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The study presents a comparison between EU-member countries that once or at present attempt(ed) to catch up to the current EU-average (Ireland, Portugal, Spain, Greece, Finland, Hungary). The aim of the paper is to analyse their trade competitiveness. The study seeks response to the questions: How different were the starting positions of these countries? What effects have prevailed already and what can be expected? What were the effects of customs abolishment related to EU-accession? How did the competitiveness of export, the import demand, the structure of foreign trade and the trade balance develop? What are the sources of the trade effects?

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The network of international capital markets is modeled as a global communications system, where information flows in one channel and funds flow in the other. Based on the fundamental logic of the measurement of information (Reza, 1992) and on the standard assumptions of the Capital Asset Pricing Model (CAPM) (Shapiro, 1999), we demonstrate that these markets operate at very large losses. Global markets are far less efficient than long-established domestic capital markets of developed countries, which do relatively well in transmitting information and funds. Along with the integration of national capital markets into a more tightly knit international network, however, major improvements in efficiency can be expected. Integration, though, implies a need for some kind of global regulations to help standardize the flow of information and the routines of pricing risk. Standardization in turn can be expected to decrease risks and increase the efficiency of distributing funds. From an information-theoretical perspective the introduction of mutually accepted regulations is desired, since it would boost the capacity utilization of the distribution system as such. A better-utilized communications system will bring faster clearing international markets and cheaper funds.

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The study deals with the interpretation, notion, and measurement of competitiveness, as well as with certain theoretical and practical approaches related to it. It sets out from the competitiveness of products and services, then analyses the competitiveness of corporations, finally considering certain aspects of the competitiveness of national economies. The study approaches its topic critically, presenting the confusion and misinterpretations of competitiveness concepts through the thorough analysis of numerous works. It especially criticises the theoretical principles and composition methods of competitiveness rankings very wide-spread in international practice, with special emphasis on the indices of  the World Economic Forum and the Human Development Index of the UNDP. This paper is an attempt to a multidisciplinary and many-sided approach to the interpretation and measurement of competitiveness.

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Considerable amounts of time and money are spent on job-training of school leavers graduated from higher-education institutions. More than a half of the employees in our sample participated in job-training between the graduation date (1999) and September 2000. The work in this paper considers two aspects of the problem. First, the relationship between training probability/training length and the initial human capital (proxied by level of education and in-school labour-market experience) is concerned with, and, second, some elements of the training-cost-sharing decision is analysed. There are some signs that university education reduces the probability of training as compared to college education, whereas in-school labour-market experience increases it. University education reduces training length as well. In-school labour-market experience has no effect on the length of job-training. Another important result is that school-leavers holding diplomas with “narrower” types of education are more likely to obtain training, and also to have longer training programmes. This implies a more severe matching problem in the case of “narrower” types of education, possibly due to prohibitive searching costs for finding a good-quality match. Results for the cost-sharing decision are in line with Becker's idea, since the firm is less likely to entirely cover the costs of general training and more likely to finance job-specific training programmes.

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A dolgozat első része áttekinti a globális klímaváltozással kapcsolatos gazdaság- és környezetpolitikai kérdéseket, előkészíti a harmadik részben bevezetendő új döntéselemzési módszert. A klímaváltozással kapcsolatos közgazdasági elemzések központi problémája a generációk közötti egyenlőség és a diszkontálás kérdése. Gondosan mérlegelve az alkalmazandó diszkontrátára vonatkozó pozitív és normatív érveket, illetve a különböző modellezési megoldásokat, a dolgozat arra a következtetésre jut, hogy a klasszikus költség-haszon elemzés módszere a klímaváltozással kapcsolatos politikák kialakítására csak korlátozott mértékben alkalmas. Új módszerekre van szükség, amelyek jobban megfelelnek a klímaváltozás mint döntéshozatali probléma sajátosságainak. Egy új döntéselemzési megközelítés az „elfogadható mezők” módszere, amely egy integrált gazdasági-klímamodellben ölt testet. A módszer különválasztja a klímaváltozással kapcsolatos normatív, értékfüggő érveket a tudományos elemzéstől. Az előbbiek a felhasználó által megadott döntések, és a modell inputjaként specifikálandók három területen: a klímaváltozás még elviselhető hatásaira, a klímaváltozás lassítására tett intézkedések még elfogadható társadalmi költségeire, illetve a tehermegosztás elveire vonatkozó döntések formájában. A modell ezek alapján meghatározza, hogy létezik-e olyan üvegházhatású gázkibocsátási mező a következő 100-200 évre vonatkozóan, amely kielégíti a felhasználó által specifikált feltételeket. Ha ilyen mező nem létezik, akkor vagy az elfogadható hatások mértékét, vagy a klímavédelemre fordítandó költségeket kell emelni. Amennyiben a kibocsátási mező létezik, akkor az magában foglalja a felhasználó által megadott kritériumokat kielégítő valamennyi jövőbeli kibocsátási pályát. Ezek közül további szempontok figyelembevételével (például nemzetközi tárgyalások során) lehet kiválasztani a legmegfelelőbb és követendő kibocsátási pályát. A dolgozat bemutatja az elfogadható mezők módszerének néhány alkalmazását is.

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Dumitru Sandu: Spaţiul social al tranziţiei (Az átmenet társadalmi tere). Polirom Kiadó, Iaşi, 1999

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The study of fiscal non-compliance - in particular, that of tax evasion - is quite extensive in the literature of economics. Lawyers do not show much interest in fiscal anomalies. An exception for this is perhaps tax avoidance which is usually interpreted as the problem of the form and substance. Apart from the modest interest in irregularities in fiscal law, the legal theories of obedience, or disobedience, and coherence have grown significantly, thanks to the precept of William Ross on prima facie duties or the concept introduced later by John Rawls on the reflective equilibrium. This paper is an attempt to apply the categories explored by legal philosophy to the developments of fiscal law.

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Az 1991-es Európai Megállapodás aláírása után 7 évvel, 1998. március 31-én megindultak a csatlakozási tárgyalások Magyarország és az Európai Unió között. A 2002. december 13-án befejezett, tehát több mint négy és fél éves tárgyalási folyamat legkoncentráltabb, sok tárgyalással, időnként feszültséggel és izgalommal járó végső szakasza a dán elnökség égisze alatt bonyolódott és az ún. záró csomagnak, a csatlakozás legfontosabb pénzügyi összefüggéseinek a kitárgyalására irányult. A tanulmány ismerteti a végső EU-ajánlat előzményeit: az ún. „berlini csomag” tartalmát, a Bizottság 2002. januári javaslatát, valamint a Tanács 2002. októberi ülésének fejleményeit, majd bemutatja az elfogadott ajánlat főbb jellemzőit, különös tekintettel a magyar csatlakozás pénzügyi vonatkozásaira.

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A szerző kereskedelempolitikai eszmefuttatást ír le Magyarország Európai Unióhoz való csatlakozása szempontjából, különös tekintettel a WTO jelenleg folyó Doha-forduló­jára. A körtárgyalások folyamán az EU közös mezőgazdasági politikája a támadások közép­pontjába került, ezért annak újabb változása várható - ez kedvezhet a komparatív előnyökkel rendelkező Magyarország számára. A forduló során várható a vámok további csökkentése, ami a magas vámokkal rendelkező fejlődő országok számára eredményez jelentős vámcsökkentéseket. A csatlakozáskor Magyarországnak át kell vennie az EU Közös Kereskedelempolitikáját; az EU széles körű preferenciális rendszere és a jelenleg magasabb magyar vámtarifák következtében a magyar piac a külsőkkel szemben nyitottabbá válik.

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Authors: József Berács, Graham Hooley, Sheelagh Matear, László Sajtos and Tamara Keszey

A marketing szakirodalomban napjainkban kevés figyelmet kap a marketingen belüli szakterületek összekapcsolása. A stratégiai menedzsment és a modern piacelméletek egyaránt hangsúlyozzák az üzleti (ezen belül a marketing) tevékenységek és a vállalati teljesítmény közötti kapcsolatot. Cikkünk ezen a területen szeretne hiánypótló szerepet játszani, részben azáltal, hogy szinergiájában vizsgálja a vállalat marketing erõfeszítéseit és ezek összefüggéseit, másrészt, hogy ezeket a tevékenységeket a vállalati teljesítmény szemszögéből elemzi. Írásunk során rávilágítunk arra, hogy a BKÁE Marketing Tanszéke által végzett országos szervezeti kutatás eredményei milyen tanulságokat hordoznak a vállalatok marketing és kommunikációs szakemberei, illetve a marketing funkció széleskörűségéből adódóan az egész vállalat számára. Eredményeink ismertetése során magyarázatot keresünk arra, hogy miért kap kiemelt szerepet a kapcsolati marketing, míg viszonylag háttérbe szorul a kommunikáció a nemzetközi gyakorlatban is. Az angol és az új-zélandi vállalatok tapasztalatainak és eredményeinek a hazai helyzettel való összehasonlítása lehetőséget teremt a gazdasági fejlettség terén meglévő elmaradás és a marketing kapcsolatának értelmezésére.

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2004-ben több új taggal bővül az Európai Unió. A csatlakozásra váró országok körében központi kérdéskent vetődik fel, hogy milyen lehetőségeik lesznek az új tagoknak érdekeik érvényesítésére, és hogy az érdekérvényesítés lehetőségeit befolyásolja-e egy ország mérete. E kérdés megválaszolására jelen tanulmány szerzője két kulcsfontosságú Európai Uniós intézmény, az Európai Bizottság és az Állandó Képviselők Bizottsága (Coreper) munkájának bemutatása segítségével tesz kísérletet. Rámutat, hogy mind a Bizottságban, mind a Coreperben kiemelkedő jelentősége van az informális kapcsolatoknak: „ismerni valakit” vagy „ismerni valakit, aki ismer valakit” gyakran a legbiztosabb út információk megszerzésére vagy elterjesztésére, és a kommunikáció ezen hálózata az európai intézményeken belül is a nemzeti hálózatok alapján rendeződik el.  A cikk hangsúlyozza, hogy a kis országok nemzeti érdekei voltaképpen leginkább a közösségi megoldások támogatása révén képviselhetőek, hiszen a tagállami hatáskörbe utalt döntések gyakran az erősebb vagy nagyobb tagállamok már eleve jobb pozícióját erősítik. A szerző megerősíti: bármely országnak, amely csatlakozik az Európai Unióhoz, lehetősége van előmozdítani nemzeti érdekeit, és ezek a lehetőségek nem szükségszerűen múlnak a kérdéses kormány gazdasági vagy politikai erején. Hozzáteszi azonban, hogy sokkal több múlik az adott állam brüsszeli tisztségviselőinek tárgyalási készségein - különösen azokén, akik a Bizottságban, illetve a Coreperben dolgoznak. A nyelvtudás, a kapcsolatépítő készség és a részletekre figyelés nem csak a nagy országok monopóliuma: ezeket az értékes készségeket akár a legkisebb tagállamok is érvényesíthetik 

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Author: András Blahó

[This special issue of Society and Economy brings together seven studies prepared for the Tamás Szentes Doctoral School in the years between 2003 and 2005.]

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The notion of competitiveness figures nowadays frequently and centrally both in economic policy and in regional development. Current economic development programmes, in short, have been directly responsible for the increasing attention devoted to analyses of regional competitiveness. At the same time, there is a growing consensus that a single notion of competitiveness can be found to describe processes of the globalising economy for companies (microlevel), industrial sectors and regions (mesolevel) as well as for national economies (macrolevel). The standard (common) concept of competitiveness has been partly developed in order to serve as a widely accepted theoretical definition, which can be measured and also be used by economic development policies. Competitiveness is intimately bound up with successful economic development. This study reviews the conceptual background and some special aspects of competitiveness and also looks more closely at one of the basic models of enhancing regional competitiveness. First, some aspects of the standard notion of competitiveness are discussed. Then some key indicators of the competitiveness of Hungarian regions will be investigated. I shall end by introducing the so-called pyramid model, which has been designed to measure and improve regional competitiveness.

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The paper deals with regional development issues in Transylvania, making proposals for professionals working at the local governments concerned. Human, geographical and economic studies on and spatial management of these microregions emerge as an essential issue connected to European regional policy and rural development. Based on the analysis of social and economic statistical data in frame of a research programme, the paper introduces associations and organisations, and their relationship in the territory under examination. Local governments of settlements joined to form development associations on a voluntary basis. These non-governmental organisations (NGOs) are to be directly involved in the activities of regional development councils of settlements and counties (judeo). The principles adopted by the EU concerning regional and rural development, and criteria to obtain pre-accession support are studied in detail. The documentation and study of regional development as a result of the research are to serve regional centres' experts in charge of microregion affairs, and also preparation of decisions in local governments as parts of microregions.

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Several new development programmes and projects connected to the objectives of strengthening an entrepreneurial society are currently going on in Hungary, but most of these programmes are functionality focused (regional development, vocational training, etc.). The coordination of the different development plans and programmes in Hungary has to be improved in order to have real achievements in promoting entrepreneurial attitudes and raising entrepreneurial activity. The main aim of this paper to underline the crucial importance of entrepreneurial education and training in the development of the SME-sector, and draw up some recommendations to promote entrepreneurial attitudes and activities.

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This study summarises the methodological aspects of the most important computerised world models and describes their prospects for the near future. Throughout the three stages of the evolution of world modelling, the development of computer technology has had a definitive role, hence this study regards computer technology as a framework of world modelling. The first evolutionary stage is related to the spread of IBM computers at the beginning of the 1970s, its milestone being the model published in The Limits to Growth (Meadows et al. 1972). With the spread of desktop computers in the second stage, world models that could run on PCs appeared; the first one being MicroIFs (International Futures) in the second part of the 1980s. The third wave was generated by the proliferation of the Internet and the continuing acceleration of the processing speed of computers. Models have become downloadable, virtually simultaneous processing options enable multi- agent-based simulations. As a result of these, models can be extended with the analyses of dynamic and emergent phenomena. Recent methodological concepts and trends promise new theoretical synthesis of world modelling.

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Issues related to international competitiveness with regard to social protection, labour markets and effective government are not too many. Hence, this paper pleads for a new vision, one that puts social policy issues' influence, distributive justice and equality firmly back at the centre of the debate about the type of international competitiveness that should be pursued in post-transformation societies, such as Hungary. The study explores the effects of labour-market policies, introduces the term “disembedded social policy” and explores later the possibility of re-embedding this policy. State attention must be focused on reasonable ratios of income equality, similar levels of welfare. The state budget will have to concentrate the neccessary resources for these purposes which limits assets meant for enhancement of competitiveness. Efficient and well-functioning competitiveness policy requests an efficient state administration, as well. The study explores the issue of decentralization and state administration, the role of the state in delegating certain powers to lower levels of administration. Impoverished and weakened governments find it increasingly difficult to pursue the kind of effective micro-economic policies (industrial support and regional development strategies) that are essential features of all successful competitive policies and development experiences. The final part of the study deals with the connection between local governments, competitiveness and democracy.

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With eight former socialist economies joining the European Union, the European Economic Area underwent substantial change. Integration co-operation, mostly through the usage of structural funds requests partners on lower level of development to catch-up (converge) to the average level of development of the Community. Williamson (1965) had shown first that indeed, there is a convergence measured on national level, the price for which, however, is a growing differentiation among the regions. Suggested way of achieving cohesion is the catching-up of less developed regions and nations. When productivity or difference in GDP per capita is taken as the most important indicator for cohesion then catching-up could be achieved by a higher than average European Union GDP per capita growth in the catching-up economies. Hence, economic growth is the key to cohesion. Trade-off theories suggest that the most important trend in international economic co-operation is the hypothetical b (beta) convergence. Convergence depends on economic policy, created competitive advantages. These factors request thorough analysis of various aspects of competitiveness: setting proper ratio between overall and regional development, achieving high-level efficiency in state administration, supporting research and development, enhancing education on all levels, and last but not least, putting in place a well-functioning economic regulation and industrial policy. Concrete challenges for the Hungarian institutional system, regulation and international cooperation are also dealt with related to the above.

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In this article, the authors give a rich-in-data account of Hungary's structural transition to a market economy between 1993 and 1998. Although the availability of statistics also puts constraint on which period to study, these years may as well be later termed the first phase of post-socialist transition. The article has three main parts. In the first, structural changes of the whole economy are presented; the structural shifts in output, value added, and investments are analysed. The diffusion of private ownership and foreign capital and the process of decentralisation and concentration are also discussed. In the second part, the manufacturing industries are in focus. With an interesting analytical tool – the growth matrix – the authors present a possible approach of studying sectoral development. By distinguishing the factor needs of the manufacturing industries, the factor intensities of production are also easy to understand and yet reasonable for studying the adjustment to modernisation trends. In the third part, the structural changes of foreign trade are shown: export orientation, import dependency, the relationship between export and technology are the main concerns of analysis. The impact of FDI on the manufacturing industries' foreign trade and performance close the third part of the article.

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A szubszidiaritás elve, amely eredetileg morális alapokról hangsúlyozta a gyengébbek megsegítésének a társadalmi kötelességét, a 90-es évek elején az európai integráció egyik legfontosabb alapelvévé vált. Világos rendező elv, hiszen segítségével elvileg egyér­telműen meghatározható a résztvevők - uniós, nemzeti és regionális szintű intézmények - hatásköre. Az elv gyakorlati alkalmazása azonban már korántsem olyan egyszerű. Különösen izgalmas elvi-elméleti viták övezik a makrogazdasági kompetenciák uniós, illetve nemzeti szintek közötti elosztását, hiszen az egyes szinteken gyakorolt politikák hatékonyságáról, „hozzáadott értékük” nagyságáról az érintetteknek kellene objektív döntést hozniuk. Az Európai Unió létrejöttében a szubszidiaritás elve kulcsszerepet játszott. A közös politikák körének jelentős kibővülése tette lehetővé az EMU beinditását, illetve az euró használatra való áttérést is. Az integrációs vívmányok megőrzése, valamint az integrációs folyamat - az uniós jelleg - kiteljesítése azonban a hatáskörök további átrendezését követeli meg.

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This study focuses on the strategic management consequences of technology development. Business policy considerations are predicated on the overall assumption that the multiplication of broadband telecommunication networks, capable of delivering both voice and data bits of information, has led telephone companies into a competitive situation where they are compelled to decrease their interconnection fees. All over the world there is an observable trend towards a cornucopia of networks and a glut of bandwidth. This means that legislation putting a cap on connection fees will only conserve a business situation that is gone long ago. Browsing the classical literature on telecommunication regulation, this study on business policy argues that instead of waiting for legislation - that is far too late to orient companies what to do policy-wise with the imminent new market situation -, wireless carriers should rather start emphasising the design of new, value-added services. Such a change of emphasis - turning away from the provision of connectivity alone - can help them achieve some added value and remain in business. Otherwise, they may soon follow the path of a slow corporate funeral following their wired brethren.

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Currently more and more large, vertically integrated firms are being transformed into flatter organisations that encompass decentralised decision structures. The author argues that an understanding of this new type of firm, called market-like firm, is missing from the theory of the firm (transaction cost theory), for two reasons. On the one hand, the Williamsonian framework of governance structures does not explore the distinguishing mark of the firm, and, on the other hand, it cannot explain the variety of firms. To overcome these shortcomings, the author proposes the extension of the Williamsonian framework with the concept of “firm-ness” that is based on the distinction between ideal-type and real-type.

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Hungarian economy adapting to accelerated globalisation has to meet world-economic challenges on several levels. The development and international competitiveness of certain national economies depend not least on the extent to which they can realise advantages stemming from FDI inflow and operation, especially that of TNCs. It can be judged only by analysis based on empirical facts whether how much TNCs contribute to the internal development of a national economy, how much they can promote its internal integration (development of connections among sectors), how much they contribute to the manifestation of pulling effects, to what extent they improve the economy's capital endowment, financial resources; what new management skills, organisational and marketing knowledge, new technology, information, market and selling opportunities they provide; how much they contribute to the efficiency improvement of products, services and labour; that is - in sum - to what extent they further the improvement of the competitiveness of countries - that of Hungary and Mexico in the certain case.

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A tanulmány röviden összefoglalja a legfontosabb számítógépes világmodellek módszertanát, és vázolja a következő évek várható fejleményeit. Az ún. „integrált” világmodelleken kívül a makro-ökonometriai világelemzésekkel, az elsősorban a mesterséges intelligencia eszközeit használó szimulációs programcsomagokkal és a fejlesztések irányaival foglalkozik. Az elmúlt évtizedekben a világmodellezés két fő szakaszra volt bontható, míg a harmadiknak most tartunk az elején. Mindhárom fázist a számítógép-technológia változásai indították el. Az első hullám a 70-es évek elején a nagy IBM számítógépek használatával esik egybe, és az első mérföldkő a „Növekedés határai”-nak publikálása volt (Meadows et al. 1972). A második fázist az asztali számítógépek elterjedése indította, így a világmodellek már PC-n futhattak. A harmadik hullámot az Internet megjelenése és az adatfeldolgozási sebesség további gyorsulása idézte elő. A programcsomagok jelentős része letölthető lett, míg a párhuzamos műveletvégzés egy újfajta modellezési filozófia népszerűségét hozta, mely lehetővé tette a mikro- és makroszint összekapcsolását. Mindezek eredményeként a modellek alkalmassá váltak a dinamikus és emergens jelenségek vizsgálatára. A metodológiai trendek a világmodellezés új, elméleti és gyakorlati szintézisét jelzik.

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Az Európai Megállapodással létesített társulási viszony 1991 és 2004 közötti időszakában az EU-csatlakozás vezérelte jogi-intézményi adaptációs folyamatnak (amit egyszerűsítve jogharmonizációnak szokás nevezni) egyik mozgalmas területe volt a gazdasági verseny joga. E szakterület gazdaságpolitikai-versenypolitikai tartalmi töltetét és jogi-intézményi konstrukcióját tekintve csak megszorításokkal oldható fel az integráció általában homogenizált szabályozási fejleményeiben. A szabályozási igazodás sok fontos elemet vezetett be az újonnan kiépülő magyar versenyjogba, de a kezdetektől látható volt, hogy mindez kissé felemásra sikeredett. A versenypolitika és a versenyhatóság a piacgazdasági vállalati struktúrák kialakulásának éveiben érdemi szerep nélkül működött. A jogharmonizáció jegyében másrészt nehezen értelmezhető versenyjogi követelmények is átíródtak a magyar jogba a nem mindig megalapozott brüsszeli instrukciók hatására. A cikk a hazai versenyjog ezen időszakának néhány fontosabb kérdését tárgyalja, továbbá kitér a jogharmonizáció intézményfejlesztési hiányosságára is. Korszakosnak mondható változás lesz a csatlakozásunk napján az EU versenyjogi rendszerében, hogy tagállami szinten kell majd alkalmazni az EU versenyjogát, a vállalkozásoknak pedig nagyobb önállósága és felelőssége lesz a versenyjognak megfelelő üzleti cselekvésük kialakításában. A tanulmány végül e fejlemények lényegét, valamint a hazai versenyhatóságra és a vállalkozásokra gyakorolt várható következményeiket foglalja össze.

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Authors: Ádám Török, László Csaba, Marc Gartner and Maximilian Spinner
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Authors: Pál Czeglédi and Tibor Kárpáti
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Neither the UN Framework Convention on Climate Change nor the Kyoto Protocol nor other international agreements aiming at the establishment of legal and economic — and also sustainable — world development mechanisms seeking to achieve a harmony between economic growth and preservation of the environment have led to any reduction in annual increases of anthropogenic greenhouse gas emissions.

This is due, to a considerable extent, to the initially non-complete principles of evaluation regarding the different responsibilities of countries in connection with atmosphere pollution. The aforementioned principles are based on total emissions volumes. However, what might be seen as more justified in any estimation of permissible pollution levels is, within potential international trading of volume quotas for the rights to carbon dioxide emissions, an account of the intensity of pollution per square kilometer of surface area and the absorption potential of forests and other green plantations present in every country.

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In the late eighties, many developing countries followed the example of the most advanced countries and opened their capital account (K.A.) in an attempt to reap new gains from increased integration with the world economy. Currently, after the wave of financial and currency crises that hurt the global economy over the last decade, enthusiasm about K.A. liberalization has greatly faded. First, the relationship between development and capital account liberalization did not come out to be as solid as initially expected; second, the greater capital mobility has brought about new forms of financial instability. This paper points to some risks that might be associated with undifferentiated deregulation of international movements of capital in connection with developing economies. It argues in favor of proper sequencing: liberalization should proceed in parallel with progress when it comes to macroeconomic stability, building market competition and the creation of a sound, internal financial system. A separate section analyzes this issue in the special context of transition economies.

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What has the state got to do with the venture capital market?

Public financing of venture capital in Hungary

Author: J. Karsai

Since the development of young companies with a good growth potential can also be expected to boost economic growth, reduce unemployment and enhance competitiveness, economic policy makers consider it a matter of prime importance that the venture capital industry provide appropriate capital supply for their development. Many countries implement central programmes to promote the venture capital financing of the development of enterprises that would have no access to venture capital on a purely market basis. The experience in Hungary is that state intervention in the venture capital industry mainly has political reasons, it uses budgetary sources sparingly and it is isolated from the private sector. But for its almost complete inefficiency, state activity would have softened the conditions of competition, crowded out the private sector and given preferential treatment to the political clientele. Realizing the abortive nature of its intervention, the state made no effort to identify the causes of failure and the role of supply and demand factors, respectively, hindering the venture capital supply of the small and medium-size enterprise (SME) sector. The intervention practice chosen by the state most recently is contrary to the practice of the European Union in several respects — a circumstance dooming government measures to boost the venture capital industry to failure again.

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The paper proposes a possible method for further developing the theory of the firm in a generalised way. It argues that a more general theory of the firm, called multidimensional theory of the firm, has to be built upon more realistic behavioural assumptions. As such an assumption, the Misesian human action concept is proposed, whose main advantage is that — as an integrated action — it encompasses both the calculative and the entrepreneurial elements in human behaviour. Four dimensions are established, the first three (core, market, entrepreneurial dimensions) represent the essential components of content for the understanding of the firm, and the fourth one (time dimension) makes it possible to consider the firm as something operating in real time. It is also shown how these dimensions are interconnected.

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Authors: Bruno Sergi, Svetoslav Salkin, Béla Sipos and Zoltán Pogátsa
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This paper examines the causes of turbulence in foreign exchange markets by looking closely at the experience of four transition economies (Bulgaria, Romania, Russia, Ukraine). It considers the influence of macroeconomic variables in currency crises occurrence through the use of logit models. In an environment of deteriorating fundamentals the examined issue is whether or not some fundamentals are able to maximise the likelihood of currency crisis incidence.

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The study introduces a Hungarian economic thinker, István Varga, whose valuable activity has remained unexplored up to now. He became an economic thinker during the 1920s, in a country that had not long before become independent of Austria. The role played by Austria in the modern economic thinking of that time was a form of competition with the thought adhered to by the UK and the USA. Hungarian economists mainly interpreted and commented on German and Austrian theories, reasons for this being that, for example, the majority of Hungarian economists had studied at German and Austrian universities, while at Hungarian universities principally German and Austrian economic theories were taught.

István Varga was familiar not only with contemporary German economics but with the new ideas of Anglo-Saxon economics as well — and he introduced these ideas into Hungarian economic thinking. He lived and worked in turbulent times, and historians have only been able to appreciate his activity in a limited manner. The work of this excellent economist has all but been forgotten, although he was of international stature.

After a brief summary of Varga’s profile the study will demonstrate the lasting influence he has had in four areas — namely, business cycle research and national income estimations, the 1946 Hungarian stabilisation program, corporate profit, and consumption economics — and will go on to summarise his most important achievements.

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What makes Hungarian SMEs perform poorly?

A stochastic frontier analysis

Author: I. Major

Small and medium-sized enterprises (SMEs) have been the target of supportive government policies since economic transformation began in Hungary although the birth of a strong and healthy layer of SMEs has not been observed in the country up to now. In this article the issue of why this has not happened is addressed. Empirical evidence suggested that Hungarian SMEs are not usually driven by the corporate values of Max Weber’s “protestant ethics”; instead, they aim at short-term financial enrichment. Hungarian SMEs cannot usually “climb the ladder” and turn into large enterprises – indeed, their survival period is relatively short.

Nickell (1996) argued that (total factor) productivity rather than profitability would reflect a company’s efficiency level. Using frontier production and frontier profit functions there is an attempt here to prove that “technical (or allocative) efficiency” and “profit efficiency” both have a distinct role to play in explaining a firm’s economic performance; and by applying limited information maximum likelihood models of SME profit gaps it will be shown that cost inefficiencies and unfavourable market conditions — alongside the inefficient allocation of factors of production — inevitably lead to the fairly low level of SME profitability.

The most important finding of the analysis is that employment has been a crucial factor in explaining the profit deviation of companies. Building on the results of Köllő (2001) the article argues that SMEs regard labour as flexible stock. Companies will seek out new labour if they find new market opportunities — but until these appear, they tend to remain in the arena of diminishing returns, this being the easiest way for them to maximise profits. Downgraded production activities do not attract substantial external financing. Yet a lack of financial resources when new market opportunities do emerge will prevent an SME from exploiting the chance.

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Authors: László Csaba, Bruno Sergi, Judit Kapás and Krisztina Majoros
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The present paper deals with the accumulation of public debt based on different kinds of nonlinear models. The same problem is analysed here in three different models. In the first model difference between growth rate and interest rate depends lineary on the debt/GDP ratio and the budget deficit. In the second model version this connection was non-linear, so two kinds of economic policy could be applied. In the third version the growth rate as well as the interest rate are in close connection with the debt/GDP ratio, in this case a stable equilibrium or a saddle path could be shown up.

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The contribution of the so-called ‘New Economy’ to economic growth in developing countries has so far been minimal. Nonetheless, in the longer run the ‘New Economy’ offers great potential for faster economic growth in post-socialist economies. Realising this potential is, however, not automatic. It could be left unharnessed if there is no suitable institutional and economic infrastructure that would allow for adoption, diffusion, and productive use of information and communication technologies (ICT). The paper here will construct a New Economy Indicator (NEI) that measures the levels of preparedness of transition economies for harnessing the potential of ICT to accelerate long-term economic growth and a catching-up with the developed countries. In the NEI ranking Slovenia scored highest; it is followed by the Czech Republic and Hungary. Albania, Bosnia and Herzegovina, and Serbia–Montenegro (former Yugoslavia) occupy the bottom of the table.

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The paper investigates the relationship among macroeconomic variables for a transition country: Hungary. The purpose of this paper is to measure the dynamic interrelationship among macroeconomic variables such as money supply, output, interest rates, inflation and exchange rates. For the empirical analysis of this investigation, quarterly data have been used for the period from 1980 to 2000, and the Johansen multivariate cointegration technique and the Granger causality tests have been applied. The results provide evidence of the existence of important causal relationships between variables that describe macroeconomic activity in Hungary.

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The purpose of this paper is to implement the regularities of product innovation in the field of marketing. The article takes a look at the different understandings of the concept of marketing innovation and it states that although the innovation concept is widely discussed in marketing literature, it lacks one important element: the “missing link” is an analysis of the relation between product innovation and marketing innovation. The paper discusses the different patterns of innovation and points out that the marketing of a product category displays a similar evolution cycle. Using the dominant product-form analogy, the author presents his hypothesis about the existence of a dominant marketing mix. He argues that as the dominant product form emerges, it is accompanied by a dominant marketing form, and he states that such standardised marketing will dominate the scene until the next discontinuous innovation.

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Authors: Tanel Tang, Svetoslav Salkin and Andrea Elekes
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Authors: Viktória Galla and Tamás Dombos
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Does employee ownership survive the transition?

Case study evidence from Estonia

Author: P. Kalmi

Privatisation to employees has been common in Estonia and in other transition economies, but some evidence suggests that employee ownership is declining. In this paper, I use the concept of “degeneration” from the literature of worker co-operatives to explain this decline. In the first part of the paper, I draw from the literature of complementarities in firm performance and apply the argument to the problem of stability of ownership structures. In the second part of the paper, I use evidence from management interviews and employee questionnaires taken at six Estonian enterprises with employee ownership. The evidence suggests that employee ownership is rapidly declining in Estonia. The main reason for the decline is that ownership is not extended to new employees.

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This paper shows the principal features of merger control in selected transition economies of Central and Eastern Europe (CEE), namely Hungary, Romania and Slovenia, by applying case study methodology. The presented findings are based on the analysis of Hungarian, Romanian and Slovenian competition law and merger rulings reached by the Competition Offices of these countries. A substantial part of the conclusions is drawn from a sample of 42 merger applications processed by the Office of Economic Competition of Hungary between 1994 and 2000. The results of empirical analysis demonstrate the considerable flexibility of merger control in the studied countries, its orientation towards the future of domestic markets and a close link with industrial policy. The paper also highlights the areas of interdependence of competition policy and transition and argues that merger control in the studied CEE countries may be regarded as currently adequate to the requirements imposed by transition.

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Analysis into the sources of lower levels of national productivities between Central and Eastern European economies and the European Union is scarce and lacks comparability. These sources are assessed by analysing the role played by sectoral structures. After providing a brief overview of comparative levels of economy-wide labour productivity between the EU-15 average, selected EU cohesion countries and the EU accession countries of Estonia, Poland, the Czech and Slovak Republics, Hungary and Slovenia, a quantitative account of the sectoral content of the national productivity gap is calculated. The paper develops a method to calculate the explanatory power of patterns of sectoral structures for the size of the productivity gap by hypothetically applying average EU-15 sectoral patterns on Central and Eastern European economies’ sectoral productivities. Subsequently, the respective roles of individual sectors in explaining the national productivity gaps are calculated by assigning weights to sectoral productivity gaps relative to their employment shares. These results are then carefully assessed in terms of potentials and prospects for swift and complete productivity catch-up and in terms of the most efficient policies to assist productivity convergence.

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In international business practice, subcontracting is an unbalanced form of co-operation. It can bring serious negative effects for partners from less developed countries because of the strong onesided dependence on the “developed” partner. International experience, e.g. in the maquiladora region suggests that degradation of corporate activities, low profitability, technological dependence, loss of own production and shrinking market presence of own products may characterise many firms, and even whole industries or regions. These firms, regions and industries often become isolated from the national economy. Therefore, potential positive modernisation effects may also be “locked” in the subcontracting firm not spreading in the economy.

Hungarian experience with subcontracting was somewhat different already in the 1970s and 1980s. Companies concluded subcontracts with more developed Western partners in order to gain access to up-to-date technology and know-how, new markets and new products. Many of them incorporated the acquired knowledge with success. During the 1990s subcontracting was the driving force of corporate modernisation, since former development sources (primarily state subsidies) dried up. Many firms chose the new option of adjustment strategy. The efforts of Hungarian companies to integrate into the international division of labour coincided with the substantial change of subcontracting deals on world markets. Subcontracting became a form of outsourcing and changed to a long-term, network-type of co-operation form with considerable knowledge transfer.

This study presents the results of an empirical survey. The Department of Business Economics of the Budapest University of Economics and Public Administration carried out two rounds of interviews in more than 300 companies both in 1996 and 1999. The survey revealed some new features of international subcontracting patterns and found some evidence of modernisation impacts subcontracting has on Hungarian corporate strategies.

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Authors: Dmitri Niarguinen, Ferenc Kumin and László (T) Vígh
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This paper investigates the relationship between industrial restructuring and regional unemployment in Poland. Poland’s regional unemployment broke out of nothing at the beginning of the 1990s decade. Since then, it has remained remarkably unchanged over the decade for a variety of factors, such as the gradual restructuring process, labour supply rigidities and technological differences. The role of each of these factors is assessed within the framework of hazard functions applied to the inflow to unemployment from a job, computed using Polish Labour Force Survey data. When voivodships are grouped according to their unemployment rate it can be seen that low unemployment voivodships form a heterogeneous group, including both rural and urban areas. Applying a new method of analysis of the labour market effects of trade integration, the paper reveals circumstantial evidence on how Poland’s international comparative advantages in labour-intensive manufacturing combine with the economic advantages of urbanised regions to play a significant role in shaping the regional distribution of Poland’s unemployment.

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Authors: Jan Wielgohs and László Csonka
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The applicability of selected aspects of the European regional policy approach to Hungary is analysed in the present paper. The balanced approach of European regional development — one combining structural change with performance improvement of existing actors — is contrasted with the one-sided Hungarian approach — one restricting modernisation efforts to facilitating structural change and attracting new economic actors. The paper — funded by the INCO-Copernicus — argues that in order to achieve the required regional transformation, besides institution building, strengthening, i.e. “empowering”, existing regional development institutions is also necessary.

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Local governments are responsible for the provision of primary education in Hungary, this being the largest expenditure item in their budget. The segmented structure of Hungarian local government may be a source of inefficiencies, since one of the most important source of inefficiencies is diseconomies of scale. This paper, using data of two counties — Baranya and Békés — presents a cost—benefit calculation with respect to the operational costs of a hypothetical, newly structured primary education system, where only institutions of “optimal (efficient) size” are operated. Two scenarios are presented. According to the first one all schools of inefficient size would be closed down, while according to the second this could happen only if there is at least one additional social/cultural institution in the settlement in question. The results of the simulation, being rough calculations, may provide guidance on what kind of questions might occur and what the approximate magnitudes of expenditures of a new system might be under specific conditions of reorganisation.

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We look at the soft budget constraint literature in the context of the state-led restructuring of state-owned enterprises (SOE) in which institutions are both regulators charged with constraining SOE restructuring outcomes and part owners of the SOEs concerned. Such institutional agents constitute a set of what we term “owner—regulators (OR)”. These economic agents may have political problems as regulators — as suggested by the Chicago School approach to economic regulation. They can also have ownership problems — here defined by literature on the theory of the firm and on vertical structure. In this light the incentives associated with the imposition of hard budget constraints may be by themselves insufficient to radically change owner—regulator behaviour. If the implementation of such constraints does not take into account the factors highlighted by this paper, hard budget constraints are likely to be either counterproductive or irrelevant.

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Authors: B. Ferenczi, S. Valkovszky and J. Vincze

This paper studies five different aspects of inflation. Undoubtedly, there are manifold requirements made on the consumer price index. It is designed to measure changes in the cost of living and the cost of holding money, to serve as basis for calculating real interest rate and real exchange rates and to fulfil the coordinating role of a core inflation index. The authors of this paper believe that seeking to capture inflation in terms of a single “universal” indicator may lead to an oversimplification of the concept. In its current form, the Hungarian consumer price index does not “purely” suit any one of the theoretical concepts of inflation. The objective of this paper is to draw up a number of proposals related to the methodology of consumer price statistics, which appear to be one of the best data sources. In an attempt to make full use of this quality and illustrate the problems noted above, we shall propose a set of indicators, for analytical purposes, designed to be appropriate for the various “areas of application”.

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Authors: Péter Gedeon, Evgeni Evgeniev and Tanel Tang
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In 1998, the European Union (EU) entered into negotiations with Cyprus, the Czech Republic, Estonia, Hungary, Poland and Slovenia concerning the enlargement of the Union. At the end of 1999, the European Commission decided that six other countries could join the negotiations in 2000 (Bulgaria, Lithuania, Latvia, Slovakia, Malta and Romania), and it was suggested that a decision concerning the date of membership would be taken in 2002 for these applicants fulfilling all the criteria. Many questions still remain on both sides, in particular regarding institutional reform of the EU (Festoc, 1998), and the ability of the Central and Eastern European countries to adopt the “acquis”.

In this article, we shall evaluate the ways in which the Central European countries (Poland, Hungary and the Czech Republic — the CECs) have already integrated to the Western European economy, using trade data over the last ten years. First, we show that since the beginning of the transition, a feature of the foreign trade of the CECs has been a strong reorientation from East to West, in particular to Germany, together with a rapid growth in trade between the EU and the CECs. Second, we describe the trade structure, focussed on foreign direct investment as a mean of developing new exports. The third and fourth sections study the development of the specialisations of the CECs and the nature of trade between the CECs and the EU respectively.

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Ferenc Jánossy was the most important Hungarian pioneer of surveys on long time series. In the 1960s he devised the famous theory of trendlines, which allowed him to forecast the great world economic recession of the 1970s a decade in advance. The best-known international authority on compiling historical time series is Angus Maddison, who prepared time series of the main demographic and macroeconomic indicators for 56 countries, from 1820 to the present day. Both scientists, whose survey method showed both a historical and a quantitative approach, reached the conclusion that human capital is the most important of production factors for securing long-term economic growth. The main purpose of this paper is to compare their results with the latest development, which is known as the “new growth theory”.

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The paper analyses the long-run (steady-state) output and price stability of a small, open economy which adopts a “crawling-peg” type of exchange-rate regime in the presence of various kinds of random shocks. Analytical and simulation results suggest that with the exception of money demand shocks, an exchange rate policy which involves a relatively higher rate of indexation of the exchange rate to price level is likely to lead to the worsening of price stability for all types of shocks. On the other hand, the impact of adopting such a policy on output stability depends on the type of the shock; for policy shocks to the exchange rate and shocks to output demand, output stability is worsened whereas for the shocks to risk premium of domestic assets, supply price of domestic output and the wage rate, better output stability is achieved in the long run.

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This paper addresses the experiences and challenges of Hungary’s monetary policy during the period 1995–2000 and in view of the progress toward EU and EMU membership. The structure of relative prices changed markedly in the past and is expected to continue to change in the future. The reason, in addition to a possible Balassa–Samuelson effect, was the elimination of subsidies and introduction of turnover taxes in the past, and a future convergence toward a price structure prevalent in the EU. In the 1995–2000 period, the resulting gap between CPI and PPI led to massive foreign capital inflows. While the policy of sterilised interventions by the National Bank of Hungary was probably the right answer, it was inevitably costly, and was made costlier than necessary by the way it was carried out. Continued adjustments in the price structure in the future will confront monetary policy with the same dilemmas and, resulting in an inflation floor, will complicate the country’s conditions of joining EMU within a reasonable time frame after EU accession.