ABSTRACT
The magnitude of the deindustrialization process in Hungary can be seen by comparing 1991 output volume indices, taking the levels of 1987. Since the economic-policy background of structural developments in industry is described, this chapter outlines changes in the macrostructure of industry. This dwindling of industry that one describes leads to the question of the role of the state in the restructuring process, with some questions on the possible scope of current industrial policy in Hungary. The growth picture of Hungarian industry is very clearly that of rapidly shrinking production across the board, with several subsectors where more than half of output has disappeared since 1987 or, in some cases, just in 1990 and 1991. The causes of the dramatic overall productivity decline in Hungarian industry have not yet been thoroughly analyzed. Only sporadic material is available from enterprise-level interviews. The declining trend of investment has resulted in a dramatic undercapitalization of many industrial firms.
