Discussion Papers 2002.
Regional Challenges of the Transition in Bulgaria and Hungary 62-77. p.
OLD AND NEW ELEMENTS IN THE SPATIAL
STRUCTURE OF HUNGARY IN THE 1990s
Ldszlo Hrubi
The spatial structure of the economy — the territorial distribution of the perform-
ance of the national economy — is a slowly changing system that, within market
conditions, usually resists short term effects and market disturbances. This conti-
nuity of the development of the spatial structure of the economy also entails that the
interventions — which, coming from the socio-economic interests, usually aim at
the moderation of the imbalances, the lagging of certain areas or the unequal mar-
ket chances of the actors — are only able to induce measurable effects and changes
in a longer time scale.
This stability, a spatial structure basically unchanged is characteristic of the de-
velopment of the Hungarian economy in the 1990s, although the turn in the begin-
ning of this decade changed, sometimes radically, a number of dominant factors.'
During the transition to the market economy, the inherited economic spatial
structure was the consequence of two large processes of historical scale. One is
historical development in the narrower sense, which was broken in many respects
by the other factor, the system of planned economy following World War II.
In the historically born spatial structure, the division line was the Danube River,
west of which a more industrialised region more closely following the European
urbanisation trends evolved, while in the areas east of the Danube agriculture was
the dominant factor in the shaping of the socio-economic (and settlement) structure
(Figure 1).
This division line separates so characteristic spatial units that during the break-
down of Hungary into regions one possible formation was the division into two
large regions, supplemented by the capital city, Budapest as the third region, as the
latter almost completely stands out from the Hungarian spatial structure.
The development zone of the socialist period, the southwest—northeast axis and
the areas north of it, was built on this structure. A significant difference is, how-
ever, the fact that the previous — "historical" — development was an organic one on
market basis, amounting to a more complex economy in the sectoral sense, while
the development will of the socialist period built a spatial economy operating in a
large, monocultural company system. This is why this latter heritage became the
industrial crisis zone in the Hungarian spatial structure from the end of the 1980s,
and the economic restructuring was successful only in those areas where it was
possible to build on, or return to, the "historical development".
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
Figure 1
Historical development zones of Hungary — advantages and disadvantages
Historical development
watershed
+
Development
-F
watershed of
Advantages („winners")
socialism era
Disadvantages („losers")
New development zone
Regions (NUTS 2 units): 0 Central-Hungary; 0 Central-Transdanubia; 0 West-Transdanubia;
0 South-Transdanubia; 0 North-Hungary; 0 North-Great-Plain; 0 South-Great-Plain
Counties (NUTS 3 units): 19 and Budapest capital city
Source: on base of the figure: Farago, L. 1999, p. 319.
It is evident that in the building out of the market economy in the 1990s, those
regions started in a better position which had belonged to the more dynamic zone
in both previous periods, and which were not transformed into monocultural areas
(which practically meant the dominance of heavy industry, in some places supple-
mented by light industry built on the female labour force).
The statistical data collection did not focus on indices of the performance of the
regional economies at that time, the starting position can be depicted by approxi-
mations. Table 1 is a collection of such indices, making the index of the so-called
economic health by counties (in order to allow comparison, in the table we in-
cluded the order of the counties measured with the GDP at the end of the decade). 2
If we look at the spatial units above 0 (the average) in the map, we can see that
all but one (Csongrad county) can be found in the area west of the Danube River,
and also the fact that every county, except two, of this large region, Transdanubia
were in a better than average position in 1991.
63
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
Table 1
Indeces of „economic health"in 1991 and GDP per capita in 2000 by counties
Index of economic health,
GDP per capita,
Name
1991
'000 HUF, 2000
value
rank size
value
rank size
Budapest
3.14572
1
2561
1
Pest county
0.47537
5
1025
10
Fejer county
0.27317
8
1664
3
Komarom-Esztergom county
0.48983
4
1093
7
Veszprem county
0.37768
7
1112
6
Gy6r-Moson-Sopron county
0.98477
2
1754
2
Vas county
0.64739
3
1499
4
Zala county
0.37797
6
1113
5
Baranya county
0.06105
11
993
11
Somogy county
0.08403
9
892
14
Tolna county
—0.31623
13
1084
9
Borsod-Abauj-Zemplen county
—1.06438
19
852
18
Heves county
—0.68228
15
925
13
Nograd county
—0.82933
17
714
19
Hajdii-Bihar county
—0.49599
14
929
12
Jasz-Nagykun-Szolnok county
—0.80256
16
874
16
Szabolcs-Szatmar-Bereg county
—1.68312
20
710
20
Bacs-Kiskun county
—0.27807
12
887
15
Bekes county
—0.82948
18
864
17
Csongrad county
0.06444
10
1088
8
Source: Nemes N., J. 1993. p. 261 (economic health) and calculated by author.
If we compare these figures to the data of 2000, we can also see that major spa-
tial structural transitions of the 1990s took place within this circle.
These advantages and disadvantages demonstrate a relative position, behind
which there was a national economy in need of a rapid renewal, on the brink of a
crisis situation (Figure 2).
In only two units, 3 in reality only in Budapest, was the average profit rate of the
businesses actually positive, whereas in many units the loss was significant. (In this
Figure 2 the two parts of Hungary divided by the Danube River are well separated:
the first eleven units are from Transdanubia or the capital city and Pest county.)
Even if economic privatisation had not been a primary political objective of the
change of social model, the balance sheets of the companies demonstrated by the
figure in themselves would have made that necessary, anyway.
The first new factor that has a potential to influence the development of the spa-
tial structure of the economy is thus privatisation. As the economic policy, for dif-
64
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
ferent considerations, chose the large shareholder—investor model as opposed to the
small shareholder — American type — ownership structure, privatisation made the
penetration of foreign capital the second new element shaping the spatial structure.
The presence of foreign — mostly large shareholder—investor type — capital was
usually accompanied by a strong export-orientation, which was initiated by the
economies of scale (the Hungarian internal market is rather small). This way the ex-
port capacity became the third factor shaping the spatial structure. Coming from the
above-said, the fourth factor was the (trans)formation of the sectoral structure of the
economy, structural modernisation, the growing importance of manufacturing indus-
try and financial—business services, which are both the primary recipients of foreign
capital and the most dynamic elements of the modern economy and growth.
Figure 2
Average of profit rates of economic units of the counties, 1991, %
Source: Report on regional processes, 1992. p. 73.
Privatisation and spatial structure
Privatisation means the sales of the economic companies in the portfolio of the state
property management organisation, which was done by the manager of the property
mostly by a market transaction — sales by tender. The sales were usually organised by
sectors (not by regions), primarily relying on large investors (as we have already
mentioned), i.e. mostly the total or the majority of the ownership was offered. Two
65
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
phases of the privatisation can be separated. The first one, until 1994, was the time of
mass sales, while the second — from mid-1995 until the end of 1997 — was the time of
the sales of the larger businesses (energy and gas suppliers, banks and insurance
companies etc.), also the minority ownerships remaining from the previous period.
The companies designated for privatisation necessarily showed a spatial distri-
bution ready by the beginning of the 1990s. The concentration of this structure is
shown by the fact that companies to be privatised could be found in only 7% of the
Hungarian settlements (primarily in Budapest 5 and the — larger — towns), the major-
ity of the settlements were not concerned by the privatisation.
The privatisation action thus did not directly modify the spatial structure. Direct
effects could have been when privations took place (firms privatised sooner and
their home regions could have had an advantage) or at what price. Actually neither
the effect of the former nor of the latter can be demonstrated. For example, Hajdd-
Bihar was among the rapidly privatised counties, still it did not profit much from
this situation later. On the other hand, a somewhat belated privatisation character-
ised Fejer or Komarom-Esztergom counties, which are now part of the core region
of economic growth.
In the first phase sales took place at usually 10-15% below the value of regis-
tered capital, and mostly followed the economic performance and market position
of the given company.
During the privatisation organised by sectors, regional development aspects
were hardly considered. We have to add that in the major part of the period there
was no institutionalised regional development system in Hungary, that was (re-
)created by the Act on Regional Development and Physical Planning in 1996. By
that time the majority of privatisation had already been done.
On the whole, only two aspects are worth mentioning. One is the fact that a
small part of the privatisation revenues was designated for regional development
purposes, certain amounts were allocated to the municipal and regional govern-
ments of the settlements where the companies were registered (based on the land
area of the plant, in some cases the size of the infrastructure). The other aspect is
that a serious condition connected to privatisation was employment, in order to
avoid the shock of unemployment.
The safeguarding of the jobs and the creation of new jobs was an understand-
able social political objective during the privatisation, also, in regional development
it is almost a primary condition, not only in Hungary but also in the practice of the EU
to date. It is well known at the same time that the growth in the efficiency (and profit
rate) of manufacturing does not increase, to the contrary, it decreases employment in
the sector and the labour force flows into the tertiary sector. The employment restric-
tion thus theoretically did not serve the rapid Hungarian modernisation, especially if
we consider that a significant source of the losses at the majority of the privatised in-
dustrial companies was over-employment, due to the lack of capital. This restriction
did not actually have any effect, because the new owners could only temporarily con-
sider this obligation.
66
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
Even though the action of privatisation did not directly touch the spatial structure
of the economy, its indirect effects are decisive. Following privatisation, the strategic
investors continuously "capitalised" the purchased companies, and they provided a
continuously safe financial background for the expansion of the company (not to
mention the fact that the expansion also means export-orientation and possibility, be-
cause the size of the Hungarian market is limited).
Foreign capital and spatial structure
The appearance of foreign capital in the spatial economy is important for two rea-
sons:
— both the organisational restructuring combined with the privatisation, and the
launch of the economy on a "marketable" growth track took place besides a
shortage of internal capital and the consequent lack of resources, thus the in-
flow and spatial structure of foreign capital considerably determined (and
still determines) the economic potentials of the regions and also their per-
formance in the longer run;
— the integration of foreign capital — even when it was not a real integration —
renewed the economic activity, introduced more advanced technologies,
products, operational systems and market behaviours.
At the closedown of privatisation, in the beginning of 1998, approximately
26,000 joint ventures with foreign share operated in Hungary — roughly every fifth
economic organisation with legal entity is a joint venture —, the total of their regis-
tered capital amounted to some 2,800 billion HUF, within which the foreign share
slightly exceeded 2,000 billion HUF. Compared to the beginning of 1994, the
number of businesses increased by about a quarter, whereas the total of registered
capital increased by 2.5 times and the foreign share tripled until early 1998.
After the end of the privatisation — and dominantly already in the second priva-
tisation phase — the spatial structure of the influx of foreign capital was primarily
determined by the development potential, perspectives and the expectations of the
free market investments in the given place. The geographical location of these is
the new development zone in Figure 1 above, the region often called the "Hun-
garian banana" (Table 2).
The inflow of foreign capital decreased regional disparities on the whole, but
did not amount to an essential spatial rearrangement. The spatial structural posi-
tions of 1990 are still valid, with slightly less deviation. Briefly depicting the situa-
tion, the capital city and the Central Hungarian Region are still dominant factors
(the index of foreign capital per inhabitant in Budapest was 5.9 times the country-
side average even in 2000), the secondary and more and more dynamic factor of
growth is Transdanubia, but South Transdanubia is declining within that, becoming
more and more similar to the Eastern regions which do not show many signs of a
67
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
breakthrough. In the circle of the latter, the situation of the South Great Plain is
improving and seems to be relatively stable also in the longer run.
The comparison of the spatial distribution and economic organisational concen-
tration of foreign capital shows characteristic paths of spatial diffusion.
Table 2
Foreign investment capital per capita of the regions and counties, 1995-2000
Foreign investment capital per capita
Name
value, '000 HUF
rank size
1995
1998
2000
1995
1998
2000
Budapest
383
706
898
1
1
1
Pest
110
252
353
5
3
2
Central Hungary
290
544
700
1
1
1
Fejer
99
184
234
6
5
6
Komarom-Esztergom
113
178
305
4
6
4
Veszprem
31
69
70
17
13
13
Central Transdanubia
80
144
199
3
3
3
GyOr-Moson-Sopron
169
335
286
2
2
5
Vas
153
224
312
3
4
3
Zala
68
73
65
11
12
15
West-Transdanubia
134
226
227
2
2
2
Baranya
82
117
63
8
11
16
Somogy
34
62
54
15
14
18
Tolna
19
27
34
19
20
20
South-Transdanubia
50
76
53
5
6
7
Borsod-Abatij-Zemplen
48
156
142
12
7
8
Heves
69
136
142
10
9
9
Nograd
37
50
61
13
17
17
North-Hungary
52
133
128
4
4
4
Hajdd-Bihar
76
124
98
9
10
10
Jasz-Nagykun-Szolnok
24
50
78
18
16
11
Szabolcs-Szatmar-Bereg
12
27
35
20
19
19
North-Great-Plain
38
68
69
7
7
6
Bacs-Kiskun
33
45
66
16
18
14
Bekes
36
58
73
14
15
12
Csongrad
83
153
143
7
8
7
South-Great-Plain
49
82
92
6
5
5
Hungary total
128
237
287
—
—
—
Provinces total
69
133
152
—
—
—
Source: Regional Statistical Yearbook, 1995, 1998, 2000. Budapest, Central Statistical Office
(different pages, calculated by author).
The type with balanced and probably lasting growth involves the Central Hun-
garian Region (especially the capital city, but also Pest county by now), also, the
catching up Central and West Transdanubian counties: Gyor-Moson-Sopron, Vas,
Fejer and Komarom-Esztergom will soon be here. At the same time, one county in
68
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
each countryside growth poles — Veszprem in Central Transdanubia and Zala in
West Transdanubia — are of lesser intensity and more fragmented than the average,
thus the presence of foreign capital is less expressed in the whole of their econo-
mies, the two regions are not coherent yet in this respect.
The remaining regions of Hungary do not get much from the favourable effect of
foreign capital. They are usually less attractive for foreign capital than the previously
mentioned regions, despite the support of the central state and the local will.
It is difficult to designate the really falling behind regions, as the concentrated in-
flux targeting the large-scale organisations (North Transdanubia and Hajdti-Bihar
county are the best examples) can remain, despite all seeming progress, devoid of
any spatial economic effect if not followed by the next levels on the size scale of the
businesses (small- and medium size enterprises). At the same time, the "South Great
Plain type", continuous but less concentrated diffusion of foreign capital (which
mostly affected the small- and medium size enterprises) can result in a more lasting
effect on the spatial economy.
In this circle, the most problematic issues from the aspect of the diffusion of for-
eign capital are South Transdanubia, a region falling behind, the "stability" of the
position of the North Great Plain, the concentrated capital acquisition of North Hun-
gary — which hardly modifies the former economic organisational structure —, but
actually the South Great Plain is in an unstable position, too, despite its favourable
geopolitical situation from the aspect of the European processes.
Export capacity and spatial structure
The dominant division line of the spatial structure, drawn by the presence of for-
eign capital, is still the division line between the capital city and the countryside,
but the situation is the opposite if we look at the level of industrialisation and the
industrial export capacity (Figure 3).
The Figure reveals that in the spatial structure of the Hungarian economy, the
level of industrialisation and the export capacity is at least as much of a dividing
factor as is the historical capital city—countryside discrepancy. The new phenome-
non, typical in the 1990s, is the fact that this effect became extremely influential.
The presence of foreign capital concentrated dynamic industrial growth almost ex-
clusively into the four counties in the upper right zone, while the rest of Hungary in
this respect is — borrowing the now famous French expression of the 1960s — the
"Hungarian desert".
Consequently the key issue of the spatial structure of the Hungarian economy —
and in a sense of the modernisation of the whole economy — is re-industrialisation,
evidently in the direction of manufacturing industry. Besides the fact that the growth
of manufacturing industry is an important factor in itself for both the whole of the
economy and the regional economy, there are two functional issues that make it even
more important:
69
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
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Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
— manufacturing industry is the dominant sector, the primary carrier of innova-
tion, and the innovative development is a necessary precondition for the eco-
nomic or spatial structural modernisation;
— manufacturing industry creates the primary demand and market for the other
important sector carrying the dynamics of growth, financial and business serv-
ices. These services are still primarily concentrated in Budapest (the GDP of
the financial and business services per inhabitant in Budapest is 5.21 times
higher than the Hungarian countryside average), but their spatial diffusion is an
inevitable precondition for the spatial spread and equalisation of the growth
(and export capacity) of manufacturing industry.
Sectoral structure of the economy and spatial structure
Table 3 is an illustration of the correlation mentioned above in connection with the
relation of industrialisation (export capacity) and the financial and business services.
As regards the sectoral structure of the economy, the development is character-
ised by a particular duality.
Budapest "got rid of the industrial character already in the first phase of priva-
tisation — by 1994 — and became part of the European urban network as a service
city, a service centre of international importance (the value of GDP in manufac-
turing industry in Budapest is only 19.4% higher now than the countryside average,
whereas that of the financial and business services — as we have already mentioned
— is 5.21 times higher than that). The development of the countryside is mostly
linked to the manufacturing industry, although — as it can be seen from the table —
the specific performance of financial and business services slowly follows that, the
spatial diffusion of the two sectors takes places parallel to each other (even the
rates of growth are rather similar). In the capital city—countryside relation, on the
other hand, practically no convergence has taken place in the latter sector.
This duality can become a problem because of the new trend of the world econ-
omy, which is characterised by the dichotomy (if you like, paradox) of globalisa-
tion and localisation, in which the international movement of capital (and the loca-
tion value of the regions in the world economy) is determined by the local devel-
opment of the economic environment (within that primarily the human capital and
the financial and business services).
Without the development of this, the capital attraction and the growth in manu-
facturing industry can decline, too, even in the Transdanubian areas that are the
core area of growth today.
71
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the
•
1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
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Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
The development of the spatial structure
(on the basis of specific GDP)
Between 1995 and 2000, the regional economic performance measured with the
specific GDP has roughly tripled in Hungary, and the territorial disparities behind
the average have usually grown, both in the capital city-countryside relation and
within the countryside.
As regards the capital city-countryside relation, the dynamics of Fejer, Koma-
rom-Esztergom, Gyor-Moson-Sopron and Vas counties, also the regions repre-
sented and determined by them, exceeded that of the capital city (and of the Central
Hungarian Region), a slow convergence could be seen, whereas all the other coun-
ties and regions showed a divergent tendency. The main tendency thus was that in
the field of regional economic performance measured with the GDP, the differen-
tiation between 1995 and 2000 mostly strengthened among the countryside areas,
within that especially at the level of the counties, not so much among the regions
(Tables 4 and 5).
In the progress of the spatial structure measured with the GDP, the above-
mentioned factors naturally cumulate, so practically no new element can be seen
here.
On the other hand, important correlations can be seen from the aspect of the de-
velopment of the future spatial structure, if we quantify the relationship among the
development of the factors examined so far (Table 6).
Table 4
Differences of GDP per capita by counties and regions, 1994-2000
Name
1994 1995 1996 1997 1998 2000
Differences calculating by counties (19 units and Budapest)
Best per worst position with Budapest capital city
2.92 3.05 3.24 3.56 3.29 3.61
Best per worst position without Budapest capital city
1.68 1.83
1.93 2.22 2.13 2.47
Budapest capital city per second (best) county
1.74 1.66
1.68 1.60 1.54 1.46
Differences calculating by regions (7 units)
Best per worst position with Central-Hungary region
2.09 2.03 2.13 2.22 2.18 2.40
Best per worst position without Central-Hungary region
1.45
1.45 1.52 1.56 1.63 1.80
Central-Hungary region per second (best) region
1.45 1.40 1.40 1.42 1.34 1.34
Source: Data of Ministry of Economy on request, 2002. (for year 2000) and Regional Statistical Year-
book, 1997, 1998. Budapest, Central Statistical Office (different pages, calculated by author).
In addition, these indices kind of summarise the main - and already described -
characteristics of the development of the spatial structure of Hungary in the second
half of the decade. 6
73
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
Table 5
GDP per capita of the regions and counties, 1995-2000
GDP per capita
Name
value, '000 HUF
rank size
1995
1998
2000
1995
1998
2000
Budapest
993
1858
2561
1
1
1
Pest
399
773
1025
18
11
10
Central Hungary
792
1474
1997
1
1
1
Fejer
544
1234
1664
4
2
3
Komarom-Esztergom
475
838
1093
8
8
7
Veszprem
463
803
1112
9
9
6
Central Transdanubia
497
978
1318
3
3
3
Gyor-Moson-Sopron
597
1204
1754
2
3
2
Vas
585
1162
1499
3
4
4
Zala
504
901
1113
7
5
5
West-Transdanubia
565
1102
1494
2
2
2
Baranya
437
783
993
10
10
11
Somogy
418
686
892
15
18
14
Tolna
506
861
1084
6
7
9
South-Transdanubia
448
770
982
5
4
4
Borsod-Abatij-Zemplen
418
690
852
15
17
18
Heves
409
726
925
17
13
13
N6grad
326
565
714
20
20
19
North-Hungary
400
678
847
6
6
6
Hajdtl-Bihar
426
754
929
13
12
12
Jasz-Nagykun-Szolnok
425
720
874
14
14
16
Szabolcs-Szatmar-Bereg
333
567
710
19
19
20
North-Great-Plain
391
675
832
7
7
7
Bacs-Kiskun
433
713
887
11
15
15
Bekes
429
691
864
12
16
17
Csongrad
513
889
1088
5
6
8
South-Great-Plain
457
761
943
4
5
5
Hungary total
549
997
1312
Provinces total
446
805
1039
Source: see at Table 4
— The growth tracks of dualistic sectoral structure — i.e. the fact that in Buda-
pest the financial and business services sector, whereas in the countryside
Hungary the export-oriented manufacturing industry is the engine of growth
— reflect totally different relations if we do the calculations without Budapest
or including the capital city. The common feature is that in both cases the
presence of foreign capital is a dominant component, although its dominance
declined by the end of the decade. The significant differences also point out
that the economic weight of Budapest within Hungary remained extremely
great, this dominant feature of the spatial structure did not change in the
1990s.
74
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
Table 6
Correlation indeces of the factors of economic territorial structure, 1995, 2000
Manu-
Business
Foreign
Industrial
GDP per facturing
services investment
Name
Year
Ye
export per
capita
share in
share in capital per
capita
total GDP total GDP
capita
Without Budapest capital city
GDP per capita
1995
-
0.4455
-0.1774
0.6745
0.6868
2000
-
0.8120
-0.3389
0.6328
0.8547
Manufacturing share in total GDP
1995
-
-
-0.3561
0.5521
0.7654
2000
-
-
-0.5232
0.6837
0.8579
Business services share in total GDP 1995
-
-
-
0.0567
-0.4526
2000
-
-
-
-0.1316
-0.4097
Foreign investment capital per capita 1995
-
-
-
-
0.6513
2000
-
-
-
-
0.5761
Industrial export per capita
1995
-
-
-
-
-
2000
-
-
-
-
-
With Budapest capital city
GDP per capita
1995
-0.0645
0.7292
0.9122
0.4358
2000
0.2501
0.5880
0.8665
0.5219
Manufacturing share in total GDP
1995
-
-
-0.4407
0.0008
0.6871
2000
-
-
-0.5066
0.0634
0.8238
Business services share in total GDP 1995
-
-
-
0.7724
-0.1102
2000
-
-
-
0.7343
-0.2141
Foreign investment capital per capita 1995
-
-
-
-
0.4293
2000
-
-
-
-
0.2687
Industrial export per capita
1995
-
-
-
-
-
2000
-
-
-
-
-
- Although Hungary is still among the five "most international" economies of
the world as regards the role of foreign capital, the correlation between eco-
nomic performance and the amount of foreign capital seems to loosen (in the
case of both growth tracks), the accumulation of Hungarian capital is strength-
ening' and the performance of the Hungarian companies - mostly in the sector
of small- and medium size enterprises - is improving. In addition to the weak-
ening of the dependence on foreign capital, this is an important phenomenon
because it might create, adapting to the trends of the beginning of the new
millennium, the conditions for the creation of integrated sectoral-regional
economic organisational systems (clusters, networks etc.) both in Budapest
and the Hungarian countryside. The penetration of the Hungarian small- and
medium size enterprises also increases the flexibility of the economic struc-
ture, and it can amount to a better adaptation to the market.
- In the growth and the economic performance, an increasing export orientation
can be demonstrated even in Budapest. For the „returns to scale" of the mod-
ern economy, the internal Hungarian market is too narrow, and the ability to
75
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
adapt to the world market remains a dominant factor in the formation of the
spatial structure, too. The external institutional consequence of this is the fact
that the integration to Europe, the accession to the European Union has no real
alternative for Hungary, whereas the internal institutional consequence is that
the economies of scale result in the strengthening of the economic organisa-
tional role of the regions, making the decentralisation of the central control and
regulation inevitable in the field of the economy, too.
Notes
I As opposed to the majority of the East-Central European countries, the Hungarian transi-
tion was a less radical turn in many respects. From 1968 on – starting with the economic
reforms launched then – the economic and behavioural characteristics of the Hungarian
companies on the whole moved, with some steps back, towards the directions typical in
the market economies. In the second half of the 1980s this process strengthened and several
formerly favoured sectors soon found themselves in a crisis situation. Before the turn – also
in the second half of the 1980s – foreign capital appeared in the Hungarian economy, this
was the time of the initial phase of privatisation, too, the so-called "spontaneous privatisa-
tion" not controlled by the state, which mostly concerned the retail and catering industry
network (units). The most important elements shaping the development of the 1990s were
thus present in the economy formerly, in less expressed forms.
2 The index of economic health is the result of a factor analysis done for the 19 counties and
Budapest (a total of 20 units) with four variables, the factor point values of the units by
main factor. The expected value ("the average") is 0, the standard deviation is 1. The four
variables are as follows: density of businesses (number of businesses per one thousand
inhabitants), share of joint ventures (the proportion of businesses with foreign share
within the total of the businesses), the income of the population (personal income tax base
per one inhabitant) and the unemployment rate.
3 Tolna county – the other unit besides Budapest – is one of the Hungarian counties with the
least population, in the territory of which operates the only Hungarian nuclear power sta-
tion. It provides 40% of the energy supply of Hungary. The power station company in it-
self provides at least 20% of the GDP of Tolna county, which makes the county seem as a
developed one measured by the specific GDP, while in reality – without the performance
of the power station — it is much less developed than the average. The average profit rate
of the Figure, more than 2%, is also the "output" of the power station.
4 At the economic organisations with mixed ownership, today the average proportion of the
foreign ownership within the total of the registered capital is around 80%.
5 Following the closedown of the privatisation process – in 1998 – more than half of the
joint ventures and approximately 57% of the registered capital of the joint ventures could
be found in Budapest.
6 The calculation was done for the interim years, and the findings show that the changes
characterised by the two end points fit in the tendency.
In the second half of the decade, the export of Hungarian capital significant strengthened,
too, especially in the Central-East European region.
76
Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 62–77. p. Discussion Papers. Special
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