Hungary's U-Turn

For two decades Hungary, like the other Eastern European countries, followed a general policy of establishing and strengthening the institutions of democracy, rule of law, and a market economy based on private property. However, since the elections of 2010, when Viktor Orbán's Fidesz party came to power, Hungary has made a dramatic U-turn. This article investigates the different spheres of society: political institutions, the rule of law, and the influence of state and market on one another, as well as the world of ideology (education, science and art), and describes the U-turn’s implications for these fields and the effect it has on the life of people. It argues against the frequent misunderstandings in the interpretation and evaluation of the Hungarian situation, pointing out some typical intellectual fallacies. It draws attention to the dangers of strengthening nationalism, and to the ambivalence evident in Hungarian foreign policy, and looks into the relationship between Hungary and the Western world, particularly the European Union. Finally, it outlines the possible scenarios resulting from future developments in the Hungarian situation.

Winners and Losers in the Liberalized Energy Retail Sector in Hungary:A Co-evolutionary Approach

This paper examines the recent history of the Hungarian energy trading market in a co-evolutionary framework. Hungary is characterized by a mixed ownership structure with mainly multinational incumbents in energy retail and distribution, while the wholesale is dominantly owned by state-owned companies. The legal framework also has dual characteristics, with free-market regulation for industrial consumers and a regulated price regime for households. Our research method follows a longitudinal approach from the period of market liberalization in 2008 until 2013. We identified strong relationship between the individual and sector performance of the trading companies and the current political ideology and institutional regime.

Szolgálatosodás Nyugat-Európában és Magyarországon. Hol tartunk és merre haladunk? – Egy nemzetközi felmérés nyomán (Servitization in Western Europe and Hungary – Based on an international survey)

A szerző tanulmányában nyugat-európai és magyarországi termelővállalatok szolgálatosodását vizsgálta. A cél a szolgálatosodás mértékének és megtérülésének elemzése volt. A vizsgálatokat az IMSS kérdőíves felmérés adatain végezte el, stratégiai, operatív és eredményességi dimenziók mentén. Munkájában nemcsak Nyugat-Európa és Magyarország vállalatainak szolgálatosodásáról ad képet külön-külön, hanem az adatok közvetlen összehasonlításával megbízható összehasonlító elemzést is végzett a két térség között, melyet a tanulmány legfőbb hozzáadott értékének tekint. Nyugat-Európában a szolgáltatások kiemelkednek a versenycélok közül, míg Magyarországon gyenge helyezést érnek el a stratégiai prioritási sorrendben. Működési szinten mindkét helyen átlagosnak mondható a szolgáltatások nyújtását támogató akcióprogramokba fektetett erőfeszítés nagysága. Ez azonban nem feltétlenül mond ellent a stratégiai szintnek Nyugat-Európában, hiszen az is mondható, hogy a szolgáltatásokkal kapcsolatos programok nem zárják ki azt, hogy más területen is fejlesszenek (pl. lean programok). Az eredmények mindkét térségben a szolgálatosodás paradoxonát mutatják. ______ The paper focuses on the servitization of manufacturing companies in Western Europe and Hungary. The author's goal was to analyse the degree and the returns of servitization. The investigations were conducted using data of the IMSS, considering the dimensions of strategy, operations and returns. Besides giving a picture of the servitization of Western European and Hungarian companies, the paper also offers a reliable comparative analysis between the two regions, which can be considered as main value added of the paper. Services are among the most important competitive goals in Western Europe, but have a low ranking in Hungary. Regarding the operational level, programs supporting the offering of services are in the average in both places. This does not necessarily contradict the high strategic level in Western Europe, because we can say that programs related to servitization do not rule out improvement initiatives in other areas (e. g. lean programs). The service paradox is experienced in both territories.

Schizophrenic public administration reform in Hungary. Tension between anti-NPM systemic and pro-NPM organizational reforms

The aim of the paper is to highlight the main characteristics of the recent Hungarian public administration reform, as well as to reveal the inconsistent nature of some of its elements and to describe the connected risks. The starting point of the article is the Magyary Zoltán public administration development programme. The reform steps are compared to the ideal type NPM approach. The Hungarian public administration reform can be characterized by strong centralization and the revitalization of Hungarian anti-liberal traditions at macro level, and by the support of the enhancement of market rules and management at micro level.

Minsk and Budapest, the two capital cities. Selected studies of post-socialist urban geography and ecological problems of urban areas

The official cooperation between the Hungarian and the Belarusian geography began to be outlined in a sunny afternoon of June 2010 in the Minsk building of the Geographic Faculty of the Belarusian State University, four years ago. Then we reviewed the potential frames of cooperation with Professor Ekaterina Antipova. It was supported by the academican Károly Kocsis, member of the Hungarian Academy of Sciences, director of the Geographical Research Institute, and we could also win the support of the dean Ivan Pirozhnik and the academician Vladimir Loginov from the Belarusian State University and the National Academy of Sciences of Belarus, respectively. This informal cooperation became official in the autumn of 2010 in the frame of the Academic Mobility Agreement Project between the Hungarian and the Belarusian academies of sciences. Since then several publications have appeared about Hungary and Belarus in the geographic journals of both countries, however, this is the first, long awaited, significant common publication. Besides the project-based co-operations like e. g. the EastMig (www.eastmig.mtafki.hu) and the ReSEP-CEE (www.mtafki.hu/ReSEP_CEE_Be.html) supported by the Visegrad Fund, a vivid student exchange program was also launched from the autumn of 2010 between the Geographic Research Institute of the Hungarian Academy of Sciences, and the Geographic Faculty of the Belarusian State University with the scholarship program of the Visegrad Fund. Later the Department of Economic Geography of the Corvinus University of Budapest, headed by István Tózsa became also an active partner of the cooperation. The publishing expenses of this book are also fully financed by the Department of Economic Geography.

A cafeteria-rendszer továbbfejlesztésének lehetőségei – múlt, jelen és jövő (Evolution of Flexible Remuneration/Cafeteria Systems – Past, Present and Future)

A cikkben a szerzők először áttekintik a cafeteria-rendszer legfontosabb jellemzőit (célját, tipikus „stakeholdereit” és HR-stratégiai kérdéseit). Ezt követően megvizsgálják, milyen átalakuláson ment át a béren kívüli juttatások rendszere 1996-tól – az első ilyen rendszerek magyarországi megjelenésétől – napjainkig. Áttekintik azt is, milyen mozgatórugók idézték elő a főbb változásokat, és ezekhez a piaci szereplők hogyan alkalmazkodtak. Szintén vizsgálják a 2012-re vonatkozó legfőbb változásokat, és ezek lehetséges kihatásait a cégek juttatási politikájára, valamint elmutatnak néhány alternatívát az új feltételek közötti lehetőségekre és kihívásokra. Empirikus felméréseik tükrében kitérnek arra is, hogy főleg a szervezeti méret és kisebb részben a tulajdonforma szignifikánsan befolyásolja a cafeteria-rendszerek alkalmazását. _________ The authors review firstly the most important features of the cafeteria system (goals, typical “stakeholders” and strategic HR issues). Then they examine the evolution of the system of flexible benefits since 1996, the first appearance of such systems in Hungary. Authors also analyze how the main drivers caused the changes, and how the key players of the cafeteria systems adapted to these movements. The reader also can find insights about the major changes for 2012 and about the potential impact of these changes on benefit policies of Hungarian firms. The contribution shows some alternative opportunities and challenges driven by different influencing factors. They also touch upon the light of empirical surveys, that the cafeteria systems are significantly influenced to a lesser extent by the form of ownership and to a bigger extent by the organizational size.

Chaos Theory and Socio-Economic Renewal in Hungary

We utilised methods of chaos theory that were originally used in a 1990’s study to analyse the behaviour of various Hungarian socio-economic macro indicators, both historically and their expected behaviour in the future. In this study, we present the method adapted to PC and the behaviour of the selected macro indicators. We characterize the pathways our society and economy has experienced and where they are heading to into the future by the means of these indicators. Comparing the present results of analysis with the results twenty years ago (when today’s present was the future) we came to the conclusion that most of the indicators became less chaotic, thus the socio-economic courses were getting more stable over the past two decades. We conclude that the opportunity to change them is slowly diminishing, it will be more and more difficult to renew the Hungarian socio-economic indicators, and to turn the processes to more desirable courses. Recommendations for change interventions are then provided.

Tanácsadói szerepek, kompetenciák (Consultant roles and competencies)

A szakirodalomban található tipikus tanácsadói szerepek, tulajdonságok rendszerezését követően került sor a Borsod-Abaúj-Zemplén megyei tanácsadók kompetenciáinak vizsgálatára a tanácsadók, valamint a vállalkozók értékrendje szerint. A nemzetközi összehasonlíthatóság érdekében a szerző, Frank Höselbarth (2000) reprezentatív felmérésében alkalmazott 21 tulajdonság, kompetencia alapján vizsgálta meg a megyei helyzetet 2001-ben és 2005–06-ban is. A szakirodalomban található tipikus tanácsadói tulajdonságok, kompetenciák (tudás, készség, tapasztalat) összefoglalását tartalmazza a németországi felmérésben alkalmazott 21 jellemző. A magyar és német tanácsadók tulajdonságaiban a szerző nem tapasztal lényeges eltérést. Az elméleti és empirikus kutatási eredményei alapján vázolja fel a tanácsadói kompetencia modellt. _______ After the taxonomy of the typical characteristics of consultants, the author made a surveys and analysis of the characteristics of consultants located in Borsod- Abaúj-Zemplén County according to the value systems of consultants and entrepreneurs. In order the maintain international comparability, she applied the 21 factors used in the representative study of Frank Höselbarth (2000) to analyse the situation of B-A-Z County both in 2001 and in 2005-06 as well. The 21 criteria applied in the German study is a summary of the typical characteristics of consultants, found in the literature. The author did not find significant difference in the characteristics of Hungarian and German consultants.

How Corporate Executives Perceive Environmental Issues

This article reports the results of a survey conducted in Hungary to compare the environmental perceptions of Hungarian corporate managers with those of other executives from around the world who had earlier responded to a similar survey conducted by McKinsey and Company. The results showed virtually no differences in how Hungarian managers perceived the importance of environmental challenges, but they did reveal stronger differences in perceptions between Hungarian and international respondents and among Hungarian respondents from companies in different owner.

The impact of creative organizational climate on the innovation activity of medical devices manufacturing firms in Hungary

The purpose of this study was to empirically investigate the impact of creative organizational climate on the innovation activity of medical devices manufacturing firms in Hungary. We applied a combined qualitative and quantitative research model, focusing on two firm’s case studies that are active in the above mentioned sector and differ to a substantial degree in their innovation activities. The connection between innovative climate and innovation was analyzed by comparing their organizational climate and perceptions of organizational members of innovation activities. Our findings revealed that classical models of creative organizational climate explain only partially the differences, although on the level of individual perceptions of climate and innovativeness we can find some connections. We found one factor that differentiated the two firms in terms of organizational climate in the predicted direction: the amount, quality, sincerity and depth of debates going on in the organization. The level of challenge (high involvement, commitment and challenging goals) and the time devoted to think about new ideas and innovative solutions (idea time) turned out to be contrary to the expectations based on previous research – although these results are less significant statistically. The results trigger further research into the sources of competitiveness in the Hungarian medical devices manufacturing sector.

Nagyobb kockázat, nagyobb növekedési ütem - kockázat nélkül nincs növekedés! Hozzászólás Thomas Piketty A tőke a 21. században című könyvéhez (Why are interest rates higher than growth rates? A comment on Thomas Piketty's Capital in the Twenty-First Century)

E rövid írás aktualitását az adja, hogy nemrégen jelent meg magyarul Thomas Piketty híres könyve: A tőke a 21. században. A könyv központi gondolata, hogy az elmúlt kétszáz év átlagában a gazdaság átlagos növekedési üteme, a g jelentősen elmarad az r értékétől, vagyis a tőke átlagos hozamától. A nevezetes r>g összefüggés egyik lehetséges oka, hogy az r szórása nagyobb, mint a g-é. A nagyobb szórás mögött nagyobb kockázati motívumok állhatnak. Ebből következően a Piketty által javasolt adókat jelentős mértékben a pénzügyi tőkének kellene viselnie. ____ The immediacy of this note derives from the fact that Picatty's famous Capital in the Twenty-First Century has been recently published in Hungarian. The central issue in the book is that taking the average of 200 years, the mean growth rate g is lower than the average return on capital r. One possible explanation of this famous r > g inequality may be that the standard deviation of r is greater than that of g because of the greater appetite for risk. The implication to draw from this is that financial capital should bear the majority of the taxes being suggested by Piketty.

A temporary loss of pace or the "middle income trap" - a commentary on the tasks for Hungary's economic development

The latest Hungarian economic growth data, though favourable, do not let us forget that in the longer term growth is weak compared to the preceding period – as well as to the performance of the East-Central European region, which is more dynamic than the European average. In order to make sense of the past decade’s relative loss of pace and lay the foundations for future development policy, it is worth placing Hungary’s case in the context of the slowing tempo typical of middle-income countries. The economic development policies currently pursued by the government are aimed at increasing output in the processing industry, and by extension exports, while relevant international experience advises that it is the higher value-added activities of the global value chain, particularly business services, which should be developed further. In this way real wages and income levels could be increased, and the economy would be less exposed to the fluctuations of international cycles.

Hedging under liquidity constraints

Although risk management can be justified by financial distress, the theoretical models usually contain hedging instruments free of funding risk. In practice, management of the counterparty risk in derivative transactions is of enhanced importance, consequently not only is trading on exchanges subject to the presence of a margin account, but also in bilateral (OTC) agreements parties will require margins or collateral from their partners in order to hedge the mark-tomarket loss of the transaction. The aim of this paper is to present and compare two models where the financing need of the hedging instrument also appears, influencing the hedging strategy and the optimal hedging ratio. Both models contain the same source of risk and optimisation criterion, but the liquidity risk is modelled in different ways. In the first model, there is no additional financing resource that can be used to finance the margin account in case of a margin call, which entails the risk of liquidation of the hedging position. In the second model, the financing is available but a given credit spread is to be paid for this, so hedging can become costly.

Some fairytales about risk management

When I started writing this paper, I thought I would only be writing about the parallel between the mathematical theory of inventory and production – as a familiar model of operations research – and liquidity management. And then during the writing process, predictably enough I must say, the scandals surrounding the Buda-Cash and Quaestor brokerages erupted. Likewise in this period, the debate about foreign currency lending gained fresh impetus; about who made which mistakes when, or whether there was anyone who didn’t make mistakes. The most surprising twist revealed in the Buda-Cash and Quaestor cases – beyond alleged losses running into several hundreds of billions of forints – was that all this could be accumulated in 15 years of selfless effort. And even if this information proves to be comment born of initial over-excitement, it still demands an explanation one way or another. If it’s true, then how can this be? And if it isn’t, then what made it appear as if this is what happened? The questions and contradictions are obvious. But the main questions are these: What do risk managers actually do? What do we pay them for? And how far can we trust them?

The financial stability and access to financing of SMEs in Hungary

The present study was prepared within the framework of cooperation between the Competitiveness Research Centre, operating within the Institute of Business Economics of Corvinus University of Budapest, and the National Association of Entrepreneurs, based on a commission from the latter. Th e goal of the study was to survey the self-financing capabilities and borrowing opportunities of majority Hungarian-owned small and medium-sized enterprises (SMEs), and to identify potential problems. The results of the research revealed that the high proportion of owner’s equity in the financing structure is not due to difficulties with borrowing, but because enterprises that cover their fi nancing primarily from their own resources have other financing opportunities at their disposal. Although general satisfaction with banks shows a diminishing tendency, it can still be interpreted favourably. The majority of companies have not encountered serious borrowing difficulties. With regard to the system of competitive tenders, company managers have sensed some improvement, but general satisfaction is still lacking. Although the research results suggest that the primary obstacle to growth in 2013 was not the lack of credit or external funding, it is important to emphasize that start-ups, young enterprises and micro-enterprises, which struggle the most with financing worries, were not represented in the analysed database.