Changes in the Structure of Industrial Production and Foreign Trade in the Period of Restrictions, 1978-1986

Abstract

After 1978-79 the functioning and the performance of the Hungarian economy was directly affected by the unprecedented degree of extemal imbalance and the consequent restrictions applied by the central authorities. The growth of industrial production decelerated markedly in these years. As against an annual average 6-percent growth rate in 1970-78, measured in comparable prices, in 1978-86 the value of this indicator dropped to 1.4 percent. In the first period there were only two of fifty-seven industries having no growth in these eight years: coal mining, and brick and slate production. In the second period, however, in another eight-year span, production decreased in nineteen industries. A production decline of such an extent is a new and unusual phenomenon in the economic history of the past forty years. Similarly unusual is the particularly abrupt drop in the output of several industries. The most striking example is the leather and fur industry, where production today is only two-thirds of what it used to be eight years ago. But quarry and gravel production decreased by nearly 30 percent, too, and the output of the other wood industry and of handicmfts and homecrafts by approximately 20 percent. Another sign of the slackening of general growth is the deceleration of production growth in each of the industries of the industrial sector, disaggregated to nine industries (see Table 1). A more detailed breakdown of the industrial sector shows that in forty-eight of the fifty-seven industries the second period was characterized by a lower rate of production growth than the first one, or by a decline. In one industry the fall in production was moderated and only eight industries, four of them belonging to the food industry, were able to achieve an increase in their rate of growth.