Külgazdaság Vol. 11-12/2019

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


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


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


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


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.

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