Hungarian Foreign Trade: Failure to Reform

Abstract

In Hungary, the first steps toward decentralisation occurred in agriculture in 1965. Although this demonstrated Hungarian commitment to decreasing the role of central planning, it was not until 1968, under the rubric of the New Economic Mechanism (NEM), that most changes were introduced. The primary goal of Hungary’s economic reform was to devise an economic system composed of the best features of market and planned economics. Although successes have been realised, Hungarian reform has suffered disappointing failures in its attempt to find a halfway house between plan and markets. The purpose of this chapter is to explain how overall weaknesses in the implementation of the Hungarian reform have contributed to Hungary’s foreign trade failures and how foreign trade policies have hindered the speed and seriousness of Hungarian reform.