2nd ICAI 2022

International Conference on Automotive Industry 2022

Mladá Boleslav, Czech Republic

Automotive GVCs in Czechia and Hungary – a comparative analysis Tamás Gáspár 1 , Magdolna Sass 2 , Jana Vlčková 3 Budapest Business School 1 Institute of International Business Economics Future Value Chain Centre of Excellency Diósy Lajos u. 22.-24., Budapest, 1165 Hungary Centre for Economic and Regional Studies and Budapest Business School 2 Institute of World Economics Tóth Kálmán u. 4., Budapest, 1097 Hungary University of Economics and Business 3 Department of World Economy nám. W. Churchilla 1938/4 130 67 Prague 3 Czech Republic e-mail: gaspar.tamas@uni-bge.hu 1 , sass.magdolna@krtk.mta.hu 2 , jana.vlckova@vse.cz 3 Abstract Czechia and Hungary are two economies, highly specialized in automotive production and engaged in automotive global value chains (GVCs) to a great extent. The main players in the two economies’ automotive industries are mainly foreign-owned: OEMs and suppliers mainly from Germany, although there are locally owned or controlled firms as well. In this paper, we analyzed and compare the backward linkages in the automotive GVCs of the two countries. We describe, what is the role of foreign OEMs and suppliers and domestic companies, and how these roles relate to each other? What is the role of OEMs in shaping these linkages? We rely on a combined methodology. First, we analyze the input-output matrixes in order to present the local and international links of the automotive industry and to estimate, in which activities local suppliers play an important role and from which countries the various inputs come. We supplement this quantitative analysis with a qualitative one: based on company interviews. According to our results, local linkages are different in the two countries, with low presence of locally owned companies in Hungary. However, industry averages conceal large differences between foreign-owned and local companies. Upgrading is present, though it is rather slow. Increasing R&D activities are mainly driven by foreign-owned firms, though even some local Czech suppliers have R&D units. Keywords: automotive industry, backward linkages, Czechia, Hungary JEL Classification: F21, F69, L62, F63 Acknowledgements This paper was created in the Centre of Excellence “Future Value Chains” in the Budapest Business School, University of Applied Sciences.

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