Political Favoritism, Public Funds and Manufacturing Firm Performance in Hungary

Using financial report data and local election results, we analyze political favoritism to uncover the political–economic pattern of public subsidies in Hungary between 2010 and 2023. The results indicate that firms’ access to central government funding is positively and robustly affected by the political alignment of the municipal location of its corporate headquarters. The positive effects are particularly strong in selected cities with corresponding political background. The capital city plays a special role in political developments. We also identify a political business cycle, showing that firms face easier access to subsidies prior to parliamentary elections.