Discussion Papers 1999.
Spatial Research in Support of the European Integration 13-30. p.
EUROPEAN ACCESS AND CHANGING
13
EUROPEAN ACCESS AND CHANGING HUNGARIAN
REGIONAL POLICY
GYULA HORVATH
REGIONAL POLICY TRIALS IN THE EARLY '90S
The introduction of a market economy in Hungary, and the transformation of the
social administration, has fundamentally altered the aims and the institutional and reg-
ulatory system of regional policy. The majority of reform programmes introduced as
part of the political and economic transformation have had, and continue to have, an
influence on regional developments in the Hungarian economy.  (Enyedi 1994, 1995)
The programmes themselves have also prompted new developments, both favourable
and unfavourable.
There are a large number of independent programmes, concepts, organisations,
budgetary resources and foundations which all attempt to guide regional economic
development. Some development programmes and business plans were formulated for
certain areas by the regional units of the Hungarian Economic Chamber and/or by the
regional offices of the Foundation for Business Development. Local governments,
ministries and regional development associations are being established with neither a
knowledge of the strategies of other organisations nor any attempt to co-ordinate or
link with them.  (Downes-Horwith 1996, Hajda 1993, P Kovacs 1997)
More so than in other East-Central European countries, Hungary has pre-reform
experience of operating a type of regional development policy, and a distinct regional
development strategy can be identified from 1971 onwards. The government decrees
of the time led to regional development planning and the inclusion of regional priori-
ties in the redistribution of financial sources. This cannot, however, be construed as
"regional policy". The central control of regional development was divided among sec-
toral lines, and sectoral objectives were superior to regional concerns in government
policies.  (Horvath 1995b, 1998)
With the implementation of political and economic reforms, the environment for
regional policy changed markedly. Under the new constitution, Parliament was given
new powers, and the 1990 Government created a separate Ministry of Environment
and Regional Policy. A Regional Development Fund was established in 1991 and the
financing of regional development was re-organised. Nevertheless, a clearly specified
concept or strategy for regional policy was not formulated during this period.
The legislation regarding regional policy was passed in 1993, providing a new defini-
tion of the main tasks and means of regional policy. The principal tasks as laid out in
the decree included regional crisis management and the economic transformation of

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
14
GYULA HORVATH
depressed and underdeveloped regions; the implementation of selective infrastructure
projects, focusing on underdeveloped areas; and the establishment of the basis for
internal and international co-ordination. Although no specific guidance was given on
an appropriate institutional system, the decree stipulated that institutions should be
promoted that are in harmony with the EU system and internal conditions.
BEGINNING A NEW ERA OF REGIONAL POLICY
The Regional Development and Physical Planning Act
In order to assist the balanced regional development of the country and the socio-
economic development of its regions, to implement a comprehensive regional develop-
ment policy, in accordance with the content of the European Regional and Spatial
Planning Charter and taking into account the regional policy principles of the
European Union, Hungarian Parliament passed the  Regional Development and Physical
Planning Act  on March 19, 1996.
The objectives of the Act are:
—
to assist the development of a market economy in every region of the
country, to create the necessary conditions for sustained growth, to
improve economic conditions and the quality of life through co-ordina-
tion between social, environmental and economic interests;
to create the conditions for self-sustaining development;
-
to reduce adverse differences — in terms of living conditions, economic,
cultural and infrastructural conditions — between the capital city and the
rest of the country;
-
to encourage initiatives by regional and local communities and to co-
ordinate them with the national objectives.
The Act determines the tasks and competence of central state organs, regional and
local organisations.  (Figure 1)
The Act orders the establishment of a new body to assist the Government in carry-
ing out regional development. The  National Regional Development Council  has the
authority to make proposals, comments and co-ordinate.
Regional development tasks within the country are co-ordinated by the  County
Development Council  which consists of representatives of county general assemblies,
local government associations, economic chambers, organisations representing
employee interests and the Ministry of Environment and Regional Policy.
After the 1998 general election the new right-centrist Hungarian government re-
organised the management centre of regional policy. The Ministry of Environment
and Regional Policy was abolished and regional tasks were given to the newly-created
Ministry of Agriculture and Rural Development. This political solution, which was a
result of negotiations between coalition parties, and the main demand of the
Smallholders' Party, involves the risk of limiting regional actions on rural and agricul-
tural development. Meanwhile, a new secretariat of state is being organised in the

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
EUROPEAN ACCESS AND CHANGING
15
Figure 1
Institutional system of regional policy in Hungary
CENTRAL
Prime Minister's
National
Ministry of
Often: State secretariat
Resta at
LEVEL
Parliament
Government
of
Agriculture and Rural
Development
Administration and
Development
Regional Development
Cuun it
Ministries
Comittee
National Regional
Nat onal
connected with
A oc atione
of Regional
Development
cent es of
of I real
regional
Development
Centre
chambers
overmonts
development
Regional
REGIONAL
Development
LEVEL
Council
COUNTY
lumber o
Chamber o
LEVEL
Trade and
Agriculture
Industry
County
County
Development
Chamber of
General
Craftsmen
Council
Assembly
LOCAL
Small area
LEVEL
Towns with county
development
rank
corporation
Designed by the author
Prime Minister's Office, the activity of which will focus on regional policy and adminis-
tration affairs. So, in the future the regional policy in Hungary will most probably be
exposed to power struggles.
The consequences drawn from analysis of the recent developments and the evalua-
tion of the European development led directly to the Regional Development Act. It is
clear that, despite the political compromises, we possess legislation in line with
European standards. The legislation:
— is compatible in its objectives with the principle of social justice and fair-
ness (irrespective of the spatial location of the place of residence, all citi-
zens have a right to their share from the growing wealth of the country), the
political principle of equality (it serves the strengthening of the cohesion
among the spatial constituents of the country), and is basically oriented
towards economic development;
— is decentralising by the character of its organisational system, building on
the principle of partnership, and the natural division of labour among
autonomous institutions;
— operates with market-sensitive tools, creating the opportunity of using
regional economic regulators, which can measure the efficiency of these
tools and thus make the institutions concerned publicly responsible.

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
16
GYULA HORVATH
The  1996 Act thus in principle created a Euro-compatible system of regional devel-
opment in Hungary. If we look at its basic features, it is considerably different from the
regional development practices of the socialist planned economy and of the transition
following the 1989 change in political system.  (Table 1)
Table I
Transitions of the Hungarian regional policy at the end of the 20th century
The policy's
Bureaucratic
Transitory
"Decentralised"
(1985-1990)
(1991-1995)
(1996—)
Aim
Equalisation
Equalisation
Restructuring
Object
Underdevelopment  Underdevelopment  Moderation of the
negative effects of
the market
Target group
Underdeveloped
Underdeveloped
Problem region
region
settlement
Tools
Regional
Regional
Earmarked provi-
Development and
Development
sion for regional
Organisation Fund,
Fund,
development, addi-
planning
projects
tional resources,
programming
Way of financing
Centralised
Centralised
Decentralised
Form of incentive
Automatic
Discretionary
Discretionary
Dominant element
County council
Local government
Regional
of the
of the settlement
Development
implementation
Council
Effect on
Isolated
Isolated
Integrative
developments
Dominant
Industry
Infrastructure
Manufacturing,
favoured sectors
(gas, telephone)
business services,
innovations
Population of
4%
17%
34%
eligible areas
Scales of direct
0.05%  of GDP
0.2% of GDP
0.3 0.5% of
-
GDP
financing
Designed by the author

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
EUROPEAN ACCESS AND CHANGING
17
The National Regional Development Concept
The future of the Hungarian spatial structure was drawn up by the National
Regional Development Concept which was adopted by Parliament in March 1998.
(Parliamentary Resolution 3511998)
The aims of the Concept are as follows:
-
to determine regional development principles, guidelines and aims — in
the long term suited to the international situation — which are followed by
the Government during its own regional development activity and with
which the Government wants to orient the other bodies of regional devel-
opment;
-
to detail regional targets for the sectoral development policies of the
Government;
-
to promote implementation of the Regional Development legislation
within the new institutional system to co-ordinate between regional and
county levels.
The tasks of the Concept are:
-
to change the spatial structure in order to provide a basis and framework
for effective, innovative and competitive economic activities and thereby
contribute to the dynamic development of the economy and increase its
income-generating capacity;
to reduce differences in social and economic opportui3ities, to plan social
and infrastructural conditions at the level of larger regional units and set-
tlements and to tackle the social problems of seriously underdeveloped
regions and settlements;
to develop programming (planning) methods, instruments and institu-
tions which — if concentrated on regions or areas of an appropriate size —
are capable of identifying and managing structural crisis at an early stage
and can, therefore, contribute to their solution;
-
to assist the mobilisation and utilisation of the regional (human, natural
and other) resources of economic development;
to ensure that the role of regional policy in co-ordination between the
various sectors and ministries is of equal importance to that at the
national level. This stems from the need to address certain conflicts
which mainly occur at the regional level, such as those concerning envi-
ronmental issues and land use, which cannot automatically be regulated
by market forces, and conflicts arising from the sharing of resources;
-
to encourage cross-border co-operation and relations and thereby con-
tribute to the better use of the potential of regions and settlements that
have become peripheries of the country due to the creation of political
borders.

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
18
GYULA HORVATH
INSTRUMENTS OF REGIONAL POLICY
Among special regional development instruments, the regional development sup-
port specified in the budget line allocated to the Ministry of Agriculture and Rural
Development from the central budget (tasks taken over from the  Regional Development
Fund)  is of great importance: it provides grants, loans and interest subsidies to assist
the implementation of development efforts in beneficiary regions.
The other significant financial instrument is the  Regional Equalisation Framework
supporting the infrastructure development efforts of local governments, which is fully
decentralised on the basis of the indicators of development. County development
councils will invite applications for these funds. During the allocation of the funds, cer-
tain issues should be taken into consideration: special features and development needs
of the country, the lack of resources for development actions carried out by local gov-
ernments; important development objectives that are not included in other support
systems (e.g. infrastructure related to tourism).
The objectives of the Targeted Budgetary Allocation for Regional Development
(Government Decree 31/1998)  are:
—
to reduce significant social and economic differences between regions in
terms of living conditions, economic, cultural conditions and infrastructure;
-
to assist the co-ordinated use of various sectoral grants and the imple-
mentation of the integrated restructuring programmes;
-
to assist the involvement of international financial resources in regional
development programmes;
-
to assist cross-border co-operation between border regions, common
planning and co-ordinated development on the basis of bilateral and mul-
tilateral agreements.
Assistance may given from the budgetary allocation for the following purposes:
— job-creating investments and development projects, which are aimed at
market and product change and at helping to maintain current employ-
ment levels;
-
the creation of innovation centres, business incubators and industrial
parks assisting enterprises, and human infrastructure development pro-
jects involving job creation;
-
thy' preparation, method of implementation and conditions of regional
development programmes, and the preparation of programmes encour-
aging the development of local societies;
-
investment into productive infrastructure, which is related to economic
development and assist enterprises, i.e. primarily development projects of
regional importance in the field of energy, transport, piped water and
sewerage networks, telecommunications and residential waste treatment;
-
special targeted programmes promoting local economic development
and development projects related to community work providing part-
time employment;

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
20
GYULA HORVATH
Figure 2
Eligible areas in Hungary, 1996
1- limits of border areas, 2 - underdeveloped region, 3 - declining industrial region, 4 - rural region,
5 - region with high long-lasting unemployment
Source: Government Decree 219/1996
Designed by the author
EU COMPATIBILITY OF HUNGARIAN REGIONAL POLICY
The complex and high level of legal regulation of Hungarian regional development,
as well as its particular institutional system, is of a unique and pioneering character in
East-Central Europe; it could even serve as an example for a number of EU Member
States. This is acknowledged in the European Committee's report on the country, as is
the fact that most elements of Hungarian regional policy are compatible with the struc-
tural policy of the EU. The goals of the Regional Development and Physical Planning
Act are in accord with the principles of social justice, equity and solidarity as well as
general cohesion. The structure of the Hungarian Regional Development Concept and
its regional orientation partly meets the requirements for a national development pro-
gramme document and for the EU compatibility of the long-term development goals.
Commission Opinion on Hungary's Application for Membership of the European Union
(Brussels, 15 July 1997) contains following statements of the current position of the
regional policy in Hungary:
— "The Hungarian Government is well aware of the need for an active
regional policy involving all Government levels.

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
22
GYULA HORVATH
Basic principles
Decentralisation and partnership
Territorial decentralisation  in Hungary is realised on several levels. Yet these territor-
ial levels do not have the same institutions or scope of authority. There is no clear divi-
sion of tasks among these levels, nor is there a clear legal definition concerning in
which cases and in what territorial and functional magnitude is direct central assis-
tance justified to interfere with the activity of the so-called selected and crisis areas.
The scope of the regional level has not been defined, its institutions and functions have
not yet developed.
In decisions regarding distribution of regional development resources and in the
decentralisation of planning and in partnership co-ordination, headway was made on
the  county level  by the establishment of county-level development councils. Nation-
wide experience shows that, while significant problems were caused by the ambiguous
status of the councils, flexibility in this matter did facilitate the establishment of these
institutions, the first decisions on the distribution of funds and the speeding up of the
planning processes.
Owing to the legal regulations, the weakest level of the territorial division of labour
is the region.  Its missing institution is the regional development council, whose estab-
lishment is voluntary, its territory is not aligned by law to the NUTS II level. It has no
defined resources or scope of authority, and it can only perform tasks that are trans-
ferred to them by the county development councils from among their own tasks. The
regional councils which have been established thus far are still in the process of being
organised, their creation is primarily motivated in anticipation of future EU resources.
These councils do not yet have definitive programmes, working organisations or their
own resources. The greatest problem is, however, that their territories do not corre-
spond to the pattern that will expectedly be the NUTS II level in Hungary.
Another characteristic of Hungarian decentralisation (which seems to make little
difference in the accession to the EU and is also attested to in other countries) is that
the targets of decentralisation are neither the local governments and nor the adminis-
trative bodies, but special partnership organisations operating on the basis of delega-
tion. What is problematic, however, is that strategic planning is also done by these
partnership organisations. Within this framework of decision-making the public nature
of regional planning is less certain.
The  principle of partnership  emphasised in the EU regional policy seems more
important than either the political legitimacy of regional policy decisions or subsidiari-
ty, therefore the Hungarian institutional system is, in this respect, progressive.  (Hrubi
1995)
According to the EU regulations regarding Structural Funds, on the  principle of sub-
sidiarity  not only the Member State can be assumed as a partner in the Union-level
regional policy but also the regional and local authorities and, as defined by the inter-
nal legislation of the Member States, its economic and social organisations. Their par-

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
EUROPEAN ACCESS AND CHANGING
23
ticipation is on the regional level and in the debates among the partners which contin-
uously shape the EU level measures.
Programming
Programming,  which has not yet been practised in Hungary, in the wide context
includes both planning and implementation. In the narrow sense of the word it is a
strict order of procedures which is compelling in both the preparation and implemen-
tation of the programmes.  (Farago 1995, 1997)
The purpose of programming is:
-
a strategic approach: only those projects (operative programmes) can be
supported which fit one of the strategic programmes;
-
an integrated, and not centralised, distribution of resources: through
integrated utilisation of the various resources, aiming at a synergic effect,
the resources can be more effectively utilised;
-
to achieve coherence (pyramid of goals): national level macro-goals and
local development initiatives should strengthen each other. The best
social and economic effects can be achieved by supporting measures
which enhance each other's impact;
-
to build upon the vertical and horizontal co-ordination and co-operation
effected by decentralisation;
-
to effect (the integrating element being territory) the development units
and the areas of action becoming the various (national, regional and
smaller) territorial units;
-
to make it a basic requirement that the process of financing and imple-
mentation can be controlled and transparent, which requires the estab-
lishment of a monitoring system.
The practice of regional development and territorial planning is not uniform in the
countries of the Union. We are therefore not expected to adhere to a non-existent uni-
fied practice but to assert the  common basic principles  and to integrate the necessary
common elements and connecting points into the Hungarian practice. The EU does
not define directives in regional development and territorial planning; but sources
from the Structural Funds are distributed on certain conditions, which, in our own
interest, should be fulfilled. The expectations of the Union in territorial planning are
expected to be integrated in the regulations on the distribution of the Structural Funds
after 1999.  (Begg 1997, Agenda 2000)
The already existing conditions and strengths that facilitate the introduction of pro-
gramming are as follows:
-
The legal framework of regional development exists.
-
The backbone of strategic programming is strategic planning, and the
Hungarian practice of formulating development concepts is similar to
strategic planning. Development concepts prepared or being prepared

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
24
GYULA HORVATH
for the various territorial units could be expanded or transformed into
strategic programmes.
-
Part of the resources have already been decentralised and distributed
through tenders.
-
The banking system (Treasury, banks) has been established and is capa-
ble of handling financial assistance.
Deficiencies and weaknesses in the introduction of programming are as follows:
—
The greatest obstacle to the introduction of programming is the present
practice of budget planning. The strategic and operative programmes,
therefore, do not have a real budget background.
-
There is no real link between strategic planning and the operative (sec-
toral) programmes.
-
The concrete programmes are monocentered, harmonisation with other
programmes is lacking. The mechanism of broad scale co-ordination is
undeveloped.
-
The utilisation of the various (central) resources is not co-ordinated. At
lower levels, local resources, which would strengthen resolution in devel-
opment, are not added to the central resources.
-
The regional level is weak. It lacks its own scope of decision-making and
financial resources. Its scope of authority and the content of its planning
has not been clearly defined.
-
Regions that are formed voluntarily and containing a number of subjec-
tive (political) elements do not facilitate long-term strategic program-
ming.
-
Regional development monitoring is lacking and so is the evaluation sys-
tem of the utilisation of resources.
Concentration and additionality
Conditions for  concentration  and  additionality  are still deficient in Hungary. Apart
from the geographical concentration of the regional development resources (the EU-
style geographical designation of the types of assisted areas), which will in any case
remain in force nationally in the future, neither activity-based concentration nor the
combination of resources comply with EU principles and trends.
In all assisted areas of the European Union, investments  creating new jobs, support-
ing enterprises  and development relating to human infrastructure have a significantly
greater share than in Hungary, while investments relating to technological infrastruc-
ture have a smaller share. Part, but definitively not the whole, of this discrepancy can
be explained by the underdeveloped nature of the Hungarian infrastructure. Local
governments should mature and, instead of over-emphasising their own direct respon-
sibility and concentrating on investments that directly influence their political popular-
ity, they should put much greater emphasis on the support of business and on the
creation of a favourable environment for business. If this is not the case then local gov-

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
EUROPEAN ACCESS AND CHANGING
25
ernment behaviour itself will be the major reason why they are not sufficiently involved
in regional development decisions. The increasing weight of economic development
renders greater importance to the territorial centres where conditions are more
favourable for the concentrated creation of jobs.
Resources influencing regional development are splintered at present: funds are shared
among nine ministries. The co-ordination of resources is weak. It is inevitable that the
mechanisms for the uniform handling, regional distribution and utilisation of the
development resources be established. Local governments in Hungary receive various
forms of assistance but the equalising mechanisms are of different orientations and
operate on different principles.
The Hungarian local government system, within the communal sector, is overbur-
dened and focused on the maintenance of institutions, which, as far as the regional
development policy is concerned, makes it difficult to obtain a clear overall picture:
financial inequalities (when tasks and resources are compared) cannot be clearly
assessed, therefore the goal and resources system of equalisation misses its aims (e.g.
finances may fail even at high indices of supply). The territorial level of local govern-
ment is incapable of operating a comprehensive goal and resources system in territori-
al policy. Mobilisable local government means are scarce (and ever-decreasing), the
credibility of the local governments is weak, and along with their poor budgets they are
coping with profound problems of maintaining and operating their institutions: they
practically have no free resources. This is true in the case of both larger cities, which
are determining factors in regionalisation, and county-level local governments, which
have hardly any revenues other than fees.
The magnitude of financial resources assigned directly for regional development goals
is
insignificant in comparison with other funds. The processes of the various funds in
defining their goals, methods of distribution and selection criteria are not harmonised.
The need for harmonisation and co-ordination to comply with territorial aspects still
emerges as a Government concern rather than as practice, while sectoral aspects and
assertion of interests are still dominant.
Joint financing raises not only quantitative but also administrative requirements.
One prerequisite for the approval of EU assistance is that a statement of recognition
of financial obligations on the part of the central and local governments and the pri-
vate investors throughout the duration of the project be enclosed in the application. In
Hungary, where budget planning several years ahead exists scarcely or not at all, this
requirement poses considerable problems. Regulations change every year, which
makes financial obligations for several years ahead disproportionately risky. Here EU
financing is linked to the further development of the whole regulation system to result
in more stable regulation. Without this it is impossible to receive considerable assis-
tance.

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
26
GYULA HORVATH
Regionalisation
The actual geographical designation of the NUTS system, and within it the NUTS II
level, is an internal affair from the EU's point of view, which means that, apart from
some general criteria, there are no absolute EU requirements about the geographical
designation, so the Hungarian parties involved have to reach their own consensus.
This consensus is all the more important, since the main aspects to be considered in
the geographical designation of the development regions are the following:
—
previous history of regional co-operation, opportunities for territorial
cohesion;
-
proportionality in the country's spatial structure;
-
relative territorial homogeneity considering the basic goals of regional
policy;
-
internal structures of the regions that allow proper operation (centre,
sub-centres, willingness and ability for co-operation etc.), compliance
with administrative borders;
-
the "geopolitical" similarity of the units to be integrated into the region,
the proximity of the international orientations which are decisive in the
long term;
-
costs of the establishment and operation (the institutions for decision
making and for the preparation of decisions, the professional and admin-
istrative background institutions, the organisations for information man-
agement, planning, management and controlling-monitoring activities,
the institution system for decentralised financing), economy of scale with
regard to the functions.
On the basis of the above aspects there are more reasons that support the six-part
division. The most important of these reasons are:
—
the two-part, as opposed to the three-part, division of Transdanubia is
historically grounded;
-
the internal cohesion of the territorial units realised by the two-part division
of Transdanubia is stronger, the coursers of development predictable on the
basis of internal resources also suggest unity along these lines of division;
-
further partitioning would lead to such dualities of development which
are spatially unnecessary with regard to the whole country;
-
the two units, although different in nature and development, have territo-
rially-accepted regional centres, the emergence of a third regional centre
has little ground and is hardly probable.
The regions to be established are shown in Figure 4.
In this situation the Government and the Parliament are responsible for the final
decisions. When defining the regional units it is not the particular and short-term terri-
torial financial interests that must be considered, but rather the regions' improved
alignment within the EU structure and, in the "Transdanubia debate", the long-term
structural interests of the country and of the area.

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
28
GYULA HORVATH
in the state budget reform and the revision of the state funds to the resources for
regional development.
The Hungarian Government undertakes that by the time of Hungary's accession to
the EU it will establish a financial system corresponding to the Structural Funds of the
EU, which will:
— create an agricultural support system in accordance with EAGGF to
strengthen and transform the structure of agriculture, to counterbalance
the impact of unfavourable geographical features on agriculture, and to
foster the development of rural society, environmental protection and
nature conservation;
set up a Regional Development Fund corresponding to ERDF, increase
endogeneous potential of the regions, foster local developments, small
and medium-sized enterprises, cross-border co-operation and innovation;
further differentiate in the target system of the Labour Market Fund,
which already almost corresponds to the target system of the EU in
accordance with the ESE
The second question is whether there is a danger, despite the many positive virtues
of the trend towards regions becoming more self-reliant, of regionalisation being seen
as a substitute for central Government action. There is a potentially destructive dimen-
sion to the increasing competition among regional authorities.
In Hungary, as a unitary country, the large administrative regions are absent, nor is
their formation urged by either the governmental agents interested in centralisation or
the regional organs that wish to expand their own competencies. Nor does the reform
programme of the public administration of Hungary take the organisation of the
administrative regions into consideration. From the perspective of regional develop-
ment, however, the programme regions should be organised in Hungary as soon as
possible.
The weaknesses in the regional structure of Hungarian economy and society (the
dominance of the capital city in advanced activities, the extreme regional differences in
income generation, the lack of regional cohesion within the semi-peripheral regions
and the peripheries) can only be abolished if a strong decentralisation process takes
place, at the same time accompanied by some concentration. That is why the manage-
ment of the organisational process of the regions can be considered an important task.
The formation of the development-programme regions is a designation task to a
lesser degree, to a larger extent it depends upon the creation of mechanisms and
organisational solutions enabling the co-operation among the bodies interested in
regional development (regional development councils, county governments chambers,
companies-businesses etc.)
Finally, within Western Europe the relationship between the EU and nation states
in the field of regional policy is in need of review. Depending on the outcome of dis-
cussions over EU enlargement, such a review has always been anticipated since the EU
appears unlikely to be able to extend its current regional policy to potential new
Member States in East-Central Europe. Addressing these concerns are the key princi-

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
EUROPEAN ACCESS AND CHANGING
29
pies of EU regional policy, and the commitment to EU economic and social cohesion
are not to be endangered.
The financial cost of Hungary's accession to the EU regional development budget is
difficult to calculate at this stage. In our estimation regional development support for
Hungary would cost 1.5-2 billion ECU.
In addition to financial restructuring a key constraint for regional development in
East-Central Europe, however, is that regional policy is still in infancy. In Hungary,
however, regional policy measures have progressed far beyond the conceptual stage,
the institutional infrastructure has been in action, and there has been a recent trend to
achieve greater compatibility between EU and Hungarian regional policies.
REFERENCES
BEGG, I. (1997) 'Reform of Structural Funds after 1999',  European Planning Studies, 5, pp. 675-690.
DOWNES, R. — HORVATH, GY. (1996) 'The Challenge of Regional Policy Development in Hungary',
Regional and Industrial Policy Research Series,  15, (Glasgow, EPRC, University of Strathclyde)
ENYEDI, GY. (1994) 'Regional and Urban Development in Hungary until 2005', In: HajdU, Z.-Horvath,
Gy. (eds.),  European Challenges and Hungarian Responses in Regional Policy,  (Pecs, Centre for
Regional Studies)
ENYEDI, GY. (1995) 'A Country Split in Twain?', In: Gombar, Cs.-Hankiss, E. et al. (eds.),  Question Marks:
The Hungarian Government, 1994-1995,  (Budapest, Korridor), pp. 131-143.
FARAGO, L. (1995) 'Dilemmas and Main Tendencies of the New Hungarian Regional Policy', In: Frohlich,
Z.-Malekovi'd, S. (eds.),  Industrial Restructuring and Its Impact on Regional Development,  (Zagreb,
Croatian Section of the RSA), pp. 203-214.
FARAGO, L. (1997) 'Tervezeselmeleti alapvetesek' (Basic principles of planning theory),  Ter es Tdrsadalom,
3. pp.1-15.
HAJDU, Z. (ed.) (1993a)  Hungary: Society, State, Economy and Regional Structure in Transition, (Pecs,
Centre for Regional Studies)
HAJDU, Z. (19936) 'Local Government Reform in Hungary', In: Bennett, R. (eds.),  Local Government in
the New Europe,  (London, Belhaven Press), pp. 208-224.
HORVATH, GY. (1995a) 'Economic Reform in East-Central Europe', In: Hardy, S.-Hart, M. et al. (eds.),
An Enlarged Europe: Regions in Competition?  (London, Jessica Kingsley), pp. 35-52.
HORVATH, GY. (199513)  Reform of the Hungarian Regional Development Fund. Transformation of the
Regional Development System in Hungary,  (Pecs, Centre for Regional Studies)
HORVATH, GY. (1996a)  Transition and Regionalism in East-Central Europe,  (Tubingen, Europaisches
Zentrum ftir Rideralismus-Forschung)
HORVATH, GY. (1996b) 'The Transition of the Regional Policy in Hungary',  European Spatial Research and
Policy, 2. pp. 39-55.
HORVATH, GY. (1996c) 'Regional Development and Institutional Change of Regional Policy in Hungary'.
Final Report of The Institutional Infrastructure for Regional Development,  ACE Project, (Pecs, Centre
for Regional Studies)
HORVATH, GY. (1998) 'Regional and Cohesion Policy in Hungary',  Discussion Papers,  23, (Pecs, Centre
for Regional Studies)
HRUBI, L. (1995) 'The Role of New Organisations in Regional Development in Hungary', In: Frohlich, Z.-
Malekovie, S.  (eds.), Industrial Restructuring and its Impact on Regional Development,  (Zagreb,
Croatian Section of the RSA), pp. 299-318.
ILLES, I. (1997) Eli:5110k es hatranyok a regionalis politikaban' (Advantages and disadvantages in regional
policy), Ettropai TiikOr, 4. pp. 21-40.

Horváth, Gyula: European Access and Changing Hungarian Regional Policy.
In: Spatial Research in Support of the European Integration. Pécs: Centre for Regional Studies,
1999. 13–30. p. Discussion Papers. Special
30
GYULA HORVATH
P. KOVACS, I. (1995) 'The Government's Gesture and Structures in the Process of Decentralisation', In:
Gombar, Cs.-Hankiss, E. et al. (eds.),  Question Marks: The Hungarian Government, 1994-1995,
(Budapest, Korridor), pp. 399-423.
P. KOVACS, I. (1997) 'The Role of Local Governments in the Process of State Decentralisation in
Hungary', In: Los-Novak, T.-Armstrong, D. (eds.),  Emerging Conceptions in Transition Europe,
(Wroclaw, Wydawnictwo Uniwersytetu Wroclawskiego), pp. 187-204.
Agenda 2000. For a Stronger and Wider Union, (Brussels, European Commission, 1997)
Commission Opinion on Hungary's Application for Membership of the European Union,  (Brussels, European
Commission, 1997)
Enlarging the European Union. Accession Partnership: Hungary,  (Brussels, European Commission, DGIA,
1998)
Hungary in the New Europe,  (Budapest, Prime Minister's Office, 1996)
Regional Development and Physical Planning Act XXI,  (Budapest, Ministry of Environment and Regional
Policy, 1996)
Orszdgos Teridetfejlesztesi Koncepcio  (National Regional Development Concept), (Budapest, Government of
the Republic of Hungary, 1997)