The impact of reindustrialization on the convergence paths of Hungarian regions

Abstract

In the May 2018 issue of Economic Review, Imre Lengyel and Attila Varga published a study titled “The spatial limits of economic growth in Hungary: An overview and some dilemmas”, which examined the convergence paths of different types of counties between 2000 and 2016. Based on their empirical research, they identified both theoretical and economic policy dilemmas, including concerns about the stagnation of the capital region and the dynamism of regions with foreign-owned manufacturing companies. In our study, we analyse the time series until 2022, and our main conclusion is that new convergence paths have emerged since 2016. The economy of the capital region has revived, while the manufacturing counties have declined, falling into a typical development trap, and the convergence of other counties has remained slow. Today, the economic growth of the country is constrained not only by the less developed regions but also by the manufacturing regions. In our opinion, the ongoing reindustrialization programs and projects in several counties are likely to lead to a long-term development trap following short-term convergence, similar to the formerly successful manufacturing regions.