Reforming the Planned Economy: The Hungarian Experience

Abstract

Hungary has experienced the longest uninterrupted experiment of reforming a planned economy. A comprehensive reform blueprint was drafted during the mid-1960s with the aim of finding a sound combination of plan and market. The reform of 1968 represented a simultaneous transformation of all aspects of the economic system. The New Economic Mechanism resulting from the reform turned out to be a peculiar transitory economic order substantially different both from the traditional Soviet-type planning system and from a market economy. It brought little actual improvement into the operation of the economy, thus making further reform efforts necessary. The second round of reforms, during the early 1980s, under the constraints of general stagnation in the Soviet bloc, resulted in the first important steps toward privatization. The present, third round of reforms is directed toward a genuine market economy.

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References

1. This article relies strongly on earlier publications of the author's on the same topic where space constraints were less rigid. References are, therefore, mostly omitted herein.

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