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The Competitiveness of Hungarian Industry


  • Hare, Paul G
  • Hughes, Gordon
  • Michael, Thomas
  • Revesz, Tamas


Using an RAS update to 1990 of an 86-sector input-output table for Hungary in 1986, and corresponding data on world-to-domestic price ratios for 1990, this paper calculates domestic resource costs (DRCs) for Hungarian industries. The disaggregated results are compared with corresponding estimates for a more aggregated model using a 21-sector input-output table. The paper discusses limitations of the data, but we find that the main calculations are quite robust, since very similar rankings of sectors are obtained under a variety of conditions. Hungary's trade relationships and constraints on trade make it uncertain whether particular sectors, like agriculture, should be treated as tradable or non-traded. We therefore obtain results for both possibilities. Finally, the paper analyses the likely impact of the recently concluded Association Agreement between Hungary and the EC on Hungary's competitiveness, finding that some sectors will be strengthened, e.g. forestry, agriculture and food processing; and others will face more difficult conditions, e.g. extraction. Other sectors are not greatly affected, so consumer goods, much of chemicals, and metallurgy remain uncompetitive.

Suggested Citation

  • Hare, Paul G & Hughes, Gordon & Michael, Thomas & Revesz, Tamas, 1992. "The Competitiveness of Hungarian Industry," CEPR Discussion Papers 736, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:736

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    References listed on IDEAS

    1. Grandmont, Jean-Michel, 1978. "Intermediate Preferences and the Majority Rule," Econometrica, Econometric Society, vol. 46(2), pages 317-330, March.
    2. Kenneth Rogoff, 1985. "The Optimal Degree of Commitment to an Intermediate Monetary Target," The Quarterly Journal of Economics, Oxford University Press, vol. 100(4), pages 1169-1189.
    3. Bureau, Dominique & Champsaur, Paul, 1992. "Fiscal Federalism and European Economic Unification," American Economic Review, American Economic Association, vol. 82(2), pages 88-92, May.
    4. Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," American Economic Review, American Economic Association, vol. 80(1), pages 37-49, March.
    5. Xavier Sala-i-Martin & Jeffrey Sachs, 1991. "Fiscal Federalism and Optimum Currency Areas: Evidence for Europe From the United States," NBER Working Papers 3855, National Bureau of Economic Research, Inc.
    6. Jewitt, Ian, 1988. "Justifying the First-Order Approach to Principal-Agent Problems," Econometrica, Econometric Society, vol. 56(5), pages 1177-1190, September.
    7. Wildasin, David E, 1990. "Budgetary Pressures in the EEC: A Fiscal Federalism Perspective," American Economic Review, American Economic Association, vol. 80(2), pages 69-74, May.
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    Cited by:

    1. Gordon C. Rausser & Leo K. Simon, 1998. "Privatization, Market Liberalization, and Learning in Transition Economies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(4), pages 724-737.
    2. Marc Duponcel, 1998. "Restructuring of food industries in the five Central and Eastern European front-runners towards EU membership (CEEC-5). A comparative review," CERT Discussion Papers 9806, Centre for Economic Reform and Transformation, Heriot Watt University.

    More about this item


    Domestic Resource Cost; European Commission; Hungary; Industrial Competitiveness;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General


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