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PM Orbán’s pledges to reindustrialize Hungary

November 6th, 2014

A left-wing commentator contends that instead of boosting industrial output, the government should help the service sector. A conservative economist on the other hand notes that reindustrialization is in fashion both in the EU and in the US.

PM Orbán has frequently said that by 2018 he wants Hungary to become the most industrialized country in Europe. Last week he also said that by the same year, Hungary should achieve full employment.

In Népszabadság, Endre Aczél recommends that instead of large-scale reindustrialization, the government should focus on the service sector in order in order to catch up with Western Europe.  The left-wing columnist points out that throughout the world, countries with higher proportions of industrial output are poorer and less developed than economies in which the service sector has a larger share. Among others, in the US and Germany, that share is proportionally smaller than in Hungary, and among the EU member states, Romania has the highest share of the industrial sector in gross economic output, Aczél remarks. He goes on to claim that in order to modernize the country and boost economic output, the government should help the service sector instead of levying surplus taxes on retail, energy, banking and telecommunication businesses. As for the prospects of reindustrialization, Aczél notes that these plans require significant foreign investment, and thus reindustrialization would increase the presence of foreign companies in Hungary. In a personal remark, Aczél surmises that “PM Orbán’s reindustrialization mentality originates in the quarry”. PM Orbán’s father owns a number of quarries.

Calm down, we will not become the ‘country of iron and steel’ again,” Csaba Szajlai writes in Magyar Hírlap. The conservative economist points out that reindustrialization is in fashion throughout the developed world – both the US and the EU consider boosting economic output as a central objective. Bearing in mind that in Hungary there is a large unqualified workforce, opening new factories would help reduce unemployment, Szajlai notes. He adds that in the Czech Republic the unemployment rate is lower due to the higher number of jobs available in the industrial sector. Szajlai believes that it is mistaken to liken contemporary efforts at reindustrialization to the Communist industrialization program after the Second World War. In the modern globalized world, reindustrialization should aim at helping globally competitive business, which requires the state to help innovation, Szajlai remarks and welcomes the Orbán government’s efforts to increase subsidies allocated for research and development to 1.8 per cent of the GDP.

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