COUNTRY PROFILES
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COUNTRY PROFILE
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Hungary |
Print articleOf all the Central European economies, Hungary has been one of the fastest in making the transition from a centrally planned to a market-driven economy.
A full member of the EU that has attracted a significant amount of foreign direct investment, Hungary is determined to maintain its position as an attractive, modern and cost-effective location for outside investment. The development of the economy has increased productivity by almost 250% over the last 10 years. With a population of 10 million, Hungary’s domestic market is relatively small. Despite this, it is still the thirdlargest economy in the region, and one of the most open economies. By 2000, more than 50% of the country’s GDP was coming from foreign companies, and by 2004, cumulative FDI in Hungary since 1998 was worth more than $60 million. This investment has been fairly evenly divided between manufacturing and services. FDi magazine recently judged Hungary the best location in Central Europe, judged on criteria such as economic potential, cost effectiveness, human resources and skill level, ICT infrastructure, quality of life and overall FDI promotion strategy.
 The parliament in Budapest, taken from the Fisherman’s Bastion |
An industrial hub
Hungary is at the intersection of four major transport corridors, with a highway network covering all parts of the country. It has become a popular centre for manufacturers of cars and automotive parts, many of them situated in the north-eastern area. The country has also attracted almost 500 foreign electronic and optical equipment producers. Quality logistics support services and a well-educated and adaptable workforce have been a further incentive to investors. A large proportion of Hungary’s FDI inflows are in high-tech production industries.
R&D centre
In line with this, R&D is also a major focus. Hungary is internationally recognised for the quality of its research and development programmes, both in universities and in the commercial arena. As might be expected, the automotive and electronics industries are major drivers in the sector, but there is also increasing input from pharmaceutical companies, including AstraZeneca and GlaxoWellcome. The government is keen to increase FDI in this area further, and offers a range of incentives, including:
- 100% R&D corporate tax allowance;
- 300% R&D allowance if the company lab is located at a university or public research institute;
- Tax credits on investments.
An outward looking economy
The output of foreign producers made up more than 40% of total Hungarian exports in 2004. According to a report carried out for the American Chamber of Commerce in 2004, local businesses welcome foreign participation as a way of accessing export markets and working capital, and majority foreign ownership is increasingly accepted in the Hungarian business community.
Setting up
 Typical European tram on edge of the Danube |
Foreign companies may operate either as joint ventures or as wholly foreignowned firms. US citizens working in Hungary will need a work permit and working visas. The application process for a work permit can take up to three months — but managing directors of foreign-owned companies registered in Hungary are exempt from the work permit requirement.
Facts in brief
Hungary’s location is in Central Europe, northwest of Romania
Its climate is temperate: cold, cloudy, humid winters; warm summers
Natural resources include bauxite, coal, natural gas, fertile soils, arable land
Agricultural products are wheat, corn, sunflower seed, potatoes, sugar beets, pigs, cattle, poultry, dairy products
Industries include mining, metallurgy, construction materials, processed foods, textiles, chemicals (especially pharmaceuticals), motor vehicles
Hungary’s legal system is rule of law based on Western model; accepts compulsory ICJ jurisdiction, with reservations
Diplomatic representation in the US — Ambassador Andras Simonyi, Chief of Mission
Diplomatic representation from the US — Ambassador George Herbert Walker, Chief of Mission
Contact Information
American Chamber of
Commerce in Hungary
V Deak Ferenc u 10
H-1052 Budapest
Hungary
Tel: +36 1266 9880
E-mail: info@amcham.hu
Website: www.amcham.hu
Useful websites
| www.amcham.hu | US Chamber of Commerce |
| www.usembassy.hu | US Embassy in Budapest |
| www.buyusa.gov/hungary | US Commercial Service |
| www.itdh.hu | Investment and Trade Development Agency |
| www.portal.ksh.hu | Hungarian Statistics Agency |
| www.magyarorszag.hu | Official government website |