Restructuring and privatization of the Hungarian manufacturing industry

Abstract

For the third time this century, Hungary is restructuring its industrial and export markets while managing a huge debt burden and a high rate of inflation. The main difference between recent and former transitional periods is that the recent one was caused by an unprecedented wave of political and institutional changes. Hungary wants to move rapidly toward a market economy, develop a policy framework, change the fundamental character of its relations with other countries, and integrate fully into the global economy. In the latest transitional period, unprecedented changes both in the size and character of industrial organizations have occurred. New businesses sprang up and insolvent ones were liquidated. Since this economic reorganization was supported by political changes, privatization became one of the main targets and tools of the restructuring process. Under these circumstances, the transformation of the legal status and organizational forms of business became a preparatory phase of privatization and influenced the reorganization of state enterprises. In this paper, the interaction between economic restructuring and privatization is summarized, the causes of the decline of Hungary's economy are examined, and the impact of foreign investment in Hungary is reviewed.