Last Updated 12/10/01
Hungary is continuing to attract millions of dollars in fresh foreign direct investment each year as it prepares for
accession into the European Union in 2004. U.S. investors, in particular, are being encouraged to make new investments in high technology, in which the country is developing
a highly visible role as the regional center for Eastern Europe.
Case Study: Hungary Gateway to Europe 600 Million Consumers
U.S. investors recognize that Hungary is a natural gateway to the European Union and Central & Eastern Europe, a fast -growing combined market of 600
million consumers. Hungary's appeal includes its skilled and highly productive labor force, transparent investment code, attractive corporate tax rates, and other distinguishing
advantages.
Productivity, for example, is substantially higher than in Poland, Slovenia, the Czech Republic and Slovakia. This capability positions Hungary as the sixth-best country
in the world to develop high-tech industries, according to the Organization for Economic Cooperation & Development. Hungary also was the first country in the CEE to develop i
ntellectual property right laws on par with those in the United States in 1993; as a result U.S. investors have enjoyed more confidence and security in
their Hungarian investments. Foreign investors are no doubt encouraged by Hungary's historically strong GDP growth rate, which has led much of Europe over the past decade.
This year, GDP growth is projected to recover to 3.7 percent, up from the 3.3 percent level in 2002, and the outlook is for a return to even stronger growth over the next few
years. Hungary expects to join the European Union next year, which will bring a fresh infusion of investment and foreign trade interest.
Hungary was the first country in the region that introduced a EU-conformed investment incentive system from January, 2003. "Smart Hungary" is the theme for
the country's revitalized investment promotion efforts. The Hungarian government is offering substantial incentives to foreign investors, including tax holidays for up to five years.
Similarly, subsidies for investments in broadband capacity, and for worker training are a cornerstone of the nation's promotion efforts of its skilled workforce.
Already 45 of the world's top 50 multinational companies are present in Hungary. Companies partly or totally foreign owned in Hungary produced 45 percent of
added value of the total corporate sector in 2001. Also, 26 percent of the corporate sector's total workforce is employed by (partly or totally) foreign owned companies in Hungary in
2001
U.S. investors in Hungary are led by blue chip corporations like General Electric, which has made $1.1 billion in direct investment, followed by General Motors and
Alcoa; overall more than a dozen U.S. corporations — including majors like Flextronics and Ford-Visteon — have invested more than $100 million each in the country. Hungary is
focusing on further U.S. investment in the high technology industries, especially in the electronics, automotive, bio tech, electronics, information technology, medical and engineering
sectors, additionally to software development, R&D, logistics, distribution and call centers.
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