Discussion Papers 2002. 
Regional Challenges of the Transition in Bulgaria and Hungary 62-77. p.
OLD AND NEW ELEMENTS IN THE SPATIAL 
STRUCTURE OF HUNGARY IN THE 1990s 
Ldszlo Hrubi 
The spatial structure of the economy — the territorial distribution of the perform-
ance of the national economy — is a slowly changing system that, within market 
conditions, usually resists short term effects and market disturbances. This conti-
nuity of the development of the spatial structure of the economy also entails that the 
interventions — which, coming from the socio-economic interests, usually aim at 
the moderation of the imbalances, the lagging of certain areas or the unequal mar-
ket chances of the actors — are only able to induce measurable effects and changes 
in a longer time scale. 
This stability, a spatial structure basically unchanged is characteristic of the de-
velopment of the Hungarian economy in the 1990s, although the turn in the begin-
ning of this decade changed, sometimes radically, a number of dominant factors.' 
During the transition to the market economy, the inherited economic spatial 
structure was the consequence of two large processes of historical scale. One is 
historical development in the narrower sense, which was broken in many respects 
by the other factor, the system of planned economy following World War II. 
In the historically born spatial structure, the division line was the Danube River, 
west of which a more industrialised region more closely following the European 
urbanisation trends evolved, while in the areas east of the Danube agriculture was 
the dominant factor in the shaping of the socio-economic (and settlement) structure 
(Figure 1). 
This division line separates so characteristic spatial units that during the break-
down of Hungary into regions one possible formation was the division into two 
large regions, supplemented by the capital city, Budapest as the third region, as the 
latter almost completely stands out from the Hungarian spatial structure. 
The development zone of the socialist period, the southwest—northeast axis and 
the areas north of it, was built on this structure. A significant difference is, how-
ever, the fact that the previous — "historical" — development was an organic one on 
market basis, amounting to a more complex economy in the sectoral sense, while 
the development will of the socialist period built a spatial economy operating in a 
large, monocultural company system. This is why this latter heritage became the 
industrial crisis zone in the Hungarian spatial structure from the end of the 1980s, 
and the economic restructuring was successful only in those areas where it was 
possible to build on, or return to, the "historical development". 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
Figure 1 
Historical development zones of Hungary — advantages and disadvantages 
Historical  development 
watershed 

Development 
-F 
watershed of 
Advantages („winners") 
socialism era 
Disadvantages („losers") 
New development zone 
Regions (NUTS 2 units):  0 Central-Hungary; 0 Central-Transdanubia; 0 West-Transdanubia; 
0 South-Transdanubia; 0 North-Hungary; 0 North-Great-Plain; 0 South-Great-Plain 
Counties (NUTS 3 units):  19 and Budapest capital city 
Source:  on base of the figure: Farago, L. 1999, p. 319. 
It is evident that in the building out of the market economy in the 1990s, those 
regions started in a better position which had belonged to the more dynamic zone 
in both previous periods, and which were not transformed into monocultural areas 
(which practically meant the dominance of heavy industry, in some places supple-
mented by light industry built on the female labour force). 
The statistical data collection did not focus on indices of the performance of the 
regional economies at that time, the starting position can be depicted by approxi-
mations.  Table 1  is a collection of such indices, making the index of the so-called 
economic health by counties (in order to allow comparison, in the table we in-
cluded the order of the counties measured with the GDP at the end of the decade). 2  
If we look at the spatial units above 0 (the average) in the map, we can see that 
all but one (Csongrad county) can be found in the area west of the Danube River, 
and also the fact that every county, except two, of this large region, Transdanubia 
were in a better than average position in 1991. 
63 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
Table 1 
Indeces of „economic health"in 1991 and GDP per capita in 2000 by counties 
Index of economic health, 
GDP per capita, 
Name 
1991 
'000 HUF, 2000 
value 
rank size 
value 
rank size 
Budapest 
3.14572 

2561 

Pest county 
0.47537 

1025 
10 
Fejer county 
0.27317 

1664 

Komarom-Esztergom county 
0.48983 

1093 

Veszprem county 
0.37768 

1112 

Gy6r-Moson-Sopron county 
0.98477 

1754 

Vas county 
0.64739 

1499 

Zala county 
0.37797 

1113 

Baranya county 
0.06105 
11 
993 
11 
Somogy county 
0.08403 

892 
14 
Tolna county 
—0.31623 
13 
1084 

Borsod-Abauj-Zemplen county 
—1.06438 
19 
852 
18 
Heves county 
—0.68228 
15 
925 
13 
Nograd county 
—0.82933 
17 
714 
19 
Hajdii-Bihar county 
—0.49599 
14 
929 
12 
Jasz-Nagykun-Szolnok county 
—0.80256 
16 
874 
16 
Szabolcs-Szatmar-Bereg county 
—1.68312 
20 
710 
20 
Bacs-Kiskun county 
—0.27807 
12 
887 
15 
Bekes county 
—0.82948 
18 
864 
17 
Csongrad county 
0.06444 
10 
1088 

Source:  Nemes N., J. 1993. p. 261 (economic health) and calculated by author. 
If we compare these figures to the data of 2000, we can also see that major spa-
tial structural transitions of the 1990s took place within this circle. 
These advantages and disadvantages demonstrate a relative position, behind 
which there was a national economy in need of a rapid renewal, on the brink of a 
crisis situation  (Figure 2). 
In only two units, 3  in reality only in Budapest, was the average profit rate of the 
businesses actually positive, whereas in many units the loss was significant. (In this 
Figure 2 the two parts of Hungary divided by the Danube River are well separated: 
the first eleven units are from Transdanubia or the capital city and Pest county.) 
Even if economic privatisation had not been a primary political objective of the 
change of social model, the balance sheets of the companies demonstrated by the 
figure in themselves would have made that necessary, anyway. 
The first new factor that has a potential to influence the development of the spa-
tial structure of the economy is thus privatisation. As the economic policy, for dif- 
64 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
ferent considerations, chose the large shareholder—investor model as opposed to the 
small shareholder — American type — ownership structure, privatisation made the 
penetration of foreign capital the second new element shaping the spatial structure. 
The presence of foreign — mostly large shareholder—investor type — capital was 
usually accompanied by a strong export-orientation, which was initiated by the 
economies of scale (the Hungarian internal market is rather small). This way the ex-
port capacity became the third factor shaping the spatial structure. Coming from the 
above-said, the fourth factor was the (trans)formation of the sectoral structure of the 
economy, structural modernisation, the growing importance of manufacturing indus-
try and financial—business services, which are both the primary recipients of foreign 
capital and the most dynamic elements of the modern economy and growth. 
Figure 2 
Average of profit rates of economic units of the counties, 1991, % 
Source:  Report on regional processes, 1992.  p. 73. 
Privatisation and spatial structure 
Privatisation means the sales of the economic companies in the portfolio of the state 
property management organisation, which was done by the manager of the property 
mostly by a market transaction — sales by tender. The sales were usually organised by 
sectors (not by regions), primarily relying on large investors (as we have already 
mentioned), i.e. mostly the total or the majority of the ownership was offered. Two 
65 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
phases of the privatisation can be separated. The first one, until 1994, was the time of 
mass sales, while the second — from mid-1995 until the end of 1997 — was the time of 
the sales of the larger businesses (energy and gas suppliers, banks and insurance 
companies etc.), also the minority ownerships remaining from the previous period. 
The companies designated for privatisation necessarily showed a spatial distri-
bution ready by the beginning of the 1990s. The concentration of this structure is 
shown by the fact that companies to be privatised could be found in only 7% of the 
Hungarian settlements (primarily in Budapest 5  and the — larger — towns), the major-
ity of the settlements were not concerned by the privatisation. 
The privatisation action thus did not directly modify the spatial structure. Direct 
effects could have been  when  privations took place (firms privatised sooner and 
their home regions could have had an advantage) or  at what price. Actually neither 
the effect of the former nor of the latter can be demonstrated. For example, Hajdd-
Bihar was among the rapidly privatised counties, still it did not profit much from 
this situation later. On the other hand, a somewhat belated privatisation character-
ised Fejer or Komarom-Esztergom counties, which are now part of the core region 
of economic growth. 
In the first phase sales took place at usually 10-15% below the value of regis-
tered capital, and mostly followed the economic performance and market position 
of the given company. 
During the privatisation organised by sectors, regional development aspects 
were hardly considered. We have to add that in the major part of the period there 
was no institutionalised regional development system in Hungary, that was (re-
)created by the Act on Regional Development and Physical Planning in 1996. By 
that time the majority of privatisation had already been done. 
On the whole, only two aspects are worth mentioning. One is the fact that a 
small part of the privatisation revenues was designated for regional development 
purposes, certain amounts were allocated to the municipal and regional govern-
ments of the settlements where the companies were registered (based on the land 
area of the plant, in some cases the size of the infrastructure). The other aspect is 
that a serious condition connected to privatisation was employment, in order to 
avoid the shock of unemployment. 
The safeguarding of the jobs and the creation of new jobs was an understand-
able social political objective during the privatisation, also, in regional development 
it is almost a primary condition, not only in Hungary but also in the practice of the EU 
to date. It is well known at the same time that the growth in the efficiency (and profit 
rate) of manufacturing does not increase, to the contrary, it decreases employment in 
the sector and the labour force flows into the tertiary sector. The employment restric-
tion thus theoretically did not serve the rapid Hungarian modernisation, especially if 
we consider that a significant source of the losses at the majority of the privatised in-
dustrial companies was over-employment, due to the lack of capital. This restriction 
did not actually have any effect, because the new owners could only temporarily con-
sider this obligation. 
66 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
Even though the action of privatisation did not directly touch the spatial structure 
of the economy, its indirect effects are decisive. Following privatisation, the strategic 
investors continuously "capitalised" the purchased companies, and they provided a 
continuously safe financial background for the expansion of the company (not to 
mention the fact that the expansion also means export-orientation and possibility, be-
cause the size of the Hungarian market is limited). 
Foreign capital and spatial structure 
The appearance of foreign capital in the spatial economy is important for two rea-
sons: 
— both the organisational restructuring combined with the privatisation, and the 
launch of the economy on a "marketable" growth track took place besides a 
shortage of internal capital and the consequent lack of resources, thus the in-
flow and spatial structure of foreign capital considerably determined (and 
still determines) the economic potentials of the regions and also their per-
formance in the longer run; 
— the integration of foreign capital — even when it was not a real integration —
renewed the economic activity, introduced more advanced technologies, 
products, operational systems and market behaviours. 
At the closedown of privatisation, in the beginning of 1998, approximately 
26,000 joint ventures with foreign share operated in Hungary — roughly every fifth 
economic organisation with legal entity is a joint venture —, the total of their regis-
tered capital amounted to some 2,800 billion HUF, within which the foreign share 
slightly exceeded 2,000 billion HUF. Compared to the beginning of 1994, the 
number of businesses increased by about a quarter, whereas the total of registered 
capital increased by 2.5 times and the foreign share tripled until early 1998. 
After the end of the privatisation — and dominantly already in the second priva-
tisation phase — the spatial structure of the influx of foreign capital was primarily 
determined by the development potential, perspectives and the expectations of the 
free market investments in the given place. The geographical location of these is 
the new development zone in  Figure 1  above, the region often called the "Hun-
garian banana"  (Table 2). 
The inflow of foreign capital decreased regional disparities on the whole, but 
did not amount to an essential spatial rearrangement. The spatial structural posi-
tions of 1990 are still valid, with slightly less deviation. Briefly depicting the situa-
tion, the capital city and the Central Hungarian Region are still dominant factors 
(the index of foreign capital per inhabitant in Budapest was 5.9 times the country-
side average even in 2000), the secondary and more and more dynamic factor of 
growth is Transdanubia, but South Transdanubia is declining within that, becoming 
more and more similar to the Eastern regions which do not show many signs of a 
67 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
breakthrough. In the circle of the latter, the situation of the South Great Plain is 
improving and seems to be relatively stable also in the longer run. 
The comparison of the spatial distribution and economic organisational concen-
tration of foreign capital shows characteristic paths of spatial diffusion. 
Table 2 
Foreign investment capital per capita of the regions and counties, 1995-2000 
Foreign investment capital per capita 
Name 
value, '000 HUF 
rank size 
1995 
1998 
2000 
1995 
1998 
2000 
Budapest 
383 
706 
898 



Pest 
110 
252 
353 



Central Hungary 
290 
544 
700 



Fejer 
99 
184 
234 



Komarom-Esztergom 
113 
178 
305 



Veszprem 
31 
69 
70 
17 
13 
13 
Central Transdanubia 
80 
144 
199 



GyOr-Moson-Sopron 
169 
335 
286 



Vas 
153 
224 
312 



Zala 
68 
73 
65 
11 
12 
15 
West-Transdanubia 
134 
226 
227 



Baranya 
82 
117 
63 

11 
16 
Somogy 
34 
62 
54 
15 
14 
18 
Tolna 
19 
27 
34 
19 
20 
20 
South-Transdanubia 
50 
76 
53 



Borsod-Abatij-Zemplen 
48 
156 
142 
12 


Heves 
69 
136 
142 
10 


Nograd 
37 
50 
61 
13 
17 
17 
North-Hungary 
52 
133 
128 



Hajdd-Bihar 
76 
124 
98 

10 
10 
Jasz-Nagykun-Szolnok 
24 
50 
78 
18 
16 
11 
Szabolcs-Szatmar-Bereg 
12 
27 
35 
20 
19 
19 
North-Great-Plain 
38 
68 
69 



Bacs-Kiskun 
33 
45 
66 
16 
18 
14 
Bekes 
36 
58 
73 
14 
15 
12 
Csongrad 
83 
153 
143 



South-Great-Plain 
49 
82 
92 



Hungary total 
128 
237 
287 
— 
— 
— 
Provinces total 
69 
133 
152 
— 
— 
— 
Source:  Regional Statistical Yearbook, 1995, 1998, 2000. Budapest, Central Statistical Office 
(different pages, calculated by author). 
The type with balanced and probably lasting growth involves the Central Hun-
garian Region (especially the capital city, but also Pest county by now), also, the 
catching up Central and West Transdanubian counties: Gyor-Moson-Sopron, Vas, 
Fejer and Komarom-Esztergom will soon be here. At the same time, one county in 
68 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
each countryside growth poles — Veszprem in Central Transdanubia and Zala in 
West Transdanubia — are of lesser intensity and more fragmented than the average, 
thus the presence of foreign capital is less expressed in the whole of their econo-
mies, the two regions are not coherent yet in this respect. 
The remaining regions of Hungary do not get much from the favourable effect of 
foreign capital. They are usually less attractive for foreign capital than the previously 
mentioned regions, despite the support of the central state and the local will. 
It is difficult to designate the really falling behind regions, as the concentrated in-
flux targeting the large-scale organisations (North Transdanubia and Hajdti-Bihar 
county are the best examples) can remain, despite all seeming progress, devoid of 
any spatial economic effect if not followed by the next levels on the size scale of the 
businesses (small- and medium size enterprises). At the same time, the "South Great 
Plain type", continuous but less concentrated diffusion of foreign capital (which 
mostly affected the small- and medium size enterprises) can result in a more lasting 
effect on the spatial economy. 
In this circle, the most problematic issues from the aspect of the diffusion of for-
eign capital are South Transdanubia, a region falling behind, the "stability" of the 
position of the North Great Plain, the concentrated capital acquisition of North Hun-
gary — which hardly modifies the former economic organisational structure —, but 
actually the South Great Plain is in an unstable position, too, despite its favourable 
geopolitical situation from the aspect of the European processes. 
Export capacity and spatial structure 
The dominant division line of the spatial structure, drawn by the presence of for-
eign capital, is still the division line between the capital city and the countryside, 
but the situation is the opposite if we look at the level of industrialisation and the 
industrial export capacity  (Figure 3). 
The Figure reveals that in the spatial structure of the Hungarian economy, the 
level of industrialisation and the export capacity is at least as much of a dividing 
factor as is the historical capital city—countryside discrepancy. The new phenome-
non, typical in the 1990s, is the fact that this effect became extremely influential. 
The presence of foreign capital concentrated dynamic industrial growth almost ex-
clusively into the four counties in the upper right zone, while the rest of Hungary in 
this respect is — borrowing the now famous French expression of the 1960s — the 
"Hungarian desert". 
Consequently the key issue of the spatial structure of the Hungarian economy —
and in a sense of the modernisation of the whole economy — is re-industrialisation, 
evidently in the direction of manufacturing industry. Besides the fact that the growth 
of manufacturing industry is an important factor in itself for both the whole of the 
economy and the regional economy, there are two functional issues that make it even 
more important: 
69 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
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Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
— manufacturing industry is the dominant sector, the primary carrier of innova-
tion, and the innovative development is a necessary precondition for the eco-
nomic or spatial structural modernisation; 
— manufacturing industry creates the primary demand and market for the other 
important sector carrying the dynamics of growth, financial and business serv-
ices. These services are still primarily concentrated in Budapest (the GDP of 
the financial and business services per inhabitant in Budapest is 5.21 times 
higher than the Hungarian countryside average), but their spatial diffusion is an 
inevitable precondition for the spatial spread and equalisation of the growth 
(and export capacity) of manufacturing industry. 
Sectoral structure of the economy and spatial structure 
Table 3  is an illustration of the correlation mentioned above in connection with the 
relation of industrialisation (export capacity) and the financial and business services. 
As regards the sectoral structure of the economy, the development is character-
ised by a particular duality. 
Budapest "got rid of the industrial character already in the first phase of priva-
tisation — by 1994 — and became part of the European urban network as a service 
city, a service centre of international importance (the value of GDP in manufac-
turing industry in Budapest is only 19.4% higher now than the countryside average, 
whereas that of the financial and business services — as we have already mentioned 
— is 5.21 times higher than that). The development of the countryside is mostly 
linked to the manufacturing industry, although — as it can be seen from the table —
the specific performance of financial and business services slowly follows that, the 
spatial diffusion of the two sectors takes places parallel to each other (even the 
rates of growth are rather similar). In the capital city—countryside relation, on the 
other hand, practically no convergence has taken place in the latter sector. 
This duality can become a problem because of the new trend of the world econ-
omy, which is characterised by the dichotomy (if you like, paradox) of globalisa-
tion and localisation, in which the international movement of capital (and the loca-
tion value of the regions in the world economy) is determined by the local devel-
opment of the economic environment (within that primarily the human capital and 
the financial and business services). 
Without the development of this, the capital attraction and the growth in manu-
facturing industry can decline, too, even in the Transdanubian areas that are the 
core area of growth today. 
71 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 
• 
1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
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Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
The development of the spatial structure 
(on the basis of specific GDP) 
Between 1995 and 2000, the regional economic performance measured with the 
specific GDP has roughly tripled in Hungary, and the territorial disparities behind 
the average have usually grown, both in the capital city-countryside relation and 
within the countryside. 
As regards the capital city-countryside relation, the dynamics of Fejer, Koma-
rom-Esztergom, Gyor-Moson-Sopron and Vas counties, also the regions repre-
sented and determined by them, exceeded that of the capital city (and of the Central 
Hungarian Region), a slow convergence could be seen, whereas all the other coun-
ties and regions showed a divergent tendency. The main tendency thus was that in 
the field of regional economic performance measured with the GDP, the differen-
tiation between 1995 and 2000 mostly strengthened among the countryside areas, 
within that especially at the level of the counties, not so much among the regions 
(Tables 4 and 5). 
In the progress of the spatial structure measured with the GDP, the above-
mentioned factors naturally cumulate, so practically no new element can be seen 
here. 
On the other hand, important correlations can be seen from the aspect of the de-
velopment of the future spatial structure, if we quantify the relationship among the 
development of the factors examined so far  (Table 6). 
Table 4 
Differences of GDP per capita by counties and regions, 1994-2000 
Name 
1994  1995  1996  1997  1998  2000 
Differences calculating by counties (19 units and Budapest) 
Best per worst position with Budapest capital city 
2.92  3.05  3.24  3.56  3.29  3.61 
Best per worst position without Budapest capital city 
1.68  1.83 
1.93  2.22  2.13  2.47 
Budapest capital city per second (best) county 
1.74  1.66 
1.68  1.60  1.54  1.46 
Differences calculating by regions (7 units) 
Best per worst position with Central-Hungary region 
2.09  2.03  2.13  2.22  2.18  2.40 
Best per worst position without Central-Hungary region 
1.45 
1.45  1.52  1.56  1.63  1.80 
Central-Hungary region per second (best) region 
1.45  1.40  1.40  1.42  1.34  1.34 
Source:  Data of Ministry of Economy on request, 2002. (for year 2000) and Regional Statistical Year-
book, 1997, 1998. Budapest, Central Statistical Office (different pages, calculated by author). 
In addition, these indices kind of summarise the main - and already described -
characteristics of the development of the spatial structure of Hungary in the second 
half of the decade. 6  
73 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
Table 5 
GDP per capita of the regions and counties, 1995-2000 
GDP per capita 
Name 
value, '000 HUF 
rank size 
1995 
1998 
2000 
1995 
1998 
2000 
Budapest 
993 
1858 
2561 



Pest 
399 
773 
1025 
18 
11 
10 
Central Hungary 
792 
1474 
1997 



Fejer 
544 
1234 
1664 



Komarom-Esztergom 
475 
838 
1093 



Veszprem 
463 
803 
1112 



Central Transdanubia 
497 
978 
1318 



Gyor-Moson-Sopron 
597 
1204 
1754 



Vas 
585 
1162 
1499 



Zala 
504 
901 
1113 



West-Transdanubia 
565 
1102 
1494 



Baranya 
437 
783 
993 
10 
10 
11 
Somogy 
418 
686 
892 
15 
18 
14 
Tolna 
506 
861 
1084 



South-Transdanubia 
448 
770 
982 



Borsod-Abatij-Zemplen 
418 
690 
852 
15 
17 
18 
Heves 
409 
726 
925 
17 
13 
13 
N6grad 
326 
565 
714 
20 
20 
19 
North-Hungary 
400 
678 
847 



Hajdtl-Bihar 
426 
754 
929 
13 
12 
12 
Jasz-Nagykun-Szolnok 
425 
720 
874 
14 
14 
16 
Szabolcs-Szatmar-Bereg 
333 
567 
710 
19 
19 
20 
North-Great-Plain 
391 
675 
832 



Bacs-Kiskun 
433 
713 
887 
11 
15 
15 
Bekes 
429 
691 
864 
12 
16 
17 
Csongrad 
513 
889 
1088 



South-Great-Plain 
457 
761 
943 



Hungary total 
549 
997 
1312 
Provinces total 
446 
805 
1039 
Source: see at Table 4 
— The growth tracks of dualistic sectoral structure — i.e. the fact that in Buda-
pest the financial and business services sector, whereas in the countryside 
Hungary the export-oriented manufacturing industry is the engine of growth 
— reflect totally different relations if we do the calculations without Budapest 
or including the capital city. The common feature is that in both cases the 
presence of foreign capital is a dominant component, although its dominance 
declined by the end of the decade. The significant differences also point out 
that the economic weight of Budapest within Hungary remained extremely 
great, this dominant feature of the spatial structure did not change in the 
1990s. 
74 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
Table 6 
Correlation indeces of the factors of economic territorial structure, 1995, 2000 
Manu- 
Business 
Foreign 
Industrial 
GDP per  facturing 
services  investment 
Name 
Year 
Ye 
export per 
capita 
share in 
share in  capital per 
capita 
total GDP total GDP 
capita  
Without Budapest capital city 
GDP per capita 
1995 

0.4455 
-0.1774 
0.6745 
0.6868 
2000 

0.8120 
-0.3389 
0.6328 
0.8547 
Manufacturing share in total GDP 
1995 


-0.3561 
0.5521 
0.7654 
2000 


-0.5232 
0.6837 
0.8579 
Business services share in total GDP  1995 



0.0567 
-0.4526 
2000 



-0.1316 
-0.4097 
Foreign investment capital per capita  1995 




0.6513 
2000 




0.5761 
Industrial export per capita 
1995 





2000 





With Budapest capital city 
GDP per capita 
1995 
-0.0645 
0.7292 
0.9122 
0.4358 
2000 
0.2501 
0.5880 
0.8665 
0.5219 
Manufacturing share in total GDP 
1995 


-0.4407 
0.0008 
0.6871 
2000 


-0.5066 
0.0634 
0.8238 
Business services share in total GDP  1995 



0.7724 
-0.1102 
2000 



0.7343 
-0.2141 
Foreign investment capital per capita  1995 




0.4293 
2000 




0.2687 
Industrial export per capita 
1995 





2000 





- Although Hungary is still among the five "most international" economies of 
the world as regards the role of foreign capital, the correlation between eco-
nomic performance and the amount of foreign capital seems to loosen (in the 
case of both growth tracks), the accumulation of Hungarian capital is strength-
ening' and the performance of the Hungarian companies - mostly in the sector 
of small- and medium size enterprises - is improving. In addition to the weak-
ening of the dependence on foreign capital, this is an important phenomenon 
because it might create, adapting to the trends of the beginning of the new 
millennium, the conditions for the creation of integrated sectoral-regional 
economic organisational systems (clusters, networks etc.) both in Budapest 
and the Hungarian countryside. The penetration of the Hungarian small- and 
medium size enterprises also increases the flexibility of the economic struc-
ture, and it can amount to a better adaptation to the market. 
- In the growth and the economic performance, an increasing export orientation 
can be demonstrated even in Budapest. For the „returns to scale" of the mod-
ern economy, the internal Hungarian market is too narrow, and the ability to 
75 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
adapt to the world market remains a dominant factor in the formation of the 
spatial structure, too. The external institutional consequence of this is the fact 
that the integration to Europe, the accession to the European Union has no real 
alternative for Hungary, whereas the internal institutional consequence is that 
the economies of scale result in the strengthening of the economic organisa-
tional role of the regions, making the decentralisation of the central control and 
regulation inevitable in the field of the economy, too. 
Notes 
I  As opposed to the majority of the East-Central European countries, the Hungarian transi-
tion was a less radical turn in many respects. From 1968 on – starting with the economic 
reforms launched then – the economic and behavioural characteristics of the Hungarian 
companies on the whole moved, with some steps back, towards the directions typical in 
the market economies. In the second half of the 1980s this process strengthened and several 
formerly favoured sectors soon found themselves in a crisis situation. Before the turn – also 
in the second half of the 1980s – foreign capital appeared in the Hungarian economy, this 
was the time of the initial phase of privatisation, too, the so-called "spontaneous privatisa-
tion" not controlled by the state, which mostly concerned the retail and catering industry 
network (units). The most important elements shaping the development of the 1990s were 
thus present in the economy formerly, in less expressed forms. 
2  The index of economic health is the result of a factor analysis done for the 19 counties and 
Budapest (a total of 20 units) with four variables, the factor point values of the units by 
main factor. The expected value ("the average") is 0, the standard deviation is 1. The four 
variables are as follows: density of businesses (number of businesses per one thousand 
inhabitants), share of joint ventures (the proportion of businesses with foreign share 
within the total of the businesses), the income of the population (personal income tax base 
per one inhabitant) and the unemployment rate. 
3  Tolna county – the other unit besides Budapest – is one of the Hungarian counties with the 
least population, in the territory of which operates the only Hungarian nuclear power sta-
tion. It provides 40% of the energy supply of Hungary. The power station company in it-
self provides at least 20% of the GDP of Tolna county, which makes the county seem as a 
developed one measured by the specific GDP, while in reality – without the performance 
of the power station — it is much less developed than the average. The average profit rate 
of the Figure, more than 2%, is also the "output" of the power station. 
4  At the economic organisations with mixed ownership, today the average proportion of the 
foreign ownership within the total of the registered capital is around 80%. 
5  Following the closedown of the privatisation process – in 1998 – more than half of the 
joint ventures and approximately 57% of the registered capital of the joint ventures could 
be found in Budapest. 
6  The calculation was done for the interim years, and the findings show that the changes 
characterised by the two end points fit in the tendency. 
In the second half of the decade, the export of Hungarian capital significant strengthened, 
too, especially in the Central-East European region. 
76 

Hrubi, László: Old and New Elements in the Spatial Structure of Hungary in the 1990s. 
In: Regional Challenges of the Transition in Bulgaria and Hungary.  Pécs: Centre for Regional Studies, 
2002. 62–77. p. Discussion Papers. Special
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77