Hungary's Open Secret

BUDAPEST: Only a decade ago, with its "goulash socialism" Hungary seemed the most prosperous communist economy. After communism collapsed, Hungarian leaders, and the Hungarian people, thought that their less restricitve system offered big advantages over other communist countries in the race to reform. Where others had to rush, Hungarians thought they could change more slowly. Today, that illusion is tattered.

Hungary's economy differs from other post-communist economies in two ways: the huge debts with which Hungary began the transition, and the open economy that these debts inspired. Although the debt burden decreased since 1993, it still retards growth. As a proportion of GDP Hungary remains one of the most indebted countries of Eastern Europe.

Unlike Poland, however, Hungary never rescheduled its debts. So to maintain creditworthiness, the country has been forced to adopt pragmatic economic policies that today deliver an unusual economic openness -- this, and not the ephemeral benefits of "goulash socialism" is the longterm hope for the Hungarian economy. For with this opening, Hungary absorbed the largest foreign direct investment (FDI) in the region.

To continue reading, please log in or enter your email address.

To access our archive, please log in or register now and read two articles from our archive every month for free. For unlimited access to our archive, as well as to the unrivaled analysis of PS On Point, subscribe now.

required

By proceeding, you agree to our Terms of Service and Privacy Policy, which describes the personal data we collect and how we use it.

Log in

http://prosyn.org/8BcBjxA;

Cookies and Privacy

We use cookies to improve your experience on our website. To find out more, read our updated cookie policy and privacy policy.