The Multinational Enterprise, EU Enlargement and Central Europe: The Effects of Regulatory Convergence

198 Pages·2003·2.19 MB·English

by  Yusaf H Akbar (auth.)

The Multinational Enterprise, EU Enlargement
and Central Europe
Also by Yusaf H. Akbar
GLOBAL ANTITRUST: Trade and Competition Linkages
The Multinational
Enterprise, EU Enlargement
and Central Europe
The Effects of Regulatory Convergence
Yusaf H. Akbar
CERAM Graduate School of Management and Technology
Sophia-Antipolis
France
© Yusaf H. Akbar 2003
Softcover reprint of the hardcover 1st edition 2003 978-0-333-91988-0
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No paragraph of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency, 90
Tottenham Court Road, London W1T 4LP.
Any person who does any unauthorised act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted his right to be identified
as the author of this work in accordance with the Copyright, Designs and
Patents Act 1988.
First published 2003 by
PALGRAVE MACMILLAN
Houndmills, Basingstoke, Hampshire RG21 6XS and
175 Fifth Avenue, New York, N.Y. 10010
Companies and representatives throughout the world
PALGRAVE MACMILLAN is the global academic imprint of the Palgrave
Macmillan division of St. Martin’s Press, LLC and of Palgrave Macmillan Ltd.
Macmillan® is a registered trademark in the United States, United Kingdom
and other countries. Palgrave is a registered trademark in the European
Union and other countries.
ISBN 978-1-349-42430-6 ISBN 978-0-230-00101-5 (eBook)
DOI 10.1057/9780230001015
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources.
A catalogue record for this book is available from the British Library.
Library of Congress Cataloging-in-Publication Data
Akbar, Yusaf H., 1969–
The multinational enterprise, EU enlargement and Central Europe:
the effects of regulatory convergence/Yusaf H. Akbar.
p. cm.
Includes bibliographical references and index.
1. International business enterprises—European Union countries—
Management. 2. Industrial laws and legislation—European Union
countries. 3. Europe—Economic integration. 4. European Union—
Hungary. I. Title: Multinational enterprise, European Union enlargement
and Central Europe. II. Title.
HD62.4 .A38 2002
338.8′884—dc21
200208749
10 9 8 7 6 5 4 3 2 1
12 11 10 09 08 07 06 05 04 03
Contents
List of Tables and Figures ix
Preface xi
1 Introduction 1
1.1 Introduction 1
1.2 Methodological Issues 5
1.3 The Case Studies: Market Serving FDI 6
1.4 Structure of the Book 7
2 Setting the Scene 11
2.1 Introduction 11
2.2 The Relationship between IPE and IBS 12
2.3 The IBS Literature and the Development
of Theory of International Production 14
2.3.1 Differing Approaches to the Theory
of International Production 15
2.3.2 Controversies in the Theory of International
Production 21
2.4 Developmental Avenues in Understanding
the MNE 22
2.5 The Political Role of the MNE 23
2.6 The Contribution of European Studies 26
2.7 States’ Preferences and Policies towards MNEs 31
2.8 An Interdisciplinary Synthesis of IPE and IBS
Understanding of the MNE 33
2.9 Conclusion 35
3 Regulatory Convergence: Processes and Dynamics 37
3.1 Introduction 37
3.2 The Current State of the Art 39
3.3 Definitions and Theoretical Propositions 41
3.4 The Model of the MNE and Regulatory Convergence 43
3.5 Bringing the Politics in to Regulatory Convergence 47
3.6 Conclusions and Implications 49
v
vi Contents
4 The Empirical Setting: EU Enlargement and the
Process of Regulatory Convergence 53
4.1 Introduction 53
4.2 EU Integration and Regulatory Convergence:
a Brief Narrative 55
4.3 Economic Transition in Central and East Europe
and the MNE 59
4.3.1 Unpredictable Changes and Differing
Trajectories 59
4.3.2 The General Features of ECE Political
Economies before 1989 61
4.3.3 Steps towards Market Economies 62
4.4 The European Union Response to the Changes
in Central and East Europe 64
4.4.1 The Europe Agreements 66
4.4.2 The Accession Process 66
4.5 FDI in Hungary 69
4.6 Public Policy and FDI 74
4.7 Summary 75
5 Case Study Methodology 77
5.1 Introduction 77
5.2 Hypotheses 77
5.2.1 The Relationship between FDI
and Regulatory Convergence Again 79
5.3 Case Studies 80
5.4 Case Study Material 82
5.5 Conclusion 87
6 Banking and Financial Services 89
6.1 Introduction 89
6.2 Private-sector Banking in Hungary
since 1989 89
6.3 FDI in the Banking Sector 94
6.4 Dilemmas Despite the Arrival
of Foreign Banks 96
6.5 Legislative Change and Foreign Banks 100
6.6 MNE Bank Strategy and Regulatory
Convergence 100
6.7 Conclusions 104
Contents vii
7 The Electricity Sector 107
7.1 Introduction 107
7.2 Development of the Electricity Sector 109
7.3 Regulatory Issues 117
7.4 The Role of Foreign Ownership and Regulatory
Convergence 120
7.5 Conclusions 122
8 Telecommunications 125
8.1 Introduction 125
8.2 Technological Convergence and
Telecommunications Services 126
8.3 Telecommunications in Hungary 130
8.3.1 Fixed-line Telephony 132
8.3.2 Mobile Telephony 137
8.3.3 Data Communications Services 138
8.3.4 Internet Services 138
8.3.5 Cable Television Services 139
8.3.6 Terrestrial Broadcasting 139
8.3.7 Public Policy and the Development
of the Telecommunications Sector 139
8.3.8 Act 40 of 2001 on Communications 141
8.4 Ownership Structures in the Hungarian
Telecommunications Sector 142
8.4.1 MATÁV Group 142
8.4.2 Vivendi Group 143
8.4.3 Other Foreign Companies 143
8.4.4 Equipment Manufacturers 144
8.4.5 Future Outlook 145
8.5 The Link between MNE Presence and Regulatory
Convergence 145
8.6 Conclusions 147
9 Conclusions 149
9.1 Introduction 149
9.2 Banking Services 151
9.2.1 The Development of the Hungarian
Banking Sector 152
9.2.2 The Regulatory Environment 154
viii Contents
9.3 Electricity 155
9.3.1 Market Structure and Foreign Ownership 156
9.3.2 Regulatory Convergence and FDI 157
9.4 Telecommunications 158
9.4.1 Market Structure and Foreign Ownership 159
9.4.2 Regulatory Convergence and FDI 160
9.5 Policy-making Implications 161
9.6 Concluding Thoughts and Future Research 163
9.6.1 Can our Research be Generalized? 163
9.6.2 What are the Shortcomings and Limits
to our Research? 166
9.6.3 Implications and Suggestions for Future
Research 167
Notes 171
References 185
Index 191
List of Tables and Figures
Tables
4.1 FDI in ECE by recipient countries in percentage
terms 70
4.2 Enterprises with foreign holding by company
size, 1999 71
4.3 Value added, net sales and investment in Hungary
(1992–99) 72
4.4 Foreign trade and the contribution of MNEs
in Hungary (1994–99) 72
4.5 Exports and imports by country of origin (1998
and 1999) in percentage terms 73
4.6 Regional distribution of FDI by countries of origin
in percentage terms 74
5.1 FDI motives by sector and economy matrix 78
6.1 Foreign and domestic shareholdings within
the Hungarian banking sector 92
6.2 Top Hungarian banks 93
6.3 Branch numbers by bank in Hungary 93
6.4 Credits to the central government – percentage
of total bank assets 97
6.5 Percentage of total household deposits
(and household loans) held by individual
Hungarian banks 98
7.1 Ownership of the Hungarian electricity sector
by nationality, December 2000 113
7.2 Operating performance of electricity companies 116
8.1 Total income of the telecommunications sector 131
8.2 Trading profit of the telecommunications sector 131
8.3 Investments in the telecommunications sector 132
8.4 Main operating figures for telecommunications
companies in Hungary 133
8.5 Local telephone operators in Hungary 136
ix