Principles of the Economic Philosophy in Hungary

Since the elections in April 2014, numerous economic and political analyses have been published on what happened and what the future will look like for Hungary. From among the abundant explanations and forecasts the most powerful one to emerge has been the government narrative. After winning the overwhelming majority of parliamentary seats, it seems that the master plan of Viktor Orban has finally been achieved. He can position his party in the middle of the political arena and himself as the defender of democracy against far right party Jobbik. At the same time, the totally fragmented ‘left’, which has been unable to formulate coherent economic and political messages, is far from being able to pose a serious challenge to the government. The aim of the present analysis is to serve as a basis to reveal the fundamental principles behind the government’s economic policy. The understanding of the economic philosophy helps to see economic decisions and measures in their complexity and to judge the long-term economic sustainability of the government strategy with confidence. This strategy may have significant consequences and set a strong framework for the economic and social development of the next decade. (Click on the picture)
 

Implications of TTIP on CEE

Impacts of the TTIP (Transatlantic Trade and Investment Partnership) on Central and Eastern Europe depend on the details of the final agreement. If it develops into a deep, comprehensive agreement, the impacts will be far bigger. In this case Central European member countries of the EU would theoretically gain a lot due to their integration into the division of labor mostly through transnational firms at different levels of their supplier chain. Had the governments of these countries pursued outward looking economic policies and improved business environment, this would attract additional foreign direct investments. However, the risk of inward looking policies in this region is intensifying, which would render the utilization of opportunities even more difficult. Regarding third countries from the region, the strategy Russia chooses to adopt seems to be the most important. The negative implications of a deep TTIP would be intense. The first impact would be related to trade diversion in the short run. The long term implication is, however, much more serious and relates to Russian energy exports that make up around 75% of Russian sales to the EU. As the TTIP would improve the market access of US energy to Europe, Russian energy exports would be seriously hit. To counterbalance these negative implications, in addition to export reorientation towards other countries, this country may want to increase its influence in other sectors through investments into European assets. In an extreme case, the TTIP may trigger stronger cooperation among large emerging countries to formulate concerted efforts to neutralize negative consequences of the agreement.

 

 

 

Economic Perspectives of the Western Balkans

The economic situation in the Western Balkans can be best described with the term “cumulative crisis”. Unfavorable economic consequences of the wars and the disruption of international economic relations in the nineties were aggravated by the problems of transition and reform after the turn of the millennium. This already difficult situation was further exacerbated by the international economic and political crisis in recent years. In order to manage the region’s multiple economic challenges, the solutions offered by international institutions are mostly based on budget consolidation and structural reforms. Austerity measures may be coupled with the privatization of currently profitable firms through the involvement of foreign capital in order to increase budget revenues and because of the scarcity of domestic capital. Based on recent developments across several countries, it is realistic to expect that these measures will significantly increase the risk of hostile attitudes against foreign investors and owners unless the living standard of households improves according to expectations. The same disappointment may easily prompt hostility against the European Union or the democratic transformation resulting in increasing resistance against the current economic and political model. (Click on the picture.) 

 

Gazdaságfilozófiai alapelvek Magyarországon

A 2014. áprilisi választások óta megsokasodtak a mi történt és a mi lesz kérdéseket feszegető politikai és gazdasági elemzések, amelyekből a legerősebb narratíva egyértelműen a kormányzaté. Megvalósulni látszik Orbán Viktor terve, amely szerint politikailag középre pozícionálva a Fidesz a Jobbikkal szemben a demokrácia védelmezőjeként tudja megjeleníteni magát, miközben a szétforgácsolt és mondanivaló nélküli baloldal inkompetenciáját kihasználva komolyabb ellenállás nélkül kedvére teheti, amit akar. Ebben az elemzésben a gazdaságpolitikát mozgató alapelveket mutatom be. Ezek megértése segít átlátni és rendszerben szemlélni a gazdasági döntéseket és azok fenntarthatóságát. A jelenlegi célrendszer érvényesítése komoly hosszú távú következményekkel jár, korlátlan megvalósulása alapvetően meghatározza a következő évtized gazdasági és társadalmi működési környezetét. (Klikk a képre!)