The Tragedy of Transition: Development, Deterioration, Decay. The Case of Hungary, 1990-2020

The essay is about the economic and political development of Hungary in last 30 years. It can be neatly divided into three periods which coincide with calendar decades almost perfectly. After collapse communist system, first period constituted a glorious decade development: two governments implemented all indispensable structural reforms required for successful transition. financial stabilization 1995, consistent macroeconomic policy was applied, leading to export investment-driven, hence sustainable growth. next brought deterioration: were stalled, sharp turn consumption-led debt-fuelled growth resulted twin deficits which, by time Great Recession, triggered sovereign debt default. short stabilization, populist-nationalist government came power 2010. A decay set in: reversal reforms, nationalization, monopolization, protectionism, market-distorting taxation subsidization, state capture corrupt oligarchy, together inconsistent policy. In addition, self-styled „illiberal regime” Viktor OrbĂĄn demolished rule law institutions representing checks balances democracy. Corruption elevated level official With help huge amount subsidies coming from EU, regime maintained equilibrium achieved significant during global boom between 2014-2019. However, given fact that private investments productivity stay rather low non-tradable sector domestic economy, real convergence Western efficiency living standards remain elusive. Today constitutes primary example an economy pushed typical middle-income trap its oligarchic authoritarian regime. also proves transition are reversible; fragile. Restoration democracy seems prerequisite development.