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Enhancing Competition and the Business Environment in Hungary

Author

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  • Álvaro Pina

    (OECD)

Abstract

Over the past decade, the growth potential of the Hungarian economy has declined substantially. Trend productivity has ceased to increase, and investment has fallen to historically low levels. To an important extent, the explanation lies in a business environment characterised by high administrative burdens, regulatory volatility, barriers to growth of small and medium-sized enterprises (SMEs) and entrepreneurship, and limited competition in major non-tradable sectors, problems which have sometimes become worse in recent years. Under these conditions, many SMEs find it hard to leave semi-informality and grow. Large multinational firms operating in manufacturing often have supplier networks weakly anchored in Hungary, while those in the non-tradable sectors sometimes face little competitive pressure; in both cases, positive spillovers to the domestic economy remain limited. Steps should be taken both at the economy-wide level and in specific sectors to increase investment and restore productivity growth. Such measures must include fostering greater regulatory stability, inter alia by reducing the flow of new regulation and improving its quality, not least in taxation. Investor confidence would benefit from promoting trust and transparency in public institutions. Apart from vigorous competition enforcement across the economy, it is essential to remove sector-specific obstacles to competition, such as barriers to entry of different types, lock-in effects and distortive regulated prices, in retail, professional services, energy, and telecommunications. This Working Paper relates to the 2014 OECD Economic Survey of Hungary (www.oecd.org/eco/surveys/economic-survey-hungary.htm). Renforcer la concurrence et améliorer le climat des affaires en Hongrie Le potentiel de croissance de l’économie hongroise a considérablement diminué au cours de la dernière décennie. La productivité tendancielle ne s’améliore plus et l’investissement est tombé à des niveaux historiquement bas. La raison de cette situation tient dans une large mesure à un environnement économique général caractérisé par des charges administratives élevées, une réglementation instable, des obstacles à la croissance des petites et moyennes entreprises (PME) et à l’entrepreneuriat, et une concurrence limitée dans les principaux secteurs non exportateurs, problèmes qui se sont en partie aggravés ces dernières années. Dans ces conditions, il est difficile pour beaucoup de PME de sortir de la situation semi-informelle dans laquelle elles se trouvent et de se développer. Quant aux grandes entreprises multinationales, celles qui sont présentes dans le secteur manufacturier ont souvent des réseaux de fournisseurs faiblement implantés en Hongrie, tandis que les autres, dans les secteurs non exportateurs, sont largement à l’abri des pressions de la concurrence ; dans un cas comme dans l’autre, par conséquent, les retombées positives de leurs activités sur l’économie nationale demeurent limitées. Des mesures générales et sectorielles s’imposent pour accroître l’investissement et rétablir la croissance de la productivité. Il est indispensable en particulier de promouvoir une plus grande stabilité réglementaire, notamment en réduisant le nombre de réglementations nouvelles et en améliorant leur qualité, surtout dans le domaine de la fiscalité. Une transparence accrue et une plus grande confiance dans les institutions publiques seraient en outre propices à l’investissement. Il est essentiel non seulement de veiller à ce que le droit de la concurrence soit vigoureusement appliqué de façon générale, mais aussi d’éliminer tout ce qui fait obstacle à la concurrence au niveau sectoriel, notamment les différentes formes de barrières à l’entrée, les effets de verrouillage et les distorsions induites par les prix réglementés dans le commerce de détail, les services professionnels, l’énergie et les télécommunications. Ce Document de travail se rapporte à l’Étude économique de l’OCDE de la Hongrie, 2014 (www.oecd.org/fr/eco/etudes/etude-economique-hongrie.htm).

Suggested Citation

  • Álvaro Pina, 2014. "Enhancing Competition and the Business Environment in Hungary," OECD Economics Department Working Papers 1123, OECD Publishing.
  • Handle: RePEc:oec:ecoaaa:1123-en
    DOI: 10.1787/5jz2pwfr0nzq-en
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    File URL: https://doi.org/10.1787/5jz2pwfr0nzq-en
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    More about this item

    Keywords

    administrative burdens; barriers to entry; barrières à l'entrée; business environment; charges administratives; competition enforcement; concurrence; Hongrie; Hungary; institutional quality; PME; prix réglementés; productivity; productivité; qualité institutionnelle; regulated prices; SMEs; special taxes;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • K2 - Law and Economics - - Regulation and Business Law
    • L4 - Industrial Organization - - Antitrust Issues and Policies
    • L8 - Industrial Organization - - Industry Studies: Services
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities

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