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15 years experience and the future of privatisation

The idea of concluding privatisation in Hungary first arose in 1997. Since then, two governments have considered the proposals and turned them down. In our estimation, the postponement occurred for short-term political-power reasons rather than for well-grounded economic considerations. Even in this case, however, economic rationality remained undamaged, as a fair number of companies could be still sold during recent years, though at varying rates. At the end of 2004 it did not appear impossible that with a few exceptions the state assets in the competitive sector would soon be acquired by new owners. The principle can thus be confirmed that privatisation is worth declaring completed if it has really been concluded, i.e. when the assets to be sold and able to be sold have been acquired by private companies.

In: Állami vagyon ? privatizáció ?gazdasági rendszerváltozás, ÁPV Rt. (State Assets ? privatisation ? economic transition, State Privatisation and State Holding Company) 2005, Számadás a talentumról sorozat ("Giving account of the talent" series) pp. 16-43

Bank Competition in Hungary

Várhegyi, É.: Bank Competition in Hungary. Acta Oeconomica, Vol 54(3) 2004.

A wasp?s nest

The Economic Competition Office?s role in shaping market structure

According to economic arguments, the monopolized enterprise structure inherited from the planned economy acts as an obstacle of market competition, so many of the big, artificially created state-owned firms have to be broken up. The state, through the Economic Competition Office as ?guardian? of competition, has to play an active role in this process. The logic is clear, but it was a matter of dispute both theoretically and in practice. The article presents the theoretical dilemmas of demonopolization that appeared during transformation. It shows the attempts to resolve them through competition regulation and the decisions of the Competition Office. The author concludes that the main role in building up competitive market structure was not played by the Competition Office, which declined the task to revise the inherited structure and to oppose several privatization decisions, considering these issues economically and politically sensitive. On the other hand, most mergers and takeovers connected with privatization were simply permitted not in contradiction with the law but sometimes by inconsistent reasoning.

Közgazdasági Szemle ? Economic Review, LI. évf., 2004. January pp.1 - 23.

All theories are vague

The relationship between privatisation and competition

The expansion of the two essential elements of economic transition, private ownership and competition, do not necessarily reinforce one other and they may even come into conflict. In Hungarian practice, privatisation was given priority over improvement in the market structure, though but not in a professed or institutionalised manner. Even in the 1990s, a decisive and consistent demonopolisation policy was lacking. Procedures were unregulated and there were no clear criteria for making decisions. By analysing the colourful palette of the organisational changes, the article demonstrates that demonopolisation was mainly an unintended consequence or side-effect of individual deals and of the government?s short-term power or fiscal considerations.

Külgazdaság, 2003 Volume 11, pp. 4-23

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

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