The Neoliberal Reconfiguration of the Hungarian Political Economy, 1990–2006

  • Adam Fabry


This chapter examines the methods by which neoliberal ideas and practices were consolidated in Hungary between 1990 and 2006, as well as the variegated impact of neoliberal restructuring on society. Challenging accounts of neoliberal transformation as a relatively harmonious process, the chapter argues for a more critical understanding of this process, which stresses the importance of both economic and political coercion, as well as the extensive investment in the ideological underpinnings of neoliberalism by both external organisations, such as the International Monetary Fund (IMF) and the World Bank, the European Union (EU), the United States Agency for International Development (USAID), multinational corporations (MNCs), and neoliberal think tanks, and domestic economic and political elites. Analysing the politico-economic trajectory of Hungary from 1990 to the mid-2000s, the chapter shows that, although the country did become a ‘poster boy’ of neoliberal transformation in the region, its emergent regime of accumulation was fraught with contradictions and limitations. These limitations were revealed during the massive anti-government protests that rocked Hungary during the autumn of 2006.


Foreign direct investment Hungary Labour Neoliberalism Privatisation Uneven development 


  1. ‘A Széles-birodalom’. (2005, October 9). Retrieved March 13, 2018, from
  2. ACEA. (2008). Country Profile: Hungary. European Automobile Manufacturers Association (ACEA). Retrieved from
  3. Andor, L. (2000). Hungary on the Road to the European Union: Transition in Blue. Westport, CT: Praeger.Google Scholar
  4. Andor, L. (2004). Medgyessytől Medgyessyig: Vázlat az MSZP gazdaságpolitikájának tizenöt évéről. In I. Feitl, G. Földes, & L. Hubai (Eds.), Útkeresések: A magyar szociáldemokrácia tegnap és ma (pp. 168–195). Budapest: Napvilág Kiadó.Google Scholar
  5. Andor, L. (2010). Eltévedt éllovas: Siker és kudarc a rendszerváltó gazdaságpolitikában. Budapest: Napvilág.Google Scholar
  6. Antal, L. (1995). A Bokros-csomag. Beszélő, 5(5). Retrieved March 10, 2019, from
  7. Åslund, A. (2002). Building Capitalism: The Transformation of the Former Soviet Bloc. Cambridge and New York, NY: Cambridge University Press.Google Scholar
  8. Avery, N. (1993, September). Stealing from the State. Multinational Monitor. Retrieved January 9, 2013, from
  9. Bandelj, N. (2008). From Communists to Foreign Capitalists: The Social Foundations of Foreign Direct Investment in Post-socialist Europe. Princeton, NJ: Princeton University Press.Google Scholar
  10. Bodnár, J. (2007). Becoming Bourgeois: (Post-socialist) Utopias of Isolation and Civilization. In M. Davis & D. B. Monk (Eds.), Evil Paradises: Dreamworlds of Neoliberalism (pp. 140–151). New York, NY: The New Press.Google Scholar
  11. Bohle, D. (2010). Countries in Distress: Transformation, Transnationalization, and Crisis in Hungary and Latvia. Employment and Economy in Central and Eastern Europe, 1(1), 1–16.Google Scholar
  12. Bohle, D., & Greskovits, B. (2006). Capitalism without Compromise: Strong Business and Weak Labor in Eastern Europe’s New Transnational Industries. Studies in Comparative International Development, 41(1), 3–25. Scholar
  13. Bohle, D., & Greskovits, B. (2007a). Neoliberalism, Embedded Neoliberalism and Neocorporatism: Towards Transnational Capitalism in Central-Eastern Europe. West European Politics, 30(3), 443–466. Scholar
  14. Bohle, D., & Greskovits, B. (2007b). The State, Internationalization, and Capitalist Diversity in Eastern Europe. Competition & Change, 11(2), 89–115. Scholar
  15. Bohle, D., & Greskovits, B. (2012). Capitalist Diversity on Europe’s Periphery. Ithaca, NY: Cornell University Press.Google Scholar
  16. Brainerd, E. (2000). Women in Transition: Changes in Gender Wage Differentials in Eastern Europe and the Former Soviet Union. ILR Review, 54(1), 138–162. Scholar
  17. Cass, F. (2007). Attracting FDI to Transition Countries: The Use of Incentives and Promotion Agencies. Transnational Corporations, 16(2), 77–122.Google Scholar
  18. Crouch, C. (2009). Privatised Keynesianism: An Unacknowledged Policy Regime. British Journal of Politics & International Relations, 11(3), 382–399. Scholar
  19. Crouch, C. (2011). The Strange Non-death of Neoliberalism. Cambridge and Malden, MA: Polity Press.Google Scholar
  20. Crowley, S. (2008). Does Labor Still Matter? East European Labor and Varieties of Capitalism (Working Paper No. 823-14n). Seattle, WA: National Council for Eurasian and East European Research.Google Scholar
  21. Crowley, S., & Ost, D. (2001). Workers after Workers’ States: Labor and Politics in Post-communist Eastern Europe. Lanham, MD: Rowman & Littlefield.Google Scholar
  22. Csaba, L. (2000). Between Transition and EU Accession: Hungary at the Millennium. Europe-Asia Studies, 52(5), 805–827.CrossRefGoogle Scholar
  23. Csáki, G., & Karsai, G. (2001). Evolution of the Hungarian Economy, 1848–2000. Vol. 3. Boulder, CO: Social Science Monographs.Google Scholar
  24. Csurka, I. (1992). Néhány gondolat és nyolc társgondolat. Budapest: Magyar Fórum.Google Scholar
  25. Denton, N. (1990, September 26). A Flawed Jewel Impatient to Enhance Its Lustre. Financial Times.Google Scholar
  26. Denton, N., & Bobinski, C. (1990, September 15). Hungary Releases Its Privatization Shortlist. Financial Times.Google Scholar
  27. Dimireva, I. (2009, October 29). Hungary Investment Climate 2009. EU Business. Retrieved June 8, 2010, from
  28. Dörrenbächer, C. (2007). Challenges for Foreign-Owned Subsidiaries in FDI-Led Modernization Strategies: The Case of Hungary. Competition & Change, 11(2), 179–197. Scholar
  29. Drahokoupil, J. (2009). Globalization and the State in Central and Eastern Europe: The Politics of Foreign Direct Investment. London and New York, NY: Routledge.Google Scholar
  30. Dunn, B. (2009). Global Political Economy: A Marxist Critique. London: Pluto Press.Google Scholar
  31. EBRD. (2002). Transition Report 2002: Agriculture and Rural Transition. London: European Bank for Reconstruction and Development.Google Scholar
  32. EBRD. (2004). Transition Report 2004: Infrastructure. London: European Bank for Reconstruction and Development (EBRD).Google Scholar
  33. Endnotes, & Benanav, A. (2010). Misery and Debt. Endnotes, 2, 20–51.Google Scholar
  34. Ernst & Young. (2013). The Central and Eastern European Automotive Market: Hungary. Retrieved July 31, 2013, from
  35. ETUI. (2016). Hungary: Trade Unions. European Trade Union Institute (ETUI). Retrieved April 24, 2018, from
  36. Eurequal. (2006). The State of Inequality in the Central and Eastern Europe: Desk Research on Hungary (Working Paper). Oxford: Eurequal.Google Scholar
  37. Eurostat. (2018). Eurostat Statistical Database. Retrieved April 18, 2018, from
  38. ‘Excerpts: Hungarian “lies” speech’. (2006, September 19). BBC News. Retrieved July 21, 2016, from
  39. Fabry, A. (2009). End of the Liberal Dream: Hungary since 1989. International Socialism Quarterly, 124, 71–84.Google Scholar
  40. Fink, P. (2006). FDI-Led Growth and Rising Polarisations in Hungary: Quantity at the Expense of Quality. New Political Economy, 11(1), 47–72.CrossRefGoogle Scholar
  41. Fóti, K. (Ed.). (2003). Towards Alleviating Human Poverty: Analysis and Recommendations. Human Development Report for Hungary, 2000–2002. Budapest: Institute for World Economics of the Hungarian Academy of Sciences and United Nations Development Programme (UNDP).Google Scholar
  42. Frydman, R., & Rapaczynski, A. (1994). Privatization in Eastern Europe: Is the State Withering Away? Budapest and New York, NY: Central European University Press.Google Scholar
  43. Gács, J. (2003). Structural Change and Catching Up: The Experience of Ten Candidate Countries. In G. Tumpel-Gugerell & P. Mooslechner (Eds.), Economic Convergence and Divergence in Europe. Growth and Regional Development in an Enlarged European Union (pp. 131–167). Cheltenham and Northampton, MA: Edward Elgar.Google Scholar
  44. Genov, N. (2010). Global Trends in Eastern Europe. Farnham and Burlington, VT: Ashgate.Google Scholar
  45. Gill, S. (2001). Constitutionalising Capital: EMU and Disciplinary Neo-liberalism. In A. Bieler & A. D. Morton (Eds.), Social Forces in the Making of the New Europe (pp. 47–69). Basingstoke: Palgrave.CrossRefGoogle Scholar
  46. Gowan, P. (1999a). The Global Gamble: Washington’s Faustian Bid for World Dominance. London: Verso.Google Scholar
  47. Gowan, P. (1999b). The Theory and Practice of Neo-liberalism for Eastern Europe. In Ibid., The Global Gamble: Washington’s Faustian Bid for World Dominance (pp. 187–247). London: Verso.Google Scholar
  48. Greskovits, B. (2000). Hungary’s Post-communist Development in Comparative Perspective. In W. Baer & J. L. Love (Eds.), Liberalization and Its Consequences: A Comparative Perspective on Latin America and Eastern Europe (pp. 126–149). Cheltenham: Edward Elgar.Google Scholar
  49. Greskovits, B. (2001). Brothers-in-Arms or Rivals in Politics? Top Politicians and Top Policy-makers in the Hungarian Transformation. In J. Kornai, S. Haggard, & R. Kaufman (Eds.), Reforming the State: Fiscal and Welfare Reform in Post-socialist Countries (pp. 111–141). New York, NY: Cambridge University Press.CrossRefGoogle Scholar
  50. Hamar, J. (1999). Regional Effects of FDI Inflows in Hungary. Acta Oeconomica, 50(1–2), 169–190.Google Scholar
  51. Hanley, E., King, L., & János, I. T. (2002). The State, International Agencies, and Property Transformation in Post-communist Hungary. American Journal of Sociology, 108(1), 129–167.CrossRefGoogle Scholar
  52. Hardy, J. (2008). Poland’s New Capitalism. London: Pluto.Google Scholar
  53. Harvey, D. (2007). A Brief History of Neoliberalism. Oxford: Oxford University Press.Google Scholar
  54. ‘History of the Hungarian American Enterprise Scholarship Fund’ (HAESF). (2013). Retrieved November 27, 2013, from
  55. HITD. (2007). The Automotive Industry in Hungary: Engine of Growth. Budapest: Hungarian Investment and Trade Development Agency (HITD).Google Scholar
  56. Horn, G. (1999). Azok a kilencvenes évek. Budapest: Kossuth Kiadó.Google Scholar
  57. Hunya, G. (1999). Integration through Foreign Direct Investment: Making Central European Industries Competitive. Cheltenham: Edward Elgar.Google Scholar
  58. Iankova, E. A. (2002). Eastern European Capitalism in the Making. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  59. Inzelt, E. (2011). White-Collar Crime during the Political and Economic Transition in Hungary. US-China Law Review, 8(2), 352–379.Google Scholar
  60. Jacoby, W. (2010). Managing Globalization by Managing Central and Eastern Europe: The EU’s Backyard as Threat and Opportunity. Journal of European Public Policy, 17(3), 416–432. Scholar
  61. Jeffries, I. (1993). Socialist Economies and the Transition to the Market: A Guide. London and New York, NY: Routledge.CrossRefGoogle Scholar
  62. Kiss, J. P. (2001). Industrial Mass Production and Regional Differentiation in Hungary. European Urban and Regional Studies, 8(4), 321–328.CrossRefGoogle Scholar
  63. Klein, N. (2007). The Shock Doctrine: The Rise of Disaster Capitalism. London: Allen Lane.Google Scholar
  64. Kornai, J. (1990). The Road to a Free Economy. Shifting from a Socialist System: The Example of Hungary. New York, NY: Norton.Google Scholar
  65. Kornai, J. (2006). The Great Transformation of Central Eastern Europe. Economics of Transition, 14(2), 207–244.CrossRefGoogle Scholar
  66. Ladányi, J. (2002). Residential Segregation Among Social and Ethnic Groups in Budapest during the Post-communist Transition. In P. Marcuse & R. van Kempen (Eds.), Of States and Cities: The Partitioning of Urban Space (pp. 170–182). Oxford: Oxford University Press.Google Scholar
  67. Laky, T. (2002). Labour Market in Hungary. In K. Fazekas & J. Koltaz (Eds.), The Hungarian Labour Market, 2002 (pp. 11–36). Budapest: Institute of Economics, HAS; National Employment Foundation.Google Scholar
  68. Lapavitsas, C. (2013). Profiting Without Producing: How Finance Exploits Us All. London: Verso.Google Scholar
  69. Lapavitsas, C., & Research on Money and Finance (RMF). (2010). Eurozone Crisis: Beggar Thyself and Thy Neighbour (Occasional report). London: Research on Money and Finance.Google Scholar
  70. Lipton, D., & Sachs, J. (1990). Creating a Market Economy in Eastern Europe: The Case of Poland. Brookings Papers on Economic Activity, 1990(1), 75–147. Scholar
  71. Lóránt, K. (2007). A Magyarország eladósódásával kapcsolatos legfontosabb tudnivalok. Nemzeti Érdek, 1(4), 28–41.Google Scholar
  72. Magyar Nemzeti Bank (MNB). (2007). Foreign Direct Investment in Hungary, 1995–2005. Budapest.Google Scholar
  73. Marx, K. (1980). Capital. A Critique of Political Economy. Volume 1 (B. Fowkes, Trans.). London: Penguin Classics.Google Scholar
  74. McNally, D. (2011). Global Slump: The Economics and Politics of Crisis and Resistance. Oakland, CA: PM Press.Google Scholar
  75. ‘Médiabirodalmat épít Széles Gábor’. (2005, September 15). Retrieved March 13, 2018, from
  76. Medve-Bálint, G. (2014). The Role of the EU in Shaping FDI Flows to East Central Europe. JCMS: Journal of Common Market Studies, 52(1), 35–51.Google Scholar
  77. Mitra, P., Selowsky, M., & World Bank (Eds.). (2002). Transition, the First Ten Years. Analysis and Lessons for Eastern Europe and the Former Soviet Union. Washington, DC: World Bank.Google Scholar
  78. Mocsáry, J. (2001). Visszapillantás a privatizációra. Eszmélet, 1(52), 4–39.Google Scholar
  79. Mommen, A. (2004). Magyarország neoliberális forradalma, a kapitalista globalizáció sikertörténete? Eszmélet, 1(63), 159–176.Google Scholar
  80. Myant, M., & Drahokoupil, J. (2011). Transition Economies: Political Economy in Russia, Eastern Europe and Central Asia. Hoboken, NJ: Wiley.Google Scholar
  81. Nagy, P. (2003). From Command to Market Economy in Hungary under the Guidance of the IMF. Budapest: Akadémiai Kiadó.Google Scholar
  82. OECD. (2004). OECD Economic Surveys: Hungary 2004. Paris: Organisation for Economic Co-operation and Development (OECD).Google Scholar
  83. OECD. (2011). Divided We Stand: Why Inequality Keeps Rising. Paris: Organisation for Economic Co-operation and Development (OECD).CrossRefGoogle Scholar
  84. Pascall, G., & Manning, N. (2000). Gender and Social Policy: Comparing Welfare States in Central and Eastern Europe and the Former Soviet Union. Journal of European Social Policy, 10(3), 240–266. Scholar
  85. Pavlínek, P. (2004). Regional Development Implications of Foreign Direct Investment in Central Europe. European Urban and Regional Studies, 11(1), 47–70. Scholar
  86. Phillips, R., Henderson, J., Andor, L., & Hulme, D. (2006). Usurping Social Policy: Neoliberalism and Economic Governance in Hungary. Journal of Social Policy, 35(4), 585–606. Scholar
  87. Piketty, T. (2018, January 16). 2018, The Year of Europe. Le blog de Thomas Piketty. Retrieved April 4, 2018, from
  88. Pirani, S. (2009). Change in Putin’s Russia: Power, Money and People. London: Pluto.Google Scholar
  89. Pogátsa, Z. (2009). Hungary: From Star Transition Student to Backsliding Member State. Journal of Contemporary European Research, 5(4), 597–613.Google Scholar
  90. Rádai, E. (2001). Pénzügyminiszterek reggelire. Rádai Eszter beszélget Békesi Lászlóval, Bokros Lajossal, Kupa Mihállyal, Medgyessy Péterrel, Rabár Ferenccel, Szabó Ivánnal. Budapest: Helikon; Beszélő.Google Scholar
  91. Radosevic, S., & Yoruk, D. E. (2001). Videoton: The Growth of Enterprise through Entrepreneurship and Network Alignment (Working Paper No. 3). London: UCL School of Slavonic and East European Studies (SSEES).Google Scholar
  92. Ringold, D. (2000). Roma and the Transition in Central and Eastern Europe: Trends and Challenges. Washington, DC: World Bank Publications.CrossRefGoogle Scholar
  93. Ringold, D., Orenstein, M. A., & Wilkens, E. (2005). Roma in an Expanding Europe: Breaking the Poverty Cycle. Washington, DC: World Bank Publications.Google Scholar
  94. Saad-Filho, A. (2010). Neoliberalism in Crisis: A Marxist Analysis. Marxism 21, 14(1), 247–270.Google Scholar
  95. Sachs, J. (1990, June 13). What Is to Be Done? The Economist.Google Scholar
  96. Sass, M. (2003). The Effectiveness of Host Country Policy Measures in Attracting FDI: The Case of Hungary. In A. B. Zampetti & T. Fredriksson (Eds.), The Development Dimension of FDI: Policy and Rulemaking Perspectives (pp. 49–58). Geneva: UNCTAD.Google Scholar
  97. Scheiring, G., Stefler, D., Irdam, D., Fazekas, M., Azarova, A., Kolesnikova, I., & King, L. (2018). The Gendered Effects of Foreign Investment and Prolonged State Ownership on Mortality in Hungary: An Indirect Demographic, Retrospective Cohort Study. The Lancet: Global Health, 6(1), e95–e102. Scholar
  98. Smith, A., & Timár, J. (2010). Uneven Transformations: Space, Economy and Society 20 Years after the Collapse of State Socialism. European Urban and Regional Studies, 17(2), 115–125.CrossRefGoogle Scholar
  99. Stiglitz, J. E. (1994). Whither Socialism? Cambridge, MA: MIT Press.Google Scholar
  100. Stiglitz, J. E. (2002). Globalization and Its Discontents. New York, NY: W.W. Norton.Google Scholar
  101. Szalai, E. (2001). Gazdasági elit és társadalom a magyarországi újkapitalizmusban. Budapest: Aula.Google Scholar
  102. Szalai, E. (2008). New Capitalism—And What Can Replace It. Budapest: Pallas Kiadó.Google Scholar
  103. Szalavetz, A. (2005). Structural Change—Structural Competitiveness (Working Paper No. 155). Budapest: Institute of World Economics, Hungarian Academy of Sciences.Google Scholar
  104. Szelényi, S. (1987). Social Inequality and Party Membership: Patterns of Recruitment into the Hungarian Socialist Workers’ Party. American Sociological Review, 52(5), 559–573.CrossRefGoogle Scholar
  105. ‘The MMI Top 50 for 2017’. (2017). Retrieved March, 13 2018, from
  106. Tosics, I. (2000). Lakáspolitika – szociális várospolitika. Budapesti Negyed, 8(2), 133–150.Google Scholar
  107. ‘Transformed: EU membership has worked magic in Central Europe’. (2005, June 23). The Economist, pp. 6–8.Google Scholar
  108. UNCTAD. (2005). World Investment Report, 2005: Transnational Corporations and the Internationalization of R&D. New York, NY and Geneva: United Nations Conference on Trade and Development (UNCTAD).Google Scholar
  109. USAID. (2013). The Enterprise Funds in Europe and Eurasia: Successes and Lessons Learned. Washington, DC: United States Agency for International Development (USAID). Retrieved from Scholar
  110. Vanhuysse, P. (2006). Divide and Pacify: Strategic Social Policies and Political Protests in Post-communist Democracies. Budapest and New York, NY: Central European University Press.Google Scholar
  111. VIDEOTON. (n.d.). Record Income in the Life of Videoton Holding. Retrieved May 28, 2018, from
  112. VIDEOTON. (2017). VIDEOTON: One Company—Infinite Possibilities. Székesfehérvár: VIDEOTON. Retrieved from Scholar
  113. Völgyes, I. (1978). Modernization, Stratification and Elite Development in Hungary. Social Forces, 57(2), 500–521.CrossRefGoogle Scholar
  114. Voszka, É. (1995). Centralization, Re-nationalization, and Redistribution: Government’s Role in Changing Hungary’s Ownership Structure. In J. Hausner, B. Jessop, & K. Nielsen (Eds.), Strategic Choice and Path-dependency in Post-socialism (pp. 287–308). Brookfield, CT: Edward Elgar.Google Scholar
  115. Wedel, J. R. (1998). Collision and Collusion: The Strange Case of Western Aid to Eastern Europe. New York, NY: Palgrave Macmillan.Google Scholar
  116. World Bank. (1996). From Plan to Market. New York, NY: World Bank.Google Scholar
  117. World Bank. (1999). Hungary: On the Road to the European Union. Washington, DC: World Bank.Google Scholar

Copyright information

© The Author(s) 2019

Authors and Affiliations

  • Adam Fabry
    • 1
  1. 1.Centre for Study on Culture and Society National Scientific and Technical Research CouncilNational University of CórdobaCórdobaArgentina

Personalised recommendations