THE POLITICAL ENFORCEMENT OF LIBERALISM - BARGAINING, INSTITUTIONS, AND AUTO MULTINATIONALS IN HUNGARY

The demise of communism triggered large flows of foreign direct invest ment into Eastern Europe, This article examines the impact of recent c hanges in the international environment-the transformation of world pr oduction systems and the rise of neoliberalisn-on bargaining between m ultinational corporations and post-communist governments, It focuses o n the Hungarian automobile industry, one of the region's largest recip ients of FDI. The Hungarian case illustrates the ability of small, ope n, and geopolitically weak states to parlay shifts in the global envir onment into a bargaining asset. The ascent of lean production heighten ed pressure on auto MNCs to develop local supplier systems capable of fast delivery of components to East European subsidiaries. The pull of backward integration was particularly strong for Japanese producers, whose non-European status enabled Hungarian state authorities to secur e commitments to raising domestic content. Transplanting Japanese-styl e production in Eastern Europe proved less vexing for European MNCs, w hose status as EU-based companies freed them of local-content requirem ents and whose preexisting supplier networks obviated heavy investment s in the Hungarian components industry. But while Western auto produce rs enjoyed highly favorable terms of entry into Eastern Europe, even t hey could not elude the paradoxical effects of global changes on MNC/h ost state relations, The very eastward extension of the European Union 's nondiscriminatory rules that facilitated EU-based firms; entry into Hungary also permitted host state authorities to parry efforts by MNC s to obtain particularistic concessions after entry, The Hungarian cas e thus demonstrates that MNC/host state bargaining in the post-Cold Wa r period hinges more on the global positions of multinationals than on the structural vulnerabilities of capital-importing states (per depen dency theory) or the internal capacity of host states (per statist the ories).