Hungarian Foreign Trade and Catch-up Development

Abstract

In order to be able to give account of the relevance of the shifts in the regional structure of Hungary’s foreign trade with respect to its perspectives on economic growth (export-oriented development), the following section will outline the most important features of Hungary’s foreign trade during the CMEA era and describe in what direction it developed during the years of transformation. Regional co-operation in the form of a payments union (PU) and a free trade area is seen as a chance for economic growth and development. The concept of a ‘two-tier’ integration is the result of these advantages of regional cooperation and the concept of ‘outward orientation’. This chapter closes with an analysis of the effects of capital imports on catch-up development to conclude that, for Hungary, export surpluses, currency undervaluation and monetary stabilisation form the trinity of a successful process of catch-up development.