Privatization and Foreign Capital in the Hungarian Food Industry

Abstract

The food industry has been one of the success stories of Hungarian privatization, accounting for 47 percent of the earnings from privatization so far. By June 1993, 87 of the 138 state-owned enterprises (SOEs) in the food industry had been converted into companies, of which 41 were partly or wholly privatized, in most cases with foreign participation. The value of the foreign stake at present amounts to 25-26 percent of the food industry's total assets. This paper has five main aims: * to review the progress and early results of privatization, especially the ways and means employed and the main motives behind it in the various branches of the food industry; * to outline an explanation for the failure or slowness of privatization in the meat, poultry, dairy, grain, milling, canning, deep-freezing, and wine sectors; * to estimate the importance of foreign capital in terms of participation, share, origin, and business strategy; * to make a preliminary estimate of the impact of privatization, particularly in terms of the privatized firms' production, finances, labor situation, profitability, and degree of technical development; * to outline a possible future Hungarian strategy for further