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Abstract
In order for monetary policy’s interest rate channel to operate smoothly and effectively, the relevant retail interest rates of the real economy should react quickly and follow the movements of the prime rate. It has been observed that this connection has weakened since the financial crisis and it was suggested that the so called Weighted Average Cost of Liabilities (WACL) might be a better proxy for the banks’ marginal costs than the prime rate or interbank rate. In this study the WACL for Czech Republic, Hungary and Romania is calculated by applying cointegration tests and ARDL models. I examined whether their long-run relationships with the retail loan rates are more stable. Results: 1. Using the WACL instead of the interbank rate yields slightly more stable long-term relationships with the retail loan rates, and the WACL has been proved to be somewhat more stable than the interbank rate. 2. The interest rate pass-through has been efficient for the household loan rates in all three countries, but only in Romania for the corporate loan rates. 3. The results suggest that the central banks can effectively influence the commercial banks’ financing costs even in a low interest rate environment, although this cost represents only one component of the loan rates, and the movements of other components can offset the changes of the prime rate.
Abstract
János Kornai, the most distinguished Hungarian economist passed away on 18 October 2021. This short essay, written by a long-time disciple of Kornai tries to prioritize his scientific achievements spreading over six decades. The conclusion is that Kornai's most important contribution to the principles of economics was already presented in his 1971 book, entitled Anti-equilibrium, and without this book his most respected later works and his other original concepts, like the soft budget constraint or the shortage economy, cannot be understood.
Abstract
The enlargement of the euro area (EA), an unfinished process, was low on the European agenda in the period between the 2008 and the 2020 crises. The socio-economic consequences of the coronavirus pandemic and frictions in geopolitics would call for a coherent Europe, yet new and old fault-lines appeared in the EU involving the eastern periphery where sovereignty issues gained particular importance. The authors revisit the euro adoption process of the new member states, with a focus on the Visegrad Group (V4) countries, applying a two-track approach: a monetary policy analyses of EA entry as a rational cost/benefit issue and, second, a political economic survey of key stakeholders, set in the context of the dilemmas of retaining or sacrificing nominal monetary sovereignty. Even a piecemeal enlargement of the EA, involving Bulgaria, Croatia and Romania, would cause business consequences and political repercussions in the countries left out of EA. The paper concludes that further moves towards a developmental state model would preclude euro adoption and put such member state in collision course with the core Europe.
Abstract
The financing of young start-up companies is hindered by market failures that prompt governments around the world to intervene at the venture capital market. The aim of this paper is to give a comprehensive overview on this research field based on sound systematic literature review methodology, which was never done before. We found three major themes: pure governmental venture capital involvement, governmental-private venture capital cooperation, and governmental involvement in the financing of pre-seed startups. The evaluation of the governmental efforts varies according to these themes and also the investigated geographic location. Generally, pure governmental venture capital is the most controversial theme, the government-private cooperation is mostly viewed in a positive light, while the authors almost unanimously praise the government’s efforts when financing pre-seed startups. We found that the success of governmental venture capital should not be judged based on the realized return of its investments, since profit maximalization is not its goal. The governments try to alleviate market failures at the venture capital market and transition financed startup companies to private financing. Thus, we advise researchers to use the number of this type of successful transitions as the success criteria of governmental investments.
Abstract
Hungarian small- and medium-sized enterprises are facing the challenges of digitalisation and innovation to survive fierce competition in the era of Industry 4.0, and particularly of COVID-19. Survival in the heavily hit sectors depends on the degree of digitalisation and involvement in e-commerce. This paper aims to examine Hungarian SMEs’ current scale of digitalisation and adoption of Industry 4.0 technologies. It also analyses the role of the Hungarian government’s support for SMEs’ digital transformation. To this end, secondary data were collected from Eurostat, the European Commission and the Hungarian Central Statistical Office, including the Digital Economy and Society Index (DESI), indices of skills and innovation from SME performance reviews and sectoral business statistics. In processing the data, the study strictly followed the European Commission’ classification protocol, complemented by a qualitative analysis of reports and programmes related to digitalisation and Industry 4.0 in Hungary. The findings reveal that there is a further need for strengthening the digitalisation and innovation capacities of Hungarian SMEs. The effects of introduced measures could not be seen yet. Hence, the Hungarian government should continue to support SMEs’ digital transformation in order to increase their role in high-tech manufacturing and knowledge-intensive services.
Abstract
In the following paper, I examine the considerable impact of the recent world-economic shift that has determined the circumstances of Hungarian suppliers' value-chain integration. I argue that as a result of the specialized positions they occupied in the value-chain after the collapse of the Comecon market, Hungarian enterprises in export-oriented industries faced a dilemma—a trade-off between obtaining the most advanced technologies (and thus access to world-market niches) and retaining ownership in the hands of domestic capital. When company managers opted to protect ownership with the help of the state, they exposed themselves to greater risk of downgrading their position in the value chain. If they managed to get access to advanced technologies (and the requisite funding), they were more likely to lose control over their company's assets, either as a result of a hostile takeover or becoming part of the larger partner's merger-and-acquisition plans. This paper is a discussion of some of the particular characteristics of this dilemma, as well as a comparison with the experience of Hungarian service providers who implemented a different strategy. This paper is also a critical assessment of some of the chief characteristics of the world-economic evolution that has been underway since 2009, such as German automotive value chains' expansion in the CEE region and the growing role of Chinese capital in regional infrastructural projects.
Abstract
Industrial parks may be high pollutants of the local environment, but also engines of regional development, employment, and economic value added. To make them more sustainable, regional planning often purports to promote a transition to a greener approach, but in reality, many green measures oppose business logic and profitability, while those companies that do invest in sustainable solutions do so without having a clear strategy. This complicated setup is to be explored and modelled in this article which is focused on a remarkable area, the urban region of Székesfehérvár, an industrial city in Hungary having an impressive economic development and hosting significant domestic and international companies. The disharmony between greening policies, intentions and actions is observable in Székesfehérvár, despite the considerable local and regional potentials of renewable energy resources. Findings indicate that systemic thinking and future-oriented decision making will be necessary to achieve true sustainability, which also requires a mutually proactive attitude and the cooperation of different sectors. A legitimate strategy aiming at greening the local and regional economy (with renewable energy concerns), implemented by both public and business actors can be the key element of a successful transition. This strategy needs to be stimulated by local governance.
Abstract
This article tries to explain the differences in COVID-19 case fatality rate (CFR) in 22 European countries by their type of organization and performance level of their healthcare systems. The CFR is taken here as the most important indicator since it measures the ratio between COVID deaths and COVID cases. In our view, this indicator reflects the true performance of the healthcare system, as this indicator is freed form public health interventions, like testing, lockdowns or social distancing.
Our research is also unique, because it sees the healthcare system in a holistic way and tries to explain the CFR not by individual risk factors, socioeconomic indicators, or partial system parameters, but by using a complex healthcare system classification method adopted from Isabelle Joumard and an overall healthcare system performance index adopted from European Health Consumer Index (EHCI).
The main results are twofold. First, higher EHCI score is related to lower CFR. So, the countries are cumulated basically in two quadrants: High EHCI performers (score 790 and higher) with low CFR (below 1.93%) and low EHCI performers with high COVID CFR. Second, apart from Czech Republic, the V4 countries are not doing very well in fighting COVID. Hungary is the worst, not only from the V4 group, but the worst from the whole list of 22 European countries included in this research. Poland is doing better, but still is high above the median CFR. Slovakia was the second worst from the V4 group. Czech Republic is the best V4 performer and the only country with EHCI score lower than median and CFR also lower than the median.
Abstract
The main objective of this paper is to identify the impacts of the COVID-crisis on growth, in particular on growth potential in the European Union (EU), in the context of a broader growth analysis. The quantitative analysis underlying this paper focuses on the financial and economic (“Great”) recession of 2008–2009, the subsequent recovery and the period of the COVID-crisis. We provide a detailed overview of some of the mechanisms of the COVID-crisis on growth.
The COVID-crisis is likely to have a direct impact on the level of potential output. A decrease in investments and labour market hysteresis may have long-lasting effects on potential growth. The former would have a negative impact on productivity. This can lead to increased inequalities and have a negative effect on social cohesion. The future development of divergences among the EU Member States is particularly important. Their possible intensification could disrupt the functioning of the euro area and the internal market.
A lasting source of potential growth in the EU Member States could be productivity growth. Its decisive structural factor is the growth dynamism of total factor productivity (TFP). There are large differences in this area with regard to the level and growth dynamism of performance of the Member States. Narrowing the output gaps vis-à-vis the front-runners through deep structural reforms could be a key factor in raising growth potential. The cleansing effects of crises, which force structural change and resource reallocation, can also create new opportunities for TFP growth.
Abstract
COVID-19 has been the “hottest” topic in many fields of research during 2020–2021. Our analysis focuses on the publications related to the pandemic in the business and economics area. Using the Web of Science database, the main international research patterns in this field have been analysed. Our research covers less than two years (2020 and part of 2021), but the number of publications is large (more than 1,000) in this limited time span. The publication patterns of the CEE countries have also been examined. Bibliometric and social network analysis was used to assess which countries and institutions published the most during this period. For analysing the main trends in the given field, keyword analysis was performed.
