Hungary under Orbán: Can Central Planning Revive Its Economy?

Simeon Djankov

No PB15-11, Policy Briefs from Peterson Institute for International Economics

Abstract: Since the promising start of its transition from a centrally planned economy to capitalism, Hungary has failed to join Western Europe in terms of living standards and democracy. The dominant political figure in Hungary, Prime Minister Viktor Orbán, shares many features with Russian president Vladimir Putin. Both view the increasing role of the state as economically beneficial, and both consider the Western European economic model to be flawed. Hungary is headed towards centrally planned capitalism, demonstrated by the partial nationalization of the banking sector, the monopolization of some sectors of the economy, and the reversal of the pension reforms of 1998. Plagued by the most persistent budget deficit of any post-communist country, Hungary's greatest challenge is to establish a fiscally sustainable growth path.

Date: 2015-07
New Economics Papers: this item is included in nep-cis and nep-tra
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