Changes

Prior to World War II, the Hungarian economy was primarily oriented toward agriculture and small-scale manufacturing. Hungary's strategic position in Europe and its relative lack of natural resources dictated a traditional reliance on foreign trade. In the early 1950s, the communist government forced rapid industrialization following the standard Stalinist pattern in an effort to encourage a more self-sufficient economy. Most economic activity was conducted by state farms and state-owned enterprises or cooperatives. In 1968, Stalinist self-sufficiency was replaced by the "New Economic Mechanism," which gave limited freedom to the workings of the market, reopened Hungary to foreign trade, and allowed a limited number of small businesses to operate in the services sector.

Prior to World War II, the Hungarian economy was primarily oriented toward agriculture and small-scale manufacturing. Hungary's strategic position in Europe and its relative lack of natural resources dictated a traditional reliance on foreign trade. In the early 1950s, the communist government forced rapid industrialization following the standard Stalinist pattern in an effort to encourage a more self-sufficient economy. Most economic activity was conducted by state farms and state-owned enterprises or cooperatives. In 1968, Stalinist self-sufficiency was replaced by the "New Economic Mechanism," which gave limited freedom to the workings of the market, reopened Hungary to foreign trade, and allowed a limited number of small businesses to operate in the services sector.

[[File:Floodgate in Bekes Hungary.jpg|thumb|330px|Floodgate in Békés.]]

[[File:Floodgate in Bekes Hungary.jpg|thumb|330px|Floodgate in Békés.]]

Although Hungary enjoyed one of the most liberal and economically advanced economies of the former Eastern Bloc, both agriculture and industry began to suffer from a lack of investment in the 1970s. Belated reaction to the economic crisis of the early 1970s and deteriorating terms of trade resulted in increasing indebtedness. In response, the Hungarian Government launched a restrictive economic policy in the late 1970s and early 1980s, followed by the “Dynamization Program of 1985,” which increased consumer subsidies and investments—mainly in unprofitable state enterprises—eventually leading to a doubling of foreign debt levels. By 1993, Hungary's net foreign debt rose significantly—from $1 billion in 1973 to $15 billion. Liberalization of the economy continued, however, and in 1988-89 Hungary passed a joint venture law, adopted tax legislation, and joined the International Monetary Fund (IMF) and the World Bank. By 1988, Hungary developed a two-tier banking system and enacted significant corporate legislation which paved the way for the ambitious market-oriented reforms of the post-communist years.  

Although Hungary enjoyed one of the most liberal and economically advanced economies of the former Eastern Bloc, both agriculture and industry began to suffer from a lack of investment in the 1970s. Belated reaction to the economic crisis of the early 1970s and deteriorating terms of trade resulted in increasing indebtedness. In response, the Hungarian Government launched a restrictive economic policy in the late 1970s and early 1980s, followed by the “Dynamization Program of 1985,” which increased consumer subsidies and investments—mainly in unprofitable state enterprises—eventually leading to a doubling of foreign debt levels. By 1993, Hungary's net foreign debt rose significantly—from $1 billion in 1973 to $15 billion. Liberalization of the economy continued, however, and in 1988-89 Hungary passed a joint venture law, adopted tax legislation, and joined the International Monetary Fund (IMF) and the World Bank. By 1988, Hungary developed a [[Two-tier system|two-tier banking system]] and enacted significant corporate legislation which paved the way for the ambitious market-oriented reforms of the post-communist years.  

*GDP: HUF 27,220 billion (approx. $163.9 billion) ($1=HUF 172 - average exchange rate Jan.-Dec. 2008).

*GDP: HUF 27,220 billion (approx. $163.9 billion) ($1=HUF 172 - average exchange rate Jan.-Dec. 2008).

*Annual growth rate (2008 est.): 1.8%.

*Annual growth rate (2008 est.): 1.8%.