ABSTRACT
This chapter focuses on the development of the Hungarian small business sector before and after the collapse of socialism. It argues the research which was made in the period of 1993-1995. Institutions serving the rapid elimination of the small private business sector were established in 1949 when the dictatorship of the proletars was introduced in Hungary. The new Hungarian government and its opposition agreed that new institutional order and an industrial policy were needed which were in harmony with the nature of the market economy dominated by the private sector. Hungarian agriculture has its own system of small business protection. There are more than ten different preferential loans available for agricultural small businesses. Empirical and statistical evidence shows that the small business sector is the main job creator in several countries. Local governments in big towns also built up institutions of small business protection.
