Foreign Direct Investments in Business Services: Transforming the Visegrád Four Region into a Knowledge-based Economy?

Foreign direct investments (FDIs) in the service sector are widely attributed an important role in bringing more skill-intensive activities into the Visegrad Four (V4). This region—comprising Poland, the Czech Republic, Hungary and Slovakia—relied heavily on FDIs in manufacturing, which was often found to generate activities with limited skill content. This contribution deconstructs the chaotic concept of “business services” by analysing the actual nature of service sector activities outsourced and offshored to the V4. Using the knowledge-based economy (KBE) as a benchmark, the paper assesses the potential of service sector outsourcing in contributing to regional competitiveness by increasing the innovative capacity. It also discusses the role of state policies towards service sector FDI (SFDI). The analysis combines data obtained from case studies undertaken in service sector outsourcing projects in V4 countries. Moreover, it draws on interviews with senior employees of investment promotion agencies and publicly available data and statistics on activities within the service sector in the region. It argues that the recent inward investments in business services in the V4 mainly utilize existing local human capital resources, and their contribution to the development of the KBE is limited to employment creation and demand for skilled labour

Privatization and State Capacity in Postcommunist Society

Economists have used cross-national regression analysis to argue that postcommunist economic failure is the result of inadequate adherence liberal economic policies. Sociologists have relied on case study data to show that postcommunist economic failure is the outcome of too close adherence to liberal policy recommendations, which has led to an erosion of state effectiveness, and thus produced poor economic performance. The present paper advances a version of this statist theory based on a quantitative analysis of mass privatization programs in the postcommunist world. We argue that rapid large-scale privatization creates severe supply and demand shocks for enterprises, thereby inducing firm failure. The resulting erosion of tax revenues leads to a fiscal crisis for the state, and severely weakens its capacity and bureaucratic character. This, in turn, reacts back on the enterprise sector, as the state can no longer support the institutions necessary for the effective functioning of a modern economy, thus resulting in deindustrialization. Using cross-national regression techniques we find that the implementation of mass privatization programs negatively impacts measures of economic growth, state capacity and the security of property rights.http://deepblue.lib.umich.edu/bitstream/2027.42/40192/3/wp806.pd

Overcoming Postcommunist Labour Weakness: Attritional and Enabling Effects of MNCs in Central and Eastern Europe

Based on micro-level analysis of the developments in the steel sector in Poland, Romania and Slovakia, this paper examines the effects of multinational corporations (MNCs) on labour unions in Central and Eastern Europe. It makes a three-fold argument. First, it shows that union weakness can be attributed to unions’ strategies during the restructuring and privatization processes of postcommunist transition. Consequently, tactics used for union regeneration in the West are less applicable to CEE. Rather, the overcoming of postcommunist legacy is linked to the power of transnational capital. Through attritional and enabling effects, ownership by MNCs forces the unions to focus their efforts on articulating workers’ interests. The paper examines the emerging system of industrial relations in the sector and explores the development of the capabilities needed to overcome postcommunist legacies

Rethinking “democratic backsliding” in Central and Eastern Europe – looking beyond Hungary and Poland

This essay introduces contributions to a special issue of East European Politics on “Rethinking democratic backsliding in Central and Eastern Europe”, which seeks to expand the study of democratic regression in CEE beyond the paradigmatic cases of Hungary and Poland. Reviewing these contributions, we identify several directions for research: 1) the need to critique “democratic backsliding”, not simply as a label, but also as an assumed regional trend; 2) a need to better integrate the role of illiberal socio-economic structures such as oligarchical structures or corrupt networks; and 3) a need to (re-)examine the trade-offs between democratic stability and democratic quality. We also note how insights developed researching post-communist regions such as Western Balkans or the post-Soviet space could usefully inform work on CEE backsliding. We conclude by calling for the study of CEE democracy to become more genuinely interdisciplinary, moving beyond some narrowly institutionalist comparative political science assumptions

Between Apprehension and Support: Social Dialogue, Democracy, and Industrial Restructuring in Central and Eastern Europe

This article explores the attitudes of trade union organizations to restructuring and privatization of their enterprises to strategic foreign investors in Central and Eastern Europe\u27s biggest steel producers: Poland, Czech Republic, Romania, and Slovakia. Contrary to advocates of insulating technocratic decision-makers from social partners, this article argues that higher quality of democracy and concomitant social dialogue carried out at the level of the sector with union organizations that are autonomous of the government in power (as was the case in the Czech Republic and Poland), are associated with greater restructuring and with support for privatization to strategic foreign investors. In these circumstances, the unions actually pressure reluctant governments to accelerate the privatization process. By contrast, politically motivated capture of individual enterprise-level unions and splitting them from sectoral-level organizations, as occurred in countries with lower quality of democracy (Romania and Slovakia), weakens the autonomous sectoral-level organizations, which are generally supportive of restructuring. Conversely, captured unions remain far more resistant to reform than their counterparts belonging to autonomous sectoral organizations. Thus, higher quality of democracy and concomitant vibrant social dialogue safeguard industrial restructuring

Large-Scale Transition of Economic Systems Do CEECs Converge Towards Western Prototypes?

In order to identify convergence patterns among the group of Central and Eastern European Countries (CEECs) we analyze clusters of traditional OECD countries, i.e. EU-15 plus Norway and Switzerland, Anglo-Saxon non-EU countries plus Japan, and CEECs based on macro data on government regulation and spending instead of micro data on firm relations and market characteristics as is usually applied in Varieties-of-Capitalism (VoC) analysis. This framework is supposed to incorporate some of the critique that has been expressed towards the traditional VoCapproach, especially its ignorance of government spending and performance. We acknowledge for the transition aspect by looking at cluster history and principal component analysis for periods of transition. Our analysis reveals that there is consolidation rather than convergence with CEECs being divided in clusters leaning towards CME and LME prototypes respectively. Overall, there are worlds of redistribution within which clusters differ with respect to their mix of - negatively correlated - regulation and innovation. Interestingly, CEECs do not mix up with Mediterranean MMEs, which indeed provide a kind of worst case setting, while Scandinavian CMEs as well as traditional LMEs provide a kind of role model within their respective worlds of redistribution

Does inequality erode generalized trust? Evidence from Romanian youths

Generalized trust is a critical component of liberal democratic citizenship. We evaluate the extent to which exposure to socioeconomic inequality erodes trust among Romanian youths. Using national survey data of Romanian eighth-grade and high school students, we evaluate this effect as a product of socioeconomic diversity within the classroom, controlling for the social status of the students as well as socioeconomic inequality within the community where the school is located. Our analysis shows that generalized trust is higher for students in higher grades. However, despite this maturing effect, students exposed to greater levels of socioeconomic diversity have significantly lower levels of trust. The effect is particularly acute for students in the ninth grade. This finding holds when controlling for socioeconomic diversity and polarization in the community. The result reinforces the idea that generalized trust develops early in one’s life and is quite stable, although a major life transformation, such as entering high school, may alter trust depending on the social context

Lost in Transformation: Place-Based Projects in the EU’s Multi-Level System

The place-based approach has been the guiding principle of the EU’s Cohesion Policy for a decade. Building on the idea that place matters, the place-based narrative advocates that socio-spatial inequalities can be overcome by the production of place-tailored public goods designed and implemented through integrated and deliberative policy decisions. The role of external agents is to help local actors to mobilize resources “from below” through an enabling regulative framework. Within the EU’s multi-level governance system, the EU can provide incentives for place-based policies, but the implementation of these interventions is strongly embedded in national policy regimes. This chapter explores the way Hungary’s domestic institutional environment, being at odds with Cohesion policy’s place-based approach, could impair a progressive, place-based initiative to further objectives on social cohesion. The chapter scrutinizes the institutional evolution of Give Kids a Chance program, an initiative to tackle child poverty, whose priorities and governance modes have been reshaped under the constraining effects of the domestic policy landscape. Centralization, selective decentralization in the form of outsourcing policy delivery and disinvestment in social policy are identified as trends in the Hungarian public policy to have contributed to the loss of place-based program elements and coordination mechanisms of EU funded Give Kids a Chance program. Empirical evidence for the chapter was gathered in the frame of a post-doctoral research project (PD 112659) and the RELOCAL project: Resituating the Local in Cohesion and Territorial Development H2020 Framework project.szabadon elérhető / Open acces