Abstract
This chapter looks at how reconfiguring Hungarian regimes are linked to changing modes of world-economic integration since the world-economic crisis of the 1970’s. It traces the process through which a “bridge” position of the Hungarian economy, relying on Western technological imports counterbalanced by the export of cheap Soviet oil and raw materials got dismantled in the context of the 1970’s crisis, and how resulting reorganizations prepared the ground for the privatizations and Western FDI-based model of the 1990’s. Then, the chapter follows how the end of privatization is succeeded by a debt-led integration model in the 2000’s, and replaced after the crisis of 2008 by a reconfiguration of internal–external structures of world economic integration defined by a politics of the present conservative government that combines a dependent integration subservient to the needs of foreign capital with a broadening of state-backed oligarchic national capital in non-tradable sectors. The chapter points out how strategies of external integration are intertwined with changing global geopolitical relations, manifesting in the increasing role of Russian and Chinese finance locally.
This research was co-financed by the project “From developmental states to new protectionism: changing repertoire of state interventions to promote development in an unfolding new world order” (OTKA FK_124573), supported by the NRDIO (NKFIH) in Hungary.
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Notes
- 1.
Trade with the global South remained miniscule compared to Western trade and, because in some instances it did not deliver expected results, it had been deprioritized by the 1980s.
- 2.
The third group, the energy lobby, played a more important role in the 1980s.
- 3.
On top of that between 1979 and 1981 US Federal Reserve raised the Fed-interest rate which caused turbulence in international money markets. The crisis culminated in a series of sovereign defaults all over the global semi-periphery from Latin America, Africa, Eeastern Europe, and southern Asia in the 1980s and early 1990s.
- 4.
The background of these national capitalist classes traces back to state socialist reform-technocrats, corporate managers, and petit entrepreneurs who could partially turn privatization to their benefit thanks to political connections they had nurtured in the late socialist reform period.
- 5.
- 6.
Some of these industrial policies were co-drafted by Hungarian government officials from the Ministry of Innovation and Technology, and agents of German lobby organizations, for example the German-Hungarian Chamber of Industry and Commerce.
- 7.
The official corporate flat-tax rate is 9%, but the effective tax which companies paid in 2018 after specific allowances was only 7.2%, while the 30 largest multinationals—dominated by German manufacturers—were calculated to have paid an effective rate of 3.,6%. The Hungarian personal income tax system is similarly flat, with a universal rate of 15%. In contrast to the low corporate and income tax rates, Hungary introduced the highest value-added tax that was possible within the tax-harmonization framework of the EU, with a rate of 27%.
- 8.
- 9.
The former Comecon Development Bank, established in 1970; members are Bulgaria, Cuba, Czechia, Hungary, Mongolia, Romania, Russia, Slovakia, and Vietnam.
- 10.
Since 2015, three out of the four largest Chinese banks by total assets, China Construction Bank, Bank of China, and Agricultural Bank of China, already use Budapest for regional offshore RMB transactions.
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Gagyi, A., Gerőcs, T. (2022). Reconfiguring Regimes of Capitalist Integration: Hungary Since the 1970s. In: Gagyi, A., Slačálek, O. (eds) The Political Economy of Eastern Europe 30 years into the ‘Transition’. International Political Economy Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-78915-2_7
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