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The transition of the Baltic States. Why is Estonia the most successful?
133-144Views:189The study addresses the results of the Baltic States in the first phase of the transition, focusing on the process of stabilization, liberalization, privatization and institutional reforms. The paper summarizes the difficulties and the economic policy reactions, which built the basis for later successful development. The three analyzed countries have several similarities (country size, geopolitical situation, resources, Soviet heritage) so the discrepancies in the level of economic development can probably be explained by the different paths of transition. The author attempts to answer the question, how a coherent economic policy contributed to the Estonian transition, which proved the most successful.
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Political Economy of Fiscal Reform in Central and Eastern Europe
66-75Views:77The reform of public finances has been at the centre of the post-socialist transition of Central and Eastern Europe since the early 1990s. At various stages of the transition, the reform process encompassed the entire gamut of public finances: the national budget, sub-national finances, extrabudgetary operations, and state-owned financial and non-financial enterprises. For the most part, fiscal reform was a non-linear stop-and-go process – often characterised by backtracking as well – and was uneven across countries. Moreover, unlike most reform experience in the rest of the world, fiscal reform in this region took place against the backdrop of a radical break, as sovereign countries emerged from a colonial past following the collapse of the Soviet Union. An important milestone was reached in 2004–2007, when all ten countries covered in this article became members of the European Union. The purpose of this article is to discuss fiscal reform in Central and Eastern Europe from the perspective of political economy. Following an overview of basic reform trends, the article focuses on the principal drivers and impediments to reform in the region. To conclude, the ingredients of successful reform are examined. The article does not provide an exhaustive inventory of reform measures, nor does it offer a survey of broad political economy issues prior to or during the transition period. Country references are intended to serve as stylised illustrations of main points, rather than as a comprehensive documentation of reform episodes.
Journal of Economic Literature (JEL) classifications: H1, H3, P2, P52.
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The power of path dependence? State capacity and autonomy in East Central Europe during transition
Views:130The paper examines development of state capacities and autonomy in East Central Europe during transition, and attempts to establish a relation between state characteristics and trajectories of economic transformation, especially with regard to privatisation and FDI. The assertion is that the quality of state capacities and the degree of state autonomy, although changing over time, mutually reinforces the formulating of economic policies, and hence in structural transformation. Thus, state characteristics are important determinants of transition outcome, but are themselves affected by structural economic changes.
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Varieties of development paths in post communist countries with special regard to the transition in Hungary
5-25Views:126Transition in Central and Eastern Europe was carried out in various ways. However, the different countries’ current economic structure, institutions and main economic performance measures are rather similar. The question asked is whether these countries follow a specific kind of development model? What seems likely is that they differ substantially from CIS countries in many aspects. But they also seem to differ from existing models of capitalism more than they do from each-other. Based on this information, the varieties of capitalism literature assumes that such a model does indeed exist. However, no comprehensive positive description of the model has so far been provided. This paper tries to define the main elements of the CEE capitalist models. These are small open economies, with close integration into the world economy through foreign investments, a relatively limited and declining role of state redistribution, the problems of dual economic structure and insufficient job creation, a relatively large shadow economy and “business capture”-type cronyism. Further research is required to properly describe the elements and interactions among them.
Journal of Economic Literature (JEL) classifications: D72, E65, P31
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The future of Russian outward foreign direct investment and the eclectic paradigm: What changes after the crisis of 2008–2009?
31-54Views:138This article explores the future of Russian outward foreign direct investment in the aftermath of the crisis of 2008–2009. As it is too early to analyse the full impact of the crisis, it develops hypotheses about the degree of slowdown in the foreign expansion of Russian transnational corporations. It uses an extension of the eclectic paradigm to home country advantages (competitive environment, business environment, development strategy, State involvement) applied to a comparison of the Russian Federation with other economies in transition as an analytical tool. Systematic differences between transnationals from the Russian Federation (global firms, based on natural resources, aiming for vertical integration of assets) and from new European Union member countries (regional firms, based on downstream activities or services, aiming for horizontal integration) allow us to formulate more solid conclusions about the future of the Russian firms facing lower export prices, lower market capitalizations and higher debts. In turn, this article argue that a comparison with the large emerging economies of Brazil, China and India, under the acronym of BRIC can be less useful in the current context, as these economies are significantly less affected by the crisis of 2008–2009 than the Russian Federation; hence they can not expect a slowdown in their outward foreign direct investment similar to that of Russian transnationals.
JEL: F23; F21; O52; P29
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The emergence of digital transformation in the automotive industry - Industry 4.0 in Hungary
3-28Views:379It is no exaggeration to say that the digital transformation can be seen as both a paradigm shifts and a real technological revolution (Perez, 2010, Mergel, et al., 2019). In order to get to know the preparedness of the Hungarian automotive industry players in the topic, we conducted an empirical research in October - December 2020. The main goal was to determine the level of automotive actors in the digital transformation process. Company leaders were primarily asked about their progress in the digital transition process, its opportunities and challenges, organizational culture, and potential human resource management responses. This study focuses on the digital transition concentrating on the following dimensions: strategy and leadership, human resources, business processes, supply chain, manufacturing, products and services. Based on the results, we classified the examined Hungarian automotive industry actors into clusters.
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Analysis of labor market in Northern Hungary
84-102Views:210The aim of the paper is to reveal the main causes of unemployment and understand the labor market situation in Northern Hungary, as well as quantify and evaluate the changes in the employment structure. The main concern is about the changes in the number of registered job-seekers in Hungary and in particular, in the North Hungarian region. The author uses several tools to investigate this issue, such as shift-share analysis, linear regression, Lilien-index and Beveridge-curve. The Lilien-index suggests that in Northern Hungary the flow of sectoral labor force has exerted less and less influential power on employment since the transition. Job vacancies and the high number of unemployed do not meet in Northern Hungary; the reason for that is the inadequate qualification level of the unemployed. The labor market position of the North Hungarian region is determined by the specific socio-economic situation resulting from the transition, so it will be useful the regionally differentiated employment policy in Hungary.
Journal of Economic Literature (JEL) codes: J21, R23
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From mud-hut to microprocessors: The unified growth theory
29-50Views:97The Unified Growth Theory attempts to explain economic growth in the long run within a single framework. Accordingly, it is expected that a successful unified theory is capable of modeling the transition among different economic regimes. In this study, after identifying the main features of the three growth regimes (Mathusian, post-Malthusian and sustained economic growth), we review two typical unified growth theories. While the Hansen-Prescott model seeks to explain how the transition occurred, the Galor-Weil model focuses on the causes and interrelatedness of the observed phenomena.
JEL classification: N10, O41
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The shadow price of childbearing and the total fertility rate in Hungary
31-61Views:193The total fertility rate has been declining sharply in Hungary since the democratic transition. Moreover, the rate has been well below the replacement level since the second half of the 1980’s. It is therefore relevant to investigate the underlying factors behind the permanently low level and continuously declining trend in the rate. In this article, based on Walker (1995), I present the time series of the shadow price of childbearing in Hungary, with which I estimate the total cost incurred by the first-born child, using empirical data. I introduce the connection between the total fertility rate and the increasing mean age at birth. Subsequently, I first compare the tempo and parity-adjusted total fertility rate to the shadow price of childbearing, and then conduct a partial analysis. Based on the results, I recommend measures for public decision-makers that could positively incentivize childbearing
Journal of Economic Literature (JEL) kódok: J11, J13
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Institutional diversity and economic performance
Views:76Definition and role of institutions. Institutions are diverse: examples from OECD countries. Does institutional diversity matter for comparative economic performance? The problem of measurement. Do institutions tend to converge or diversify further? What are the driving forces? What did we learn from institution building in transition economies? Need for a better understanding of interactions between institutions and policies. The OECD work and
experience. Conclusion: the need for a vision. -
Protecting the Architectural Heritage and Economic Strategy
18-28Views:110This essay advances five theses explaining the desolate state of the architectural heritage in Hungary. It also addresses the issue of why two decades of transition was not sufficient to remedy the shortcomings of four decades of socialism. In the second part of the study we attempt to draft a strategy that could help overcome these difficulties. It aims at a combination of business, municipal and civil society activities guided by a nationally coordinated plan. Following these guidelines the architectural heritage in Hungary could be transformed into an asset instead of a liability, as has been the case in many other European countries.
JEL classification: I38, O21, P20, R11
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Agricultural employment in Hungary and the North-Great Plain region
Views:114The transition deeply effected the economical sectors of Hungary. The role of agriculture within the economy reduced, its contribution to the GDP is now less than 4%. These developments caused considerable changes within the structure of employment in agriculture, a process which corresponds to EU trends. The North-Great Plain Region is situated in the northe-east part of Hungary and can be considered a typical agricultural area. In this region the GDP per capita has been one of the lowest in Hungary for several years. The reasons for this are as follows: the dominant role of agriculture in comparison with other sectors of the economy, the low profitability of agricultural production and related activities and the high ratio of less developed areas within the region. Agriculture plays an important role in this region because it provides workplaces for local people, reducing their migration into big towns and contirbutes to the rural development of the region.
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Exit strategies of family businesses in Hungary
43-63Views:211The study aims to examine the ownership transmission strategies in the context of family firm succession in Hungary. The successful transfer of ownership, management and acquired experience at a family firm represents one of its greatest challenges; however, there is still a lack of understanding of the unique future strategies and succession outcomes of Hungarian family businesses. As a significant proportion of the founders of those family businesses established after the regime change (post-1989) are now reaching retirement age, a study of how such business organisations plan to survive the generational transition is highly relevant. This study applies a mixed methodology of quantitative and a qualitative analysis (e.g.,
in the case of IPOs). The results show that the average age of the examined family firm CEOs is higher than the global average and the majority of them plans to keep ownership and management within the family. Other exit strategies (i.e. initial public offerings, mergers and acquisitions) are not typical of the examined sample. -
Our national economy after the transmission
55-84Views:82This study looks through the key indicators of the Hungarian economic transition from the 90s until now. To make the Hungarian processes more understandable, we show it in international comparison with data from other post-socialist EU members. We then examine how the social processes and the economic changes fir together, emphasizing among other things the changes in health, education and cultural life.
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Corporate and state roles in Hungarian industrial development after the nineties
7-22Views:97In the nineties the development of Hungarian industry was first disappointing, but later it was definitely rapid and successful. Several publication have described the process of this industrial transition in general as well as in the light of the foreign market performance of Hungarian industry. However, the majority of the analyses were based on stistical surveys and the participants of the processes were somewhat neglected. For this reason the present study examines the influence of major corporate participants and that of the government on the development of the industry, as well as their behaviour, and conclusions are drawn as regards the strategic potentials of Hungarian industry after 2003 and 2004. First the study offers an overview of the most important corporate participants of the Hungarian industry, then it seperately discusses the peculiarities of the market presence of foreign industrial firms, in particular to what extent the European Union's ambitions, taking shape from the year 2000, aiming at improving competitiveness can be reflected in Hungarian economic policy. Thus the question is whether we can expect the revival, to some extent, of Hungarian industrial policy which has appeared to be lifeless since 1996, and whether we can expect state participation in the promotion of the development of Hungarian industry which should be of European standards and yet more active than round the turn of the century.
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Chance for a more liveable Hungary
5-18Views:89This study examines the question of how successful the transition of Hungary in social fields has been over the last two decades. It comes to the conclusion that, besides the successes in the economy and the deficits in the social spheres, the reserves of the first one and a half decades are approaching exhaustion. The accession to the EU creates a chance, but not a guarantee, for the next period to be a success. The challenges for the country are very different in 2007 from what they were in 1995. For this reason we try to show directions for sustainable growth and more fruitful social politics.
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Political budget cycles: fiscal cycle effects in state expenditures in Poland
47-62Views:108In this paper we aim to investigate what kind of role fiscal cycles played in the development of the state budget balances in Poland between 1989 and 2011. Overall, the results of the latest research have found that political budget cycles (PBC) are more typical in less developed countries with a shorter period of experience with democratic institutions, such as the post-socialist transition economies. Nevertheless, empirical studies point out that this phenomenon has been disappearing over time as voters learn how democratic institutions and political manipulation operate. However, this theory could not be proved by testing the pattern of Poland, neither in the case of budget balances nor for state expenditures. Despite the fact that some fiscal cycle effects were found in public sector wages and pensions in the election period of 1997 and 2001, these proved to be temporary, and simultaneously some other measures were identified that counterbalanced the effects of pork barrel spending. Overall, the cyclical evolution of the budget balances in Poland, particularly in the nineties, was not a result of political budget cycles.
Journal of Economic Literature (JEL) classifications: D72, E62, H3