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Visegrad Twins' Diverging Path to Relative Prosperity - Comparing the Transition Experience of the Czech Republic and Hungary

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  • Lajos Bokros

Abstract

The author highlights the striking difference between the economic transition of the Czech Republic and Hungary. These two countries, roughly of the same size and same level of development, have traveled on markedly diverging paths toward relative prosperity. After the velvet revolution of 1989, the Czech Republic began to introduce a comprehensive and consistent package of macroeconomic stabilization coupled with voucher privatization. Hungary ? not having experienced a revolution, rather a change of the ruling elite ? was not ready to make substantial macroeconomic adjustment, but did implement a supply-side shock therapy toward corporate restructuring. The strategy of the Czech government was widely regarded as successful, while the Hungarian one was considered as flawed. The situation had changed by the mid-1990s, however, when Hungary was forced to undertake comprehensive macrofinancial stabilization, which, in turn, has paved the way for high-level, sustainable, and export-led growth since. The Czech Republic paid its price for postponing corporate restructuring, but there have been important reforms since 1997 directed at accelerating modernization in both the real and the financial sectors. The pattern of macro versus micro adjustment was, therefore, quite the opposite in the two countries.

Suggested Citation

  • Lajos Bokros, 2001. "Visegrad Twins' Diverging Path to Relative Prosperity - Comparing the Transition Experience of the Czech Republic and Hungary," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 51(4), pages 206-216, April.
  • Handle: RePEc:fau:fauart:v:51:y:2001:i:4:p:206-216
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    More about this item

    Keywords

    transition; macroeconomic stabilization; corporate restructuring;
    All these keywords.

    JEL classification:

    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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