ABSTRACT
This chapter aims to provide some evidence on the questions about the relationship of foreign direct investments (FDI) and regional differences in development levels and the concentration of business activity. Hungary is a small open economy, which started the transition process from socialism to the market economy in 1989. Hungary is an interesting test environment also, because during the communist era spatial structure of the economy was strongly influenced by government decrees. Foreign direct investments and the activity of multinational business largely contributed to major structural changes in the Hungarian economy after 1990. The chapter concentrates on the primary effects, since simple comparison of the spatial structure of FDI in Hungary and the level of development and economic strength of the various regions showed strong correlation. It concludes that spatial concentration of FDI has been and remained very high in Hungary throughout the 1990s and 2000s exceeding the concentration level of gross domestic product (GDP) production.
