ABSTRACT

This chapter discusses the major macroeconomic developments in Hungary since the beginning of 1989. Hungary's full-scale privatization efforts did not begin until after 1989 and this country, like many others, encountered problems along the way and progress was delayed intermittently. The chapter also discusses the general macroeconomic changes to inflation, employment, economic growth, net exports, and government debt. It reviews the privatization process and the notable presence of international investors in Hungary. The chapter examines the connection among economic growth, inflation, and employment changes that occurred in Hungary since 1989. Any economy that undergoes dramatic changes in its ownership of resources, structure, production facilities and output, will necessarily witness significant changes in its labor market. The chapter explains those changes from the early days of the transition in Hungary through 1996. The Hungarian economy would recover eventually from this initial phase as industries were restructured, policymakers held interest rates down and substantial capital was generated especially through direct foreign investment.