Discussion Papers 2002.
Regional Challenges of the Transition in Bulgaria and Hungary 104-128. p.
THE EVOLUTION AND DEVELOPMENT OF THE
LEGAL REGULATION OF REGIONAL DEVELOPMENT
IN HUNGARY
Istvcin Finta
Introduction
The legal regulation of regional development passed through such significant
changes, which can not any more ignored by the jurisprudence treating the new
trends carefully and the by the administrative law either. This is supported also by
the currently intensifying legislative activity. It is not merely a passing political
fashion, since it is also in Hungary clear that by ignoring the territorial aspects and
generally the category of space a durable balance and economic growth is impossi-
ble for the entire country. Previously the tools and institutional system of regional
development was outside the filed of interest of the jurisprudence and therefore
their fundamental theories were elaborated not by the legal but by the regional sci-
ence. At the same time it is also Obvious that one of the most important tools of the
implementation of regional development targets is the law itself. Therefor the pre-
viously extern regional development principles and methods are becoming more
and more intern for the jurisprudence. On the other hand, whether the results of the
science will be integrated and with which distortions will be integrated in the legal
norm, which is organising the legal relations of the addressees will be clear exactly
in the course of the legal regulation process.
The regional development law is not yet and independent legal discipline, if we
wish to place it within the system of jurisprudence, than — by the subject, object of
the regulation and by the legal relationships evolving — we can consider it as part of
the administrative law.
In the course of investigation of the positive statutory law a fairly high number
of the elements of the regulation can be evaluated (such as the identification of the
circumstances of life to be regulated, the circle of beneficiaries and obligates, deci-
sion-making competencies, the system of legal consequences, etc.). Admitting the
necessity and importance of detailed analysis, the introduction of the legal material
of regional development is only possible trough the overview of some of the most

Finta, István: The Evolution and Development of the Legal Regulation of Regional Development in Hungary.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 104–128. p. Discussion Papers. Special
important aspects. Therefore the most important aspect of analysis will be the re-
gional development philosophy transmitted by the legal regulations and also the
question how far the modern scientific theories and results are represented in those
legal regulations. Within this larger field we will study on the case of the void legal
regulations how far the institutionalised tools system encouraged the regional de-
velopment and haw it impacted the development of the society. Regarding the cur-
rently effective legal regulations the question is to be answered, how far the legal
orders match with the principles of the European Union and how they contribute to
the development of the independence and autonomy of the territorial tiers which
seems to be indispensable for the development of the regions.
The regulation of regional development in the period
between 1971-1996
The government decrees of 1971
The first regional development legislation activity in Hungary appeared in 1971.
According to the act on legislation (1987:XI Act) we can not talk about any acts
since the concerning government acts had the forms of government decisions,
which belong to the so called "other legal tools" of the state administration. Three
significant government decisions were made in the observed period, the 1006/1971
(March 16) government decision on the principles of regional development, the
1007/1971 (March 16) government decision on the national settlement network
development concept, and the 2006/1971 (March 17) government decision on the
system of regional planning and regional plans.
According to the government decisions the most important actors of regional
development and regional planning are the National Planning Office (NPB), The
Ministry of Housing and Urban Development (MHUD) and the capital city and
county councils. The control of the elaboration of the regional development plans
was the competency of the National Planning Office. The NPB and the MHUD
designated the planning-economic regions together and the main task of the
MHUD was the elaboration of the draft plans for the planning-economic regions.
The county councils prepared the county development plans based on the informa-
tion and instructions by the National Planning Office.
The decisions divided the country from the planning aspect into economic re-
gions and sub-regions. The number of economic regions was six and this division
was almost identical with the current regional division. The sub-regions consisted
of settlements performing urban or partial urban functions and the settlements in
their gravitation zone.
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The authors of the government decisions based their work on the theory of cen-
tral places becoming more and more popular at that time. Therefore they catego-
rised the settlements of the country by the categories of nationally prioritised cen-
tre, highly prioritised centre, prioritised centre, medium level centre, local centre,
and other settlements. "The supply responsibility for the operation and mainte-
nance of the technical infrastructure and service system was carried by the towns,
county seats, and therefore these were also the beneficiaries of the resource divi-
sion system" (Pdlne Kovdcs  1999).
At this time the institutional system of regional development and the state
household was completely overlapping. As the contemporary researchers stated:
"The local economic activity and organisation is missing from among the precon-
ditions of the regional growth. The hypothetical economic districts bear no eco-
nomic functions and the organisations required by these"  (Kulcsar 1972).
If we are about to summarise the impacts of the government decisions in 1971,
we will find that the direct consequence of the hierarchical system and the over-
pushed urban development praxis established by the NPB in 1971 was the  strong
polarisation of the settlements and the stagnation of the development level of the
tiny villages,  and in may cases their alarming and irreversible decay. The targeted
equalisation was implemented exclusively in the case of the higher settlement cate-
gories, however the regional and the urban—rural differences, inequalities remained
unchanged producing more and more regional problems  (Paine Kovcies  1999). In
the planned economic mechanisms the separated state funds and the targeted in-
vestments too have necessarily financed the urban development. The targets of the
industry-centred economic policy naturally afflicted the agrarian regions. The in-
comes of the population, the incentives of the social policy also reinforced in terms
of targeted layers of the society the disadvantage of the tiny villages  (Pdlne Kovdcs
1999).
The 12/1980-1985 Parliament decision on the long term tasks of regional
and settlement development
The 12/1980-1985 Parliament decision on the long term tasks of regional and set-
tlement development realised the failures of the previous period however the de-
clining economic circumstances did not provide for the opportunity of the correc-
tion of mistakes and they could not stop and eliminate the negative trends. The de-
cision pays special attention to the development of the fragmented territories with a
high number of tiny villages in the frontier, to the better utilisation of the local re-
sources and to the improvement of the infrastructure. The decision concretely
named within the latter area the problem of the healthy drinking water, the im-
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2002. 104–128. p. Discussion Papers. Special
provement of housing, the channelling and cleansing of wastewater and the im-
provement of telephone supply.
In the fairly long period lasting from the realisation of the problems produced
by the previous concept until the turn the resources were exhausted. The decision
of the Parliament rather closed down the debate and pacified the public opinion,
but it did not open up a new type of regional policy.
The 1996 Act on regional development and physical planning and the
National Development Concept
The act on regional development and physical planning
Following the systemic change the legal regulation of regional development arrived
at a milestone, which is also indicated by the enactment of the 1996. XXI. Act on
regional development and physical planning. The level of the legal source itself —
the level of the act — implies that the role of regional policy and regional develop-
ment has significantly grown in comparison with other sectors.
The act has introduced ten territorial categories (region — within this category
planning-statistical region, and development region-, privileged areas, urban areas,
micro-regions, business zones, backward areas, eligible areas, restructuring areas,
rural areas, innovation centres, backward frontiers). However the legislator did not
combine this categories with concrete functions, the act mentioned some of them
only in connection with the regional development targets and tasks, and some other
are exclusively mentioned among the declaratory elements of the act and nowhere
else. And the legislator did not attach a concrete organisational background to any
of these spatial categories.
The actors of regional development are: Parliament, the government, the min-
ister whose competency regional development belongs to and the National Devel-
opment Councils. The task of the latter is — in opposite to the previous organisa-
tions with general competencies — is definitely bound with regional development.
The council is equipped with preparatory, recommendation, reporting and co-
ordinative competencies and rights in connection with the establishment of regional
development policy.
To the most important tasks of the Parliament belong the definition of the prin-
ciples of regional development support and decentralisation, and — within the
Budgetary Act — the decision making upon the financial means aimed at regional
development.
The role of the government seems to even more emphasise, since the govern-
ment decides upon the proportion of the central and territorial resources aimed at
regional development and also upon the supports required by the implementation
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2002. 104–128. p. Discussion Papers. Special
of the regional development programmes defined in the national regional develop-
ment concept.
The competencies of the minister especially in comparison with the competen-
cies of other sectoral ministers, do not seem to be fairly strong, since his most im-
portant activity is practically the elaboration of the national development concept.
Besides that he only bears co-ordinating and participating or organising functions,
opportunities considering the different development concepts and programmes and
the utilisation of financial means connected with them.
The act institutionalised three forms in terms of the territorial tiers of regional
development but — in 1996 — only one single attached organisational framework
and territorial unit. This territorial unit was the county, and its institutional back-
ground the county development council, and — with only reporting and co-
ordinating functions — the county councils. The development associations of the
municipalities are below this tier, the organisation of which is poorly (as legal per-
sonalities) and their territorial delimitation is not at all defined by the act. These
associations are operating in the micro-regional tier the territorial unity of which in
the lack of legal regulation only depends on the free ambition of the municipalities.
It is necessary to mention that — independent form this act — there is a micro-
regional delimitation shaped alongside planning-statistical aspects but this rarely
coincides with the borders of the development associations. Besides the act is
based on this territorial delimitation.
Above the county tier is the regional tier, which could be set up — at the time of
the amendment of the act — by the county councils on a voluntary basis. The act did
not attach an institutional background to the regional tier and did not apply a terri-
torial delimitation either.
During this period preliminarily the county development councils were
equipped with significant regional development resources. The members of the
regional development councils were:
•
the president of the county council,
• the mayors of the towns with county rank within the territory of the county,
•
the representative of the minister,
•
the representatives the territorial economic chambers,
• one representatives by statistical districts of the municipal associations oper-
ating within the county.
The act on regional development and physical planning in this form was effec-
tive only for couple of years, its content and philosophy was soon basically
amended.
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The Parliamentary Decision on the Nation Development Concept
The 35/1998 Parliamentary Decision on the National Development Concept was
passed in 1998. This decision may be considered as a modern document, which
also meets the European requirements, too. The regional development concept es-
tablished the vision of future, in which the regions with different social and eco-
nomic preconditions would develop alongside different, special development paths
with an intensive division of labour and in harmony with each other and not infe-
rior to each other. The territorial inequalities were moderated and the number and
circle of the socially and economically backward and disadvantaged regions af-
flicted by significant unemployment. The regions of the country became together
with the frontiers of the neighbouring countries the main initiators of the European
and cross-border co-operation and at the same time the regions will be the scenar-
ios of the intensive co-operation of the counties in the development policy. The
urban network is becoming more and more balanced, the public services of the ur-
ban institutions will be physically accessible from any settlement and the decen-
tralised system of the intellectual and education centres will ensure the driving
forces of the development.
One of the important targets of the conception is the solution of the Budapest-
centred spatial structure, the means of which is the development of the centres,
which are appropriate for growth.
The concept classifies the moderation of the territorial inequalities as one of the
most important tasks. In the interest of the successful treatment of this problem it
established separate spatial categories. These are the beneficiary regions of re-
gional development:
•
economically or socially backward regions,
•
the industrially restructuring regions,
•
rural and agrarian regions,
•
regions effected by serious or long lasting unemployment.
In connection with the development of the tool system of regional development
the decision considers the co-ordinated operation of the different separated state
fund, earmarked provisions for development, other means of state and the mone-
tary allowances would be desirable. (The principle of concentration.) If necessary
the means operating in a decentralised decision-making circle and the regional re-
sources shall be increased.
According to the decision we gradually have to shift to the programme financ-
ing, and in the case of the development supports the applications supported by de-
velopment programmes shall enjoy priority (principle of programming).
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2002. 104–128. p. Discussion Papers. Special
The parliamentary decision can not be considered as a legal regulation and
therefore it is a fairly low level norm, even if it describes a quite significant strat-
egy of regional development. Unfortunately the legislation of the next period rather
considered the level of the norm than its content in the course of passing the legal
regulations considering regional development.
The modification of the Act on regional development in 1999
The 1999 Act on the modification of the Act on regional development and physical
planning well indicates the significant changes in the regional development policy.
The modification did not concerned the associations of local governments at all,
and introduced moderate changes concerning the county development councils and
fairly significant changes concerning the regional development councils.
The representatives of the industrial and trade chambers representing the actors
of the economic life lost their representation in the council, the number of the mi-
cro-regional representatives was decreased, but a member became the representa-
tive of the deconcentrated organ of the Ministry for Agriculture and Rural Devel-
opment, and the representative of the regional tourism committee, which is inferior
to the Ministry of Economy.
The centralisation progressed even more obviously in the course of the regula-
tion of the regional tier institution system. The modification of the act has changed
the operation of the previously voluntary bottom up regional development councils
and preliminarily its constitution. Similarly to the county tiers, The number of the
micro-regional representatives decreased within the council, the economic cham-
bers lost their representation, while representatives of the different ministries gave
half of the members. The members of the regional development councils are:
• the presidents of the county development councils, operating in the venue of
the council,
• the minister, the representative of the ministry of the interior, environment al
protection, economy, transport and water management, social and family af-
fairs, public health, education, youth and sports and finance,
• one representative by county of the concerned development associations of
municipalities;
• the mayors of the towns with county rank within the venue of the council;
• the president of the territorially competent regional tourism committee.
This composition ensures in the practice the dominance and unlimited interest
enforcement of the prevailing governing party (parties).
The modification took a strong stand in terms of the delimitation of the regions.
The act itself did not undertake the delimitation of the regional borders instead it
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relied on the regulations by the parliamentary decision on the National Develop-
ment Concept, which divided the territory of the country into seven regions. In this
conception each region — except for the Central Hungarian Region with the capital
city as its centre — includes three counties.
The modification institutionalised a further territorial tier which is the territorial
development council. The territorial development council was set up by the re-
gional development councils and the county development councils for interregional
and cross-county tasks and for the performance of certain prioritised development
tasks.
The evaluation of the legal regulation
If we wish to give a comprehensive evaluation of the act and its modifications, we
come to the conclusion that the act on regional development introduced new no-
tions, categories within the Hungarian jurisdiction and also such sui generis insti-
tutions, the practical adaptation of which implies a number of their weaknesses.
These deficiencies can be detected in the basic categories, the inconsistency of
certain basic terms and principles, the lack of definition, regulation of the status of
the organisations constructed by the act. These imply that the legislator did not
really decide upon
• the real role and function of the act,
• the targets to by served by the different organisations,
•
whether the loner term maintenance of these tiers is necessary or they rather
serve actual political interests,
•
whether the territorial tiers also concern the modernisation of public admini-
stration.
If economic development is the definitely declared preliminary target of the act,
its is necessary to take a clear position in such conceptional issues which concern
the methods of the performance.
Economic development can be implemented:
•
with exclusive state efforts, top down,
•
in a corporate, centralised system,
•
in a decentralised system based on self-governance,
•
in a self-governance system.
a) In the case of the first version the field of regional development would be
integrated into the system of public administration as the executive power of
the government policy, as one of the elements of the sectoral policies, in the
framework of such an organisation, which can be any time eliminated, reor-
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ganised or re-established in a different form. In this version the organisa-
tional form may be preliminarily deconcentrated organ and further — as we
can currently find some examples — the non-profit company established on
behalf of the ministries. The latter performs its work many cases in an
agency form.
This system is definitely defenceless against the varying policy of the dif-
ferent governments changing each other, and therefore the establishment of
legal guaranties ensuring the stable functioning of regional development for
the longer term — such as regulation by the constitution — is not necessary.
b) The legal autonomy or dependency of the current development council sys-
tem reminding of partly corporate and partly deconcentrated organ, can not
be compared with the legal status of other organs, since there is no other le-
gally institutionalised organ or organisation of this type. The principles of
operation do not offer more help for the better understanding, since the
regulations concerning the legal status — autonomous, decentralised, central-
ised — are absent in the ac. Accordingly the prevailing government — simi-
larly to the first version — is able to intervene in the life of the council. This
version refines the first solution so far that besides the central actors certain
representatives of local or territorial interests are adapted but the dependency
from the prevailing political power stabilises itself.
The organisational form of the current system is the council set up in a
sui generis way, which is in terms of its legal status and financing autonomy
in the state if weightlessness.
c) The relative independence, autonomy of the regional development institution
system based on the principle of self-governance is unquestionable. In the
. case of this model we can raise the question, who shell be the members of
the given organisation, and in the framework of which procedure the mem-
bers should be admitted. Assuming a bottom up system, the majority of the
members would be selected from the local and territorial representative by
election or delegation.
If we accept this version it is necessary to lay down the constitutional ba-
sis of regional development — which can ensure its long-term stability. This
may be implemented in a way that following the (2) paragraph of the con-
stitution we would integrate the following regulation: The state guaranties
the decentralised, territorial development of the economy based on self-
governance, and encourages the modification of the territorial inequalities.
Further — in the interest of avoiding the state of weightlessness — it is nec-
essary to create the constitutional fundaments of the resource division. This
means concretely the identification of the proportion of development re-
sources between the given actors, such as the government, the territorial
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tiers, the local tier. (this of course does not mean that we set certain ratios —
i.e. 40%-30%-30% — for ever, but as a general provision we could lay down
that the government is not allowed to decide upon more than 50% of the
available development resources.)
In the course of the selection of the organisational forms we will either
have to choose from among the available self-governmental organisations or
we have to apply a sui generis regulation. The available organisational forms
are public bodies, (non-profit) economic organisations and foundations. The
regulations concerning these organisations do not really stand close to each
other and therefor we will have adapt the first to the latter or we have to ap-
ply the sui generis regulation.
d) The integration of regional development into the system of local govern-
ments is necessary in the case if such a reform of the local-government and
public administration system is carried out which is in a professionally
founded connection with the territorial tiers. Currently there are no such im-
pact reports available, which would justify or disprove the necessity of the
establishment of the regional tier public administration.
The researchers called attention to possibility of the institutional collision
of regional development and public administration already in 1972. Ac-
cording to them: "The disadvantage of the public administrative territorial
units is — from the aspect of regional planning — that they are relatively rigid
and unable to follow the rapid changes within the territorial division of la-
bour. This phenomenon is connected with the partial public authority char-
acter of the public administrative activities organised by territorial units,
with their institutional background and with other factors too. A contradic-
tion may evolve between the spatial division of public administration and the
territorial division of the productive forces and this may hinder — preliminar-
ily within the territorial units — the understanding of the trends of regional
development" (Kulcscir 1972. p. 78.) .
According to certain opinions the indispensable precondition of economic
development is that it should operate in self-governmental system. It is a fact
that the fundamental rights of the local governments are guarantied by the
constitution and therefore the introduction of the regional tier of self-
governance would mean an important guaranty for the implementation of the
regional development function. Those who agree this, mix the target with the
tool. The target is not the establishment of the self-government, but the de-
velopment of economy. One of its tools may unquestionably be the regional
self-governance. But the political and financial autonomy can not only be
ensured in the self-governmental form or better said it can not be ensured in
every case in the self-governmental form either. It is enough to think about
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24/2001 Parliamentary Decision on the principles of regional development
incentives and decentralisation and the system of preconditions of the
classification of the beneficiary regions
The most important document is 24/2001 Parliamentary Decision on the principles
of regional development incentives and decentralisation and the system of precon-
ditions of the classification of the beneficiary regions, which comprehensively
regulates the system of principles in terms of division of resources, decentralisation
and incentives. The first part of the regulation names the elements, principles, the
harmonised and co-ordinated utilisation of which can ensure the implementation of
the higher level regulations (such as the 1996 Act on regional development and
physical planning, etc.) and the further tasks described in the decree.
The above mentioned principles are as follows:
• the harmonised functioning of the financial means and incentives, and the
transparency of the utilisation;
• the priority of the programme-financing in the course of decision making;
• the extra support for the most backward regions and (in the interest of the
latter target) the differentiation between the counties;
•
division of functions between the incentive system: the most important fields
of the supports serving the territorial equalisation are the communal and in-
frastructure development, while the so called earmarked provision for re-
gional development is to support preliminarily the economic development
and the creation of further work places.
The legal regulation knows two — in terms of targets — basically different forms
of support. On of these forms — the earmarked provision for regional development
— describes economic development as its target, while the other support system —
serving the territorial equalisation — is to establish the basic conditions of economy
and at the same time the equalisation of the chances between the settlements.
The legal regulation formulated the detailed regulations connected with the ba-
sic targets according to the different demands of the two different incentive sys-
tems.
The principles of the decentralisation of the earmarked provisions for
regional development
The definition of the principles in the case of the earmarked provision for regional
development was carried out as follows:
One of the fundament of the decentralisation is the implementation of pro-
grammes of national importance concerning more counties, the resource of which
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is partially the central budget and partially the finances of the county development
councils.
Further two principles are the differentiated utilisation between the counties, the
volume of which shall be defined preliminarily based on the development level and
the population of the concerned counties and the region, and the population of the
advantaged areas. 35% of the earmarked provision for regional development must
be decentralised to the regional and 30% to the county tier. The amount of the de-
centralised allocations must be stipulated differentiated by regions and counties and
in reverse proportion to the development indicator.
In the course of the distribution of the amounts delegated to the decision-
making competency of the regional development councils the following indicators
must be taken into consideration:
•
the GDP per capita, indicating the development of the region, up to 50% of
the available allocation,
• the population of the selected micro-regions, up to 20% of the available allo-
cation,
• the population of the region, up to 30% of the allocation.
In the course of the distribution of the amounts delegated to the decision making
competency of the county development councils the following indicators must be
considered in terms of the earmarked provision for regional development:
• the population of the county, up to 20% of the allocation,
•
the GDP per capita, up to 30% of the available amount, and
•
the number of population of the beneficiary areas up to 50% of the available
funds.
The principles of the utilisation of the earmarked provisions for regional development
Within the earmarked provisions for regional development the different territorial
tiers have defined different rules for utilisation:
In the regional tier:
• establishment of innovation centres assisting businesses and industrial and
agro-parks,
•
productive infrastructure investments serving the improvement of the en-
ergy—, transportation—, water— and wastewater system of regional impor-
tance, connected with economic development encouraging businesses,
•
developments implemented in business zones,
•
developments implemented in the institutions of higher education and re-
search serving the evolution of the knowledge based society,
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•
significant developments establishing at least 50 workplaces,
•
the implementation of the regional development programme.
In the county tier:
•
investments, creating new workplaces, developments, investments assisting
the market—, product— and technology transfer in an environment-friendly
way contributing to the maintenance of the employment rates,
• establishment of industrial zones and incubator houses,
•
territorial development programmes, programmes contributing to the devel-
opment and organisation of the local society, elaboration of feasibility stud-
ies assisting economic development,
•
productive infrastructure investments connected with economic development
and encouraging businesses but not supported by the regional development
council, especially developments serving the establishment of fishing lakes,
telecommunication, the placement and treatment of regional waste,
•
developments ensuring human resources — including education, industrial
training, the reintegration of unemployed and the maintenance of public
health,
•
rural tourism developments,
• the implementation of the county development programmes.
• and the programmes for the gypsies launched by the decision of the county
development council.
A specific part of the earmarked provisions was not decentralised and therefore
it serves for the central government as a central fund for the following targets. It
ensures financial support for:
• development programmes also supported by the European Union,
• prioritised regional development programmes and crisis treatment tasks set
in government decisions,
• central development programmes announced in co-financing with other cen-
tral resources,
•
programmes serving the implementation of the regional development strat-
egy set by the minister responsible for regional development,
•
investments with the involvement of working capital.
The second large incentive system, which is aimed at the territorial equalisation,
differentiates between the subsidies for the counties in the course of defining the
principles of decentralisation in the following way: it considers the indicator GDP
per capita up to 30% of the available funs and the number of inhabitants in the re-
gion up to 70% of the fund. The targeted areas of the subsidies are the following:
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• the establishment of the productive infrastructure in the settlements or in
parts of settlements,
• the maintenance, improvement of the existing infrastructure networks, in-
cluding the construction of agricultural access roads,
•
construction, maintenance of surface draining systems and the rehabilitation
of dead channels,
• preparation of industrial areas,
•
human resource development receiving targeted supports,
• developments by local governments connected with tourism, environment
and nature protection, and social employment,
•
investments of municipal institutions, which are connected with the basic
tasks of the municipality,
• for the preparation of physical plans,
•
investments receiving targeted subsidies.
In the source of the utilisation of the subsidies preliminarily those targets should
be supported wich are implemented with territorial concentration.
Criterion of the classification of beneficiary territories
Among the last rules the act regulates the criterion of the definition of assisted re-
gions.
The legislator adapts four possible region types:
• Socially and economically backward regions (the complex indicator which is
defined by a special system of indicators, is less than 75% of the national av-
erage;
• The regions of industrial restructuring (the proportion of the industrial em-
ployees in 1990 was over 150% of the national average and the decrease of
the employees within the industry in the period between 1990-1999, and the
unemployment rate was over the national average);
• Rural development areas (less than 50% of the population is living in set-
tlements with a density higher than 120 persons/ km 2, a the census in 1990
the proportion of the agricultural employees was over the national average,
the personal income tax base is below the national average, and the unem-
ployment was over the national average).
The category of the areas afflicted with durable unemployment was included in
the previous regulations. The European Union does not use the category of areas
afflicted with durable unemployment, since the durable unemployment is the con-
sequence of backwardness, industrial or agricultural restructuring and therefore
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2002. 104–128. p. Discussion Papers. Special
these type of territories are connected with durable unemployment. In the course of
the classification in 1998 from among 88 assisted regions only 2 belonged exclu-
sively to the category of the regions afflicted with durable unemployment.
Different indicators help the definition of the assisted areas, which applied with
the formulas included in the appendix of the act give the values of the certain re-
gions.
The parliamentary decision — in harmony with the function of the decision form
— set the trend to be followed as a kind of guiding in the level of principle to be
followed, which may be in the better case accepted, followed and enforced in the
practice by the executive power.
The intention of the government and regional development policy can be de-
tected in the following government decrees
892001 Government Decree on the detailed rules of utilisation of earmarked
provisions for regional development
The decree — similarly to the legislation of the previous years — in the course of the
definition of the designation of the earmarked provisions adapted some of the prin-
ciples of the parliamentary decree mentioned above. Such principle is co-operation
in restructuring and the co-operation based on territorial integration, the prepara-
tion for receiving the Structural Funds of the EU or the assistance for involving the
international financial resources into regional development programmes or the
moderation of the inequalities.
The legal regulation following the practice of the parliamentary decree divides
the earmarked provision into three parts. It defines a decentralised amount, which
is distributed by the county and regional development councils in an application
system, and second, it defines a part targeted at the central tasks of regional devel-
opment upon the utilisation of which the minister of agriculture and rural develop-
ment decides.
The targets of the county application system are completely identical with the
principles of the earmarked provision for regional development defined in the par-
liamentary decree.
This government decree introduced a new institution, the monitoring commit-
tee. These committees are to control and monitor the programmes to be imple-
mented by the regional development councils. Their task is to study the efficiency,
quality of the programmes, as well as to investigate the adequate character of the
physical or financial indicators used for the evaluation of the programmes and the
evaluation of the results, etc.
This decree insures for the regional development councils for the fist time a sig-
nificant amount of central resources, which may be adequate for the implementa-
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Finta, István: The Evolution and Development of the Legal Regulation of Regional Development in Hungary.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 104–128. p. Discussion Papers. Special
tion of certain regional development programmes. However the delegation of the
resources is not without conditions it does not seem to be the least consistent with
the regional policy of the European Union.
The legal regulation regulates the way of utilisation of central resources for
those regions, which do not participate in any regional tier Phare programmes. The
most important elements of the legal regulation are the Preliminary Regional De-
velopment Programme (PRDP), the task description, the Permission Documents for
task financing, and the Committee of Professionals.
The PRDP is prepared by the regional development councils under the consid-
eration of the content of the Preliminary National Development Plan for a three
year period (the volume of the available resources is known for two years, and
seems to be secure for the year 2001). The content of the PRDPs is set, human re-
source development, small and medium size business development, employment,
rehabilitation and regional development sub-programmes and measures may be
included in them. For the approval of the PRDPs by the councils the agreement by
the Ministry of Agriculture and Rural Development, Ministry of Education, Minis-
try of Social Welfare and Families and the steering body of the Labour Market
Fund is necessary. These ministries set the conditions of the implementation of the
programme by regional development councils in separate agreements.
The task descriptions are prepared by the Ministry of Agriculture and Rural de-
velopment — in agreement with the other ministries — and it hands it in to the
Treasury.
The regional development councils prepare for every sub-programme the Per-
mission for Financing Documents and they send it to the Ministry of Agriculture
and Rural Development. The Ministry of Agriculture and Rural Development in
agreement with the other ministries hands in the actual Permission for Financing
Documents to the Treasury.
The task of the Committee of Experts is to evaluate the applications, which
were prepared by the regional development councils in the agreements and in the
Task Descriptions and also in the Permission for Financing Documents.
The members of the Expert Committee are appointed based on the recommen-
dation by the county councils and the self-government of the capital city by the
regional development councils and the ministries.
The Expert Committee's:
•
chairman is the person appointed by the minister,
•
meetings are assembled by the chairman, with written invitation, 8 days prior
to the meeting, with the attachment of the applications which are appropriate
for evaluation,
•
it makes it decision with simple majority based on the criterion set by the
county development council,
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Finta, István: The Evolution and Development of the Legal Regulation of Regional Development in Hungary.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 104–128. p. Discussion Papers. Special
•
minutes of the meeting have to be prepared about the meetings which must
be sent to the regional development council with the order set.
The regional development council may depart from the recommendation of the
Committee of Experts only with 3/4 majority. The regional development council is
obliged to explain the different decisions. The explanation must be real, based on
facts and accessible by the publicity.
Based on the introduced government decree the regional development councils
are now appropriate for the implementation of the sectoral plans and targets func-
tioning based on special priorities set by the government as quasi deconcentrated
organs of the ministries. The arguments of the statements are as follows:
•
the representatives of the branches are in definite majority within the Expert
Committees,
• a separate agreement must be signed with the different sectors,
• the approval by the ministries is necessary for the approval of the PRDPs,
• the Taskdescriptions are prepared by the Ministry of Agriculture and Rural
Development with the agreement of the other ministries,
• the permissions are to be handed in to the Treasury, and their adaptation re-
quires the agreement by the ministries.
It is also interesting that the government decree does not consider the terms of
the 8§ of the 1996 XXI act, according to which the National Development Council
is an important actor of the sectoral and not the governmental reconciliation about
regional development tasks.
The decision-making freedom of the regional development councils on the utili-
sation of earmarked provisions for rural development is fairly limited, which gen-
erally limits their decision-making opportunities, since the resources available by
this provision give the major part of their budget.
It may also be worthy to consider just fort the sake of comparison the central
regulation of the resource division decision making by the regional development
councils.
According to the 104/1998 (V. 22.) government decree on the content and order
of evaluation of the feasibility study connected with filing of a claim by the local
governments concerning the earmarked and targeted provisions the standard mem-
ber of the experts committee of the county development councils participating in
the evaluation are the following: the representative of the territorially competent
county development councils by the location of the investment (in the capital city
the Assembly of the Capital City), the Chamber of Architects, the National Service
of Public Health, the county pedagogical servicing organisation, the Environment
Protection Directorate and the representative of the County Office of Agriculture.
The chairman and the standard members of the expertise committee are invited by
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Finta, István: The Evolution and Development of the Legal Regulation of Regional Development in Hungary.
In: Regional Challenges of the Transition in Bulgaria and Hungary. Pécs: Centre for Regional Studies,
2002. 104–128. p. Discussion Papers. Special
the president of the county development council and the invited members are in-
vited by the chairman of the expertise committee.
The representative of the concerned local government is to be invited to the
meeting of the expertise committee, and the author of the feasibility study as well
as the expert of the concerned territory and the representative of other, social and
civil organisations may be invited to the meeting.
Only the permanent members bear the right of voting. The committee decides
upon the selection of the most advantageous version with simple majority, in the
case of equal votes the vote of the chairman decides.
The decision on the targeted provisions is not the competency of the county de-
velopment council, but the composition of the preparatory committee is fairly in-
teresting.
Among others the targeted decentralised decisions belong to the competency of
the county development councils. The decision—making procedure itself is not
regulated by the legal regulation comprehensively, it only declares that the minister
for interior releases — reconciled with the Ministry of Agriculture and Rural Devel-
opment — directives for the functioning of the application system of the subsidy.
This is included in the 7001/1998 (BK. 9) directive of the Ministry of Interior on
the operation of the application system of the targeted decentralised subsidies. Ac-
cording to the directive the consideration of the following legal regulations is sug-
gested in the course of the establishment of the order of applications:
•
the 1992 LXXXIX Act on the earmarked and targeted provisions for local
governments,
• the 1992 XXXVIII Act on public finances (especially as regards the content
of accumulation expenses),
•
the 1991 XVIII Act on the order of accountancy (with special regard to the
content of investments and renovation costs),
•
the 1997 CXLVI Act on the 1998 budget of the Republic of Hungary.
The essential feature of the regulation concerning the decision-making mecha-
nisms of the county development councils is the respect of the independence of the
council besides the fact the aspects formulated in the recommendation may signifi-
cantly contribute to unified and professionally acceptable decisions.
The above listed legal regulations concern basically the decision-making proce-
dure and its preparation. However we should not forget about the regulation on the
implementation the most improtant of which is the 1995 XL Act on pubic pro-
curement.
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2002. 104–128. p. Discussion Papers. Special
rural development had to be excluded from the legal regulations on regional devel-
opment and therefore it required a separate regulation.
The eligible fields within the subsidy system are as follows:
•
Village development and renewal, the protection of the natural elements, as-
sisting the self-organisation of local civil communities,
•
alternative income resources (developments encouraging restructuring, de-
velopment of rural and agrarian tourism, identification and creation of rural
workplaces — including work opportunities for women),
•
development of rural infrastructure (the development of the monitoring sys-
tem, the establishment of so called tele-houses, infrastructure investments
required by the economic activities which are able to generate incomes).
The application is eligible in the case of developments, which will be imple-
mented within the territory of such the settlements, the density of which was 1
January 2000 at least 120 capita/ km 2 or less, or the number of permanent popula-
tion is 10,000 or less. The comprehensive tender targets are as follows:
•
subsidising complex economic development programmes with an ecological
basis,
•
development of rural and agrarian tourism,
• encouraging traditional manufacturing,
•
locally characteristic, landscape-specific agricultural activities and the food
processing industries,
•
local utilisation, processing and marketing of materials which are not food
staff,
•
development of rural infrastructure.
The decree also regulates:
• the general conditions of support (such as the category of assisted areas)
• the form of support
•
and in the appendix the maximum amount of support.
Summary
The legislative activity defining the directions, approaches of regional policy and
the importance of the category of space in the period between 1971 and 1996 has
shown and intensity in 10-15 years cycles, as a result of which the legislators tried
to treat the territorial problems of Hungary usually in lower level legislation.
Due to the nearby accession to the European Union the role of territorial—re-
gional policy is becoming more important which is unfortunately not motivated by
127