Creating Market Economy in Eastern Europe — страница 10

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appropriate stabilization meas­ures. Although this may seem relatively straightforward, it requires cohesion and commitment among policy makers and willingness among the populace to pay the costs of the transition. Pressures for wage increases must be resisted, and the process of privatization must proceed. To the extent that the latter can be achieved, the contours of new market arrangements can be defined. Finally, although uncertainty in foreign markets remains, relief of hard-currency debt will unquestionably add a measure of flexibility. Another issue is the extent to which the Polish "success" (if we can call it that) was promoted by Western assistance. In light of the Polish leadership's commitment to rapid transition, the West has provided considerable

assistance in the form of exchange-rate stabilization funds, debt restructuring, and govern­ment guarantees. HUNGARY: THE NEW ECONOMIC MECHANISM AND PRIVATIZATION Early works in comparative economic systems devoted little attention to the Hungarian economy. Over the last twenty years, however. Western economists have begun to pay more attention to Hungary. As one prominent observer of Hungary and other East European systems has noted, "The Hungarian reform experience says as much about central planning as it does about Hungary, and therefore an understanding of that experience is important for those interested in the prospects for reform in all of Eastern Europe, and indeed, in the Soviet Union. In other words, Hungary is a prototype of economic reform for the former

planned socialist eco­nomic systems of Eastern Europe, and presumably elsewhere. These thoughts, expressed some ten years ago, remain relevant in the 1990s as Hungary, like other socialist systems, pursues a transition to the market. However, the background of reform in Hungary is important to a proper analysis of contem­porary problems and prospects. Prior to 1968, Hungary applied the Soviet model of centrally planned social­ism in a typical fashion. But then, in 1968, Hungary began to introduce by far the most radical economic reform attempted in Eastern Europe (with the exception of Yugoslavia). In the words of one early observer of this reform, it clearly represents the most radical postwar change, in the economic system of any Comecon country, which has been

maintained over a period of years and gives promise of continuity. Although the reform program in Hungary met with only partial success, the problems that have arisen (conflicts of objectives, for example, and difficulty in persuading participants to change their ways) are fundamental to the reform experience of planned socialist systems. Hungary shares many features with other Eastern and Southeastern Euro­pean countries, such as Yugoslavia. It provides a refreshing contrast to the Soviet Union, which in some important respects is atypical. Hungary is a small country heavily dependent on foreign trade. The Hungarian experience with reforming foreign trade, and in particular its efforts to become integrated into the world economy both East and West, is prototypical. The

difficulties of reforming the foreign trade mechanism arc crucial to the Hungarian economy as well as to the economies of many other systems of Eastern Europe. 1) Hungary: The Setting Hungary is located in central Europe. Its land area of approximately 36,000 square miles makes it roughly the same size as the state of Indiana. Its popula­tion of about 11 million is comparable to that of the population of Illinois. Although Hungary is not self-sufficient in energy, it docs have supplies of coat, oil, and a number of minerals, including important bauxite deposits. Although it has some rolling hills and low mountains, Hungary is basically a flat country with good agricultural land and a favorable climate. As in other East European countries, the period since World War II has

seen the popula­tion flow from rural to urban areas and a changing balance of industrial and agricultural activity. Today, approximately half the population lives in urban areas. Hungary is not particularly prosperous. Most estimates of its gross national product or per capita gross national product place Hungary in the middle of the East European countries. It is generally wealthier than Bulgaria and Yugoslavia and certainly wealthier than Albania; it ranks behind East Germany and Czechoslovakia. Hungary's per capita income appears to be close to that of Greece. In this sense, economic development remains a key issue in Hun­gary. By the standards of Western Europe, Hungary remains relatively poor; by the standards of the Third World, Hungary ranks among the more affluent