The PoliLv Research Wiorking Paper Series disseminates the lindings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. 7hue papers carry the names of the authors and should be used and cited accordingly. The findings, interpretations, and conclusions are the authors' own and should not be attributed to the World Bank, its Executive Board of Directors, or any of its mlember countries.

Clusters have attracted much attention in the recent past. Other than ever growing academic interest, clusters have also become primary targets of development policy. Various documents of the EC 1 expressed strong confidence in clusters being exceptionally suitable drivers of economic growth, innovation, and competitiveness. National governments in addition to the EC supported policies designed to promote the process of clustering and the establishment of cluster organizations. Another important string of literature and policy practice is foreign direct investment (FDI) attraction and the development of local linkages (most importantly supplier networks) of foreign investment enterprises (FIEs). Both structures, clusters as well as widespread supplier networks, have common features. Most importantly, both need sufficient numbers of potential collaborators. Both can be developed most successfully in regions where economic activity is vivid and within which enterprising and cooperation have traditions. Clustering processes seem to be especially strong in businesses producing complex products. Labor division has large potential also internationally in the most globalized industries, like electronics-ICT or the automotive industry. Hot spots of these industries may effectively attract firms and investments from a fairly wide geographic area.Agglomeration of economic activity is a phenomenon which has occurred as long as human history. Centers of active and vibrant economic development and welfare have attracted various businesses for centuries. As early as the work of Marshall (1890), there has been an awareness of the importance of geographical proximity in determining the location of industrial activity. Marshall argued that clusters develop as a consequence of three factors (a) the presence of a skilled local labor market, (b) key inputs from suppliers, and (c) rapid know-how transfer 1

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The main ambition of this study is to explain the unexpected change in the transition process of some Central and Eastern European (CEE) countries starting in the second half of the 2000s. Special attention is paid to changes in and the attitudes of governments toward state ownership. Although statist approaches gained momentum in the economic policy of various states in and after the 2008/2009 crisis, this did not mean a fundamental reorientation expressed in changes in the main economic conditions such as ownership patterns. Nevertheless, governments in some CEE countries seem to flirt with such ideas too in the general policy of increasing state economic intervention. The privatisation process was stopped and in a number of cases, formerly privatised assets were re-nationalised. Governments strengthened their influence in the governance structure in mixed-ownership companies. The main body of the present paper provides a better understanding of this change in state property policies. We also call attention to the risks of a reversal of the privatisation logic. An increasing role of the state as proprietor may today strengthen similar negative political and economic consequences and risks as the ones against which the privatisation agenda of the 1990s was suggested. It can reduce competition, give way for political and personal rentseeking, and weaken the functions of market economic institutions.

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Varieties of development paths in post communist countries with special regard to the transition in HungaryTransition in Central and Eastern Europe was carried out in various ways. However, the different countries' current economic structure, institutions and main economic performance measures are rather similar. Central-and Eastern European countries underwent two major systemic changes in the 20th century. Both of them were directed by some kind of uniform ideological background. In the case of Central Europe the socialist transition was engineered to fit Soviet models and political expectations. This doctrinaire policy lasted for a long period in some countries (Czechoslovakia, Bulgaria or the GDR), while Yugoslavia, Hungary and Poland experimented with variations to the model in order to overcome some of the most severe bottlenecks of the socialist economic system (e.g. lack of price orientation, low level of working morale and incentives). Nevertheless, strong state paternalism, soft budget constraints, isolation from world markets and international competition remained in place. Still, the communist experience of Central-European countries was not totally uniform. The question asked is whether these countries follow a specific kind of development model? What seems likely is that they differ substantially from CIS countries in many aspects. But they also seem to differ from existing models of capitalism more than they do from each-other. Based on this information, the varieties of capitalism literature assumes that such a model does indeed exist. However, no comprehensive positive description of the model has so far been provided. This paper tries to define the main elements of the Szanyi Miklós a Debreceni Egyetem Miklós SzanyiThe second systemic change was back to a market economy. At the very beginning of the process the Washington Consensus was still in place and international organizations and advisers recommended the neoliberal transition treatment expressed in the acronym SLIP (stabilization, liberalization, institution building and privatization). Although advisers' opinions changed rather slowly, the various transition economies applied SLIP with wide variations in sequencing and timing. Some elements were postponed or never implemented. In the case of institution building a large variety of models was used. Hence, transition economies have developed in largely different ways during the past 25 years. Uniformity has remained in place only in terms of international organizations and financial institutions. These have continued to evaluate transition and economic performance using sometimes rather arbitrary, uniform schemes of measurement.Thus, after almost 25 years the transition process has created quite differing new market economic systems in Central and Eastern Europe. At the same time, new branches of economic thought have become established that compared the transition process and the variety of capitalist systems in order to find best practices. The varieties of capitalism (VoC) literature ...

Abstract:A new empirical model is presented in this paper with respect to the productivity spillover effects of foreign direct investment (FDI) by focusing on the multi-layered structure of industrial classifications. In this model, the market presence of horizontal FDI in a host country is expressed using multiple spillover variables with a nested structure corresponding to the aggregated level of industrial classification. Using large-scale firm-level data from Hungary, we estimated the nested variable model and verified horizontal FDI spillover effects that cannot be captured with the conventional model having a single horizontal variable.

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