Discussion Papers 2002.
Regional Challenges of the Transition in Bulgaria and Hungary 27-48. p.
THE TRANSFORMATION OF THE HUNGARIAN URBAN
NETWORK AFTER 1990
Pal Beluszky
The characteristics of urban development during
the "socialist" period
The emergence of the present modern urban system (in Hungary) began in the mid
19th  century. (This does not mean, however, that the developments of earlier eras in
the urban network have completely disappeared; they can still be detected in the
role, structure and image of various towns.)
In the mid 19th  century the coincidence of several factors accelerated the estab-
lishment of the civil society and the development of towns. (1848: the feudal socio-
economic establishment was terminated; 1867: Hungary regained its limited sover-
eignty within the framework of the Austro-Hungarian Monarchy, and a great wave
of modernisation commenced: steamboats and railroads were built, mechanised
large-scale industry emerged, etc.)
This phase of town development was rather inhomogeneous, while comprehen-
sive, modern urban development was carried out almost only in the capital. While
the population of Budapest grew fivefold, to 880 thousand, between 1848 and
1910, the population of the rest of the towns 'only' doubled. As late as in 1910,
still only one fifth of the population lived in towns (that is, settlements in town
status [or town rank xxx]), and there was an enormous gap between Budapest and
the rest of the towns. Nevertheless, the dualist era started the process of Hungary's
catching up with Western Europe; this, however, was halted by the disintegration
of the Monarchy and by the re-drawing of Hungary's borders in the Trianon Peace
Treaty after World War I. 1  Even so, urbanisation continued to be encouraged in
some aspects, e.g. by the development of large-scale industry within the new bor-
ders. By 1941, partly owing to the new borders, the proportion of town-dwellers
had risen to 38.1% of the population.
The process of urbanisation was stepped up after World War II, during the dec-
ades of the "socialist" era. 2  The year of communist takeover, 1948, was a turning
point in ideology.  Hungary's entire economic development policy was subject to

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
(also) ideological objectives,  burdened throughout with a contradiction difficult to
reconcile. This contradiction ensued from the fact that the political system, which
claimed social, ideological and economic superiority, was established in the more
backward part of Europe, therefore the discrepancy between the declared principles
and reality was obviously experienced every day. This "incompliance"  bereft  the
socialist system from its main and almost only  legitimating argument and rushed it
into forced and overstrained economic development programmes, dominating and
eclipsing all other aspects of the society.
This led to the rapid industrialisation of Hungary; during the 1950's, 750 thou-
sand jobs were created in the industry; in 1960 already about 34% of the active
population worked there, and by the 70's, this sector had become dominant in the
employment structure. At the beginning, industrialisation followed 19 th  century
patterns, limited primarily to mining, to the production of raw materials, energy
and to the classical lines of heavy industry. Investments, therefore, were concen-
trated to the already existing industrial centres (the so-called "heavy-industrial
axis" and Budapest); the so-called "socialist towns" (Kom16, Ajka, Varpalota,
Oroszlany, Kazincbarcika, etc.) were also erected in these areas. The "industrial-
isation of the provinces" was carried out later, in the sixties, which then  brought
about the growth and development of several other towns.
At the beginning, political power was concentrated in the capital, and later, in
the mid 60's, it appeared also in the county seats. From this time on, the central
government bodies (the planning office, the ministry of finance, etc.) distributed to
the counties their share of the development resources.  Further distribution was
partly the task of the counties themselves. 3  In this "further distribution" the county
seats were in a favourable situation; the seventies and the early eighties were
marked by the  astonishing growth  of the county seats and by the accumulation of
their power. The idea and practice of  settlement planning  was developed to facili-
tate planned, central control over the development of the settlement network. After
a period of temporary waning, this practice was revived again in the late 50's. It's
principle documents, the National Concept for the Development of the Settlement
Network and the Regional Development Policy were prepared in 1971. The con-
cepts had a double strategic goal: they were to ensure the efficient utilisation of the
resources of the economy and to decrease the territorial disparities in the living
standards of the population. The most important planning tool of the concept was
the classification of settlements. By emphasising the advantages of territorially
concentrated economic development and, consequently, the efficient operation of
the institution system, this classification provided the ideological and "theoretical"
basis for the policy that  settlements (towns) with central functions should enjoy
priority in development programmes.  The development of settlements, or what was
actually realised of the plans, was limited to the development of towns. The proc-
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Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
ess of urbanisation was followed and also supported by a tendency of a great num-
ber of settlements to be officially registered as towns. (There were 52 towns in
Hungary in 1945, 76 in 1970, and 166 in 1990.)
Before 1990, the  general conditions and characteristics of the development of
towns were the following:
1) Although some "market elements" had already appeared in the development
of the settlement and town network before 1990 (enterprises' site location
decisions, advantages coming from geographical location, differences in the
buying power of the population, the activity of various "regional lobbies",
the practice of "bargaining the plan", etc.), this area, too, was dominantly
still  controlled from "above".  "Control from above" did not necessarily mean
central, government control or interference; it included e.g. the practice that
the industrial programmes, site location policies, the financing of settlements
and of institutions were orchestrated by the large, state-owned companies.
Thus, industrial plants usually did not emerge in the different towns by util-
ising the gradually accumulated local capital or by springing from its small
industry; instead, they were established as the result of single "central" deci-
sions, which from one day to another changed the functions and positions of
the related settlements. When assigning new functions to settlements, deci-
sion makers did not take into account the settlements' history and endow-
ments, did not promote the continuation of their organic "development", and
did not facilitate close relationships between the company and the settlement
(and its inhabitants); thus, these companies rarely integrated into the econ-
omy and community of their host towns or settlements. In turn, the decline,
crisis or collapse of a company or industrial sector again drastically changed
the conditions of the affected settlement, especially in the case of mono-
functional settlements. In the process of urban development the local en-
dowments, resources, ideas and the quality of the local community were
given little consideration. Added to this was the marginal amount of the set-
tlements' own income (that received by the settlement council) and the great
significance of the settlements' administrative classification (county or dis-
trict seat, town or village) in the development perspectives of the settle-
ments. "Control from above" also contributed to the  increasingly homogene-
ous nature of the  town network,  to the widespread use of unified, model-like
practices, and to  concentrated development.
2) The processes of  homogenisation  and  concentration  had been the  general
trend of settlement development until the late eighties. Homogenisation was
facilitated by the  monopolistic nature  of the control, supply and institution
systems of the economy and society, and by the unified and model-like
functions and distribution of the centralised institutions. 4  At the same time,
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Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
activities forced into centrally determined frames resulted in  concentration
of the activities; examples of this range from the lawyers, forced to work in
professional lawyers' teams, to the bakers, who worked uniformly for the
relevant county's single baking company. The intense industrialisation of the
country boroughs and the development of the urban institutions of industrial
towns bereft most Hungarian towns from their particular character.  The in-
stitution system in towns was also established in a "standardised" manner,
without any respect to their actual needs.
3) The inclination and efforts of what was referred to as the socialist model of
society building to achieve more concentration coincided with the  concen-
tration processes which accompanied the actual period of Hungarian ur-
banisation  (the so-called first urbanisation cycle). These tendencies were
also enhanced by the prevailing practices in settlement network planning and
settlement development. However, in spite of both the extreme concentration
of investments in settlement development and the extensive growth of the
economy, urbanisation (the development of towns and the spreading of the
urban lifestyle) did not keep pace with the extension of the towns' industrial
functions. In spite of the spectacular and rapid development of (a part of) the
towns and in spite of the large-scale housing programmes, again concen-
trated in towns, the country remained in an  "under-urbanised" state, at least
when compared with the size of urban industry and with the volume of cen-
tral functions. "Under-urbanisation" was the reason underlying the emer-
gence of a massive group of  commuters.  One fifth of the active population,
or more than two fifth of the population of villages, became commuters.
Their numbers were increased by those who wished to live closer to towns
but could not manage to obtain state-owned apartments there; these people,
attracted by lower construction costs, easier access to extra income, and by
the appeal of country life, settled down in nearby villages. These processes
had multiple impacts on the settlement network; commuting formed the
whole country into a single residential area, while real conurbation only
emerged around few towns, most prominently around Budapest. Large-scale
commuting left residential areas and emerging conurbations vulnerable to
their main employment providers. (This fact had rather serious impacts after
the crisis of the raw materials and heavy industry began in the mid eighties.)
4) The concentration of the economy and of the institution system, that is, the
concentration of "power," also involved the strengthening of hierarchy rela-
tions. The fact that county seats became the centres of power; also the in-
creased number of institutions in the county and district seats; the creation of
districts in rural areas; 5  the lack of settlement autonomy and the encourage-
ment of settlement network development all contributed to the emergence of
30

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
a  chain of hierarchy  in the society. This hierarchy was highly structured
from top to bottom, from Budapest down to the associated villages, 6  and
heavily influenced the everyday life, living conditions, general opportunities,
etc. of the population. This hierarchy influenced and controlled the processes
of migration and demography, the stratification of the local communities, the
quality of general supply, etc. The desire to advance in the social and occu-
pational hierarchy sooner or later required a similar "step forward" in the hi-
erarchy of settlements, leading to migration.  Territorial disparities emerged
primarily  along the settlement hierarchy  and only secondarily among the re-
gions. The employment structure, the decreased disparities in the industrial,
agrarian and residential functions of the settlements and the emergence of
hierarchy, which created substantial disparities, resulted in a practice where
the aspects of hierarchy dominated the classification of settlements into set-
tlement types.  This applied also to the classification categories of the Na-
tional Regional Development Concept.
The conditions of the transformation of the urban network
after 1990
In Hungary, the "socialist" economy went into deep crisis in the mid 1980's; in
order to invigorate the economy, the political government tolerated more and more
"market economy elements" (including the emergence of larger private enterprises,
the privatisation of state-owned companies, the fact that of foreign capital was al-
lowed to enter, etc.). By the end of the decade, the government had lost so much of
its public support that, during multi-party elections in the spring of 1990, it gave
way to parliamentary democracy and to a freely elected government, which started
to deconstruct the "socialist" structures. Naturally, this had a strong impact on the
conditions of settlement development.
Changes in these conditions were effected partly by the deconstruction of the
structures established during the "socialist" era, and partly by the establishment of
a market economy.
1) The crisis of the "socialist economy", involving the significant decrease of
its output, already appeared before 1990, and the process was only acceler-
ated by the events in that year (the emerging requirements of the market
economy, the collapse of the COMECOM market, etc.). At the beginning,
and especially between 1990 and 1995, the political and social changes took
place in the context of a severe economic recession; neither did the expan-
sion that commenced after 1996 rebuild the "old" economic structure. Be-
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Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
tween 1988 and 1993, the number of industrial jobs decreased with 540
thousand (38%), while total employment decreased with 1.1 million jobs.
Severe drops in output were not only experienced in mining (where by 1993
production was down to 57.6% of that in 1985) and metallurgy (where pro-
duction went down to 53.3% between 1985 and 1993), but also in the clothes
industry, which had marketed its products on the COMECOM market (pro-
duction went down to 45.2% between 1985 to 1993), and in food processing.
Declining production brought about the closure of a range of mines and in-
dustrial plants, especially in Borsod-Abatlj-Zemplen county (where coal-
mines were closed down and the metallurgic complex of Ozd was wound up,
etc.), and in  Nogrdd and Komdrom-Esztergom  counties. Consequently, large
crisis areas emerged, which did not only include mining and industrial set-
tlements but also their commuter areas. Large, continuous crisis areas
emerged in  Northeast Hungary  along the  Ozd—Miskolc  axis, in  Szabolcs-
Szatmdr-Bereg  county and in Nogrdd county, and in several mining areas of
the  Transdanubian Range. The "spectacular" decline of production brought
about soaring unemployment also in towns.
Apart from a few towns, employment in mining and industry dropped so
heavily that it completely changed the functional structures of towns, their
types and positions in the settlement structure, the lifestyle of their inhabi-
tants, etc. (A typical example of this process is  Ozd,  the characteristic prod-
uct of capitalist and socialist industrialisation. Here, the number of industrial
jobs dropped from 18 thousand to 3.5 thousand; 10 thousand of its inhabi-
tants left the town, and the number of industrial workers per 1000 employees
dropped to 89, to so low a figure that this settlement, with a population of 40
thousand, cannot be considered as an industrial town any longer; nor as
anything else yet.) The weight of industrial employment in the total popula-
tion dropped to one third in  Oroszkiny  and Komla,  and to less than fifty per-
cent in Varpaiota and Martfii  (Table 1).  The fact that in 15 years, between
1982 and 1997, the number of industrial workers out of 1000 town-dwellers
went down from 200 to 70, and the fact that this decrease was rather differ-
entiated, brought about the restructuring and re-differentiation of the town
network.
2) The  reduction of industrial employment  in towns and the  general demo-
graphic conditions of Hungary  give rise to entirely new and, in the case of
towns, unusual  demographic tendencies.  The development of our town net-
work takes place in a  country with decreasing population.  (In 1998 the po-
pulation of Hungary decreased with 44 thousand; this trend is forecasted to
continue during the first third of the 21 st  century.) In all regions and counties
32

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
Table 1
Changing industrial role of some towns, 1982-1997
Number of
Number of
Number of
industrial jobs
Number of
industrial jobs
per 1000
Town
industrial jobs,
per 1000
industrial jobs,
1982
inhabitants,
1997
inhabitants,
1982
1997
1. Ozd
17,782
367
3,698
89
2. Oroszlany
7,792
369
2,458
118
3. Komlo
10,394
337
3,094
111
4. Varpalota
11,425
399
4,409
167
5. Martfii
5,159
749
2,584
350
6. Kazincbarcika
12,961
333
6,328
184
7. Sopron
13,986
254
5,256
98
8. Nyfrbator
3,211
232
1,245
94
9. Balassagyarmat
9,409
314
5,532
185
10. Hodmezovasarhely
11,129
205
5,277
107
11. Ajka
10,956
358
6,951
212
12. Tatabanya
18,959
245
5,360
74
13. Miskolc
50,552
239
16,502
93
14. Nagykanizsa
15,200
278
8,405
160
Source:  Data from Regional Statistics Yearbook. 1982, 1998.
of Hungary there was a  natural decrease in population after 1990.  The
population of towns, however, decreased more rapidly  after 1990  than that
of the whole country:  in 1998 the total population of towns was only 95,7%
of the 1990 figure. This means that our towns have a negative migration bal-
ance: this loss of town-dwellers in 1998 totalled some 17 thousand over
Hungary. The population of certain towns and cities is decreasing drasti-
cally; Budapest, for instance, lost 8.8% of its population, about 180 thousand
inhabitants. There was a similarly "spectacular" drop in the population of
Miskolc (11.6% since 1990). The population of the towns in the conurbation
belt of Budapest, however, is steadily growing (the growth in Szentendre is
14.9%, in Szigetszentmiklos 13.7% and in Erd 15.6%), indicating a new cy-
cle of urbanisation.
3) The  regional frameworks of town development  have changed partly because
of the deconstruction of the "old structures". This process has not ended yet;
therefore, the  spatial structure of Hungary is still in shaping, having changed
very rapidly during the past few years. The fundamental tendency of this
change is that the eastern regions of the country have been devaluated (for
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Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
reasons including the agrarian crisis, which prevails to this day, primarily af-
fecting the Great Plain region; the decline of the industries working for the
COMECOM market (the canned food and the textile industries, etc.); the re-
dundancy of the commuters from this area; and the devaluation of the main
transportation routes towards the COMECOM markets); the western regions
have obtained more favourable positions, especially along the Budapest-
Gyor—country border transportation axis; while Budapest and its
surroundings have retained their advantageous positions.
4) Formerly, there was strong differentiation along the  settlement hierarchy  in
all aspects including the structure and demographic conditions of the society,
the local labour markets, the living conditions, the availability of basic sup-
ply, etc. This yielded a mosaic-like spatial structure. Today there is a reverse
tendency: the favourable and unfavourable phenomena (the re-evaluation of
the geographical location, the emergence of crisis areas, etc.) emerge on a
territorial, regional level; it is the differences among the regions which be-
come dominant, while  disparities among the settlements have been reduced.
The mosaic-like nature of the spatial structure is fading, and the opportuni-
ties of settlements are more and more strictly determined by their geographi-
cal and regional location.
By the same token, the  order of importance of the factors that differenti-
ate among the settlements and regions  is also changing. Previously, the most
important differentiating factor was the position in the settlement hierarchy,
and, closely connected to this, the infrastructural conditions of the settlement
and the availability of institutions; in the context of full employment the ef-
fects of the labour market were of less significance. Today, however, the
prospects of an area (chances and risks for enterprises, labour market condi-
tions, investors' assessments of opportunities, etc.) are determined primarily
by the  income opportunities.
Naturally, the state of the settlement network is increasingly influenced by the
emergence and establishment of the "new" structures of the market economy and
of multi-party democracy:
1) After 1990, the political, legal and ownership conditions of the market econ-
omy  have been gradually established. Settlements, including towns,  found
themselves competing on a "market" of settlements.  Although central influ-
ence on the settlements has not ceased to be exerted (a very high proportion
of the operational and development resources of the local governments is
channelled to the settlements through the central budget, while the propor-
tion of their own income is rather low in almost all settlements, except for a
few with special conditions), several measures have  increased the autonomy
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Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
of towns  (property assigned to local governments, income generated by this
property, strengthened function of local governments, privatisation, etc).
Economic decisions, as well as in certain cases the decisions on the location
of certain municipal institutions  are motivated by the forces and rules of
market competition,  which the state (the government, the administration, the
regional development organs, etc.) can only influence with indirect tools.
The activity of the local economy and, in part, that of the local institution
system is determined by the endowments of each town (their geographical
location, their transportation conditions, the state of their environment, the
availability of infrastructure, their labour market conditions, the buying
power and needs of their inhabitants, the management competence of their
municipal leadership, etc.).
2) In Hungary after 1990, foreign capital played a significant role in regional
and settlement development; between 1990 and 1999, Hungary's per capita
foreign investment figure was the highest among the transition states: 1970
USD per capita (the respective figures were 1029 USD in the Czech Repub-
lic, 800 USD in Slovenia, and 706 USD in Poland). The primary target area
of foreign investment was  Budapest and its conurbation  (65% of all invest-
ment was realised here), and  North Transdanubia (with 15% of all invest-
ment).
3) The activity of the market-based economy and its site location decisions may
lead to the emergence of new disparities. Economic development today has
no "social" motivation. The regional restructuring of the economy has al-
ready started. Most economic organisations are concentrated in the areas
with more favourable endowments (Budapest, its surroundings, North-West
Transdanubia, the Lake Balaton area, etc.).  The regional structure of Hun-
gary is being transformed.
4) The multiplied number of economic and social actors (in the 1990's the total
number of economic organisations and private entrepreneurs reached 800
thousand!), the reduced role of central redistribution, and legislation intro-
duced after 1990 as a response to previous centralising efforts all work
against the processes of deconcentration. This is also reflected in the changes
that have been introduced in public administration.
The 1990 act on local governments changed the administrative conditions
of settlement development. Advantages and disadvantages arising from legal
status have become less remarkable. The local government act does not
make significant distinctions between towns and other settlements, nor is
there a difference between their financing schemes. This fact has
"liberalised" the practice of obtaining town status; the number of settlements
in town status is growing rapidly.
35

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
The  radical decrease of the role of the  traditionally strong  county level
has also effected an entirely new situation. The counties ceased to function
as administrative units with power, distributing financial resources and con-
trolling regional development. At the same time, the institution system is still
organised exclusively on the territorial basis of the counties, often inappro-
priately; the operation of museums, for instance, the public archives, the of-
ficial institutions of tourism, public health care, jurisdiction, the public li-
brary network, labour institutions, the collection of census data, etc., are all
organised on the basis of counties. Thus, county seats still play a prominent
role in the organisation of the society and in the hierarchy of settlements,
although this role is more strongly "challenged" by their competitors than
before. All this facilitates "free competition" in the development of the town
network.
A new element in the system of Hungarian public administration (and re-
gional development) is the  region (and the regional seat), comprising the ter-
ritory of several (an average of three) counties.
While in the former, council-based, regime the central administration and
the counties distributed the financial resources to the local councils on a
subjective basis, today local governments receive central normative funding.
Local governments receive their allowances partly on the basis of per capita
quotas, and partly on the basis of public tasks they are to perform (number of
pre-school places maintained, number of pupils educated, number of those
receiving social benefit, etc.), irrespective of their legal status (that is, town
or village). The local governments are entitled to levy taxes, but this possi-
bility is very limited because of the high rate of central taxes.  Thus, two
thirds of all local government spending comes from the central budget.
5) "Freedom" in settlement development was enhanced by the fact that with the
change of regime all previous regional and settlement development pro-
grammes were nullified, and planning, as a tool for economic control, was
completely exiled from Hungarian economic policy. Between 1990 and
1996, on the basis of ad hoc decisions,  areas in unfavourable conditions
(small villages, border areas) and  crisis areas were given central support.
The Regional Development Fund was established to carry out this task. The
Fund, however, could not meet the new challenges of regional development,
neither in the amount of resources it disposed of, nor in its system of goals
and distribution. It seems that the 1996 act on regional development and re-
gional planning and the Regional Development Concept has had little effect
on regional processes. Instead, mainly improvised and propagandistic meas-
ures have been and are initiated to control these processes; it seems at times
that governments and top policy-makers are hardly concerned with the issue
at all.
36

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
6) Further changes in the conditions of settlement development are those that
have taken place in the  social and demographic structure  of Hungary's
population. Most prominent of these are  increased differentiation in wealth
and the  radical decline of the economic activity.  The standard deviation of
incomes doubled during the 1990's; the difference between the top and bot-
tom 10 percent of the population in 1999 was sevenfold. Increased differen-
tiation in wealth naturally involves growing disparities among settlements
and parts of settlements; this process facilitates the differentiation of suburbs
and the emergence of slums in certain towns and disadvantaged settlements.
The decrease in the economic activity rate is due partly to the aging popula-
tion, partly to wide-spread unemployment (11.9% in 1993 and 7.8% in
1998), to longer average time spent in education, and partly to changed em-
ployment and working habits (many people work in family enterprises with-
out being registered as employees).
The consequences of changing conditions —
changes in the town network
Urbanisation — settlements acquiring town status
Since the mid 1980's the  number of towns  in Hungary has increased rapidly: in
1984 Hungary had 109 settlements in town status, 206 in 1999 and 252 in 2001
(Table 2).  Until the end of the 1980's, more settlements in Hungary performed ur-
ban functions than were actually in town status. It was in the mid 80's that the
value and advantages of town status started to diminish. Before that time, per cap-
ita budget allowances for towns surpassed those for villages manifold; industrial
development programmes and state-run housing projects were carried out almost
exclusively in towns. In the mid 80's these advantages were reduced (in part be-
cause state-run housing projects almost entirely stopped also in towns, and because
councils came to include normative elements in their practice of distribution of fi-
nancial resources, etc.), and, parallel to this, the number of settlements acquiring
town status increased: in 1989 as many as 41 settlements obtained registration as
towns. Thus, by the early 1990's, the circle of settlements in town status more or
less coincided with those which actually performed urban functions: in 1995, 194
settlements were registered as towns, while a survey carried out not much later
listed 190 settlements as performing urban functions. Since settlements have con-
tinued to obtain town status ever since, Hungary today has a number of settlements
registered as towns but performing no or hardly any urban functions.
37

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
Table 2
Number of towns in Hungary, 1945-2001
Year
Number of towns
1945*
52
1960
63
1970
76
1982
96
1984
109
1988
125
1990
166
1993
184
1995
194
1998
118
1999
206
2000 (1 st January)
222
2000 (31' December)
237
2001
252
* Besides these, several other settlements were in town status
in 1945, which were later integrated into Great Budapest
The 1990 act on local governments, in order to curb previous malpractices
about obtaining town status (artificially increased population, joining villages to
towns, forced development campaigns at the expense of rural areas, etc.) and also
to meet the trends of democracy, gave the settlements wide-scale autonomy, thus
allowing for many of them to obtain town status. The effective law on local gov-
ernments only contains a single sentence defining the conditions for settlements to
become towns: "A settlement may initiate the procedure to become a town if its
level of development and its regional role justifies its town status." Town status
today involves no advantages other than prestige. At the same time, in spite of the
emergence of "new" factors of urbanisation, hardly any settlements developed into
functional towns during the 1990's; except some settlements in Budapest's conur-
bation that have acquired a number of urban functions. The "new" factors of urban
development have only appeared remarkably in a small portion of the existing
towns; therefore, the bulk of the town network was not much affected. Today 64%
of Hungary's population, or 6 million and 420 thousand people live in settlements
in town status.
38

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
The town hierarchy
The role of a given town in the settlement network is most directly suggested by its
position in the settlement hierarchy.  The hierarchic level on which the town is
placed depends on  the quantity and diversity of the basic urban functions  it per-
forms. Basic urban functions include those institutions and activities of the service
sector in the wide sense (e.g. education, cultural institutions, health care, com-
merce, administration, judiciary, financial and insurance services, etc.) which meet
special (as opposed to everyday) needs. Thus, urban functions do not include, for
instance, the service provided by general practitioners; however, specialised clin-
ics, hospitals, care centres, and the management of health care services are consid-
ered as such; by the same token, secondary and tertiary education are urban func-
tions, while primary education is not.
To describe Hungary's present town hierarchy, we took stock of exactly one
hundred urban institutions and examined whether or not they are available in a
given town. (In our survey we did not include institutions and functions of national
scope, because the position of Budapest is so obvious at the top of the hierarchy
that we considered that unnecessary to deal with.) We classified the one hundred
indicators into  hierarchic levels according to the frequency of their occurrence. We
defined the number of such hierarchic levels partly on the basis of the results of our
previous surveys and partly on the basis of empirical data.
We considered six levels:
1) Institutions in the capital (institutions of national scope)
2) Institutions of regional centres (institutions with scope over several counties)
3) Institutions of county seats
4) Institutions of medium towns
5) Institutions of small towns
6) Institutions of "minute towns"
Having designed this framework, we investigated to what extent each settlement
shared the indicators of each level of hierarchy. Thus, we detected 122 settlements
with a wide range of urban functions and an array of accompanying urban features
(traditions, sizable population, the general urban image, economic basis, etc.), and
further 80 settlements, which perform more or less urban functions  (Table 3).
Within this paper we do not have the opportunity to give a detailed analysis of
the results; instead, we describe the changes over the 1990's (we prepared the same
type of hierarchy analysis for the years 1910, 1965 and 1995). The comparison of
the results of these surveys indicates that the number of towns, in the functional
sense, is strikingly stable, especially if we only consider the settlements with
39

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
Table 3
The number of settlements on the different levels of the hierarchy, 2000
Level of hierarchy
Number of towns
I.
Capital
1
II.
Regional centres
5
Among these performing complete functions:
4
performing incomplete functions:
1
III.
County centres
13
Among these performing complete functions:
6
performing incomplete functions:
7
IV.
Medium towns
25
Among these performing complete functions:
12
performing incomplete functions:
13
V.
Small towns
78
Among these performing complete functions:
29
performing incomplete functions:
49
VI.
Smaller settlements with urban functions
79 (88?)
Among these performing complete functions:
36
performing incomplete functions:
43
(52)
Total
201
201 (210)
clearly urban functions (i.e. from the small-town level upwards). In 1910 there
were 124 "real" towns within what came to be the present borders of Hungary,
while today we have 121. Although there have been replacements in the "stock",
yet neither the industrialisation of the socialist period, nor the ten years that have
passed since 1990 have increased the number of settlements with urban functions
(Figure 1).
Neither has the position of Budapest changed significantly in the town hierar-
chy. As early as in the mid 19th century, in the period of the unfolding of the civil
society, the capital stood far out from among the rest of the towns; in certain high
level activities (e.g. in banking services, in higher education) it had 30% to 60% share
in the country. At the beginning of the "socialist" era, more than half of Hungary's
manufacturing industry was concentrated in Budapest; later, the great majority of
the institutions of the economic and public administration, and those of cultural life
were to be found in Budapest. Many attributed this "over-development" to an er-
ratic settlement policy. Yet, after 1990 Budapest further increased its weight in
certain fields (foreign investment, banking activities, business services, etc.); it is
40

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
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Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
to be noted, though, that since the 1998 elections the government has been rather
ungenerous to the capital. It is difficult, however, to counteract "natural" processes
with political tools: Budapest today is the "bridgehead" of modernisation and of
international contacts, the only real international town in Hungary.
Of course, this does not apply to regional and lower level functions; on these
levels there is an alternative to site location in Budapest; the question is to what
extent our settlement policy has promoted site location in the provinces and
whether or not those institutions that could freely choose their sites or headquarters
considered this possibility. This hierarchic distribution of urban roles and functions
warn us of how flawed that settlement policy is which takes a general stand in the
issue of the capital's development, and claims, for instance, that Budapest is over-
developed. It is to be noted that the arrival, settlement and growth of institutions of
international scope is a national interest that should be promoted. (The fact that in
the early 1990's foreign capital paid special attention to Hungary and settled here
in an outstanding proportion helped Hungary become one of the most "prominent"
countries in the modernisation process of the East and Central European countries.)
The settlement of international functions in Hungary depends on many factors, in-
cluding the state of the environment, urban traffic conditions, the cultural atmos-
phere, cultural and artistic events and their quality, the availability of high level
services, etc. A policy that hinders the development of reception potentials is not
only harmful to Budapest but also to the whole country. Neither does the decen-
tralisation of institutions of national scope seem appropriate. On the other hand, it
seems that Budapest also has an outstanding share in regional roles: 77% of the
doctors of the Hungarian Academy of Sciences and 56.9% of all qualified re-
searchers work in the capital, and 56.5% of all arriving foreign capital was regis-
tered here. Two fifths of all third level students of Hungary study in Budapest.
When attempting to reduce the dominance (?) of Budapest, the only feasible way
seems to be to strengthen the provinces' weight in the regional functions and insti-
tutions. When considering the relation between Budapest and the regional centres it
has to be noted that no more than 1 to 2.1 million people live in any given large
provincial town and in its gravity zone, which, as suggested by international expe-
rience, is not enough for a real big city to emerge. On the other hand, nearly 5 mil-
lion people live in the regional gravity zone of Budapest, that is, from where Buda-
pest is more expedient and convenient to access than any other regional centre.
Neither has there been any change in the fact that a hierarchic level is actually
missing from between Budapest and our "regional centres," the level of the "real"
large towns. Compared to the capital's population of 1.8 million, the average
population of the regional centres is below 180 thousand, only one tenth of that of
Budapest. The missing level "below" Budapest is also proved by international
comparative studies. According to a survey on the hierarchy of the large towns and
42

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
cities of East and Central Europe, Budapest belongs to the top circle of cities in the
region, together with Warsaw, Prague, Kiev, Saint Petersburg, etc. On the second
level, however, we do not find any Hungarian towns (this circle includes Brati-
slava, Brno, Krakow, Riga, Ljubljana, etc.); our regional centres belong to the third
and fourth level.'
The circle of regional centres has been unchanged for a long time. Four towns
comply fully with this role:  Szeged, Debrecen, Pecs and Miskolc.  The position of
GyOr  has somewhat changed. Over the past few years it has become the most im-
portant provincial commercial, entrepreneurial and banking centre, has experienced
a boom in tourism, in the business service sector, etc. (e.g. Gyor has the largest
number of banks and financial organisations of all provincial towns). With these
functions Gy6r has caught up with the other regional centres; at the same time there
is growing discrepancy between its position in the business hierarchy and its posi-
tion in the hierarchy of public and local institutions. This is also a pronounced sign
of the restructuring of the town hierarchy, indicating the possibility that centres of
business and tourism may, in certain cases, separate from administrative centres.
Sopron,  with no  county seat functions  but in an excellent geographical location (a
couple of kilometres from the border with Austria, near Vienna, along one branch
of the Budapest—Vienna transportation corridor), also became a county centre dur-
ing the past decade. Sopron, like Gyor, experiences the rapid growth of market-
based institutions. Urban functions have also developed rapidly in the more  popu-
lous settlements around Budapest,  especially in services based on private capital,
and in the resort towns, primarily in the Lake Balaton area.
Another development in the last decade is that the process of "regular"  subur-
banisation  has gained speed; the frantic-paced process of conurbation was also
witnessed during the years of socialism, but at that time it was those who left
agrarian areas in favour of towns and industrial areas who inflated the population
of the outskirts and surroundings of towns, giving the forming conurbation a rural
character. Today, however, the dominant trend has become moving out of the city,
primarily to the outskirts, which provide comfortable and pleasant living condi-
tions. A new type of living space has emerged in the form of residential quarters,
running "their own" institutions, often operating a security service (fenced area,
guards, lift gates, etc.). This process of suburbanisation causes the rapid reduction
of the population of Budapest.
43

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
The competitiveness of towns
During the formation of "new" structures, the competitiveness of towns gained
particular importance. When determining a town's "competitiveness", we consid-
ered the following aspects:
— The intellectual capital of the town
— The competitiveness of its economy
— Its regional position
— Its positions in "networks"
— The income conditions and the quality of living it offers
— The "general development level" of the town's infrastructure
— The dynamism of its development
By quantifying these aspects we constructed a complex indicator to determine
the competitiveness of each town.
Our "system of indicators" is  highly coherent:  there is close correlation among
the rankings in the different "sectors", even though we did not make efforts to cor-
relate them. Only the indicator of "dynamism" deviates from the rest of the indi-
cators. This indicates the probability that the pace of a town's growth is scarcely
related to its success in the competition of towns. (While Budapest has outstanding
indicators in competitiveness, several of its indicators of dynamism are negative.)
The individual factors of competitiveness are closely related with each other; it  is
never the case, for instance, that a town with considerable intellectual capital would
be completely unsuccessful in the development of its economy or infrastructure.
This fact indicates that the  development of the economy can also be achieved
through indirect measures. This is especially remarkable, for instance, when cop-
ing with the crisis situation of a predominantly industrial town: the "recovery" of
lost industry is not necessarily the best way to revive its economy.
The competitiveness of a town is closely related to its position in the town hier-
archy. The "gravity" of certain medium and large towns may counterbalance their
unfavourable regional positions; Nyfregyhaza, for instance, outperforms Zalaeger-
szeg and Kaposvar in competitiveness. Neither does the west-east slope necessarily
appear in the competitiveness of small towns on the same level of the settlement
hierarchy; several Transdanubian small towns are placed rather low in the com-
petitive ranking. On the top of the two hierarchies, the settlement hierarchy and
competitive ranking, the correlation is +0.71.
The position in the settlement hierarchy and the ranking in competitiveness are
strongly correlated on the upper levels, and more loosely on the medium and lower
levels. This, on one hand, proves the marked role of the settlement hierarchy model
in the process of modernisation; on the other hand, it is to be noted that the "new
44

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
elements" have mainly penetrated the higher circles of the town hierarchy. At the
top of the hierarchy all other factors make only secondary impact, in spite of the
fact that while Gy8r boasts the best competitive results it is preceded in the town
hierarchy by the four other regional centres. In spite of their less favourable re-
gional location, however, Pecs, Szeged and Debrecen perform at about the same
level (their intellectual capital surpasses, their economic development lags behind
that of Gy6r). At the lower levels, the role of the town hierarchy is less significant;
here competitiveness is determined by the town's regional location, by special in-
dividual factors, and by the location of one or two significant business organisa-
tions in the town. On the other hand, a large number of settlements in town status
form a static mass where competition and competitiveness are almost non-existent.
Another consequence of the fact that such fundamental role is played by the
town hierarchy is that several elements of the town network have "survived" and
live on; these elements appear in the competition of towns, which shows that the
hierarchy is a very solid structure, which may reflect "events" that took place cen-
turies ago.
This "hierarchic distribution" of competitive performances makes  Budapest
stand far out among the other towns,  representing a separate category. Instead of
providing long lists of data to prove this, it is probably enough to point out that
more than half of the 20 billion USD worth of all foreign capital that has entered
Hungary since the change of the regime targeted Budapest and that 88% to 94% of
all international financial transactions in Hungary is handled in the capital. Today
we witness the mysterious repetition of the processes that took place in the second
half of the 19th  century, at the early stages of civil urban development: also then
Budapest was the bridgehead of modernisation, of economic development, and of
the arrival of foreign capital; the phenomenon that the new processes appear in a
limited number of poles, is a rather general regularity of regional development.
A few remarks are to be made about the final ranking of towns in the town
competition survey (the competitive typology of towns is presented in  Figure 2).
— The final scores can be evaluated on the basis of two aspects: on one hand by
looking at how many necessary competitive conditions a given town has; on
the other, we may consider its competitiveness and performance compared to
its role in the settlement hierarchy (Kaposvar, for instance, performed well
compared to all other towns, but compared to its population, county seat
status, and rank in the hierarchy, its score is poor: it is preceded by several
towns not even in county seat status: Gyongyos, Esztergom, Mosonmagyar-
(war, Godolle, etc.)
— The first three competitive groups, including 39 settlements and Budapest,
can be considered as those in which the multiple conditions for success defi-
nitely exist.
45

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
From among them Gyor, Pecs, Szeged and Debrecen stand out. The perform-
ance of Gy5r may be surprising to those who did not follow the developments of
the past decade. Although the town has not been able to catch up with the other
four large regional centres in the town hierarchy, nor does its intellectual capital
come near to theirs (Gyor does not have a university, higher education is one-sided,
the research network is poor, which causes a lack in highly qualified personnel),
through its excellent location, developed infrastructure, industrial traditions,
emerging business services and high industrial technology Gyor has become the
most competitive town in Hungary. (Its position in the town hierarchy is very
similar: on the basis of market-driven elements (financial institutions, business
services, commerce, etc.) it belongs to a higher level than when its centrally as-
signed functions are considered.) Although the regional location of Pecs, Szeged,
and, especially, of Debrecen is unfavourable, through their intellectual capital they
continue to form a well distinguishable, competitive group. Their intellectual capi-
tal is still growing, and they even have the chance to increase their weight in this
field at the expense of the capital.
The second level comprises 10 towns, all of which, except  Sopron,  are county
seats (a few county seats, however, Tatabanya, Szekszard, Bekescsaba, Kaposvar
and SalgOtarjan, are not included in this group). The outstanding score of Sopron is
not surprising: its location in the Budapest—Vienna axis is excellent, it is one of the
most important gates of Hungary, the gravity of its services even reaches inside
Austria, it has a beautiful countryside and townscape, it is a university town, its
civil and cultural organisations has a long tradition, etc. And even if Sopron cannot
be expected to move even further in the competitive ranking, it can still gain fur-
ther positions through its special high-value services (like the already existing pri-
vate dental care centre). Miskolc, in spite its forced development during the social-
ist era and the consequent restructuring of its whole economy, still shows the signs
of crisis. Its competitiveness is for the most part the heritage of previous decades,
and its surroundings are the most disadvantaged region of Hungary. It is rapidly
losing its population. Also in Miskolc, economic revival could probably be
achieved through means other than the recovery of its lost industry. In this group
some county seats of the Great Plain performed quite well (e.g. Kecskemet and
Ny iregyhaza).
Notes
I  The peace treaties signed in and around Paris after World War I (that concerning Hungary
was signed in the Trianon Palace) caused the disintegration of the Austro—Hungarian
Monarchy; Hungary lost 71.5% of its territory and 63.6% of its population to the newly
formed states of Czechoslovakia, Yugoslavia, Romania, Poland and Austria.
2  In Hungary the socialist era began in 1948; this year was often referred to as the "year of
the takeover".
47

Beluszky, Pál: The Transformation of the Hungarian Urban Network After 1990.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 27–48. p. Discussion Papers. Special
3  The total surface area of Hungary is 93 thousand square kilometres, which is divided to 19
administrative counties and Budapest. The average surface of the counties (excluding Bu-
dapest) is 4870 km3 ; their average population is 420 thousand.
4  Financial services in Hungary, for instance, were for decades provided by two institutions:
the Hungarian National Bank (Magyar Nemzeti Bank), performing the tasks of the central
bank and financing the actors of the economy; and the National Savings Bank (Orszagos
Takarekpenztar), providing financial services to citizens, with unified branches in every
county and town performing the same activity and having the same scope of authority
everywhere. Under these circumstances the emergence of e.g. a regional financial centre
was inconceivable. All segments of the "state-run society", from health care through pub-
lic education, museums, local media to funeral services, were operated on the same prin-
ciples.
5  In areas of tiny and small villages, where the population of a settlement was below one
thousand, basic institutions (primary school, council, post office), the cooperative head-
quarters, etc. were operated in one larger nearby settlement, leaving these small settle-
ments without primary institutions.
6  Those villages in the areas described under Note 5 which did  not have their own adminis-
trative or other institutions (councils).
Grimm 1994.
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