Governmental Change and FDI Inflow to Poland and Hungary in 2010-2016

Abstract

Objective: The purpose of this article is to explain if and how FDI flows have changed due to the most recent parliamentary elections in Poland and Hungary. The shift in governmental policies are said to affect the institutional settings in the host country and hence the willingness of foreign firms to invest. In the study we tried to identify any interdependencies between the FDI inflow and unexpected electoral results. Research Design & Methods:Based on statistical data we applied a cross-country analysis to verify whether the perceived higher investment risk truly undermined the choices of firms. Qualitative analysis and critical discussion drawing on available reports and databases were applied. Findings:Hungary and Poland have recently suffered a drop in the inflow of FDI as revealed by the statistical databases. It is, however, hard to determine whether this decline will continue and to what extent it has been dependent on recent policy changes, particularly in the light of evidence stressing unabating investment attractiveness and new projects coming. Implications & Recommendations:The recent election results in numerous countries suggest an alteration in perceiving the necessity for further international openness and integration. The new nationalism, protectionism and economic patriotism have gained new supporters. Contribution & Value Added:We tried to show the idiosyncrasy of the relationship between institutional election-induced changes in the political landscape and the subsequent modification of attractiveness sentiment leading presumably to changes in actual FDI flows.

Keywords

• FDI
• Poland
• Hungary
• political uncertainty
• institutions
• governments
• policy