Inquiry on the changing structure of the Hungarian economy and of the financial system
The changes of the world economy in the aftermath of the 2008 crisis and the Hungarian economic policy’s newly framed priorities after 2010 – concerning the desired structure of the Hungarian economy – put questions concerning the structural transformation of the Hungarian economy and new needs related to financial intermediation in the limelight.
Our inquiry in 2015 seeks answer to the following issues:
How far do structural changes either occurring spontaneously or as a result of the changing state regulation comply with international trends and within those with processes taking place in countries in similar conditions? Put differently: how much are the reorientations of the Hungarian economic policy are in accordance with the structural changes observable in the world economy and what risks can the unfolding of these reorientations entail?
After the crisis there appeared a worldwide need for a more secure and more stable financial intermediation and a more stringent supervision. How far do the top-down changes in Hungary directed by the state satisfy these criteria?
Our question is also related to issues concerning the structure of the Hungarian economy such as the observable trends in the sectoral, employment, consumption, import and export structures and the targeted reduction of the weight of services in the economy. As far as financial intermediation is concerned, we are curious how much the state interference with market and property relations, the merging of the central bank with financial supervision, and the development of new reorganization regulation support financial stability and economic growth. Lastly, to what extent can the changes in the structure of the Hungarian economy and of the Hungarian financial system contribute to the mitigation of the problems of employment, growth, competitiveness and financial balances?
The Role of Expectations in the Success of Bailout Programs: Crisis Management in Greece and Ireland
DÓRA GYŐRFFY
In the context of the debate on the effects of fiscal austerity on growth the paper aims to explain the role of expectations in the emergence of austerity cycles during financial bailouts. It argues from a political economy perspective that the conditions, their implementation and market reception are forms of a social dilemma. In such situations expectations about the actions of other actors approximated by the concepts of trust or distrust play a critical role. An environment of trust among major actors is conducive to mitigating the size and effects of fiscal contraction, while an environment of distrust is likely to magnify both. It is also argued that the credibility of government is the key driving force in these self-reinforcing cycles. The crisis management experiences of Greece and Ireland serve to illustrate the theoretical model.
European integration and economic growth Factor market integration, growth effects and European growth model
PÉTER HALMAI
As regards the medium term growth effects, the induced physical capital formation should be stressed. European integration improves the efficiency of production factor combinations used in the production of the output. Due to the increased efficiency Europe becomes more attractive for investors, investments increase. As a result of this process, the initial efficiency surplus of the integration is strengthened by the induced physical capital formation too. The medium term growth effect lasts until capital formation is above the average. As the capital per worker ratio increases in the neoclassical growth theory, the benefit from an additional capital investment decreases. Above the average capital formation continues until the marginal product of an additional unit of capital equals the its marginal cost. This effects prevails therefore only in the medium term as it gradually cease to exist. (This kind of investment boom characterized Spain at the time of its EU accession.) Long term growth effects result in a permanent change of the accumulation ratio. As the accumulation of the physical capital follows the law of diminishing returns, long term growth effects can mainly attributed to knowledge accumulation, e.g.: to technological development. In case of medium term growth effects the per capita output stabilizes at a new, higher level. In case of long term effects however, there is a permanent change in the rate of growth. The latest growth theories suggest that the integration insures a permanently higher rate of growth relative to the case without integration.
Budget support: towards a more effective aid (?)
BEÁTA UDVARI – JULIANNA PONTET
Recently, there have been changes in international development cooperation, beyond the growing role of emerging donors new types of aid – for example, budget support – occur besides traditional project aid. Several donors and the relevant literature expect that budget support may increase aid effectiveness. The European Union is among the donors which appreciate budget support, its role appears in guidelines and statements. Despite these facts, the Hungarian literature does not deal with the potential effects of budget support. Present article aims to give an overall picture of budget support, introduce its advantages and disadvantages, and present the main tendencies from the point of view of recipients. We intend to use a general approach, so our aim is not to analyse an independent donor’s or recipients’ activity.
Legal supplement
Concept of reasonable accommodation and its economic nexus
ORSOLYA MIKOLA
Reasonable accommodation or reasonable adjustment, as main tool combatting discrimination based on disability is a changing concept, similarly to the definition of disability. In the frame of the European Union, reasonable accommodation is ex- pressed in the context of labor law, and also in the field of employment and occupa- tion. The Court of Justice of the European Union has fulfilled its task to interpret it, like in the case of Coleman, Chacon Navas, Z., HK Danmark and Kaltoft. With giving a broader meaning of disability and more concrete solutions of reasonable ac- commodation, I have the vision of an automatic system, where employers are aware of their social responsibility to eliminate all barriers, both physical and attitudinal ones, where the group of people with disabilities will be more respected and more valued.
EU vs. WTO
Irreconcilable conflicts or winds of change?
BIANKA ESZTER BOHÁTI
The main purpose of the present article is to make a description about what kind of practices of refusal have been introduced by the European Union in connec- tion with the rights of WTO. In most cases, the procedures of the EU’s are depicted through related legal cases. The main goal of examining these cases is to present and unfold the underlying problems of refusing legal practices which over the course of time became insensitive to change. This „approach” has been the reason of in- tensive debates over decades, which began with the foundation of GATT, and has resulted in a long chain of reactions whose influence can be still sensed up until today. It is essential to highlight that trivial fact that, not surprisingly, in the field of world trade, the main leading role is casted to those states which obtain a more significant economic potential. Since this article has been written in the ’old continent’, the conclusions drawn from legal cases and the resulting problems concerned are discussed in relation to the European Union accordingly. As a conclusion, it is stated that the viewpoint of the approach mentioned above makes impossible the vindication of individual rights. This disadvantage is caused by countermoves initi- ated against individuals and due to refusing practices of the EU. A solution to these problems proposed could be that if the EU, besides placing its interest forward, took into consideration the interests of individuals and, in the light of these, reconsidered its attitude towards the rights of WTO.