Skip to main navigation menu Skip to main content Skip to site footer

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



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.


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


Author Biography

Marta Götz

Associate Professor at the Vistula University, Department of Business and International Relations

Barbara Jankowska

Associate Professor at the Poznań University of Economics and Business, Department of International Competitiveness

Anna Matysek-Jędrych

Assistant Professor at the Poznań University of Economics and Business, Department of International Competitiveness

Katarzyna Mroczek-Dąbrowska

Assistant Professor at the Poznań University of Economics and Business, Department of International Competitiveness


  1. Acemoglu, D., & Johnson, S. (2005). Unbundling Institutions. Journal of Political Economy, 113(5), 949-995.
  2. Alam, A., & Shah, S. (2013). Determinants of foreign direct investment in OECD member countries. Journal of Economic Studies, 40(4), 515-527.
  3. Brahim, M., & Dupuch, S. (2016). Foreign direct investments in Europe: are the East-West differ-ences still so noticeable?. European Journal of Comparative Economics, 13(1), 37-61.
  4. Brunetti, A., & Weder, B. (1998). Investment and Institutional Uncertainty: A Comparative Study of Different Uncertainty Measures. Weltwirtschaftliches Archiv, 134(3), 513-533.
  5. Busse, M. (2004). Transnational Corporations and Repression of Political Rights and Civil Liberties: An Empirical Analysis. Kyklos, 57(1), 45-66.
  6. Busse, M., & Hefeker, C. (2005). Political risk, institutions and foreign direct investment. HWWA Discussion Papers, 315, 1-28.
  7. Cem, T. (2013). The determinants of foreign direct investment inflow in the Central and Eastern European Countries: The importance of institutions. Communist & Post-Communist Studies, 46(2), 287-298.
  8. Chidlow, A., Salciuviene, L., & Young, S. (2009). Regional determinants of inward FDI distribution in Poland. International Business Review, 18(2), 119-133.
  9. Child, J., & Rodrigues, S.B. (2011). How organizations engage with external complexity: A political action perspective. Organization Studies, 32(6), 803-824.
  10. Cieślik, A. (2004). Determinanty przestrzennego rozmieszczenia firm z udziałem kapitału zagranicznego na terenie Polski. Bank i Kredyt, 4, 55-70.
  11. Colli, A., Mariotti, S., & Piscitello, L. (2014). Governments as strategists in designing global players: the case of European utilities. Journal of European Public Policy, 21(4), 487-508.
  12. Democracy Index 2016 Revenge of the deplorables (2017). Retrieved on September 11, 2017 from
  13. Éltető, A., & Antalóczy, K. (2017). FDI promotion of the Visegrad countries in the era of global value chains. Centre for Economic and Regional Studies HAS Institute of World Economics Working Paper, 229, 1-37.
  14. Fonseca, M., Mendonca, A., & Passos, J. (2007). The Investment Development Path Hypothesis: Evidence from the Portugese Case – A Panel Data Analysis. School of Economics and Manage-ment, Technical University of Lisbon Working Paper, 021/2007/DE, 1-28.
  15. Gauselmann, A., Knell, M., & Stephan, J. (2011). What drives FDI in Central-Eastern Europe? Evi-dence from the IWH-FDI-Micro database. Post-Communist Economies, 23(3), 343-357.
  16. Götz, M. (2016). FDI policies in Europe in the aftermath of the 2008+ crisis. Economics and Business Review, 2(1), 15-33.
  17. Goswami, G.G., & Haider, S. (2014). Does political risk deter FDI inflow?: An analytical approach using panel data and factor analysis. Journal of Economic Studies, 41(2), 233-252.
  18. Grosse, R., & Trevino, L. (2005). New Institutional Economics and FDI Location in Central and East-ern Europe. Management International Review, 45(2), 123-145.
  19. Harms, P., & Ursprung, H. (2002). Do Civil and Political Repression Really Boost Foreign Direct Investment?. Economic Inquiry, 40(4), 651-663.
  20. Hosseini, H. (2005). An economic theory of FDI a behavioral economics and historical approach. The Journal of Socio Economics, 34, 528-541.
  21. Iwasaki, I., & Tokunaga, M. (2014). Macroeconomic Impacts of FDI in Transition Economies: A Meta-Analysis. World Development, 61, 53-69.
  22. Jackson, G., & Deeg, R. (2008). Comparing capitalisms: Understanding institutional diversity and its implications for international business. Journal of International Business Studies, 39(4), 540-561.
  23. Jacobs, A.J. (2017). Nested dependent city-regions: FDI, uneven development, and Slovakia’s Brati-slava, Nitra, Trencin, Trnava, and Zilina city-regions. Journal of Urban Affairs, 1-19.
  24. Jensen, N. (2003). Democratic Governance and Multinational Corporations: Political Regimes and Inflow of Foreign Direct Investment. International Organization, 57(3), 587-616.
  25. Kersan-Skabic, I., & Orlic, E. (2007). Determinants of FDI Inflow in CEE and Western Balkan Countries (Is Accession to the EU Important for Attracting FDI?). Economic and Business Review, 9(4), 333-50.
  26. Lee, J-Y., & Mansfield, E. (1996). Intellectual Property Protection and U.S. Foreign Direct Invest-ment. Review of Economics and Statistics, 78(2), 181-186.
  27. Medve-Bálint, G. (2014). The Role of the EU in Shaping FDI Flows to East Central Europe, Eastern Enlargement Ten Years On: Transcending the East-West Divide?. JCMS Special Issue, 52(1), 1-16.
  28. Miller, T., & Kim, A.B. (2017). 2017 Index of Economic Freedom. Institute for Economic Freedom, The Heritage Foundation.
  29. Mueller, J.W. (2014). Hungary’s election offers some disturbing lessons for Europe. Retrieved on September 11, 2017 from
  30. Nölke, A., & Vliegenthart, A. (2009). Enlarging the varieties of capitalism: the emergence of de-pendent market economies in East Central Europe. World Politics, 61(4), 670-702.
  31. North, D.C. (1991). Institutions. The Journal of Economic Perspectives, 5(1), 97-112.
  32. Nunnenkamp, P. (2001). Foreign direct investment in developing countries: What policymakers should not do and what economists don’t know. Kieler Diskussionsbeiträge, 380, 1-19.
  33. Oman, C. (2000). Policy Competition for Foreign Direct Investment A Study of Competition among Governments to Attract FDI. OECD Development Centre Studies, 1-130.
  34. Paul, A., Popovici, O.C., & Calin, C.A. (2014). The attractiveness of CEE countries for FDI. A public policy approach using the TOPSIS method. Transylvanian Review of Administrative Sciences, 42, 156-180.
  35. Poland elections: Conservatives secure decisive win (2015). Retrieved on September 11, 2017 from
  36. Popovici, O.C. (2015). Assessing FDI determinants in CEE countries during and after transition. Annals of the University of Oradea, Economic Science Series, 24(1), 113-122.
  37. Popovici, O.C. (2016). Determinants of FDI in the new EU member states. Romanian Economic and Business Review, 11(2), 173-182.
  38. Rodrik, D. (2017). Populism and the Economics of Globalization. Centre for Economic Policy Re-search Discussion Paper, 12119, 1-44.
  39. Sardi, T. (2010). Parliamentary elections in Hungary- The results and political implications. Re-trieved on September 11, 2017 from
  40. Shatz, H., & Venables, A.J. (2000). The geography of international investment. World Bank Policy Research Working Paper, 2338.
  41. Shi, W.S., Sun, L.S., Yan, D., & Zhu, Z. (2017). Institutional fragility and outward foreign direct investment from China. Journal of International Business Studies, 48(4), 452-476.
  42. Stawicka, M.K. (2014). Determinants of Foreign Direct Investment Inflow in Central and Eastern European Countries. Oeconomia Copernicana, 5(2), 7-20.
  43. Szadkowski, S. (2017). Polska liderem inwestycji zagranicznych w regionie. Retrieved on September 11, 2017 from
  44. Szanyi, M. (2016). The reversal of the privatization logic in Central European transition economies: an essay. Acta Oeconomica, 66(1), 33-55.
  45. Ślusarczyk, B., & Kot, S. (2012). State Aid for Foreign Direct Investment in Poland. The Business Review Cambridge, 20(1), 130-137.
  46. Wei, S.J. (2000). How Taxing is Corruption on International Investors?. Review of Economics and Statistics, 82(1), 1-11.


Download data is not yet available.