Discussion Papers 2001. No. 35.
Regional Development and Governance in Hungary
CENTRE FOR REGIONAL STUDIES
OF HUNGARIAN ACADEMY OF SCIENCES
DISCUSSION PAPERS
No. 35
Regional Development and Governance
in Hungary
by
Ilona PALNE KOVACS
Series editor
Zoltan GAL
Pecs
2001
Discussion Papers 2001. No. 35.
Regional Development and Governance in Hungary
Publishing of this paper is supported by the
Research and Publishing Fund of the Centre for Regional Studies, Hungary
ISSN 0238-2008
2000 by Centre for Regional Studies of the Hungarian Academy of Sciences
Technical editor: Ilona Csape, Zoltan Gal
Typeset by Centre for Regional Studies of HAS Printed in Hungary by Siimegi
Nyomdaipari, Kereskedelmi es Szolgaltato Ltd., Pecs
Discussion Papers 2001. No. 35.
Regional Development and Governance in Hungary
Contents
1 The legal frameworks of the decentralisation / 7
2 The structure of the model / 9
2.1 Fragmented municipalities / 9
2.2 Weak meso-tier /10
2.3 Expanding deconcentrated state administration /13
2.4 Lack of associations /15
3 The regional development policy before 1996 / 19
4 Reform of the local governmental system in 1994 /21
4.1 Slow integration / 21
4.2 Ambivalent strengthening of county assemblies / 23
4.3 Careful steps towards the integration of territorial state administration / 24
5 The act on regional development in 1996 /25
5.1 The regulation /25
5.2 The first experiences of functioning of the regional policy /30
6 The agenda of the territorial reforms /32
6.1 Reform alternatives for territorial division to replace the "too small" or
"too large" counties /33
6.2 The failure of the reform debates — Concealment of political aspects /34
7 The story since 1998 — the regionalisation — ultimate chance? / 36
References / 40
Discussion Papers 2001. No. 35.
Regional Development and Governance in Hungary
List of Tables
Table 1 Main data on local governments 1 January 1992, 1998, 2000 /11
Table 2 Number and population of settlements by population size-groups,
1 January 1997 and 2000 /11
Table 3
Number of the settlements (districts) participating in
associations (1992) /16
Table 4 Number of settlements (districts) participating in associations
(1999) / 16
Table 5 Situation of micro-regional development associations in 1994 / 17
Table 6 Situation of micro-regional development associations in 1999 / 17
Table 7 Local government budgets as % of total incomes between
1993-1999 /23
List of Figures
Figure 1 Map of public administration in Hungary /12
Figure 2 Central and Regional Public Administration in Hungary in 1994 / 14
Figure 3 Central and Regional Public Administration in Hungary in 1998 / 26
Figure 4 The key organisations of regional development in Hungary /28
Figure 5 Various designations of the regions in Hungary /31
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
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Discussion Papers, No. 35.
1 The legal frameworks of the decentralisation
Following the systemic change the first really significant legal document passed by
the newly elected parliament was the Act on Local Governments. The preparation
of the Act progressed in the crossfire of serious political debates, since all political
groups realised that the act will fundamentally impact the future power exercise.
Despite of the number of amendments and debates the act was passed with a sig-
nificant majority.
The Act meets international standards as far as its spirit and liberalism are con-
cerned and at the same time, has brought a dramatic change in the structure of
Hungarian public administration. The Act declares the right to self-governance, as
the collective right of citizens living within one locality, therefore the settlement
became the key element in the local government system. It is conspicuous in both
the Act on Local Governments and the Constitution that the legislature strove at
creating the guarantees of the local governments' autonomy in terms of structure
and decision-making. This is reflected by the enumeration of the basic rights of
local governments, the declaration of equity in terms of their legal status. The
regulation of the relationship to the state as well as the weak control of lawfulness
over the local governments seem to point to the fact that the essence of the Hun-
garian self-governmental model is autonomy and independence from state influ-
ence and hierarchy. The choice of value by the legislator in relation to the local
government model was mainly motivated by political intentions, and therefore
besides the guarantees of democracy and independence the aspects of efficiency
and the public administrative rationality were rather neglected. (Stewart, J.—Stoker,
G. 1995). Once the structure and labour guarantees thereof prevail, this model can
provide all advantages. However, legislation and administration following the en-
actment of the Act on Local Governments pointed out that despite of all the liber-
alism of the regulations the model of self-government with its legal guarantees of
free decision-making alone can not ensure political and power decentralisation.
The parliamentary and governmental decisions and measures of the previous years
in many respects run counter to the original logic of self-governance, despite of the
fact that from the aspect of the legal form there was no interference with the com-
petencies and decisions of the local governments.
The constitutional guarantees of the basic rights of local governments:
• The Act on Local Governments declares the relative autonomy of local gov-
ernments, stating that all decisions made on local matters are final and there-
fore can only be revised for lawfulness. The provision stating that local pub-
lic matters can be remitted to other central government offices only in ex-
ceptional cases is of great constitutional importance. This regulation ensures
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the dominance of the local governmental sector within the public admini-
stration. Although the Act on Local Governments stipulates that "local af-
fairs may be delegated to other organisations only exceptionally", no defini-
tion of "local affairs" or their minimal content is provided, therefore no legal
hindrances are set to limit the expansion of the deconcentrated state admini-
stration.
• The Act grants great freedom to the local governments to establish organisa-
tions, to pass decrees, join alliances for the protection of common their inter-
ests and other types of associations.
• The Act defines the compulsory tasks of the local governments, specifying
the government support they are granted to and indicating that larger local
governments may be assigned with more tasks. Distinguishing between the
tasks of local governments and the state administration, the Act provides that
the tasks of local governments may only be defined by parliamentary acts.
The liberal spirit of the Act is well illustrated by the fact that it allows a
fairly liberal distribution of local governmental functions on a voluntary ba-
sis, being obviously more favourable to municipalities versus the counties.
• The declaration of the equal rights of local governments and the subsidiary
status of the counties was important for the legislator. This principle put an
end to the previous, century-long tradition granting more power to the 19
counties, which used to be the only territorial tier of the Hungarian State. In
the Soviet-type council system between 1950-1990, the power between the
representative body and public administration was not divided. The soviet-
type council system incorporated the various tasks from safeguarding of lo-
cal interests, through the supervision of companies and management of
services, to the administration by public authorities, placing all these under
the control of elected bodies. The socialist state did not "distrust" county
councils, which were considered as both the agency of the central state and
representative of the municipal interests. The central state therefore did not
care to develop a deconcentrated system of public administration, since it
had control over the whole mechanism once the territorial governance as a
whole had been incorporated into the prevailing hierarchy. This means that
the new model of local government instituted in 1990 inherited a completely
uniform system of territorial governance. As to this legacy, a further specific
feature of the previous 40 years is to be mentioned. The Soviet—type council
system in Hungary functioned not only in a uniform but also in a territorially
integrated, concentrated organisational mechanism. This was valid for coun-
cils in tiny villages, the districts (settlements in the neighbourhood of towns
and the towns themselves) and for the administration of towns as well. The
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Discussion Papers, No. 35.
high level of integration — it was said — improved efficiency and the profi-
ciency of public administration but at the same time, resulted in a huge
"deficit in democracy" and made representation within the councils just a
formality. The focal point was the county council controlling the activities of
local councils in several ways ranging from legal supervision, through the di-
rection of public administration, to acting as a forum of appeal and allocating
of financial resources and a major investor in the service provision.
2 The structure of the model
The above facts led to the mentioned characteristic features of the Hungarian local
governmental model, which made conscious efforts to eliminate all the compulsory
and hierarchical aspects of integration.
There are four aspects in which the Hungarian system of local governments dif-
fers from the Western European trends: too small municipalities, too weak coun-
ties, to large and powerful state sector in the territorial tier and too few associa-
tions.
2.1 Fragmented municipalities
As first, due to the aspiration of small villages to absolute self-rule and autonomy
these local authorities are highly fragmented. The more than three thousand
autonomous decision-making bodies in the wake of the Act on Local Governments
replaced formerly integrated 1600 local authorities. Over 35 per cent of the local
authorities have less than 500 inhabitants. The average-size local government has
3,400 inhabitants, which is below the European average. There are also countries
with more fragmented local authority systems in Europe i.e. France and Greece,
Austria shows similar figures to Hungary but the majority of the European coun-
tries operate with much larger local authorities. The average size in Germany is
7400; in Poland 15,800; in the Netherlands 23,200 and in the UK where village
authorities were attached to the towns the average local government caters for a
population of 129,000. These high population figures are the result of the admin-
istrative contractions of the 1960s and 1970s, which were aimed at making public
administration more efficient and economic. Today, in Europe (in the Scandina-
vian countries, in Germany, in the Benelux countries and in Great Britain, too)
there are far less local authorities than in 1950 (Norton, A. 1994). It is only in Hun-
gary where the situation. of 1950 was re-established. The process by which the
number of Hungarian local authorities doubled within a single year (1990) is
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Discussion Papers, No. 35.
unique in Europe. The Act enabled the settlements, which maintained their original
name to elect their local body independent from their size. The newly elected local
government of course bears the totality of local governmental rights, may set up its
own office or establish institutions, etc. This disintegration process runs counter
to the European trends and is continuing nowadays: (Table 1-2) communities still
detach themselves from the municipalities. Due to the fragmentation, the func-
tioning of the administrative and institutional system is horrifying expensive and
operates in many municipalities with low proficiency. The social—psychological
explanation for the disintegration prior to independence is understandable; it is not
only in local politics that sentiments dominate rationality (Pcilne Kovcics, I. 1993).
Local authorities in some instances foster these ambitions through the distribution
and financial mechanisms and do not try to channel local administration into rea-
sonable framework by co-ordinate means.
2.2 Weak meso-tier
The second feature of the Hungarian model is the loss of importance of the county
self-governance. The 1990 Act on Local Governments states that the county may
assume only those functions, which the municipalities cannot be obliged to per-
form or refuse to assume ("subsidiarity"). The disadvantage to county assemblies
obviously declared by the constitution from the very beginning (Figure 1):
If we consider first of all the elections as the general basis of local governmen-
tal legitimacy we will see the following: In course of the first elections county
assemblies were elected indirectly by electors. Therefore they had only secondary
legitimacy deriving from the municipalities. Although the county — in this inter-
pretation — should have functioned as a representative body of local governments,
it was exactly its relationship to local governments, which was not properly de-
fined. First of all, not all of the local governments were represented in the county
assembly and this was particularly true for the counties with a high number of tiny
villages. Furthermore, the law included no provisions for the direct relationship
between county and municipalities while taking great care not to restrict the
autonomy of the settlement in any way.
The inferiority of the county-level is also expressed in the division of tasks and
responsibilities. The county was granted tasks covering larger geographic areas or
the whole county while the local government of any settlement may assume the
same tasks on its own or in co-operation with other local governments. The mu-
nicipalities have the right to delegate tasks or institutions supplying larger districts
with their arbitrary decision to the county. It means, that the functions and compe-
tencies of the counties can change in specie and time and the continuous modifi-
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Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
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Discussion Papers, No. 35.
cations depend on the unilateral decisions of local governments, which may curtail
or delegate the task. The destiny and the "owner" of the institutions with district
tasks are therefore uncertain.
Table 1
Main data on local governments 1 January 1992, 1998, 2000
Year
Local
Local govern- Villages bound
District
Notary-district seats
governments
ments with to notary (corn- (common)
located in
single offices mon) districts
notary
Number
offices
Cities Large Villages
villages
1992
3092
1439
506
1998
3154
1759
1395
505
28
35
436
2000
3158
1762
1396
536
29
36
471
Source: The Register of Names of Localities of the Hungarian Republic, 1997. Budapest, Central
Statistical Office.
Table 2
Number and population of settlements by population size-groups,
1 January 1997 and 2000
Population size groups
Number of settlements
Percentage distribution of the
-
population
1997
2000
1997
2000
—
499
1 009
1 032
2.7
2.8
500 —
999
703
687
5.1
5.0
1 000 —
1 999
652
655
9.2
9.4
2 000 —
4 999
491
483
14.4
14.4
5 000 —
9 999
135
138
9.2
9.5
10 000 — 49 999
116
115
22.4
22.0
50 000 — 99 999
11
12
7.0
7.5
100 000 —
>
9
9
30.0
29.4
Total
3 126
3 131
100.0
100.0
Source: Territorial Statistical Annual, 1996. Budapest, Central Statistical Office.
The third point is that the activities of the county-level government are "oh
ovo" restricted by the definition of the legal status of towns with county rank. The
Hungarian Parliament decided the establishment of 23 towns of county rank. The
Act on Local Governments granted the right to the towns with county rank (i.e. all
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towns with a population of more than 50,000 or smaller if they are county seats,
and therefore their number exceeds that of counties), to undertake county—tier
competencies within their own geographic area. Towns with county rank do not
have representation in the county assembly and there is no co-ordination between
them, thus county assemblies represent only small municipalities and towns.
Towns with county rank function parallel to the county assemblies. This parallel
functioning complicates the administration of county-level services and the
formulation of global developmental objectives for the entire county is fairly
difficult and probably over dimensioned. Despite the lopsided operation of
counties the government did not encourage the partnership. As a result of the
division of interests within the local governmental system the measures of
centralisation and delegation of interests could be passed practically without any
limitations.
Figure 1
Map of public administration in Hungary
Borsod-Abai,j-
Zemplen
•
Salgotarjan
Szabolcs-Szatmar-
Miskolc
Bereg
Nograd
Eger C)
Nyiregy haza
•
Gyir
Heves
Wpm Gyor-
Eszter • o
Debrecen
Moson-Sopro Tatab ny
KOest
Hajdu-Bihar
asz-Nagykun
Szombathely
Sztesfehe
Szolnok
Veszprem
r
Pest
Vas
Szolnok
Veszprem
Fejer
•
Ow'
Dunaujvarros
Keeskemit
Zalaegerszeg
Bakes
Zala
Bacs-Kiskun
C)
Bekescsab
agykanizsa
Somogy
Tolna
songrad
Szekszard
•
Kaposvar
Odmezdvisirhe y
*Szeged
2
Seekszird
*pees
3
Baranya
Sopron
•
4
Key: 1
country borders, 2 — county borders, 3 — county seat, 4 — town with county raub
—
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Discussion Papers, No. 35.
2.3 Expanding deconcentrated state administration
The state, ever since it established the formal—legal autonomy of local govern-
ments in decision—making, has never given up the ambition to restrict this auton-
omy as much as possible. The division of labour between local governments and
state organisations and the regulation of the means for implementation of local
government tasks were mainly regulated by simple laws and governmental decrees,
therefore the Parliament lost control and influence on the process. Although the
government did not diminish the independence of decision—making and the organ-
isational autonomy of the local authorities, it continuously narrowed the scope of
decision-making by taking over a significant part of local and territorial public
affairs. The strengthening of the deconcentrated public administration took place
mainly at the expense of the county assembly. The unhealthy degree of the Hun-
garian deconcentration can be explained in different ways.
It is typical that central government considers centralisation as the ideal form of
implementing tasks. Thus it is a Hungarian speciality that this centralisation ten-
dency cannot be limited either by the legal regulation of the Constitution, or by the
channels of interests of county and local governments. Essentially, there is no
public legal guarantee of state construction and operation progressing towards
political decentralisation.
Another hothead of deconcentration is the structure and model of the national
government whereby individual branches represent a greater weight than the com-
plex interest of governments as collective bodies. A blatant example of this is that
the ministries were provided with almost unlimited right to create their own de-
concentrated sectoral structure subordinated to their organisational interests. Al-
most all ministries made the most of this possibility.
The disperse structure was built first on the former county council administra-
tional branches after the local elections. Therefore land, labour, public health,
consumer and fire control administration fell under the auspices of the relevant
ministries. The role of the former financial and planning departments of county
councils for example was taken over by agencies subordinated to the Ministry of
Interior and the Ministry of Finance. Offices and agencies such as the compensa-
tion offices and property transfer committees, etc. were set up to cater for tempo-
rary tasks. In the first four years following the systemic change, more than ten new
types of deconcentrated organs were created, bringing the total number of state
regional agency types up to almost forty, in community, county, and regional lev-
els (Figure 2).
As creating these organisations, the national government was not forced to con-
sider whether it was financially or professionally feasible to set up a new organi-
sation responsible for one single task. Arguments were always ready: on the basis
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Figure 2
Central and Regional Public Administration in Hungary in 1994
Ministries
Their regional organs
(in each county or region)
•
Ministry of Home Affairs
•
Refugee Office
•
Public Administration Office
•
Financial and Administrative Information Service
•
Fire Service
•
Ministry of Agriculture
•
Veterinary Service
•
Institute for Species Experiments and Dairy Products
•
Plant Sanitation
•
Forest Inspectory
•
Land Office, Office for Agriculture
•
Ministry of Defence
Defence Replacement Headquarters
•
Ministry of Justice
•
Ministry of Industry and Trade
•
Regional Offices of State Energy Security Supervisory Board
•
Consumer Protection
•
Office of Geology
•
Office for Measure Calibrating
•
Mining Office
•
Ministry of Environmental and Regional Development
•
Environmental Supervisory Office
•
Directorate of Nature Conservation
•
Directorate of National Parks
•
Offices of Regional Chief Architect
•
Ministry of Transport, Communication and Water Conservancy
•
County Transport Supervisory Office
•
Telecommunication Supervisory Offices
•
Regional Water Management Directorates
•
Public utilities, companies for road maintenance
•
Ministry of Foreign Affairs
•
Ministry of Culture and Education
•
Ministry of Labour
•
Supervisory Offices of Labour Security and Labour
•
Labour Centre
•
Ministry of Public Welfare
I • Regional Public Health Service
•
Ministry of Finance
•
Directorate of Public Taxation and Control
•
Central Statistical Office
I • Directorate of Statistics
•
Economic Competition Office
Note: In the figure, we do not show the central and regional organs of the Frontier Guards, the Police,
penal authorities, the National Security Office (Ministry of Home Affairs) and the Customs
Office (Ministry of Finance) as armed bodies and the organs of Ministry of Defence.
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of the legislation relating to county assemblies, there is no other way but creating a
disperse organisation since county governments were not allowed to undertake
tasks which might create a hierarchy in their relationship with the municipalities.
Without going into details of the system, it is necessary to point out, that the gov-
ernment willingly decreased the competencies of the self-governments in fields
where the nature of the task theoretically would have require an elected county
body. Some of the newly established deconcentrated organs proved to be superflu-
ous or malfunctioning. There is a great deal of parallel functions and a lack of co-
ordination within the territorial administration while important functions remained
in abeyance. Especially in regional development and labour market administration
the bureaucratic and hierarchic functioning of the state and the organisational
model were disadvantageous as compared with the local governmental model.
These phenomena undoubtedly proved the fact that as resuming office, the gov-
ernment did not have a conscious concept of state construction or if it did it were
unable to put it into practice.
If we examine more carefully the method of power delegation, we will find that
the decision-making authority shifted upwards in the hierarchy with complete dis-
regard for the local governments.
The meso-tier integration was absent in the structure of territorial government.
An information, development and management centre would have been required
which is capable of flexibly representation and co-ordination of the autonomous
actors in the economic and local governmental sphere, bearing their local and re-
gional interests in mind, but without a direct profit orientation.
However, the government made some efforts to establish a kind of medium tier
co-ordination unit for public administration. For this sake the government assigned
in 1990 the so-called prefects of the republic in eight regions, which were created
specially for this aim. Yet, the prefects of the republic had to face the general lack
of trust and popularity, among others for the reason that they tried to practice a
kind of prefectoral power against the local governments enjoying the "ecstasy" of
freedom. The governmental representative (which used to be called historically
Lord Lieutenant) with great traditions in Hungarian public administration lost its
quasi-political character. In 1994 the position was reintegrated in the county sys-
tem where he carried out rather lawfulness control and appeal authority tasks.
2.4 Lack of associations
The low efficiency of the rather small municipalities of the Latin countries is bal-
anced with the system of associations and the assistance of the medium tier. In
Hungary in spite of the fragmentation of municipalities the associations are fairly
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rare in the local and micro-regional level. The fact that the counties lost their in-
fluence would not be so painful if the towns or settlements with central functions
could take their role, i.e. assume the responsibility for integration within the area
or the settlements around the town. The law provides this possibility but no means
oblige the cities and villages to associate and in fact they did not seem to be moti-
vated at all. The former settlement development policy and service management
practice before 1990 granted only public administrative status to functions of set-
tlements; the higher status went together with the responsibility for supplies de-
fined on a normative basis. The cities and settlements in the surrounding were in
1984 organised in a common administrative unit, yet no real, vital contact could be
established. Towns were not able to implement a real administrative integration
even in the old regime and by now they have completely given up this ambition. In
our survey in 1994 and 1998 the results showed that the settlements only associ-
ated under the pressure of necessity or in many cases not at all (Table 3-4).
Table 3
Number of the settlements (districts) participating in associations (1992)
Number of Associations for Associations
Other
Common body
Settlements
administrative
for Services
of
tasks
Provision
Representatives
Total
3135
923
411
77
57
Source: Ministry of Interior, 1992.
Table 4
Number of settlements (districts) participating in associations (1999)
Number of
Associations for
Number of municipalities
settlements
administrative tasks
participating in an association
Total
3135
1430
2439
Source: Ministry of Interior, 1999.
They rather negotiate informally with the local government providing for a
service for them when employing the service. Similarly, the interviews revealed
that the majority of towns failed in establishing deliberate relationships with their
surrounding. Even if contacts were established, this happened usually not on the
basis of the recognition of mutual interests, the co-operations are mainly motivated
by transitional financing difficulties and cases of necessity. The tiny villages lo-
cated in urban attraction zones preferred smaller decentralised areas as their ad-
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ministrative partners. We could not discover any association, which was able to
co-ordinate a whole urban surrounding unit. Several associations were established
but they all focused on single issue, like a certain investment development, the
improvement of infrastructure, or various development projects, but there seemed
to be no need for general, comprehensive co-operation or joint planning.
By 1994 we could find a relatively high number of voluntary established so
called micro-regional associations. They usually set the target of developing the
local economy and infrastructure. They will gain importance first after the Act on
Regional Development and Physical Planning, yet we will come back to this mat-
ter later (Table 5-6).
Table 5
Situation of micro-regional development associations in 1994
Location
Associations
No
Number of
No Total number of
data
organisations
data
organisations
With their seat in a
having a having no
town
village
city as a member
Totally
62,0
58,0
20,0
93,0
44,0
3,0
140,0
Percentage of the total
44,3
41,4
14,3
66,4
31,4
2,2
100,0
number
Source: Paine Kovacs, I. 1994.
Table 6
Situation of micro regional development associations in 1999
-
Totally 263 micro—regional organisations of which
52.0% are associations of local governments without legal personality
14.1%
associations with legal personality
28.0% civil organisations
5.9% other
Source: G. Fekete, E. 1999.
Yet, prior to the introduction of the Act the general aversion to planning and to
co-operation was characteristic, but obviously the legislation on associations also
contributed to lack of motivation to associate. The Act on Local Governments
recognised the importance of associations and considered them as legal entities.
But the regulation was not elaborated in detail in order to surmount the gap be-
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Discussion Papers, No. 35.
tween the fragmented local decision making system and the services and infra-
structure organised by districts. For lack of comprehensive and clear regulations
local governments are obviously anxious about losing their autonomy to an organi-
sation capable of taking. Therefore they fail to realise the advantages and the ne-
cessity of association.
The rise of the disintegration process was actually not the government's respon-
sibility, rather the consequence of the weaknesses of the Act on Local Govern-
ments as well as of the political pressure behind the regulations of the act. The
government looked on the disintegration process inactively. The handicaps result-
ing from disintegration were gradually realised. Several reform ideas were formu-
lated within the central government to reverse the than situation. The ministries of
regional development and labour recognised and supported the integration of
smaller regions, as mentioned above.
Summarising, the Act on Local Governments had tremendous importance in the
construction of the Hungarian democratic state structure. Local communities were
given a wide scope of competencies and autonomy and therefore they became im-
portant schools of democratic political learning. Yet, the Act was despite its liber-
alism unable to guarantee the decentralisation of state administration and organi-
sation, thus the local self-government sector could not become a dominant element
of territorial administration.
Generally, the Act can be evaluated as very progressive with the remark that in
many aspects it only outlines the frameworks of functioning not considering on the
other hand the following circumstances:
• In the division of functions, the border between the state and local govern-
ments should have been made more unambiguous, as a protection against the
inevitably expanding central power. The Act on Local Governments created
only the frameworks but did not filled them with competencies and means of
implementation, means of the so-called simple laws and government decrees.
• The autonomy of local governments requires not only rights but political and
economic guarantees too, since without them the autonomy can be no more
than formal legal fact.
• Local societies and politicians were not yet prepared for the liberty given to
local governments and this inevitably led to functional disturbances. The in-
stitutional system of training and retraining of the staff of local authorities
has not been implemented to date, although this would have been highly nec-
essary because of the transformation.
18
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
3 The regional development policy before 1996
The contradictory structure of the medium tier, the lack of territorial self-govern-
ment not only caused disturbances in territorial administration but contributed to
the over centralisation of the government's regional development policy. The gov-
ernment recognised the political importance of managing regional inequity, but
• was unable to formulate a consistent regional policy;
• did not clarify competencies within the government; and
• represented a paternalistic regional development policy with unclear objec-
tives.
A consistent regional development policy was also hindered by a number of
branches interfering with local processes in a rather uncoordinated way.
The competencies of regional development within the government were not
clear. Regional development activity in most countries is unable to gain enough
political weight to be undertaken by an independent ministry. In Hungary due to
rivalry within the government this governmental activity was for decades divided
into settlement development and regional development even though exactly these
activities require strict co-ordination.
Even though regional policy had an independent ministry for itself, the Ministry
for Environment Protection and Regional Development, however, the Ministry's
weight within the government was rather less compared to sectoral departments or
to the Ministry of Interior supervising local authorities.
Almost all the branches undertook settlement and regional development activi-
ties in a dual organisation system.
• A number of ministries set up their own departments of regional develop-
ment, which launched tenders for targeted support for focal authorities.
• The "second line" was the functioning of the county-level deconcentrated
organisations of ministries. One type of the deconcentrated organs, the so-
called state commissioner was particularly important in terms of regional de-
velopment. The role of the state commissioner was varying in the county tier
crisis-treatment programmes initiated by the central government. Yet, the
common feature of the role of the prefects of the republic was, that they we
eager to keep county assemblies far away from the decision-making. The
government assigned different ministries with the management of the certain
crisis counties and prefects of the republic were to organise the local imple-
mentation. Later, the prefects of the republic set up various committees and
consultative organs (with no public legal control whatsoever) to "legitimise"
their decisions.
19
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
• The next stage was the establishment of the development councils with the
participation of central and local actors once again with uncertain public le-
gal background.
In 1993 government policy became more transparent owing to the strengthening
significance and regulation of the Regional Development Fund. Parliament passed
a resolution about the guidelines of regional development allocations and the eligi-
bility of assisted regions.
The government's explicit regional development policy was formulated essen-
tially in the county programmes. The common feature of these programmes was
that the government launched or stopped them based on its unilateral decisions.
This method followed misdirected, paternalistic traditions. The county assemblies
(self-governments) were excluded from the preparation and implementation of
county programmes.
In financing regional and settlement development the centralisation by the gov-
ernment was extreme. The efficiency of financing regional and settlement devel-
opment was deteriorated by the dominance of targeted central support, the lack of
co-ordination between branches and the poor ability of territorial partnerships to
enforce interests. The efficiency of regional development policy was deteriorating
due to the fact that the objectives of social assistance, crisis management and eco-
nomic development were entangled, therefore the utilisation of allocations was
inefficient.
However, this functioning remained of spending public resources rather than of
development activities. Supporting dynamic, innovative and enterprise promoting
centres, which would have a strong influence on their environment and contribute
to the country's economic growth, unfortunately did not feature among the objec-
tives of regional development. Support should be granted to the poorest regions as
an expression of solidarity and as a possible act of promoting the local economy
instead of providing subsidies on purely social grounds. However, the chances of
economic progress in backward areas were quite slim, at least prior to a country-
wide low economic growth.
The government's experts apparently did not realise the new regional processes
in Hungary (which went on for twenty years in Western Europe), which will give
rise to a regional organisation different than in the past few decades and which will
enforce the improvement regional policy means and objectives (Enyedi, Gy.—Palne
Kovacs, I. 1994).
Despite of all these, the perspective of development was towards a decentral-
ised and multi-sectoral model in which not only regional and local governments
but also other public bodies, direct administrative structures, actors of business and
civil sectors will find a place. At the same time, it was hoped that the initial proc-
esses would transform the boundaries between the profit and non-profit sector.
20
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
4 Reform of the local governmental system in 1994
The national government realised, earlier than local authorities, the vacuum in the
territorial integration, which was left behind by the fall of the counties. The lack of
a territorial integrative organisation was especially disturbing in the government's
operation because it coincided with the disintegration of the local governmental
structure.
Therefore government experts proposed the reconsideration and modification
of the Act on Local Governments. The government's programme for updating pub-
lic administration also proposed the reassessment of the deconcentrated organisa-
tional form. The experts of the Ministry of Internal Affairs reinforced the signifi-
cance of the improvement of the Act on Local Governments and proposed amend-
ments were formulated.
During the first governmental cycle local governments (especially small mu-
nicipalities) "got" a great deal from the government. However, along with the pa-
ternalistic attention number trends evolved suggesting that this policy will be on
the long term unsuccessful in managing regional development problems or re-
gional differences of public services. Organisational disintegration, the deteriora-
tion of the professionalism in public administration, the uniformity of infrastruc-
ture investments by local governments, unrefined administrative deconcentration,
the unhealthy extent of central redistribution all become obstacles of the exploita-
tion of the advantages of real decentralisation which is the great potential of the
local governmental model.
4.1 Slow integration
The new government elected in 1994 tried to counteract one of the most contra-
dictory processes by measures suggesting a cautious but evidently more up-to-date
concept:
• Legal prescribed requirements of the establishment of new municipalities
became more rigorous. According to the modification settlements with less
than 300 inhabitants may not receive the status of independent municipali-
ties.
• additional financial benefits were promised to self-governments associating
with each other.
In the wake of the autonomy of small settlement local governments it was nec-
essary establish at least a basic infrastructure level (schools, city halls, water sup-
ply etc.). This admittedly brought about spectacular changes in the image of mu-
nicipal self-governments and came as a revelation to the local population. In the
21
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Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
same small settlements, the "enrichment of the public sector" was coupled with
high unemployment and the shattering of the villages' economic basis. Construc-
tion on one side, demolition on the other; and which of the trends would be lasting
and how will they affect each other? What should be state resources used for?
How can the local society of the settlements be convinced that autarchy and self-
contained autonomy is insufficient way surmounting the crisis? Would the gov-
ernment assist for the long-term regression, if it supports "local egoism"? Which is
the right model for the villages: traditionalism or modernisation?
These questions are also inherent in amendments, which allegedly aim at ad-
ministrative rationality. It was a question, what economic management and devel-
opment strategy should follow the rules suggesting conceptual change. Can the
government undertake measures under the aegis of the "modernisation pro-
gramme", which will most probably be politically unpopular? It had a symbolic
value that in the 1995 budget, a special contingency provides funding for associa-
tions established for the maintenance of primary school educational institutions
and purchase of school buses instead of the former practice, individual school con-
structions. Government comments on the bankruptcy of self-governments also
allude to previous wasteful investment decisions and admit that the resources for
funding new institutions petered out. The modification of the grant system should
also promote integration. These tiny signals forecast the integrative intention
within the self-government system, which, however, met considerable political
opposition and resistance on behalf of the self-governments.
Nevertheless, the modernisation of the local government system in the devel-
oping countries indicate, that the structural reform or the generalisation of the as-
sociative system will be inevitable sooner or later. The vacillation of the govern-
ment in other issues may bear the way of a more progressive regional and local
development strategy when it comes to taking politically unpopular steps. The
central government could motivate the association of municipalities first of all by
financial regulation because the most important part of the local budget is coming
from the central state despite that the proportion of local revenues increased within
the local budgets (Table 7).
The measures for the enhancement of the economy of scale considered as the
administrative precondition of modernisation do not seem to be very successful
from the perspective of ten years. Notwithstanding the parliament passed an inde-
pendent act on the associations of local governments, but this new act was unable
to motivate the settlements to co-operation. There were certain modifications in
the financing too, which actually favoured associations in the course of the distri-
bution of supports. The differentiated division of labour is encouraged by the
trend, that currently larger local governments, especially those nearby the cities are
assigned with district scale supply tasks. However as a whole the local govern-
22
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
mental provision of tasks is still fragmented. Unfortunately no comprehensive
survey was carried out on this topic either. The conclusion declared currently by
the Hungarian Audit Office based on a representative survey is fairly characteris-
tic: there is no information on the impacts of the decision-making competency
related to the implementation of the 3646 local governmental tasks and competen-
cies. The above survey (with some 20% representation) proves that the proportion
of the associations in the organisation of public services was only 6,9% in 1999
(Hungarian Audit Office, 2000).
Table 7
Local government budgets as % of total incomes between 1993-1997
Incomes
1993
1994
1995
1996
1997
1999
Beneficial income total
17.6
14.3
16.0
19.4
19.3
28.8
From the foregoing:
Duties
1.7
1.2
1.5
1.4
1.3
Local taxes
4.5
4.1
3.9
7.7
8.0
12.9
surrendered income total
8.5
9.6
13.0
11.5
13.8
13.3
From the foregoing:
Personal income tax
8.1
9.2
12.6
10.7
13.0
12.4
Car tax
0.4
0.4
0.4
0.7
0.8
0.7
own and surrendered incomes totally
26.1
23.9
29.1
30.9
33.1
42.1
Accumulation and capital income totally
8.1
10.0
9.4
9.7
8.6
8.3
State grants and subsidies total
42.6
44.3
41.3
35.6
34.7
29.1
From the foregoing:
Normative state grants
35.6
33.2
31.3
24.6
24.6
18.7
Designated and targeted subsidies
3.0
5.0
4.5
3.2
3.7
2.5
Personal income tax contribution
1.1
1.0
Social Security funds
15.2
11.5
13.3
16.0
16.2
13.7
Other funds, repayments, bond repayment
3.8
1.7
2.8
3.9
3.4
4.0
Credit, bond incomes
4.2
8.6
4.0
3.9
4.0
2.8
Annual income total
100.0
100.0
100.0
100.0
100.0
100.0
Source: Financial Review 1995. 1., 1997. 1., 2000. 9.
4.2 Ambivalent strengthening of county assemblies
One of the most important changes in the local government system was the intro-
duction of the direct election system at the county level in order to strengthen the
legitimacy of county government in 1994. The system of elections did not prove to
be successful. At the same time the establishment of two artificial "constituencies"
per county for the settlements with more or less than 10,000 inhabitants respec-
23
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
tively appeared to solve or rather circumvented the problem of area delimitation
within the county. These categories had nothing to do with interests within the
county as they separated the town from its surrounding. This election system was
definitely in contradiction with the intention of the government programme and
left the representative proportions within the county assembly to sheer chance. In
the course of the elaboration of the election technique the basic concept whereby
the government recognises micro-regional associations within the counties and
intends to rely on them in regional policy was completely forgotten. As a result of
the unique election technique party politicians are in majority in the county as-
semblies, who can hardly satisfy their political ambitions having only restricted
competencies and space of movement. It was a big mistake to create bodies with
strong political legitimacy for the restrictedly increased number of competency
and power.
A positive legal dogmatic step was providing counties the status of "territorial
government", as a result of which the concept of division of competencies between
the municipal and county level could have been reassessed. Unfortunately in spite
of that, county governments did not receive an adequate amount of competencies
and tasks even after modifying the election system and reinforcing their status,
since both the municipalities and the ministries resisted during the reforms in 1994
granting the counties more significant competencies.
Another sign of rationalisation was that the chairman and the chief administra-
tor of the county assembly could be vested with sate administrative authority. Ac-
cording to the former legal dogmatic concept, county governments could not as-
sume duties, which might create a hierarchy over local self-governments. The for-
mer four years this rigid rule or principle was the pretext for the establishment of
deconcentrated offices, i.e. the nationalisation of a significant part of territorial
duties. The government's objective to streamline and rationalise territorial level
state administration could, in this way, be realised even if state administrative
tasks are delegated to the competence of the county self-governments.
4.3 Careful steps towards the integration of territorial state
administration
As already mentioned, directly after the new government assumed office and
following the large political debate on the "prefects" symbolising the centralised
state, the eight administrative regions of the prefects of the Republic were
abolished. With this step the new government practically renounced the ambition
of direct interference into local and territorial matters (Pcilne Kovcics, I. 1995).
24
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
In 1996 the government announced a comprehensive program on the reform of
public administration. The objective of the program was to rationalise and
integrate the fragmented public administrative system in the territorial tier and to
establish co-ordination through the offices of county assemblies replacing the
former "prefects". Four years after the announcement of the state administrative
reforms we ought to admit that they were only partially successful. It is undeniable
that the number of independent deconcentrated organs decreased, preliminary due
to the integration of the territorial units under the supervision of the same ministry.
Yet, county assemblies have only weak co-ordination means and more important
tasks were not delegated (back) from the deconcentrated sector to the county
assemblies. Therefore, the dominance of the state/deconcentrated sector in the
territorial tier remained unchanged (Figure 3).
5 The act on regional development in 1996
5.1 The regulation
As regards regional power, besides the Act on Local Governments and the reforms
of the state administrative system the most important and possibly most ambiguous
step was the enactment of the Act on Regional Development and Physical Plan-
ning in 1996. The most important objectives the integration of the different
branches in the economic and regional policy; the harmonisation of the environ-
mental, labour market, infrastructure, housing and regional policies; and focus on
the local resources and needs. These trends involved the necessity of the decen-
tralisation of public administration and a more flexible management of regional
policy establishing partnerships with the actors of the social and private sectors.
The failures of the former regional policy were caused by the centralised adminis-
trative system neglecting the local actors in the regional development decision-
making. Recognising this mistake the government undertook decentralisation.
The different political and professional forums raised various requirements to-
wards the slowly shaping act, which were finally included to the dominant princi-
ples of the act:
• The government intended to create the foundations of one single regional
policy operating under common rules, having a concept and covering the en-
tire country — the principle of programming.
• The advanced regions — in the name of efficiency — expected to be granted
supplementary support for their further development — the principle of inno-
vation and additionality.
25
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
Figure 3
Central and Regional Public Administration in Hungary in 1998
Ministries
Their regional organs
(in each county or region)
•
Prime Minister's Office
•
Ministry of Home Affairs
•
County and Capital City Public Administrative Offices (20)
•
(Consumer Protection Inspectorates, Public Guardianship Offices,
Property Transfer Committees)
•
Refugee and Migration Office
•
Territorial State Household and Administrative Information Services (19)
•
County and Local Fire Service
•
County and Capital City Civil Defence Headquarters
•
Ministry of Agriculture and Rural Development
•
Headquarters of Veterinary and Food Inspection Services (20)
•
Territorial branches of National Compensation Bureau (13)
•
Stations for Plant Improvement and Soil protection (20)
•
State Forestry Services (10)
•
County and Capital City Land Registry Offices (20)
•
Offices of Agrarian Affairs (19)
•
Stations for Species Experiments (28+8)
Ministry of Defence
•
Ministry of Justice
•
Ministry of Economy
•
Regional Offices of Technical Security Inspectorate (10)
•
Territorial Offices of Geology (7)
•
Offices for Measure Calibrating (20)
•
Mining Office (4)
•
Regional Secretariats of Tourism Committees (9)
•
by the parts of the ministry
•
Ministry of Environmental Protection
•
Environmental Supervisory Offices (12)
•
Directorates of National Parks (9)
•
Offices of Regional Chief Architect byparts of the ministry
•
Ministry of Transport, Communication and Water Conservancy
•
County Transport Supervisory Office (12)
•
Telecommunication Supervisory Offices (5)
•
Regional Water Management Directorates (12)
•
Ministry of Foreign Affairs
•
Ministry of Culture and Education
•
Ministry of the National Cultural Heritage
•
Ministry of Youth and Sport
•
Ministry of Social and Family Affairs
•
County and Capital City Labour Offices (20)
•
Ministry of Public Health
I Regional
•
Public Health Service (20)
•
Ministry of Finance
I • Directorate of Public Taxation and Control (20)
•
Central Statistical Office
•
Territorial Directorates (20)
Source: Verebely I., 1998. pp. 420-421.
26
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
• The crisis regions expected the government to focus on their development —
the principle of concentration.
• The local governments of the small and tiny settlements were hoping to re-
main the beneficiaries of different grants — the principle of solidarity.
• Economic actors wanted to participate in the shaping and financing of devel-
opment policy as equal partners — the principle of partnership.
• County governments required under the slogan of decentralisation the en-
largement of their competencies and resources — the principle of subsidiarity
and decentralisation.
The county assemblies were already disappointed as the act was passed. They
in vain expected the Act on Regional Development and Physical Planning to ar-
range what only a norm of general political value, the Constitution and the Act on
Local Governments could have arranged. Namely, they wished to receive a. role in
regional policy and to be integrated as real territorial bodies into the system of
power. Their hopes were cherished by the fact that the European Chart of Regional
Governments was already shaping at that time as well as the Declaration of the
Assembly of European Regions. These documents predicted the European trend of
strengthening of the medium tier administration. The still existing uncertainty
about the decentralisation of power and the lack of trust towards county assemblies
left their mark on the regulation of regional policy, as well.
Although the government realised the advantages of decentralisation it re-
mained reluctant to share its competencies in regional policy with the directly
elected county government. The legislator made efforts to eliminate the contradic-
tion by introducing a special institution: the regional development councils — at
four levels of regional policy systems (Figure 4).
These partnership institutions and special agencies well known in Western
Europe were established to integrate the regional development efforts of the local
governments, state administration, economic and civil actors (Horvath, Gy. 1998).
In some cases, they are even capable of working out common development pro-
grammes and to accumulate resources for the implementation of the programmes
(Halkier, H. et al. 1998). However, they are unable to do one thing: to substitute
territorial self-governments bearing political legitimacy and standing on the foun-
dation of the principle of representation (Jones, M. 1998). During the establish-
ment of the partnership institutions the "legitimacy danger" in connection with
corporate organisations and the agencies and the weaknesses of the lacking trans-
parency were not realised yet even though the literature regularly elaborates the
topic (Thynne, 1. 2000). In Hungary the motivation was to avoid/ignore the elected
county assembly by creating the territorial development councils, the principle of
partnership was rather an excuse than target.
27
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
SETTLEMENT I MICRO-
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Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
In terms of public law it is difficult to define the nature of the territorial devel-
opment councils since the legislator did not care to describe the precise type of
organisations to be established under the name development council. This led to
several practical problems in their operation i.e. in their financing, employment
matters or legal control. It was for instance not clear whether the employees of
these organisations are civil servants. Also, while the council enjoyed great free-
dom in the facilitation of its own organisation, decision—making and resource dis-
tribution, no superior organisational control was established.
The composition of the development council shows tripartite or corporate char-
acter, it is varying in the different tiers (like national, regional, county and micro-
regional). County development councils for example, consist of one representative
of the county assembly, one of the cities with county rank, representatives of mi-
cro-regional associations within the county (their number is fixed by law), repre-
sentatives of employers (chambers) and the employees (trade unions) and finally
the representative of the ministry responsible for regional policy. The composition
of the councils was more or less suitable to co-operate the activities of the con-
cerned actors based on the principle of partnership. However the basic contradic-
tion of the model is that these development councils were equipped with far more
power and competencies than the directly elected county assemblies. County de-
velopment councils decide upon the development concept of the county and are
entitled to distribute state subsidies within an application system. At this place we
have to remark, that partnership corporations or the quasi non-governmental or-
gans (quangos) are expanding not only in regional policy but also in other
branches (such as the management of tourism, education or water). There could
even be a welcomed tendency if evaluated from the aspect that administration is
becoming more flexible. Still we cannot disregard the political fact, that the central
government is often led by the ambition to bypass the county assemblies. Further,
the increase of the "quasi", organs with an unstable status and less political legiti-
macy also harm the principle of transparency, makes co-ordination difficult and
results in a deficit of democracy. The expansion of organisations with different
status in the territorial tier represents fairly well the confusion in the territorial tier
of Hungarian public administration. Deconcentrated organs, partnership organisa-
tions and other quango organisations replaced the weak self—governments.
In spite of announcing the requirements of EU compatibility in order to inte-
grate Hungarian territorial division into the NUTS system the Act was unable to
launch and amplify the establishment of regions larger than counties. The act made
the counties the dominant units of regional development and although it provided a
possibility for the creation of regions larger than them it only made this compul-
sory in two regions, in the agglomeration of the capital city, Budapest and in the
Lake Balhton region. The fundamental reason for the hesitation about the regions
29
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
was the fact that in regionalisation not only political-power issues but also possible
geographical borders are uncertain. The National Regional Development Concept
of Hungary was passed by the Parliament at the spring of 1998. This document
defined the number and borders of the NUTS 2 regions. However, the develop-
ment councils established by the Act on Regional Development were not forced to
be organised based on the NUTS 2 regions. These councils did not receive re-
sources or competencies exactly due to the voluntary principle. The county devel-
opment councils still have the right to decide upon the geographic "region" they
want to establish a common regional development council and further the compe-
tencies and tasks they want to endow them (Figure 5).
5.2 The first experiences of functioning of the regional policy
The enactment of the Act resulted in fairly significant changes as regards the ac-
tors of territorial administration. However the new system has been functioning
only for a few years now. The balance of the first experiences contained both,
positive and negative phenomena.
Strengths
• There was a special institutional network and some decentralised fund for
regional development.
• A fairly positive phenomenon was that public and private actors of regional
policy are motivated to co-operate with each other.
• The system encouraged partnerships between rural settlements and urban
centres in the framework of micro-regional associations.
• The central government had to communicate with the territorial actors in
planning and in the redistribution of resources.
• The public sector, particularly local governments had to begin to plan their
activities due to the Act on Regional Development and Physical Planning
obliging them to prepare regional development plans.
• The attitude of the local and actors and branches (ministries) was changing,
spatial aspects are becoming more important elements in the development
decisions.
• The partial decentralisation of development recourses increased the effi-
ciency of regional policy.
30
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
c,)
ary
Hung
in
ions
reg
t
he
of
t
ions
na
ig
des
r
ious
Va
2
Co)
.C)
Pálné Kovács, Ilona: Regional Development and Governance in Hungary.
Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
Weakness
• No territorial information system has been established yet for the creation of
development plans and the evaluation of the implementation.
• Skills and experts were insufficient in territorial planning.
• There was a huge scarcity of recourses for regional policy not only due to the
economic situation but also to the fact that ministerial departments have
more power and the resources than the actors of regional policy.
• Large regions were the weakest among the territorial planning units due to
the uncertainty of geographical boundaries, willingness of county develop-
ment councils to co-operate with each other is quite low and the there is still
a lack of own competencies, means and recourses.
• The local actors were more motivated by short-term targets and equity than
the requirement of efficiency and modernisation, and therefore the danger is
real that resources will be fragmented.
6 The agenda of the territorial reforms
Summarising: notwithstanding the Act on Regional Development launched signifi-
cant integration processes, the problem of territorial power division has not yet
been solved since the systemic change. The meso-level is 'floating" and neither
professional nor political answers can be given to the following questions:
• Do we really want to decentralise power in this country where centralisation
has strong and long traditions?
• What tasks shall the missing medium tier overtake?
• How many territorial tiers are at all necessary in Hungary?
• Which are the geographic borders of the new territorial division?
A characteristic feature of the debate over the counties in the past decade is that
it often appears as a merely spatial division issue hiding the real political and
power correlation. The "anti-county group" stopped arguing that municipalities are
able to provide all local functions thus the medium level is unnecessary. They
argue now that the millennium-old counties are not capable any more of carrying
out medium level tasks. The notions differ when it comes to the question whether
they are too small or too large. The answer evidently depends on what tasks we
want to render to the medium level. The county-debate sometimes votes for large
regions other times for urban attraction zones, usually neglecting or concealing the
political consequences.
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Discussion Papers, No. 35.
6.1 Reform alternatives for territorial division to replace the
"too small" or "too large" counties
The "city-county" (micro-regional) alternative. Following the systemic change the
independence of the settlements became the ultimate political interest, the greatest
achievement of system of local governments. Naturally, the favouring of inde-
pendence of the settlements, the »l'art pour l'art« freedom could not stand long
against proficiency and efficiency. It was soon realised that the system fragmented
into 3200 autonomous decision-making bodies is struggling with malfunctions.
The point of the model proposing the so-called town-counties against the counties
is that the municipalities will be able to carry out their administrative and service
functions in co-operation with the towns. The notion of the towns co-operating
with their environs is of course not new either in the literature or in the history of
Hungarian public administration. The popular political scientist of Hungary, Istvan
Bibo, and Ferenc Erdei researching already in the period between the two World
Wars elaborated in 1947 a concept on replacing the counties by the so called
town—counties. The popularity of the programme published under the aegis of the
National Peasant Party was not so much due to the rearrangement of the territorial
system but rather to the fact, that this model was the only competitive alternative
to the soviet model of the Communist Party. The so-called districts have existed
for centuries in the Hungarian territorial public administration. Their scope was
fairly similar to the proposed town-counties but the districts — with the exception
of a short period between 1954-1971 — never had representative content, thus they
have never been self-governments either but the administrative units of the coun-
ties. In 1984 the system of so-called urban zones was introduced to replace the
districts but these units have never had a wide range of functions and representa-
tion. Public administration building on urban attraction zones responses to the
need of providing services for the population and manage administrative affairs of
the citizens in the geographical vicinity. These tasks appear in the urban attraction
zone in close correlation. The close twinning of towns and their neighbourhood in
the servicing and infrastructure does not necessarily require an independent public
administrative tier. The more flexible associations of the concerned local govern-
ments are rather suitable to implement and co-ordinate common tasks. In my
opinion, the urban attraction zones are not alternatives but complements to the
counties. The geographical scale appears lately more often in the local govern-
mental performance of tasks. Under the supervision of the government district
offices were set up within the appointed urban local governments, which are
authorised to issue different licences and certificates. The so-called micro-regional
associations proved to be especially viable, which integrate the development ac-
tivities of the local governments. Encouraged by these experiences the issue of
33
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Discussion Papers, No. 35.
institutionalising the micro—regions as public administrative units was raised
again.
Regions above or instead of the counties. From the historical review it is clear
that regional (a region here means a unit larger than the county) divisions have no
traditions in Hungary. When any attempt appeared to introduce a regional division
different from the counties the motivation was always centralisation, to break
down the national independence opposition and to empty the political content of
the county frames. It is also obvious that none of the regionalisation attempts
proved to be successful, the counties repelled all attacks. Despite the region is not
an unknown category of public law since organisations with regional competencies
have been operating for a long time in the different sectors of public administration
(such as in the field of environment protection, water and mining management).
Behind the debates over the counties in the recent years we can feel the distrust of
the government and its reluctance to enable the counties to become strong politi-
cal-power counter-poles. In some cases there is nothing more behind the "Europe
of the Regions" slogan but the mere rejection of the counties or any power unit
between the top and the bottom. Until 1999, the modification of Act on Regional
Development there was quite a huge confusion concerning the number and de-
limitation of the regions. Naturally, without the authority and political content for
regions it cannot be decided how many levels are necessary and whether regions
should be organised above or instead of the counties (Pcilne Kovcics, 1. 1997). And
naturally without having clarified the content it is not possible to debate reasona-
bly on the geographical borders.
6.2 The failure of the reform debates — Concealment of political
aspects
The parties and professionals have been struggling with the concept of power divi-
sion at the territorial tier, yet a full consensus seems to be very hard to achieve.
The future of the counties, more exactly the medium tier is now subject to signifi-
cant debates. Although these debates seem to be about whether counties, town-
counties, (micro—regions) or regions are the territorial division of the future, the
matter is far more complex: the question is, whether a decentralised or a central-
ised state structure should or must be created in Hungary intending to join the EU.
The idea of federalism does not even occur to the bravest reformers, which is un-
derstandable as the spatial structure, ethnic composition and size of Hungary does
not require a federal arrangement, yet the necessity of the medium—tier is not dis-
puted any more. Everyone seems to agree with the purpose of decentralisation, as
it would not be elegant for the central power to narrow-mindedly stick to its
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Discussion Papers, No. 35.
power. The Hungarian answer is undoubtedly urged by the process, according to
which in the neighbouring countries the regional reforms gathered a momentum
after a long hesitation (Regulski, J. 1998). Despite of the superficial affirmation of
decentralisation, if examined deeper those concerned, we will find that the coun-
ter-interested are in majority against those for decentralisation:
• We cannot expect any politician in the central government (and especially
not in the sectoral departments) to support with belief the restriction of their
own power by a regional level on which of course they would have rather
less influence on.
• The municipalities who just tasted freedom are very distrustful with any new
tier "above" them, even if this would function as their self-governmental
body.
• The most of the citizens do not understand why further bureaucratic tier
spending their taxes is necessary.
• The technocrats of public administration might accept that regional admini-
stration and co-ordination are necessary but they are definitely reluctant to
let the non-professional representatives of a democratically elected political
body interfere in "professional" issues.
It is not at all easy to achieve real decentralisation, when the freedom of settle-
ments, which they already enjoyed is cut, but based on the experience of ten years
we have to accept that the freedom of settlements is not able to guarantee in itself
the decentralisation of the system. The Hungarian Act on Local Governments,
which are very liberal in public political sense were not able to guarantee the spa-
tial decentralisation of power. With a bit of cynicism we can say that the govern-
ment, supporting the demand of the settlements for autonomy and autarchy, applied
the principle of "divide et impera" as the (often counter) interests of the 3200 set-
tlements can be easily tackled without a spatial integration linking the settlements.
Still, the strengthening of the territorial political—local governmental tier proceeded
not only in the interest of the settlements but also of the central government, as:
• the central decision-making is not able to receive sufficient information
without regional partners;
• the bureaucratic and centralising state administration is not able to get social
support or legitimacy for its decisions;
• the centralised and bureaucratic, uniform decision-making system is unable
to mobilise local resources for the national priorities;
• a more elaborate decision structure is more flexible and better at adapting to
the changing requirements;
• the centralised system has significantly weaker connections to the society
and is less democratic which in turn jeopardises its legitimacy.
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These arguments, however, are too technocratic to be satisfactory for settling
the debate over the counties, or regions eliminating the centralising reflexes and
weakening distrust and prejudices.
Summarising, we can say that the conceptual steps of the governments were fa-
vourable from the aspect of modernisation, rationalisation, democratic structure,
increasing political weight and real decentralisation of power. By the comprehen-
sive amendment and reform of the self-government and of the territorial adminis-
trative system and the legislation of regional policy, the Hungarian state-develop-
ment process was pushed towards decentralisation. This will, in the longer term,
provide self-governments with more favourable conditions and larger space of
movement than the former paternalistic and centralising government policy. At the
same time, specific techniques, actual measures of the governments were not al-
ways unambiguous; political compromises and branch aspirations inserted sources
of danger in the operation, which can deteriorate the chances of implementation of
the original ideas. The efficiency of the new order of regional policy, the advan-
tages of decentralisation of planning and decisions making on regional develop-
ment are connected with the general trends of public administration and govern-
mental policy. We can say that the chance of successful regional policy depends on
the success of Hungarian decentralisation process and economic development
7 The story since 1998 — the regionalisation — ultimate
chance?
New government — old dilemmas
The new government proclaimed by 1998 a more resolute regionalisation. Ac-
cording to the government programme the possibility of the introduction of re-
gional public administration shall be examined by the year 2000. The government
submitted the proposal for the modification of the Act on Regional Development
and Physical Planning to the Parliament. According to this it is compulsory to es-
tablish regional development councils for the territory of the NUTS 2 regions. The
aim is to create regions, which meet the regional assistance requirements of the EU
and will become the strongest level in the regional policy.
The balance of the modification of the Act on Regional Development is not ex-
plicitly positive from the aspect of the requirements of EU accession. The govern-
ment, parallel to increasing the space of the regional tier development policy, ex-
panded its own power. The modification of the act violated even two of the princi-
ples of the European Union: the decentralisation (subsidiarity) and the partnership.
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Namely, the government modified the composition of the development coun-
cils: interestingly the labour councils, as the representatives of the employees and
the economic chambers, as the representatives of the employers did not receive
representation in the councils. Also, the representation of the micro—regions func-
tioning as the associations of municipalities was decreased. Notwithstanding it was
a positive development that finally the mayors of the county seats are members in
the councils, but the changes led to the situation that the representatives of the
government acquired the majority within the councils, since in the regional tier 10
ministries receive representation in the council. The regional and the county de-
velopment councils are not any more decentralised only deconcentrated organs if
their composition is considered, even if they maintained some of their local repre-
sentative character. These changes worn us that the uncertain and intermediate
status organs, as the beneficiaries or rather the subjects of decentralisation would
hardly mean a safe constitutional solution, since they lacking the constitutional
value and guaranties of self-governance may fall victim any time to the centralisa-
tion ambitions of the central government.
We may come to a similar conclusion if we consider the public administration—
organisation measures of the central government. The government undoubtedly
announced its regionalisation programme within its public administrative pro-
gramme. There are investigations carried out to identify the fields of the decon-
centrated administration, where regional integration would be possible which is if
possible within the frameworks of the statistical regions. Therefore the adminis-
trative and other public servicing organisations were ab ovo equipped with re-
gional competency. Yet the question is, whether the process of regionalisation will
continue towards public administrative or political regions?
In the present state of the debates it is difficult to forecast the future since re-
gionalisation seems to lack both sufficient professional arguments and a unified
political will. Notwithstanding we are professionally not prepared for a total re-
gional revision and reform, still in recent times demanding regionalisation is be-
coming rather a fashion in the groves of politics. The opposition parties argue be-
sides the EU accession that if the regional tier will be the key element in regional
development regional decision-making must be democratised as well. They justly
refer to the fact, that the regional tier serves alongside the recent governmental
intentions exclusively centralisation targets.
The danger of inpatient regionalisation is not only in the lack of professional
basis. A further, fairly important factor is that the regional identity is also absent.
This latter is especially important, of course, if regions are organised as political
units functioning on the principle of representation. It was in vain to emphasise the
necessity of regionalisation and to establish regions within the state administration
and regional development, if the population cannot identify emotionally or cogni-
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Discussion Papers, No. 35.
tively with these arbitrary units. Even their name deliver basis for debates, and
their seats has not been clarified either. The government namely, as delimitation
the regions and made the establishment of development councils compulsory did
not make a decision on the seats of the regions. Ever since, there is a savage fight
between the potential regional seats for acquiring the regional functions, institu-
tions and organisations.
Summarising we can declare that behind regionalism, the magic notion of the
political elite there is no conscious region building strategy. In order to elaborate
this strategy the following matters must be clarified.
1. The functions requiring regions larger than the counties must be identified
and defined. No systematic investigations were carried out in this respect, which
based on the aspects of the economy of scale could have clarified the fields of the
current system of public administrative tasks, which would require or at least is
able to adapt the regional scale. For the time being certain programmes and tasks
of regional development require regional scale, we can also consider the possibil-
ity of regionalising environmental protection and tourism. In the fields of public
health, higher education or public administration there are some functions, which
can be regionalised, but as a whole they do not fortify yet the necessity of the es-
tablishment of a separate administrative tier.
2. After the clarification of the functions we must define, whether these func-
tions require a new regional level with general authority, whether this tier should
be facilitated instead of or above the counties and whether smaller regional units
below the counties shall be created. In order to be able to decide upon these ques-
tions the territorial aspect of service systems, infrastructure, accessibility must be
analysed. Accordingly, at the time being, it is not obvious that micro-regions, the
158 statistical urban attraction zones necessarily have to be the "lower meso—tier",
since the spatial organisation of the district scale services and administrative ac-
tivities shows many different varieties. Their number is rather higher than 158,
which obviously implies that the establishment of micro—regions would not mean
an appropriate solution for the integration of regional administration, it could only
provide for the voluntary framework of the municipal co-operation. It is especially
important to consider whether in Hungary two medium tiers are necessary at all.
The Western European experiences imply that usually the smaller countries like
Hungary content themselves with one medium tier.
3. After having identified the number of functions and levels the legal status of
the region can be modelled:
• state administrative units with an administrative office controlled by the gove
• rnment,
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Discussion Papers, No. 35.
• special delegated organs with co-ordinating authority,
• associations of local and county governments,
• a kind of corporation, similar to the county and regional development coun-
cils
• a directly elected self government with strong authority, or
• a "member state" within a federalised structure.
It is easily imaginable that in a classic unitarian country lacking regional tradi-
tions the fully authorised self—governmental status shall be achieved gradually.
The example of Great—Britain shows, that filling up the standard regions with po-
litical—democratic content is also possible through special "preparatory" forms
(Harding, A. et al. 1999).
4. Having identified the content and the number of the levels, the geographical
alternatives can be worked out. In this respect the appointment of regional centres
is especially important. The enforcement of geographic rationality does not prom-
ise to be an easy task. The Hungarian space is differentiated by the settlement
structure. It is almost impossible to build proportional regions on the settlements
with the regional centre located in the geographic middle. Therefore it is important
to build the administration on the real order of the regional spatial relationships,
and it is also worthy to consider to establish regions with possibly different status _
(several examples of which exist in Europe).
5. Subsequent to the scientific elaboration of reform alternatives, a public con-
sensus must be achieved for the decision, as I am convinced, the regional division
of the power cannot be an internal affair of either the narrow professional sphere
or the government. For this reason the gradual introduction and the conscious
nourishment of regional identity are especially important.
As these tasks forecast implementation will take time. A hastily made, badly
prepared and forced regionalisation may have the same fate as the former reforms,
in addition, it would endanger the stability of the power of the governments strug-
gling with a host of social and economic problems.
However, until the accomplishment of the process of regionalisation in Hun-
gary counties will remain the regions, since counties are the only units in Hungary
that meet — yet partially — the requirements of the European Charter of Regional
Governments.
* * *
In Hungary the most essential issue is not whether the counties or regions
should make the sub-national level. The primary task is to get rid of the traditions
of state centralisation and formulate a political will for the decentralisation of the
power.
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Pécs: Centre for Regional Studies, 2001. 41 p.
Discussion Papers, No. 35.
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Discussion Papers 2001. No. 35.
Regional Development and Governance in Hungary
The Discussion Papers series of the Centre for Regional Studies of the Hungarian
Academy of Sciences was launched in 1986 to publish summaries of research findings
on regional and urban development.
The series has 5 or 6 issues a year. It will be of interest to geographers, economists, so-
ciologists, experts of law and political sciences, historians and everybody else who is,
in one way or another, engaged in the research of spatial aspects of socio-economic
development and planning.
The series is published by the Centre for Regional Studies.
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Forthcoming in the Discussion Papers series
Role of the Regions in the Enlarging European Union
Special Conference Issue
Discussion Papers 2001. No. 35.
Regional Development and Governance in Hungary
Papers published in the Discussion Papers series
No. 1
OROSZ, Eva (1986): Critical Issues in the Development of Hungarian Public Health
with Special Regard to Spatial Differences
No. 2
ENYEDI, Gyorgy — ZENTAI, Viola (1986): Environmental Policy in Hungary
No. 3
HAJDU, Zoltan (1987): Administrative Division and Administrative Geography in
Hungary
No. 4 - SIKOS T., Tam& (1987): Investigations of Social Infrastructure in Rural Settlements
of Borsod County
No. 5
HORVATH, Gyula (1987): Development of the Regional Management of the Econ-
omy in East-Central Europe
No. 6
PALNE KOVACS, Ilona (1988): Chance of Local Independence in Hungary
No. 7
FARAGO, Laszlo — HRUBI, Laszlo (1988): Development Possibilities of Backward
Areas in Hungary
No. 8
SZORENYINE KUKORELLI, ken (1990): Role of the Accessibility in Develop-
ment and Functioning of Settlements
No. 9
ENYEDI, Gyorgy (1990): New Basis for Regional and Urban Policies in East-
Central Europe
No. 10
RECHNITZER, Janos (1990): Regional Spread of Computer Technology in Hungary
No. 11
SIKOS T., Tamas (1992): Types of Social Infrastructure in Hungary (to be not pub-
lished)
No. 12
HORVATH, Gyula — HRUBI, Laszlo (1992): Restructuring and Regional Policy in
Hungary
No. 13
ERDOSI, Ferenc (1992): Transportation Effects on Spatial Structure of Hungary
No. 14
PALNE KOVACS, Ilona (1992): The Basic Political and Structural Problems in the
Workings of Local Governments in Hungary
No. 15
PFEIL, Edit (1992): Local Governments and System Change. The Case of a Regional
Centre
No. 16
HORVATH, Gyula (1992): Culture and Urban Development (The Case of Pecs)
No. 17
HAJDU, Zoltan (1993): Settlement Network Development Policy in Hungary in the
Period of State Socialism (1949-1985)
No. 18
KOVACS, Terez (1993): Borderland Situation as It Is Seen by a Sociologist
No. 19
HRUBI, L. — KRAFTNE SOMOGYI, Gabriella (eds.) (1994): Small and medium-
sized firms and the role of private industry in Hungary
No. 20
BENKONE Lodner, Dorottya (1995): The Legal-Administrative Questions of
Environmental Protection in the Republic of Hungary
No. 21
ENYEDI, Gyorgy (1998): Transformation in Central European Postsocialist
Cities
No. 22
HAJDU, Zoltan (1998): Changes in the Politico-Geographical Position of Hun-
gary in the 20th Century
Discussion Papers 2001. No. 35.
Regional Development and Governance in Hungary
No. 23 HORVATH, Gyula (1998): Regional and Cohesion Policy in Hungary
No. 24
BUDAY-SANTHA, Attila (1998): Sustainable Agricultural Development in the
Region of the Lake Balaton
No. 25
LADOS, Mihaly (1998): Future Perspective for Local Government Finance in
Hungary
No. 26
NAGY, Erika (1999): Fall and Revival of City Centre Retailing: Planning an Ur-
ban Function in Leicester, Britain
No. 27 BELUSZKY, Pal (1999): The Hungarian Urban Network at the End of the Sec-
ond Millennium
No. 28
RACZ, Lajos (1999): Climate History of Hungary Since the 16 th Century: Past,
Present and Future
No. 29
RAVE, Simone (1999): Regional Development in Hungary and Its Preparation
for the Structural Funds
No. 30
BARTA, Gyorgyi (1999): Industrial Restructuring in the Budapest
Agglomeration
No. 31 BARANYI, Bela—BALCSOK, Istvan—DANCS, Laszlo—MED:5, Barna (1999):
Borderland Situation and Peripherality in the North-Eastern Part of the Great
Hungarian Plain
No. 32
RECHNITZER, Janos (2000): The Features of the Transition of Hungary's Re-
gional System
No. 33 MURANYI, Istvan—PETER, Judit—SZARVAK Tibor—SZOBOSZLAI, Zsolt
(2000): Civil Organisations and Regional Identity in the South Hungarian Great
Plain
No. 34 KOVACS, Ter& (2001): Rural Development in Hungary