Книжка 1, 2007

The accession of ten new countries to the European Union in May 2004 did not produce any major problem in the everyday functioning of the integration. At the same time, in the new members, no wonder happened either.
Most of the negative expectations linked to accession proved unjustified or mainly due to deficiencies in the preparation for membership. The article analysis the impact of accession on growth, inflation, employment, small- and medium-sized companies, regional development, budget and political sovereignty. The main conclusion is that eventual negative developments cannot be linked to EU accession but to home-made economic policy failures in the previous years. Of course, it is always easier to blame external factors, including now Brussels for own mistakes. In other areas, where membership created a new situation, the expected impacts could be identified well in advance (e.g. sovereignty).
A separate chapter deals with the two-year balance of accession. Trade with the new member countries shows a dramatic growth, particularly in exports. As a result, the traditional trade deficit turned to a substantial surplus within a period of two years, indicating the (regional) competitiveness of the Hungarian economy. The success of adjustment can be proved by the smooth transposition of EU directives and guidelines related to the internal market. Less promising were Hungarian developments concerning the main objectives of the renewed Lisbon agenda. In turn, Hungarians were successful in applying for higher positions in different EU institutions. Also, level and structure of utilizing EU funds can be considered satisfactory, excepting the delayed direct payments to farmers.
With membership, Hungary became a policy-shaper of EU decisions and politics. In the first years, however, this manouevring room has not been adequately used, since the traditional, historically rooted unilateral policy-taker behaviour and mentality could not yet be overcome. Another important problem is the deeply divided Hungarian society between two basic political parties and strategies that does not only appear in the different approach to global and European developments but seriously hinders the identification and implementation of Hungarian strategic interests in the enlarged European Union.
JEL: F15

The confidence crash in the major financial institutions, the disastrous consequences of the discretionary monetary policies of the BNB, as well as the dramatic depreciation of the national currency created the preconditions for the search and the enforcement of a radical solution - namely, the adoption of the currency board arrangement (CBA). The outcome of CBA is connected with the appreciation in the real effective exchange rate. The only economic adjustment implies that the production should look for ways to keep and increase its competitiveness mainly along the line of higher efficiency and better quality.
Bulgaria's current account has been negative for almost all the period since 1990 (more than 11% in 2005). The good news is that the international foreign exchange reserves of the country have been steadily going up. Bulgaria has managed to keep remarkable budget discipline after the adoption of the CBA. Recently, in search of incentives for economic growth there were some experiments with various tax structures.
In the conditions of Bulgarian economy the importance of the institutional factors for social and economic progress outweighs the others. The macroeconomic forecasts provide conditional projections - as a consequence from adopting one or another line of macroeconomic policy, or a given exogenous influence (for instance the dynamics of the domestic energy prices, of the major foreign exchange rates etc.), i.e. they study problems of the type "what - if". The employed simulation model is used within the framework of the LINK project.
JEL: E61; E63

The paper provides an overview of the three main mid-term economic programmes of Hungary: the National Strategic Reference Framework (NSRF), designed for identifying the main development objectives and for the efficient use of (EU and domestic) financial resources, the Convergence Programme (CP), the fulfilment of which is crucial for getting closer to the introduction of the euro, and the National (Lisbon) Reform Programme (NRP) having macroeconomic, microeconomic and employment objectives to reach in order to modernise the economy and the society. The paper shows the most important linkages, contradictions and overlaps between the three programmes, stressing the need for permanent coordination. Ibudget corrections are in the foreground right now, but is crucial that they should be followed by real reforms: the CP foresees such reforms, and some of them are already designed and will be introduced as soon as in 2007. In the design of such reforms, the NSRF and the NRP have a very important role. Hungary should not handle any of the above programmes as just "homeworks ", which can be solved by the creation of a certain amount of official papers, because the implementation of these programmes is of crucial importance for the economic and social development of Hungary in the coming years.
JEL: E65

The paper provides on overview of the Hungarian Convergence Programme (CP) that envisages the path to restore macroeconomic equilibrium during the next three years. The spiralling budget deficit in 2006 made an update of the previous CP inevitable. In the September 2006 version the government shows strong commitment to face up to the fiscal imbalances and structural problems, yet several aspects question the feasibility of the Programme. The paper focuses on the evaluation of the major objectives and elements of the CP as well as on significant technical assumptions and external factors that may constitute a downside risk for the implementation. Besides introducing a corrective fiscal package the Convergence Program draws the outlines of several, long-awaited reforms of almost the entire sphere of the social welfare systems. As the primary focus is on the feasibility of the budgetary consolidation strategy, the paper deals with these reforms only in the context of the long-term sustainability of public finances.
JEL: E63

Both economic history and theory show us that foreign capital is indispensable in the process of modernization. Countries in Central and Eastern Europe in the late 80s were facing an extremely challenging double task: they had to transform both their political and economic systems. Despite the difficulties most of them tackled all the problems with remarkable success, creating the bases of market economies and democracies simultaneously. Rapid privatization and institution building signed the way of Hungary, the first mover in the transition process, and - as a consequence - strong capital inflow (mostly FDI) occurred. The domination of MNCs has become evident by now, and outward investments began to rise, too. In this paper we analyze foreign direct investments in Hungary, the activities of multinational companies, and the characteristics of outward investments in the last two decades.
JEL: F23, G31, G38

This paper presents the results of a research project undertaken at the Institute for World Economics that focused on changes and institutional innovations in advanced economies' National Innovation Systems. These changes were provoked either by emerging new technologies or by changes in the outside environment that made the reform and the transformation of the institutional system necessary. We tried to identify the factors that provoked changes in the system, as well as the direction of these changes (whether different countries have carried out identical or similar changes). We also investigated the methods, the changes have been accomplished.
The three topics surveyed are the following: institutional centralization; innovation financing; and demand-oriented innovation policy as a complement to the usual supply oriented analyses.
JEL: O31; O32

Innovation is the main driver of knowledge based growth of modern economy. That is why the improvement of innovation performance becomes a core of economic policy.
On the base of benchmarking innovation performance of the Bulgarian economy using the European innovation scoreboard data the paper identifies main challenges to the national innovation policy. Among them are: to foster the overall R&D funding base; to initiate a recovery of R&D in the business enterprise sector; to strengthen the human resource base; to enhance the interactions between the actors of the science, technology and innovation system. In this respect the following questions, concerning innovation policy mix are discussed: What are the main objectives and priorities of R&D policy in the country? Is there a gap between the challenges and the main objectives and priorities? Which policy instruments are in place today aiming at affecting R&D activities in the private and in the public sector? What are the instruments outside the R&D domain which are of particular relevance to R&D activities and the development of R&D expenditures? Is there a gap between the main policy objectives and priorities, and the instruments in place? What are the most important policy instruments that affect R&D expenditures? How does the governance of the system of R&D policy instruments take place, and is there a form of co-ordination between R&D policy and policy instruments from outside the R&D domain? Is there any evidence for interactions among the policy instruments in place with respect to affect R&D expenditure?
JEL: 025, 038,052

If not in the regional differentiation process of the last one-and-a-half decades then definitely in the area of decisive processes can we can talk about a change. This change generated a new spatial structure, which also indicates a new economic and social spatial structure and a regional restructuring of settlements.
Individual regional development paths determining the new spatial structure display a high degree of regional differentiation in terms of development indicators in individual regions. Growth and decline at macro level determined by economic cycles diverge regionally to a substantial degree, and in some cases these divergences are extreme. Certain regions react more promptly than others to circumstances changed by economic cycles. This is not just due to the different regional dynamics but also to the ‘inherited' sectoral structure and the government's development policies. Based on experience in the 1970s and 1980s we come to the conclusion that the mono-cultural production structure shaped by a mono-sectoral development policy implies several risks at regional level, as does supporting investments taking no heed of the amounts or nature of the assistance.
JEL: P25

The paper discusses the state of the development of the labor resources in the agriculture of Bulgaria. Main tendencies are drawn for it, outlining that the changes after 1989 provoke substantial changes in their quantitative and qualitative dimensions. The focus is on the qualitative characteristics of the agricultural enterprises' managers - of private and corporate type. On one hand, the sustainable decrease of the absolute number of the employed in the branch, the worse age reproduction structure of the agricultural population, the unfavorable educational structure and the unfavorable business environment for development of the agricultural activity influence adversely. On the other hand, the registered positive results in the economies with size over 100 decares used agricultural land give reason to draw the optimal conclusion that the large enterprises, producing for the market, possessing agricultural equipments and employed agricultural workers, are managed by considerably young managers with suitable agricultural education.
JEL: Q13

This paper aims at giving a snapshot on the major trends of SME development in Hungary. After a brief historical background, the focus is put on the current changes taking place in the Hungarian enterprise policy. A major transformation is underway in the SME financing as a result of the substantially increasing EU funds available for enterprise development. This process is also supported by the favourable competition policy rules applicable for the SME sector in the EU. These changes are also supported by the increasing competition between commercial banks for financing possibilities, the target group of which policy is the SME sector. Besides, the concentration of the SME support system with the aim of increasing effectiveness of state subsidy for SME sector is also carried out.
JEL: F15, L21, L25

The modern corporate governance structure in any country includes as its key factor the structure and functionality of the corporate boards. Currently, the boards experience a more or less radical change of their traditional activities and structure, acquiring new features and diversifying the old ones in order to answer of the raised demand before them by the business and social communities. The paper is revealing the status of the problem in Bulgarian companies within the immediate pre-accession period; it is based on a companies' survey selected from the main economic sectors. And, the main findings show an inclination of the current boards toward more traditional functionality and conservative structuring, i.e. the boards concentrate more in terms of time and quality to the traditional functions as overall governance and/or operational management and adopt appropriate structures. This also means that the surveyed boards are more reluctant of dealing with the functions like resolving of conflicts of interests and more flexible structuring as creating specialized committees, especially when things come to the nomination and compensation of the board members. Hopefully, the recent amendments of the legal framework in the field will provoke a restructuring and diversification of board functionality toward the highest present-day standards.
JEL: G32, G34, G38, K22