foreign capital stock is considerably concentrated. This observation is principally real in the relatively undeveloped territories. However the diffusion of the investments has already started – especially in the eastern sector. It contributes to economic development of these underdeveloped areas.

The activity of foreign firms moderate the influence of settlement-hierarchy and city concentration on the capacity of the processing industry.

The Budapest–Budaörs–Törökbálint triangle can be put on the list of dynamic centres with incompleted development (Székesfehérvár, Győr). The foreign firms in the processing industry played an impörtant part on development of this innovation zone, even if the priority of the tertiary industry (the service sector) isn't uncertain. However the foreign companies in the processing industry take upon themselves the bulk of development of a new core area in the Gödöllő micro-region.