Legal insecurity, Clientelism, and corruption: The dangerous trend towards authoritarian rule.
Prime minister Viktor Orbán (Image: MIT press agency of the Prime minister)
Authoritarian regimes like the one of Viktor Orbán appear to be very attractive to Multinational Companies in times of crisis. The argument goes that through the direct connection to the president transacting business would be much easier and could be done without ifs and buts. But this is just one side of the coin. On the other side are looming corruption, low legal security, and nepotism which can endanger foreign direct investments. As a result companies without close ties to the government often lose all their competitive advantages. This applies especially to multinational companies that are unaware of the local power structures between economy and politics. Overall it is just some companies that are able to take advantage of the direct access to people in power. For the most part, investing in countries with such profound deficits in legal security and non-transparent power structures can put foreign investments at risk and prevent companies from entering that market at all.
Why can Hungary not be called a democracy anymore and what are the consequences of this trend for foreign investors? Dr. Hannes Meissner und Dr. Johannes Leitner take a deep look into the downfall of Hungary’s democracy and what this means for foreign multinational companies. The whole article in German can also be found on our Website.