Overview of Hungary

1
Overview of Hungary

• Wade DanisAssistant ProfessorInstitute of
  International BusinessJ. Mack Robinson College
  of Business Georgia State University

2
Agenda

• Hungary at a glance (overview of demographic
  characteristics, geography, etc.)
• Historical and cultural overview
• Recent economic history performance (i.e.,
  transition to a market economy, recent economic
  performance)
• Doing business in Hungary
• Other? (QA)

3
Which is the Hungarian flag?
1
2
4
3
5
7
8
6
9
10
11
12
4
Which is the Hungarian flag?
Lithuania
Slovenia
Puerto Rico
Poland
Chile
Hungary
Liechtenstein
Georgia
Bulgaria
Czech Republic
Albania
Estonia
5
Hungary
6
Overview of Hungary
Area 93,030 square kilometers (slightly
smaller than Indiana) Population 9,981,314
(decreasing .25 annually) Population density
107 inhabitants per km² (Georgia
55) Climate continental warm summers cold
winters Official language Magyar (Finno-Ugric
group of the Uralic language family) Capital
city Budapest (1,800,800 inhabitants) Shares
borders with Austria 366 km, Croatia 329 km,
Romania 443 km, Serbia 151 km, Slovakia 677 km,
Slovenia 102 km, Ukraine 103 km
7
Hungarian History I

• 5th century A.D. Magyar tribes migrate from the
  east
• 896 A.D. Magyars, led by Árpád, invade and
  conquer resident Slavs and began permanent
  settlement
• 10th century István (Stephen), Árpáds
  great-grandson, became Hungarys first Christian
  king converted the people to Christianity
• 15th century Hungary reaches a high level of
  cultural and political influence during the
  Renaissance However, large portions of the
  country were soon conquered by the Ottoman Turks
• 16th 18th centuries Hungary ruled by the
  Austrian Hapsburgs during their rise to world
  prominence
• 1848 Rebellion against Hapsburg rule (defeated)
• 1867 Dual Monarchy established (sharing of power
  between Austrians and Hungarians)
  Austro-Hungarian empire dissolved at the end of
  World War I
• 1918 - 1938 After WWI, Hungary becomes an
  independent republic but loses two-thirds of its
  former territory and three-fifths of its people
  to newly created neighbor states

8
The Austro-Hungarian Empire (1911)
9
Hungarian History II

• 1938-1944 Hungary was a German ally through most
  of WWII Germany invades in 1944 after Hungary
  begins surrender negotiations with the Allies
• 1945 Liberation by Soviet troops
• 1946 Elections under Soviet guidance by 1949
  Communists had seized control of the government
  and declared a socialist state the Peoples
  Republic of Hungary
• October November 1956 Hungarian Revolution
  Communist reformer Imre Nagy tried to change the
  system, withdrawing Hungary from the Warsaw Pact
  and declaring Hungary a neutral state in. In
  response, on November 4 the Soviet Union attacked
  Hungary and repressed the movement. Nagy and
  other leaders of the movement were tried secretly
  and executed in June 1958.
• 1956-88 János Kádár became the leader of the
  Communist government until 1988, when he resigned
  under pressures for reform
• 1990 First free elections The Hungarian
  Democratic Forum swept the Communists from power
  and József Antall became prime minister
• 1999 Hungary becomes a member of NATO
• 2004 Hungary joins the European Union (EU)

10
Overview of Hungary

• The Hungarian People

11
(No Transcript)
12
Development data

• Human development index 35 of 177 countries
• Real GDP per capita - 16,814
• Adult literacy rate 99
• Infant mortality rate 7 per 1,000 births
• Life expectancy 69 (male) 77 (female)

13
Life expectancy at birth total population,
number of years, 2001                     
                                                  
   
http//titania.sourceoecd.org/vl2856806/cl29/nw
1/rpsv/factbook/10-01-01-g01.htm
14
Hungarian population by religion (HCSO- Census,
2001)
15
Hungarian Cuisine
16
Hungarian Cuisine

• Hungarian specialties include gulyás (goulash)
  and halászlé (Fish soup)
• Paprika is a common spice in many dishes
• Pork is the most common meat
• Three meals a day and a mid-morning snack is
  typical (lunch is the main meal)

17
Per Capita Wine Consumption
Source www.wineinstitute.org/
18
Overview of Hungary

• Society

19
Government

• Parliamentary democracy 19 counties
• President is Head of State
• elected to 5 year term by Parliament
• Laszlo Solyom since 2005
• Prime Minister is Head of Government
• elected by the National Assembly on the
  recommendation of the president
• Ferenc Gyurcsany since 2004 (Hungarian Socialist
  Party)
• Cabinet A centre-left minority government, led
  by Ferenc Gyurcsany the SZDSZ-Hungarian Liberal
  Party left the government in April 2008
• Main political parties
• Hungarian Socialist Party (MSZP)
  Fidesz-Hungarian Civic Union (Fidesz) Christian
  Democratic People's Party (KDNP) Hungarian
  Democratic Forum (MDF) SZDSZ-Hungarian Liberal
  Party (SZDSZ)
• Unicameral Parliament comprised of
• 386 members and is called the Országgyulés

20
(No Transcript)
21
Education

• Compulsory education for children 6 - 14
• After 8 years of grade school, children begin
  four years of secondary school for technical
  training or preparation for higher education
• Five academic, four medical, and nine technical
  universities in Hungary, as well as other
  specialized institutions
• Since 1994 students must pay a small fee for
  university studies

22
http//epp.eurostat.cec.eu.int/portal/page?_pageid
1996,39140985_dadportal_schemaPORTALscreend
etailreflanguageenproductSTRIND_INNORErootST
RIND_INNORE/innore/ir091
23
Percentage of Hungarians who complete secondary
school
24
Economy

• The transition to a free-market economy has been
  difficult for many of Hungarys citizens, who
  have endured higher prices, higher taxes, and a
  lower standard of living.
• Important natural resources include bauxite,
  coal, and natural gas.
• Strong foreign investment, stable government
  institutions, a booming small-business sector,
  and a hardworking labor force are key strengths.
• Currency is the Forint (HUF) 1 US Dollar 163
  HUF

25
Economy- basic data

• 1.3 GDP growth in 2007
• Projected to increase to 2.4 in 2008 and
  accelerate to 3.6 in 2009
• 8.0 consumer price inflation in 2007
• Owing to regulatory price changes, projected to
  decrease to 5.3 in 2008 and to 3.4 in 2009, and
  below 3 thereafter
• The budget deficit is expected to meet the
  targeted 4 of GDP in 2008, but to be above
  target in 2009
• Unemployment rate 7.4
• Average monthly wage 199,000 Forint
• ( 15,000 annually)

Source Economist Intelligence Unit
26
(No Transcript)
27
(No Transcript)
28
(No Transcript)
29
(No Transcript)
30
Foreign Trade
Major exports 2007 of total Major
imports 2007 of total Machinery
equipment 62.4 Machinery equipment
52.2 Other manufactures 26.7 Other
manufactures 32.3 Food, beverages
Fuels electricity 9.6 tobacco 6.2
Food, beverages Fuels electricity 2.9
tobacco 4.2 Raw materials
1.9 Raw materials 1.7
Leading markets 2006 of total Leading
suppliers 2006 of total Germany 29.4
Germany 27.1 Italy 5.6
Russia 8.3 Austria 5.0
China 7.0 France 4.9
Austria 6.2
31
Economic structure
32
Taxation

• Corporate tax rate of 16 (one of the lowest of
  the ten new members of the EU)
• A low corporate rate is balanced by relatively
  high local business taxes levied by
  municipalities, and high personal income taxes
  and employment charges
• Value-added tax (VAT) of 20
• Most of the austerity measures that the
  government implemented in late 2006 and 2007 to
  bring the countrys runaway budget deficit under
  control have relied on tax increases

33
Doing business in Hungary- business environment
rankings
34
Hungary ranks 37th out of 111 countries in the
worldwide quality-of-life index and has third
best result amongst the Central and Eastern
European Countries.WORLDWIDE QUALITY-OF-LIFE
INDEX, 2005 (Score on a scale from 1 to 10)
Source The Economist Intelligence Unit, 2004