Abstract
The chapter argues that the Hungarian economy relies almost exclusively on foreign direct investments. It is shown how governments in Hungary managed this structural dependency. In 2010 the lack of convergence to the West, an extreme lack of social mobility and economic misgovernance during the global financial crisis resulted in the collapse of the Socialist-Liberal coalition of Ferenc Gyurcsány. This left the way open for Viktor Orbán and his Fidesz government. While positioning as anti-neoliberal, Orbán dismantled the welfare system and coupled a neoliberal economic regime with popular mood enhancing measures and crony capitalism. Low taxes and wages shall attract foreign investors in the hope that they will create jobs. It is argued that this model is unsustainable and dependent on external financing from Western Europe and the EU.
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Notes
- 1.
Guernsey, Jersey, Isle of Man, Cayman Islands, British Virgin Islands, etc.
- 2.
A striking example: in the city of Győr, a Natura 2000 site was opened for industrial construction because Audi was set to build a new production plant there. The European Commission astonishingly decided in favour of ‘job creation’.
- 3.
The deployment of a GNI rather than a GDP indicator would still not account for losses due to transfer pricing.
- 4.
A comparison on purchasing power parity (PPP) would be more appropriate here. Unfortunately, the PPP indicators of Eurostat are highly problematic. The Eastern European figures are diminished by the inclusion of services (hotel, taxi, restaurants), which domestic citizens hardly consume. There is also no reliable inflation component for housing prices, a leading expenditure.
- 5.
As for instance to the telegraph on 13 October 2013, where he agrees with her “there is no such thing a society remark” and professes to be against “social engineering”.
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Pogátsa, Z. (2021). The Political Economy of Hungary: Managing Structural Dependency on the West. In: Bos, E., Lorenz, A. (eds) Das politische System Ungarns. Springer VS, Wiesbaden. https://doi.org/10.1007/978-3-658-31900-7_8
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