Hungarian Economic Review

In memory of Sándor Popovics

2025-04-15T16:09:13+00:00

90 years ago, on April 15, 1935, the founding president of the Hungarian National Bank passed away. The outstanding financial expert and economic politician was a defining personality of economic life for decades. In a memorial speech delivered at the request of the Hungarian Economic Association, Baron Frigyes Korányi, a former minister of finance, presents the outstanding expertise, leadership, statesmanship and human virtues of Sándor Popovics. From the tribute, we can learn about Sándor Popovics’ economic views on, among other things, the advantages of the market economy and individualism over collectivism, the sanctity of private property, the importance and limitations of state bureaucracy, the main tasks of economic policy, the dangers of overtaxation (and excessive state interventions in general), and the involvement of foreign capital. (The article is a reprint of the article published in the June-August 1935 issue of Közgazdasági Szemle.)

Economics meets economic history in merger control

2025-04-15T16:14:22+00:00

This paper aims to address the difficulties in merger control, the interpretation of economic evidence and corporate behaviour. In recent years, there has been a growing perception in the United States that merger policy has become too permissive, market concentration has increased, and the acquisition of potential competitors has become common. The Fisher Body–General Motors merger at the beginning of the 20th century was seen as an example of vertical integration in economics for decades – until its value as an example was more thoroughly examined. In light of the current attempts to reform merger control, we attempt to illustrate this process by drawing on the interdependence of economic theory and economic history.

Analysing the technical efficiency of the Hungarian manufacturing industry

2025-04-15T16:21:37+00:00

Our study examines the technical efficiency of the Hungarian manufacturing industry over the period between 2013–2022, using stochastic frontier (Stochastic Frontier Analysis, SFA) models that allow for the treatment of unobserved heterogeneity among firms. In addition, we decompose output growth into the contributions of input growth and productivity growth, and further break down changes in productivity into the effects of technological change and changes in technical efficiency. The results indicate that growth during the examined period was primarily input-driven, while technological progress (1.4% per year) also had a favourable impact on productivity. However, improvements in technical efficiency were moderate, with significant differences across firm size categories, suggesting that there is substantial potential for further enhancing sector efficiency, especially among small and medium-sized enterprises. Furthermore, according to our model, higher export orientation exerts a positive influence on corporate efficiency. Technological development and technical efficiency can be supported through different policy tools: technological progress can be fostered mainly by promoting innovation and R&D, whereas improving technical efficiency can be achieved by strengthening training and advisory systems. Consequently, our findings provide an important starting point for designing measures aimed at boosting the competitiveness and productivity of the manufacturing sector.

Why has the Hungarian change of system been unsuccessful?

2025-04-15T16:28:50+00:00

The Editorial Board of this journal has launched a debate on how the share of capital and labour has changed in the Hungarian economy since 1990 and how important this change is for catching up with the countries ahead of us. In his opening article, György Boda claims that the return of labour in the GDP distribution is trending downward. This is a problem, because with relatively low wages, Hungarian exports can only be integrated into the international value chains at the lower levels of the chain, where the relative size of the value-added is constrained by the nature of the products. On the one hand, this article questions the usefulness of the classical, two-class model used in Boda’s paper, and on the other hand, it claims that the numerical results in it do not convincingly justify the author’s most important conclusions.

Theoretical considerations behind the debate on wage levels, and some practical consequences

2025-04-15T16:34:48+00:00

While the Classical School had focused on primary distribution (that is, the distribution of wages and profits during production), the Neoclassical and Austrian Schools no longer concerned themselves with these issues. However, since the Cambridge Capital Controversies have revealed that the neoclassical production function does not yield a “meritocratic” theory of the distribution of wages/profits based on distinct productivities of capital and labour, the Neoclassical and Austrian Schools cannot provide a coherent theory of profit. As a consequence, they also cannot explain how the wage/profit ratio arises in the economy. The only corroborated theory comes from Pierro Sraffa and the Post-Ricardian School, who conclude that this primary distribution is social and not economic in nature (i.e. it is based on the relative strength of capital and labour, and not on supposed distinct productivities). The practical consequence of these theoretical considerations is that apart from the obvious constraint of the level of total factor productivity, relative social strengths (measured by indicators such as collective bargaining coverage) have a high explanatory value in terms of accounting for wage shares within value added, and therefore the resulting wage levels.

The economic benefits of career guidance

2025-04-15T16:39:43+00:00

The career guidance profession has been trying to establish its economic benefits and usefulness for decades. There is little working relationship between career guidance professionals and evaluating economists, while the financial issue of career choice, the series of career decisions that support life paths, is repeatedly brought to the fore. Little is known to date about the real economic benefits, direct and indirect outcomes of guidance. Although, in technical terms, there is no longer any need to organise a classical attempt to understand the mechanism of action. This article is an attempt to review and present the available, but not nearly sufficient, literature on the subject.

Report from the Forecasters’ Forum

2025-04-15T16:45:59+00:00

The Economic Policy and Economic Theory Department of the Hungarian Economic Association (MKT) organised the Forecasters' Forum as its season-opening conference.