The Dynamics of Foreign Bank Ownership: Evidence from Hungary

Várhegyi, É. (co-authors: Majnoni, G. and Shankar, R.): The Dynamics of Foreign Bank Ownership: Evidence from Hungary. World Bank Policy Research Working Paper 3114, August 2003

Living memories of the past?

A new wave of redistribution at the turn of the millennium

Redistribution within the economy and state aid for companies have recently become an important field of economic policy once again. The lens of the daily press is deceptive, however: we are not facing a brand new issue. Redistribution has been a constant companion of economic transition. This article examines the phenomenon of focusing on Hungarian private enterprises as a distinctive feature of the new wave beginning at the turn of the millennium. It presents the varied methods and the ideologies and driving forces behind them. According to the final conclusion, the best subsidy would be to decrease subsidies, and instead to modify general economic conditions in a way favourable to business players.

Competitio 2003, volume 2, pp. 83-104

Redistribution instead of privatization

The fate of the state assets between 1998 and 2001

The government has lacked a clear privatization policy since the summer of 1998. Retrospective analysis, based on official publications and press statements from the central asset management authority and conversations with other participants of the process, suggests that earlier trends have altered in many respects since the parliamentary elections in 1998. The assets of State Holding Company (SHC) have increased instead of decreasing. SHC has consumed rather than increased public funds and its main activity has become extra-budgetary redistribution of state revenues. The author assumes this does not derive from any comprehensive, secret plan. The strongly centralized decisions have been driven by short-term political interests, by creative interpretations of several experiments, and in some cases by constraints or by their absence. The events and their results in the field of state asset management reflect well the ideas and behavior patterns of the government, also applied in other economic and political areas.

Közgazdasági Szemle ? Economic Review, XLVIII. évf., 2001. September pp. 726 - 744.

Ownership structure and corporate governance in the large enterprise sector in Hungary

How typical is the organisation of a network of "managerial capitalism" and ?recombinant property? in the large enterprise sector in Hungary? Based on the ownership structures and corporate governance methods of the top one hundred companies, the article argues that both models may be justified within a narrow sphere or in a particular sense. In a formal and legal sense the management is only a shareholder in exceptional instances, and its informal influence depends on the ownership type. Its power is determinative in the case of divided ownership and for some corporations owned by the state. The concept of inter-corporate ownership elaborated by David Stark is characteristic in the sense that the majority of the large enterprises are linked to a network, though these are mainly subsidiaries of multinational companies. This, however, is not a uniquely Hungarian or post socialist solution. There is a fundamental difference between Hungarian and foreign enterprises as owners at almost all levels of corporate management. It is not advisable, therefore, to treat the two groups as a single category within the conceptual framework of the "network".

Közgazdasági Szemle (Economic Review) July-August 2000, pp. 549-564

Spontaneous privatisation in Hungary

The phenomenon known as "spontaneous privatisation" is one of the most passionately disputed components in the history of Hungarian privatisation. Some economists and politicians consider the essence of the process to be the disintegration of state enterprises into a group of companies, whereas others regard it as the sale of firms or company sections based on managerial decisions. Most participants in public disputes use spontaneous privatisation as a term of abuse and as a synonym for the conversion of political into economic power or for the preservation of assets, i.e. wasting state assets. In line with this, evaluations are also radically different. At one pole, spontaneous privatisation is an indication of the companies? ability to adapt, but at the other it is equivalent to unlawful acquisition of advantage or even theft.
The basic preconditions for the transition that is unique to Central Eastern Europe in many respects were created by earlier Hungarian reforms. The series of steps taken is a good indication of the continuity and breaking points of the economic and political changes as an important cross section of the disintegration of a centrally planned economy. The question is whether this method could have been an alternative path to privatisation nowhere else followed. How do we evaluate this method of transition subsequently, ten years later? Richly illustrated with contemporary disputes and actual company cases, this book seeks answers to these questions.

ÁPV Rt., (State Privatisation and State Holding Company) "Számadás a talentumról" ("Giving account of the talent") series 1998


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