Spatial aspects of the restructuring of the Hungarian economy between 2000 and 2019

Abstract

In the years following the regime change of 1989-90, Hungary faced numerous economic and political challenges. Apart from the dominance of privatisation, the ‘90s can definitely be described as a decade of transition. The performance of the Hungarian economy had reached the pre-transition level by the turn of the millennium, while the labour market and the structure of economic sectors had undergone substantial changes. In the present paper, we investigate how stable the developed sectoral structure proved to be in the two decades that followed and what territorial specificities the changes were characterised by. Our main question is how further structural changes – besides the sectors’ performance (productivity) growth – contributed to the changing economic performance of territorial units in the period of 2000-2019. In our study, we divide productivity change into a “between-sector” and a “within-sector” element. We regard the analysis as a relevant research question in general as well. However, the global financial crisis occurring at the “mid-term” of the studied period (2008) represents a special rupture. The analysis framework is provided by the counties (NUTS3 regions), we conduct our analysis in this context. It can be established that the primary factor of productivity growth is the increase of performance within sector groups and not the change in the economic structure of counties. The impact of structural changes is smaller in magnitude and may even have a negative value in several cases, i.e., the economic structure of counties has shifted from higher-productivity sectors towards those with lower productivity.