EMU 2.0 – Responsibility versus solidarity?

PÉTER HALMAI

Deepening of the Economic Monetary Union is the key issue for the European integration. During the debates on EMU 2.0, two approaches have emerged. These take different positions in terms of the interaction of solidarity and responsibility, and of risk sharing and risk reduction. In fact, Solidarity and Responsibility of the Member States are two sides of the same coin. The new synthesis of these two points of view allows substantive progression. At the heart of the EMU reform there can be deeper economic and financial union, resilient structures, the increase of risk sharing and the reduction of inherited risk. Successful integration can be achieved by inclusive, highly explained, understood and adopted reforms. All this is not only possible through “large packages” of the EMU 2.0 reform. At the same time, it is necessary to clarify the critical mass of these measures (“small package”). Journal of Economic Literature (JEL) codes: F02, F15, F17, F43, F55.

Scramble(s) for Africa – Some issues of global economic integration and marginalisation

SZABOLCS PÁSZTOR

The paper compares the recent scramble for Africa in general and Sub-Saharan Africa in particular with the previous ones led by the great powers. The comparative approach focuses on the identification of similarities and differences with the aim of providing a nuanced view on the scrambles for the resources of the continent. Its major conclusion is that the increasing influence of great powers over time has nothing particularly new in it and behind similar interests can be identified. Sub-Saharan Africa is still dependent on external markets, and the economic powerhouses of the world still regard it both as a resource base and a market for their own products. Despite the scrambles that took place in different time periods, the involvement of the great powers could not reverse the marginalisation of Sub-Saharan Africa in the global economy. The core countries of the world economy may transform the trade pattern of the region to a certain extent, but the room of manoeuvre still remains quite limited for the less powerful open economies of the continent. Journal of Economic Literature (JEL) codes: F54; N17; O10.

Risks of the Hungarian economic structure

ERIK BRAUN

Foreign trade relations play a decisive role in Hungary’s economy, as a result of which trends taking place in the world economy may have a significant impact on its economic performance. Consequently, the position of industries in global value chains and the structure of input-output relations are relevant factors in terms of Hungary’s economy. The objective of this study is to analyze the dependence of domestic sectors on inputs and outputs on the basis of which the risks inherent in foreign trade relations for the stable operation of the economy can be identified. According to the results, besides the automotive industry other domestic sectors such as the manufacture of computers, electronic and optical goods and the manufacture of machinery and equipment n. e. c. also have strong cross-border exposure to global value chains. The majority of these industries have strong ties to the German economy, however, some of them also significantly depend on other countries, such as China, Italy, Austria or Denmark. Journal of Economic Literature (JEL) codes: C67, O25.

The Crisis Calls for Rethinking Economic Policy

Some thoughts inspired by Stephanie Kelton’s book The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy Public Affairs, 2020, New York

ISTVÁN ÁBEL

The global scale of the COVID-19 pandemic renders traditional tools of macroeconomics illsuited for handling the crisis. A growing consensus unfolded that it is time to rethink economic policy. There is a need for prompt and large fiscal and monetary intervention. The heterodoxeconomics represented by modern monetary theory (MMT) offers a novel approach to assess and meet these needs. MMT calls for countries that can print their own currency to ignore debt-to- GDP ratios, rely on the central bank to backstop public debt, and continue to run deficit spending unless and until unemployment and inflation return to normal. Proper use of this approach requires a clear understanding of the functioning of the monetary and banking system. Godleytype stock-flow consistent macroeconomic accounting helps to navigate with these and other real economic and ecological constraints. Stephanie Kelton’s book The Deficit Myth does a good job by discussing these important topics from a new perspective, in a manner that was simultaneously shocking and yet compelling. Journal of Economic Literature (JEL) codes: E12, E52, E62.

Is the progressive turnover tax to be sanctioned?

DÁNIEL DEÁK

The article provides an explanation for the case law on the EU Member States’ progressive taxation, levied on turnover in the light of the harmonised EU law. The introduction of special sectoral taxes has become an important measure of local tax policies, which in part generate significant budget revenues but, more importantly, they are also designed to protect the position of weaker domestic competitors. This policy raises the suspicion of illegal state aid, but now this debate seems to be settled after a number of judgements decided by the Court of Justice of the EU in favour of the Member States. These judgments came as a general surprise to experts in the Member States concerned because the covert, yet effective state aid provided to domestic competitors seems obvious for those who live here. However, the EU’s existing ‘legal toolbox’ has proved to be insufficient to stop the Member States from following a policy of illegal state aid. The law requires clarity, and the practices that can be observed in the case of the apparently selective sectoral taxes can be hardly disguised. In this sense, even the judicial bodies of the EU, living to some extent in an ivory tower, cannot be blamed either. Journal of Economic Literature (JEL) codes: F02, H27, K34.

Innovative companies – innovative investors

Western experiences of equity market for startups

JUDIT KARSAI

In addition to traditional venture capital funds, business angels, business accelerators and incubators, as well as crowdfunding platforms play an important role in financing startup companies. As these market players are relatively new, little experience has been gained with their operation. It is not yet known whether the market reorganization between players in this capital market will prove to be lasting, especially in view of the unfolding global recession in connection with the spread of the COVID-19 pandemic. However, learning from experience can be beneficial to less developed regions for the creation and successful expansion of startups using alternative sources of capital and associated technical support, networking, market knowledge and men­toring. The article provides an overview of the functioning and development trends of the new institutions providing equity financing, including their cooperation and competition, as well as their impact on the sponsored businesses. The trend so far indicates a decline in the importance of traditional venture capital funds in financing startups and early-stage companies, as these funds increasingly turn to larger-scale investments by more mature companies. This process has been accompanied by a stronger emphasis on the participation of large corporations in markets in many forms, the increasing role of institutionalized business angels, business accelerators and incubators, and the development of crowdfunding platforms providing capital through community funding. An important lesson is that successful former startup founders, utilizing their experience and wealth, play a key role in the preparation and execution of capital investments in startups in all types of alternative capital organizations. Thus, the successful development and capital supply of startups are becoming the result of a self-reinforcing process.

Journal of Economic Literature (JEL) codes: L26, G20, G23, G24.

Keywords: Entrepreneurship, Startup, Equity finance, Venture capital, Business Angel, Accelerator, Crowdfunding.

The European Union and China: conditions of the balanced trade relationship

TAMÁS RÁCZ – BEÁTA FARKAS

China is one of the dominant trade partners of the European Union, however, the risks and geopolitical concerns of economic relations have come recently to the fore in the EU’s trade strategy. In this study, multivariable linear regression is applied based on the data of OECD countries to reveal the factors which can help to avoid the import exposure from China. The analysis of the period between 1992 and 2018 confirms the impact of factors which are considered decisive for import exposure in the relevant literature. The number of free trade agreements and the growth rate of medium and high-tech products compared to the total industry show the highest explaining power. The lesson of this analysis is that on the one hand, the EU should insist on rule-based free trade relationships despite the current worldwide protectionist trend. On the other hand, a successfully implemented industrial strategy has crucial importance for the balanced trade relations with China.

Journal of Economic Literature (JEL) codes: F13, F14, O24.

Keywords: European Union, China, trade, import exposure.

The Brazilian Variety of Capitalism

JUDIT RICZ

The article analyses the major institutional spheres of the Brazilian market economy and the interrelationships between their elements based on the approach of the Varieties of Capitalism (VoC) school. For a better understanding of the path dependent nature of the Brazilian economy, the firm-centred perspective of the VoC is embedded in the analysis of the political system, and changes in the economic role of the state are also considered.

The case study analysis of the Brazilian market economy and its operational logic within this extended theoretical framework offers a novel approach in the domestic and international literature and results on the formulation of novel theoretical and practical insights regarding Brazil’s development path and in more general terms late comer emerging economies and the middle income trap.

The election of the radical far-right president, Jair Bolsonaro by the end of 2018 can be explained by one basic message: the promise of change. In contrast to this, according to the main argument of the paper the basic mechanisms of the Brazilian market economy are dominated by state guidance, hierarchical structures and informal relations that are long-standing and stable features. The objective of the study is to prove that these unique operational logics and principles have been sustained even during the decade of the social developmental state in the 2000s and have not been substantially changed during the years of the (neo-)liberal economic policy turn starting in 2012. The elitist, hierarchical and informal relational organization of the Brazilian market economy is expected to be further strenghtened in the light of recent political and economic changes.

Journal of Economic Literature (JEL) codes: O10, O54, P16.

Keywords: Brazil, Varieties of Capitalism, system paradigm, developmental state, middle income trap, path dependency.

Legal challenges of the retention of worker status as reflected in recent case-law of the Court of Justice of the European Union

LAURA GYENEY

In recent years, a growing number of cases related to the retention of worker status have em­erged in CJEU jurisprudence with reference towelfare benefits, requiring a much deeper analysis of the field treated earlier as peripheral. Such an analysis seems especially justified in the light of the current political and legal discourse concerning the issue of free movement, focusing on the question of equal treatment in the field of welfare assistance for mobile citizens. The purpose of this study is to present and put into context the relevant case-law of recent years by analysing the judgments of the CJEU in two cases that are benchmarks in this field: the Tarola and Saint Prix cases. Both cases highlight the key role that economically active status continues to play in integration law. These judgments also shed light on the challenges arising from the difficulties in distinguishing between the economically active and inactive EU citizen statuses. This issue emerged as an increasingly grave problem in the field of law of free movement, posing a serious dilemma for law enforcement.

Journal of Economic Literature (JEL) code: K31 Labor Law. Keywords: retention of worker status, equal treatment, welfare benefits, free movement of wor­kers.

Productivity, Innovation and Foreign Trade (Hungarian Firm-level Data)

LÁSZLÓ HALPERN

In addition to exports, imports are important factors too when the relationship between innovation and productivity is analyzed at the level of firms. Innovation boosts productivity, and this impact has been changing in Hungary between 2005 and 2016. The estimated impact increased until 2010, then declined and fell to the level of 2005 in 2016. This impact was exacerbated by the continuous decline in the share of innovative firms.

Working abroad, changing jobs and leaving the profession

ÁGNES HÁRS – DÁVID SIMON

Higher wages, better work conditions and pleasant work environment are considered to be the most attractive elements when deciding for emigration and working abroad. Individual motivations shade off the picture described by migration models. Beyond the expected advantages and gains, the decision is often coinciding with personal losses and self-denials. Those working abroad often should take a job different to the one in the home country. Changing the previous job can be promise but loss as well. The article will focus on this particular section of migration, the character and motivations of job change of Hungarians moving abroad.

Journal of Economic Literature (JEL) kódok: C83, J40, J60, J61.

Global crisis, local liquidity?

Analysing the impact of coronavirus pandemic crisis within a multicountry DSGE model with heterogenous banking system based on liquidity demand

Ádám Czelleng

The study discusses the actual and potential economic crisis triggered by the coronavirus epidemic as the function of the banking system’s liquidity. In this paper, we analysed how and to what extent the liquidity conditions of the banking system in the euro area and in Hungary influence the economic effects of the coronavirus epidemic. Results confirm that with the consideration of financial frictions they affect the pace of recovery primary through the investment channel. The negative impact of the crisis is more significant and the recovery path changes slightly if banks are distinguished by their liquidity positions with surpluses and deficits. To address the research questions, a multicountry dynamic model was applied. This approach is new in the Hungarian literature in as much as in the model the effects of the liquidity position of the banking system are identified and quantified in the event of an economic shock. One of the major conclusions is that the steady expansion of the Hungarian banking system’s liquidity, in which both monetary policy and regulation (micro- and macroprudential policy) plays a significant role is a necessary but not sufficient condition for stabilizing the national economy. The effects are asymmetric, i. e. whereas the improvement in the liquidity in the euro area’s banking system hardly contributes to the mitigation of the domestic effects, its deterioration strengthens significantly the negative domestic macroeconomic repercussions. To minimize the effects, targeted and well-timed measures are necessary that can help recovery. They should remain transparent and sustainable (meeting minimum prudential requirements).

JEL Codes: E12; F37; G21; G28.Key words: multicountry DSGE, monetary policy, liquidity, regulation

Abstracts of the Articles

INQUIRY

Has the crisis been approaching?

Economists all over the world have been long pondering what kind of crisis has been approaching, would it bring economic slowdown or recession – and when.

Other economists have been gauging whether the world is more resistant to global recession than it was in 2008. Again, others have been gathering the characteristic features of the „new norm” or „new normality” and have been hesitating what developments should economic and monetary policies prep for.

Külgazdaság wants to participate in these global discussions. We asked our authors to share their opinion of rears and hopes. They can, of course, concentrate on any aspects of this huge topic.

We wish to follow and forecast even the Hungarian issues. What risks do our authors foresee – global turbulence, bust after the boom, recession etc. – which will close the period of rapid economic growth?

Challenges of deepening free trade in the Southern Mediterranean

TAMÁS SZIGETVÁRI

The European Union has signed dozens of free trade agreements in the last decade. These free trade agreements contain not just the abolishment of barriers for trade in goods, but they are much broader in their scope, regulating several other issues related to trade. The main aims of these agreements are to increase the competitiveness of the EU and to secure markets and investment opportunities for European firms. In case of neighbouring regions like the Mediterranean, however, the EU has offered so called Deep and Comprehensive Free Trade Agreements. The DCFTAs require a one-sided harmonisation of trade-related areas of the legal system with the EU’s acquis communautaire, which not only makes the partner countries part of the single market, but it should increase their competiveness as well. Additionally, it should decrease the security risk related to these regions for the EU. Though the optimal outcome of the DCFTAs may have positive impacts overall, and may promote the global integration of the Southern Mediterranean region, but currently the risks of these agreements seem to be larger than the opportunities offered.

The legal framework of EU private international law relations with the UK after Brexit

Katalin Raffai

The United Kingdom has left the European Union on the 31st January 2020, after which there will be an 11-month transition period terminating 31 December 2020. This study summarizes it briefly how the future private international law relationship will be changed between the UK and the EU.

Abstracts of the Articles

The effect of changes in the terms of trade on gross domestic income, domestic absorption and income convergence. Experiences of member-states of the European Union between 1995 and 2017, with lessons for Hungary

GÁBOR OBLATH

The volume index of GDP reflects the change in real income generated by production, which differs from the change in real domestic income (RGDI) available consumption and investment in case of movements in the terms of trade (ToT). If the ToT improve (the price index of exports is above that of imports), RGDI increases by more than real GDP, permitting higher growth in real domestic expenditure than implied by the change in domestic production itself; a deterioration in the ToT implies the opposite. The study reviews alternative approaches to interpreting and measuring trading gains/losses, i.e., the effect of changes in the ToT on real domestic income. Relying on alternative methods, we quantify the impact of trading gains (losses) on the change in the components of real domestic expenditure, as well as on real income convergence within the EU between 1995 and 2017. The results suggest a close positive association between changes in real domestic expenditure – in particular, household final consumption – and the income-effect of ToT-changes. Since several new member states of the EU achieved significant gains in their ToT, the convergence in terms of per capita real domestic income was steeper than what is indicated by per capita GPP within the EU. Hungary’s convergence is well below its potential in both respects, but the lag behind potential is larger regarding per capita real income than per capita production.

Asian foreign direct investments in Hungary: the diversity of employee relations

MAGDOLNA SASS – ANDREA GUBIK – ÁGNES SZUNOMÁR – SHOBHA KIRAN – ÉVA OZSVALD

Asian foreign direct investments are substantial in Hungary in regional comparison. According to statistics compiled on the basis of the new methodology, the share of FDI from China, India, Japan and Korea exceeds 10 percent of the Hungarian FDI stock. After discussing the Varieties of Capitalism approach underpinning this article, we examine, through interviews with automotive and electronics subsidiaries, how home and host institutions, business and management culture impact the operation of the companies in question, particularly in the area of human resource management.

Our research shows a clear dominance of host country effects in terms of industrial organisations, employee relations and training, but in some areas practices of the home economy are also emerging. The human resource management practices of the subsidiaries evolve as a result of the interaction between the business culture of the home and host countries, both of which are decisive, including the market entry mode and time, so each company has a number of unique features.

Convergence or middle-income trap? Possibilities for European integration of Poland

ÁRON SZENNAY

Poland is a dominant country both in the Central and Eastern European region and in the Visegrad countries. Nevertheless, economical-political opportunities of Poland are limited due to its economic performance, geopolitical location and high dependency on import of foreign resources (for example natural gas, foreign direct investments [FDI]), similarly to other transition economies in the region. Aim of the study is to identify how can Poland join to the core countries of the European Union. In the analysis we provide an overview on the main determining factors of economic development, such as transportation systems, energy security, climate change, small and medium sized enterprises and currency policy. The

actuality of the study is given by the possibility to identify potential economic breakout points for Hungary on the basis of the similarities (former members of the Ostblock, regime change and transition to the market economy) and differences (first of all population and region). The study applies mixed methodology, since analysis of statistical data, national policies, press releases and international literatures are also used.

Abstract of the Article

The legal framework of EU trade relations with the UK after Brexit

BALÁZS HORVÁTHY

The EU and UK negotiators have successfully modified the conditions on Brexit in autumn 2019 in order to pave the way for approval of the withdrawal agreement by the British Parliament. Considering also the results of the general election held in December 2019, it is already undoubted that the UK will leave the EU in line with these conditions up to 31 January 2020. The present paper has a narrower scope and it is focusing on the trade law aspects of these conditions of Brexit. The main aim of this study is to examine, on the one hand, what role the trade law concerns have played in the negotiations, on the other hand, which set of requirements of the withdrawal agreement will govern the EU-UK trade relations after the Brexit. In doing so, the paper scrutinizes the most important trade law provisions, which will be applicable in the transition period, it looks into the specific status of Norther Ireland and discusses also the major principles that will be significant for the future, long term trade relations of the European Union to United Kingdom.

Abstracts of the Articles

The eurozone after the crisis: a monetary union operable without fiscal union

KÁROLY ATTILA SOÓS

When 11 European Union member countries established the eurozone, they did not follow the view of a large number of economist according to which a monetary union is not really operable without a concomitant fiscal union, and the latter should be basically similar to the one prevailing in the United States, assuring risk pooling among the member states. However, this view proved false in the final analysis. The euro crisis started at the beginning of 2010, as a fiscal crisis of Greece. But its actual cause was the rapid rise of unit labour costs. The consequent wage and price inflation in the Southern eurozone member countries turned crisis countries: Portugal, Spain and Italy besides Greece, and in Ireland, a country difficult to place between North and South. The lack of „Northern style labour coordination”, coupled with more or less fiscal irresponsibility, and with euro interest rates too low for the Southern countries’ interest rates, led to a bubble economy, undermining these countries’ competitiveness, worsening their current account balances, entailing unsustainable capital inflow. The sudden stop of capital inflow also strengthened the detrimental consequences of previous years’ fiscal irresponsibilities. The EU – with the active participation of its member countries and the cooperation of the IMF – could surmount the crisis, even though serious mistakes were also committed during the process. Further reforms are needed but even with their possible slowness or lack, we have no reason to suppose that the EU would not be able to handle

a possible new crisis, more or less similar to the previous one, or that any member country would exit from the eurozone by necessity, or exit otherwise, on the basis of economic considerations.129 Abstracts of the Articles

Some additions to the assessment of the role of foreign companies in Hungary

ÉVA PALÓCZ

The structural problems and low productivity of the Hungarian economy are often explained not only by politicians, but also by economic analysts by the fact that multinational companies bring low value-added activities to Hungary, which are aimed only at reaping the benefits of low wages. In other words: Hungary has become an „assembly plant”. This analysis seeks to refine this statement, showing that it is these ‚assembly plants’ that have contributed decisively to the improvement of Hungarian macroeconomic indicators (production, employment, wage levels) over the period 2008–2016. Foreign-owned companies generate more than half of the total value added produced by the Hungarian corporate sector and about 30 percent of Hungarian GDP, and their share is steadily increasing. This is the highest proportion among EU Member States, although their role is rather high in the other Visegrád countries, too – and has continued to grow in recent years. The productivity of foreign companies in Hungary is three times the national average and their average wage cost is 2.4 times that of domestic companies. More importantly, between 2008 and 2016, only foreign-owned companies contributed to the Hungarian wage convergence.

Unusual business behaviour of the ”Fidesz connected” companies? The case of the Mészáros company group

MIHÁLY LAKI

Assets belonging to Fidesz connected big entrepreneurs-businessmen grew faster than the average in the last 8–10 years. Important factor of the fast and forced growth of their assets was the permanent company acqusition. The story of the Mészáros company group shows the adverse side effect of this business behavior namely the less and less controllable product-service portfolio, and the increasing territorial fragmentation. Because of these tendencies the group applied new management methods and property conditions. They have been placed their property in private equity funds. During the stock exchange listing the share price of these funds increased extremely fast. The rapid price increase period was followed by stagnation. In spite of some failed foreign stock market entry the permanent company 130 Abstracts of the Articles

acquisition continued. One of important but not sufficient explanation of this forced expansion is the expected greater safety created by large size of the company group.

Bulletin An old-new type: frugal innovation

ANNAMÁRIA INZELT

From the end of the 20th century frugal innovations (moderate, requiring less resources) that are different from conventional, Schumpeterian innovations, are attracting more and more interests.

Following the clarification of the nature of frugal innovation this paper describes various types of frugal innovations, their characteristics and illustrates them with several examples. It devotes attention how frugality plays its role as a new frame of mind and strategy at companies. The CETA Opinion of the Court of Justice of the European Union and the future of the investment court system

TAMAS SZABADOS

In its Opinion 1/17., the Court of Justice of the European Union found that the investor-state dispute settlement mechanism introduced by the EU-Canada Comprehensive Economic and Trade Agreement (CETA) is in conformity with EU law. The confirmation by the Court of Justice is crucial, because the rules of the CETA may serve as a model for the trade agreements to be concluded by the EU in the future and for the planned multilateral investment court. At the same time, the analysis of the rules of the CETA

raises some doubts, since it seems that notwithstanding the view of the Court of Justice certain provisions on dispute settlement may still have an impact on the autonomy of the EU legal order.

Where is the centre of interest for legal persons? Violation of the personal rights of legal persons by web site: the Bolagsupplysningen case

GABRIELLA ANITA VINCZE

In recent years, a number of cases have been brought before the Court of Justice of the European Union (CJEU), which highlight the friction between the flow of data enabled by Internet technology and the emergence of rules established by EU jurisdiction and conflict-of-law rules.

The 2017 CJEU decision marks a further milestone in the jurisprudence of the Brussels series of rules on jurisdiction in civil and commercial matters, the interpretation of personal rights violations committed via the Internet and the rules on jurisdiction over tort.

The study aims to provide an overview of the Bolagsupplysningen case.

Five studies on one subject

LÁSZLÓ CSABA, GYÖRGY CSÁKI, DÁNIEL DEÁK, ZOLTÁN GÁLIK AND SZÁZADVÉG-TRIO
(DIÁNA HORVÁTH – DÁNIEL MOLNÁR – GÁBOR REGŐS)

What would Hungary loose if her EU-membership would have been ceased?

That is the question we presented to five excellent Academic researchers. All of them are experts on EU-issues, British and Hungarian economics. We asked them to analyse what would have been the outcome of an imaginary Huxit.

The question has been justified by more aspects. First, the Brexit process made a lot of confusion in the frame of mind of more Hungarians, even those who try to follow it closely. Second, in the everyday conversations increasingly appears the sentiment that the Hungarian government would slowly navigate Hungary out of the EU, or „Brussels” would be bust of the maverick Hungarian policy and sooner or later bounces the country from it. Although we wouldn’t exaggerate the importance of either opinion, we considered them as Frequently Asked Questions and tried to answer them correctly.

We asked our authors to consider the subject as a sci-fi. We didn’t ask them to lament what are the reasons of the Huxit and did not require to focus only on economics but offered them a free interpretation.

We succeeded in raising their interest. And we hope our readers would really enjoy our uncommon scientific adventure…

Sovereign debt crisis management in the EU. Sequencing, unintended consequences, lock-in

ISTVÁN BENCZES

By prohibiting the provision of financial assistance to sovereigns paid by other member states or the union itself, the so-called no-bail-out clause proved to be one of the main pillars of the architecture of the European Economic and Monetary Union for a long time. Parties seemed to behave accordingly in the early phase of the sovereign debt crisis. Later on, however, with the explicit aim of avoiding the disorderly default of member states (and especially of Greece) and/or the falling apart of the euro zone, member countries agreed on not just disregarding the no-bail-out clause but also on the institutionalization of sovereigns’ bail-outs by establishing the European Stability Mechanism. This process, however, proved to be highly contradictory. By scrutinizing the first round of the Greek bail out process in 2010 and the creation of the stability mechanism in 2012, the article highlights the importance of sequencing along with the unintended consequences of member states’ decisions, reflecting upon acute problems. Surprisingly, all related intergovernmental decisions have not weakened, but, in fact, have strengthened economic integration, and have largely determined the path of future development.

Introducing market based balancing on the EU gas markets

PÁLMA SZOLNOKI

The article focuses on the estimation of the effectiveness of BAL NC, the EU wide regulation on natural gas balancing operations, adopted in 2014. BAL NC actually could be considered as a second phase market opening in the natural gas markets. An essential element of BAL NC is that the primary responsibility for balancing should lie with the traders and only residual role should remain at the system operator. Thus within-day processes are being placed under market coordination instead of the coordination within one company, the system operator. In the article I develop indicators that can be used to examine traders’ participation in balancing. I present the indicators and use empirical data (on the Hungarian and Polish gas markets) to illustrate their functioning. The developed indicators, as the Hungarian and Polish examples show, reveal how successful was the involvement of traders in balancing. Longer time series also show the development process: by now in the Hungarian and Polish markets a very significant part of balancing (70–90%) is carried out by the traders.

Abstracts of the Articles

Interpreting the disintegration of the eurozone from the perspective of state-centric approaches

ISTVÁN BENCZES

The crisis of the eurozone, the option of a Grexit, the fact of the Brexit or the steady ascent of Europe-sceptic parties all over the union is a clear indication of how the European integration is becoming a two-way process. Yet scholarly discourse has been mostly neglectful of explaining disintegration, and as a corollary, no clear theoretical, conceptual or methodological advances have been made in order to develop such a framework. The current article therefore, scrutinizes the process of disintegration from the perspective of so-called state-centric approaches of international relations and integration theories. It raises the question whether (neo)realism, classical and liberal intergovernmentalism and neoliberal institutionalism are useful conceptual frameworks in interpreting the disintegration of the eurozone. According to its main findings, state-centric approaches are able to explain divergence in state preferences, placing all those distributional conflicts in the focus of analysis which were either not part of European integration earlier or have had only a marginal impact.

Evaluation of Hungarian venture capital investments, in particular the investments of JEREMIE funds

RICHÁRD ILLÉS – ANITA LOVAS

The JEREMIE venture capital program terminated in the first half of 2016, and more than 350 companies received capital financing. In our research we created a sample of 200 firms with detailed company data and market information, and we examined the companies’ individual characteristics based on them. Regarding the investor side we evaluated the controlling tools and we noted that almost all of the funds gain majority ownership, what is more, they participate in the management board and supervisory board. The JEREMIE tender mainly aimed to help the development of companies located outside the Central Hungary area. The examination of the headquarters support this, however considering the business sites the activities are more concentrated to the central region. The venture capitalist not only finance newly developed products, a quarter of the companies also generates continuous income so it is not just about development and this justifies the investors’ intention to diversify. Companies aim to become international since 70 percent of them targets foreign markets.

A new basis for the development of Africa? The EU-Africa research and development cooperation

BEÁTA UDVARI – JÚLIA MEZŐ, URBÁNNÉ

Investment in science, technology and innovation may significantly contribute to sustainable development of developing countries – investments can be realized from own (financial and human) resources, or from sources coming from abroad (for example, foreign direct investment, loans, aid, technical cooperation, scholarship). Both the Millennium and Sustainable Development Goals – which determine the frames of international development cooperation (aid) – focus on the role of technology in development, so they also draw the attention to the importance of aid for innovation. The European Union as one of the largest donor organizations handles the technological development in African countries as a priority, and their close trade and aid relations have been extended with research and development cooperation, too. The main aim of this exploratory study is to analyze the research and development cooperation between the EU and Africa. Our findings based on the investigation of the aid for innovation (between 2002–2016) and Horizon 2020 projects pointed out: 1. around ¾ of the total aid for innovation provided to Africa is from the European Union, but it is only around 1 per cent of the total African bilateral aid and characterized by volatility; 2. the recipient countries of aid for innovation are concentrated but change in time; 3. the most supported sectors are agricultural research, research/technological institutions, medical and environmental research; 4. there is strong concentration of participating countries in the case of H2020 projects, and the targeted sectors of the implemented projects are similar to those of aid for innovation.

Abstracts of the Articles

Interpreting the disintegration of the eurozone from the perspective of state-centric approaches

ISTVÁN BENCZES

The crisis of the eurozone, the option of a Grexit, the fact of the Brexit or the steady ascent of Europe-sceptic parties all over the union is a clear indication of how the European integration is becoming a two-way process. Yet scholarly discourse has been mostly neglectful of explaining disintegration, and as a corollary, no clear theoretical, conceptual or methodological advances have been made in order to develop such a framework. The current article therefore, scrutinizes the process of disintegration from the perspective of so-called state-centric approaches of international relations and integration theories. It raises the question whether (neo)realism, classical and liberal intergovernmentalism and neoliberal institutionalism are useful conceptual frameworks in interpreting the disintegration of the eurozone. According to its main findings, state-centric approaches are able to explain divergence in state preferences, placing all those distributional conflicts in the focus of analysis which were either not part of European integration earlier or have had only a marginal impact.

Evaluation of Hungarian venture capital investments, in particular the investments of JEREMIE funds

RICHÁRD ILLÉS – ANITA LOVAS

The JEREMIE venture capital program terminated in the first half of 2016, and more than 350 companies received capital financing. In our research we created a sample of 200 firms with detailed company data and market information, and we examined the companies’ individual characteristics based on them. Regarding the investor side we evaluated the controlling tools and we noted that almost all of the funds gain majority ownership, what is more, they participate in the management board and supervisory board. The JEREMIE tender mainly aimed to help the development of companies located outside the Central Hungary area. The examination of the headquarters support this, however considering the business sites the activities are more concentrated to the central region. The venture capitalist not only finance newly developed products, a quarter of the companies also generates continuous income so it is not just about development and this justifies the investors’ intention to diversify. Companies aim to become international since 70 percent of them targets foreign markets.

A new basis for the development of Africa? The EU-Africa research and development cooperation

BEÁTA UDVARI – JÚLIA MEZŐ, URBÁNNÉ

Investment in science, technology and innovation may significantly contribute to sustainable development of developing countries – investments can be realized from own (financial and human) resources, or from sources coming from abroad (for example, foreign direct investment, loans, aid, technical cooperation, scholarship). Both the Millennium and Sustainable Development Goals – which determine the frames of international development cooperation (aid) – focus on the role of technology in development, so they also draw the attention to the importance of aid for innovation. The European Union as one of the largest donor organizations handles the technological development in African countries as a priority, and their close trade and aid relations have been extended with research and development cooperation, too. The main aim of this exploratory study is to analyze the research and development cooperation between the EU and Africa. Our findings based on the investigation of the aid for innovation (between 2002–2016) and Horizon 2020 projects pointed out: 1. around ¾ of the total aid for innovation provided to Africa is from the European Union, but it is only around 1 per cent of the total African bilateral aid and characterized by volatility; 2. the recipient countries of aid for innovation are concentrated but change in time; 3. the most supported sectors are agricultural research, research/technological institutions, medical and environmental research; 4. there is strong concentration of participating countries in the case of H2020 projects, and the targeted sectors of the implemented projects are similar to those of aid for innovation.

Abstract of the Article

Earnings and Skill Premia at Foreign-Owned and Exporting Firms of Manufacturing Industries In Hungary

KÁROLY ATTILA SOÓS

In Hungary, one of the most open member countries of the European Union, an obviously important question is how this openness „treats” the labour force. This question is being analysed in the article in the field of processing industries, focusing on foreign ownership of firms and exports. After reviewing the literature of the issues, we analyse, with econometric methods, how (partial) foreign ownership and export activities influence the earnings of the workers of the firms concerned; how skill premia of more qualified employees move at companies owned (part-owned) by foreigners.

The devil in the details – internationalisation of a hybrid company

KATALIN ANTALÓCZY – MAGDOLNA SASS

The internationalisation of state-owned enterprises is a relatively rarely analysed problem in spite of the importance of these companies in the world economy or in their respective economies. The state-owned companies of East Central Europe were expected to disappear after the transition process is over, however, there is a relatively large number of them, which “escaped” privatisation and is in majority or minority foreign ownership. The article analyses a minority state-owned company, the Hungarian Richter Gedeon. Though the case of this company has very special characteristics, it can call attention to the problems and further interesting details of the internationalisation of hybrid state-owned companies. We call the attention to the important role of management in shaping the independence of the company, the direct and indirect (as regulator) role of the state, through which it can determine or at least influence the operation of the company in question.

EU policy towards the Southern Mediterranean in light of the financial operations of the European Investment Bank

TAMÁS SZIGETVÁRI

Support for the economic development of the Southern Mediterranean region has been on the top agenda of the European Union for more than two decades. The consequences of the Arab Spring and the growing migratory pressure, however, have increased the importance of the development needs of the Mediterranean countries in recent years. The European Investment Bank (EIB) is the European Union’s development bank, which carries out an ever-growing development lending activity in the regions outside the EU. This activity is closely related to the EU’s external (neighbourhood and development aid) policies. This study analyses the lending activity of the EIB in the Southern Mediterranean region, and seeks to demonstrate the priorities and the means by which the EIB supports the economic development of the region, and its ability to keep up with the growing expectations it has to face.

JOGI MEllékLET

The Hungarian “Maltese Marriage case”, circus artists, magicians and shares: old cases in the light of the codification of some general part rules of the new Private International Law Act

Sarolta Szabó

On 4th April 2017, the Hungarian Parliament adopted the new Act No. XXVIII of 2017 on Private International Law (hereinafter referred to as “the New Code”; entered into force 1st January 2018) aimed at modernizing and refining the rules of the replaced Law Decree No. 13 of 1979 on Private International Law (hereinafter referred to as “the Old Code”). In this paper, some legal cases of the Old Code practice are presented and analyzed, which, according to the author’s hopes, not only give an insight into the sometimes complicated functioning of general law institutions but also to explain some of the reasons behind the New Code’s certain modifications.

Slovak-Hungarian cross-border migration/Slovensko-maďarská pohraničná migrácia

 Project reference number: HUSK 1101/1.2.1/0171

Lead Partner / Vedúci Partner:

Kopint Foundation For Economic Research,  Budapest

CB partner / Cezhraničný partner:

Kempelen Institute

Duration of the project (month) / Dĺţka projektu (vmesiacoch):12

The place of implementation of the project / Miesto fyzickej realizácie projektu: 

Budapest – Komarno, Slovakian-Hungarian cross-border regions
Budapešť – Komarno, slovensko-maďarský pohraničný región

Downloadable PDF files:

Form of application

Major parameters of the project

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Contact of the Hungary-Slovakia Cross-border Co-operation Programme 2007-2013:

http://www.husk-cbc.eu/