Discussion Papers 2007. No. 60.
The Economic Chambers and the Enforcement of
Local Economic Interest
CENTRE FOR REGIONAL STUDIES
OF HUNGARIAN ACADEMY OF SCIENCES
DISCUSSION PAPERS
No. 60
The Economic Chambers
and the Enforcement of
Local Economic Interests
by
Péter PÓLA
Series editor
Zoltán GÁL
Pécs
2007
1
Discussion Papers 2007. No. 60.
The Economic Chambers and the Enforcement of
Local Economic Interest
ISSN 0238–2008
ISBN 978 963 9052 85 7
2007 by Centre for Regional Studies of the Hungarian Academy of Sciences.
Technical editor: Ilona Csapó.
Printed in Hungary by Sümegi Nyomdaipari, Kereskedelmi és Szolgáltató Ltd., Pécs.
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Discussion Papers 2007. No. 60.
The Economic Chambers and the Enforcement of
Local Economic Interest
CONTENTS
1 The institutional system of chambers ........................................................................... 5
1.1 The institutions of the intermediary sphere of the organisation
of economy ........................................................................................................... 6
1.2 Identifying the differences between chambers, social organisations
and institutions of interest representation ........................................................... 10
1.3 Chamber models in market economies ............................................................... 13
1.4 The legal regulation of economic chambers in Hungary .................................... 17
2 The economic development potentials of public law chambers ................................. 25
2.1 The different role of the local and national chambers in economic
development ....................................................................................................... 25
2.2 Economic development in Hungarian regional chambers .................................. 25
3 The funding problems of chambers in Hungary ......................................................... 31
4 The conditions of consolidating the positions of chambers ........................................ 33
References ........................................................................................................................ 37
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Discussion Papers 2007. No. 60.
The Economic Chambers and the Enforcement of
Local Economic Interest
List of figures
Figure 1 The character and direction of relations between the levels of the
organisation of economy ................................................................................... 6
Figure 2 Chamber models in the countries of Europe ................................................... 18
List of tables
Table 1
The major relations and activities of chambers within the organisation
of economy ........................................................................................................ 9
Table 2
A comparison of private law and public law chamber models ........................ 16
Table 3
The major parameters of the public law chamber model ................................ 16
Table 4
The major parameters of the private law chamber model ............................... 17
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1 The institutional system of chambers
A detailed analysis of the institutional system of chambers with the presentation
of their essential features and have fundamental importance not only because the
introduction of the basic concepts of the institutional system is an integral part of
this dissertation but also because – as I have experienced – contemporary Hun-
garian society has very limited information on the institutional system of cham-
bers. This is a problem, particularly in those cases when even economic actors
have no relevant information or they are misinformed on the institutional structure
of chambers. In several cases entrepreneurs (sometimes even elected chamber
representatives) do not exactly what chambers are for on what philosophy they
are organised and operated, what their legal status is and what functions they do
play in the organisation of the economy and what role they do play in the devel-
opment of economy and in the representation of the general interests of economy.
The misinterpretation of the functions of chambers and narrowing their func-
tions exclusively to the representation of interests is the most common error of
defining the tasks of chambers. Therefore I am trying to make an attempt for de-
scribing the role of chambers within the institutional system of the organisation of
economy and to outline the general philosophy of chambers with pointing out to
the difference between chambers and the institutions of the intermediary sphere.
First of all I am going to give an overview on the different levels of the organisa-
tion of economy and to demonstrate the relationship between these different lev-
els. Then I would like to continue with a review of literature on different groups
of economic interest introducing the general features of interest representation
and trade associations and they will be followed by a description on the legal
status of chambers. I will also evaluate the specific features of chambers origi-
nating from their public body and local governmental functions highlighting their
special tasks and roles. Through the examination of the legal status of chambers I
would like to present a more detailed analysis on a public law based chambers as
my dissertation is going to be focused on Hungarian chambers that are organised
on the basis of this model.
And finally I am going to compare the two basic – public and civil law – mod-
els of chambers with their characteristic features and give a presentation on their
advantages and disadvantages and on the theoretical and practical problems aris-
ing from their growing discrepancy from the public law model in Hungarian legal
regulation.
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1.1 The institutions of the intermediary sphere of the organisation
of economy
The organisation of economy in market economy comprises three levels which
are presented in Figure 1 (Farkas, 2000).
− Public sphere (or political macrosphere): public and governmental organisa-
tions (with designated legislative, executive and supervising functions)
− Micro-sphere: the world of businesses and enterprises
− Intermediary sphere: the organisational sphere of the economy with its spe-
cial institutions, organisations and activities embedded into a ‘mid-position’
between the first two spheres.
Figure 1
The character and direction of relations between the levels of the organisation
of economy
Source: Own edition based on Farkas (2000).
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Thus, an ‘intermediary sphere’ has been formed between the two major
spheres with an institutional system comprising such organisations and institu-
tions that are designated for performing special duties in the context of these two
spheres and may significantly increase the efficiency of market economy, the
competitiveness of the SME sector – the majority of businesses are falling into
this entrepreneurial category – with special regard to the challenges of European
integration and globalisation. Farkas (2000) is on the opinion that without this
sphere and its institutions the whole system of civil society and market economy
would be inoperative. Naturally, it is very important how these levels of different
nature and motivation are coexisting and how they together are building their
relation and cooperation system.
The operation of business organisations is neither independent from the insti-
tutions embedded into the intermediary sphere. ‘Being aware and utilising those
relations that have been built around the closer and the greater environment of a
business organisation is a key factor of the business organisation’s successful
operation. Commercial associations and companies may exchange not only useful
professional information but by their services trade associations may also provide
help for companies and perhaps the most important here is that they can function
as a network by building new relations towards international organisations and
markets’ (Andrási, 1977, p. 4.)
Beyond the above-mentioned facts and circumstances the necessity for the in-
termediary sphere and its institutions may be supported by further arguments.
They are as follows:
− The intermediary sphere model emphasizes the networked cooperation of
economic and social organisations (Bartal–Kákai–Szabó, 2005).
− Multiple actors can be involved in the organisation of economy
− It increases the efficiency of information flow and the articulation of inter-
ests
− The management of economy can be more target oriented
− The organisation of economy can be more efficient
− The institutions and organisations of the intermediary sphere will be able to
provide (profession) specific services and information
− All these are contributing to the practical implementation of the principle of
sustainability, strengthening decentralisation efforts and create a decentral-
ised management of economy. The implementation of certain economic
administrative function may increase the cost efficiency of performing dif-
ferent tasks.
Within the intermediary sphere the organisations of the representation of eco-
nomic interests are the second major institutions of the organisation of economy
after civil organisations. These groups of interest representation have two primary
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functions: they provide services and represent their members’ political interests
against local and central authorities. Their categorisation can be based on the fol-
lowing model (Futó-Knáb, 1996):
− Employers’ and employees’ organisations;
− Sectoral alliances;
− Professional associations for the best servicing of the professional interests
of companies. ‘The diversity of company interests results in a great diversity
of inter-company relations and the articulation and representation of these
interests presupposes extensive functional relations’ (Andrási, 1997 p. 6.);
− Economic chambers (including different multinational (German-Hungarian,
French-Hungarian, America-Hungarian chambers) with big firm associa-
tions;
− Company based business federations;
− Trade unions;
− All the regional, national and international level umbrella organisations of
the above (Futó–Knáb, 1996).
All these organisations have very important function sin the democratic soci-
ety: such as providing assistance for the articulation of various interests, their
representation in decisions and in coordinating the participants’ actions in the
enforcement of their interests. The efficiency of these activities depends on sev-
eral factors: above all on the number of members, on the financial power of mem-
ber organisations and as a result of the above two on the given organisation’s
power of influence or power of disturbance on the operation of local economy.
From this aspect the employers’ and employees’ representatives, trade unions,
chambers and professional organisations can be regarded the strongest groups.
Economic chambers, the subjects of this dissertation, are also members of the
intermediary sphere as they are positioned between the public sector and the civil
economy. By participating in the organisation of economy they are providing
various services for both spheres (Farkas, 1997). Within the framework of the
regulation of Hungarian chambers greater attention should be paid for the special
functions of chambers originating from their public body status. This will be dis-
cussed in details in the latter part of this paper.
Table 1 is demonstrating the major relations and activities of an entrepreneu-
rial government within the process of the organisation of economy from the
viewpoint of chambers.
The figure of György Farkas is well demonstrating the major elements of the
economic organizer functions of chambers. At the same time I am on the opinion
that adaptation towards (political power and political systems) cannot be a rea-
sonable strategy, nevertheless I consider it contradictory to the general philosophy
of chambers. Chambers representing entrepreneurial demands and the general
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interests of economy should rather shape and activate the political macro sphere
instead of merely serving for it.
The institutions of economic government as key actors of the meso-sphere
‘should be integrated into the management and organisation system of national
economy in an adequate form of functional labour division and institutional
structure and into its community level network system (Farkas, 1997 p. 9.). They
should operate efficiently in creating a more predictable and more competitive
economic environment for businesses. The public sphere should cooperate with
the basic systems of market economy including the total institutional system of
the organisation of economy which economic chambers are part of as well.
Table 1
The major relations and activities of chambers within the organisation
of economy
Activity area
Activity details
Place of activity
Outside of
1 Adaptation to power, to political system, to
the chamber system
government principally in the field of the
(macrosphere)
management of economy, economic policy and
the organisation of economy
2 Representation and enforcement of interests, the
To be catalysed
exploration and articulation of the interests of
inside chambers
(member) businesses
Outside of
3 Services: maintenance, servicing, activities
the chamber system
facilitating the system’s operation with special
(microsphere)
regard to ‘business development’ concentrating
on the following sectors:
Business development (dealing with individual
businesses)
Development of economy (on macro-, meso- or
collective level)
Other development activities (e.g. innovation,
development of commerce, regional
development)
Source: Farkas (2000) p. 15.
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1.2 Identifying the differences between chambers, social organisations
and institutions of interest representation
When identifying the functional differences between chambers and institutions of
economic interest representation I would like to emphasize that these differences
are relevant for chambers operating as public body corporations. As Hungarian
law allows chambers to operate in public body corporation form only it is worth
clearing the major differences between chambers and institutions of interest rep-
resentation. This argument can be verified by such a phenomenon – I often ex-
perience in my everyday practice – that chambers are identified as institutions of
interest representation and in some cases interest representation is associated as
their primary and sole functions. For clearing these misinterpretations we should
identify and differentiate some things from each other.
Despite public bodies due to their personal unification and self-governmental
character have very similar features to the institutional model of associations the
two forms are representing two contents differing very much from each other.
Public law economic chambers as public bodies are very different from institu-
tions of economic interest representation operating as a social organisation. The
major differences between public bodies and social organisations derive from
voluntarism, from the legal background of their foundation and from their char-
acter of interest representation.
The objectives of social organisations should harmonise with legal rules only
which means that they can be established for any purposes that are not against the
law. However public bodies should be established for public purposes only i.e.
they should perform such kind of public duties that the state or the local govern-
ment performs or had performed earlier (Szilágyi J. E. 2003). Evidently these
public duties cannot be limited to exercising mere local authority functions as
their most essential functions are associated with the management of
state/municipality assets and these assets – transferred to them by the state or the
municipality – ensure the performance of the transferred duties for the public
body organisation. However these transferred assets are the major sources of the
Hungarian chambers’ financial problems as the funding resources allocated for
the performance of the transferred duties are insufficient for covering all the
expenses incurred and chambers must use a part of their own revenues for these
purposes.
As regards the difference between voluntary and compulsory membership an
association is built up on voluntary basis. An association sets up its objectives
and tasks free and its membership does not fully cover the total number of per-
sons involved in its activities. The institutional form of associations is the most
suitable for the sound and valid articulation of diverse and differentiated interests.
Public bodies as I have mentioned perform duties stipulated by law and represent
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officially the whole range of an activity segment: they function as representative
governments covering all the individual actors of their activity scope who are ob-
ligated for contributing to all its expenses and authorised for using all of its ser-
vices. It is an elector and an elected body at the same time1 (Révész–Szakáll,
1998, p. 22).
Thus, while the foundation of a social organisation is a free right, the estab-
lishment of a public body corporation is forced by law (Bíró, 1999).2 This means
that the legislation may set up such public duties that should be executed by a
public body corporation. It can also be specified by law that certain public duties
should be performed by certain public bodies only and nobody else. The interre-
lationship between economic chambers, professional organisations of interest
representation, sectoral business federations and industrial bodies is special from
this point as their membership is originating from the same area. While in the
majority of cases the registration of membership into chambers is compulsory (in
this case the term ‘chamber’ is copyrighted3 i.e. it means that can be used by pub-
lic bodies only) the membership in organisations of interest representation and in
professional organisations is always free.
As regards interest representational functions the common and global interests
of the business community should be represented by chambers. The interests of a
professional sector are represented by professional associations. Pursuant to Para-
graph 14 of the Act on Chambers chamber organisations may not represent the
interests of particular sectors, professions, employers or employees. Public body
chambers should represent the interests of all sectors. In case of cross-sectoral
conflicts chambers should hold a neutral viewpoint creating a balance between
the conflicting interests.
Chambers were typically founded as local organisations and later they
founded a national organisation for coordinating their activities. The relationship
between economic chambers and professional organisations of interest represen-
tation is dominated by the fact that regional economic chambers are principally
territorial level organisations (though they can establish sectoral branches as
well) the representation of general professional interests, the tasks of professional
(instead of general) assistance (information, training consulting) are assigned to
professional associations although in Hungary principally in provincial areas – as
1 As I have already mentioned these arguments are not valid for the public body model of
chambers.
2 Public body systems require compulsory membership in general. Public bodies require
compulsory membership in general but some of them allow voluntary membership as
well… (Berényi, 2000, p. 117). This is reflected by the Act on Hungarian Economic
Chambers allowing voluntary membership in its Paragraph 2 (b).
3 Although chamber membership is not compulsory in Hungary the term ‘chamber’ is
falling under legal protection.
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the majority of professional organisations are concentrated in Budapest the
greater part of tasks is performed by territorial chambers.
Pursuant to the Act chambers on the one hand should enforce the general in-
terests of economy and on the other hand they must perform their duties not only
for their members’ benefit but for the benefit of the whole economy as well. This
is the essence of the public body functions of chambers this feature differentiates
them from organisations of interest representation and other bodies (and from
private law chambers as well). Besides these arguments territorial organisations
and the representation of the interests of local economy are also increasing the
importance of chamber- local municipality relations.
Trade unions are one of the major bodies of interest representation. Their rules
are regulated by labour law they represent principally the employees’ interests.
Product councils the well-known forums of the agricultural sector also belong to
this category. However their rules are regulated not only by the Act of Union but
also by the Act on Agricultural Markets. This forum represents the interests of
organisations and private persons producing, processing and selling similar prod-
ucts and has key functions in the management of the agricultural market mecha-
nism. Wine-growing communities also fall under the jurisdiction of agricultural
law. Just like chambers they work as public bodies but they are engaged in special
agricultural activities (viticulture and viniculture).
Associations can also enforce their interests through their elected representa-
tives into self-governmental bodies. This may tighten the relationship between
associations and public body corporations in some cases and may also make their
cooperation dynamic and interactive. The interest representation bodies of asso-
ciations may play important role in the successful operation and may increase the
efficiency of public bodies.
Talking about differences let me give a brief description on the differences
between economic chambers and professional – vocational – chambers4. One is
that although several types of economic chambers5 exist in Hungary their activi-
ties are regulated by different laws. Another great difference is that while Hun-
garian laws do not require compulsory membership for economic chambers the
duties of professional chambers can be performed by the relevant chamber’s
members only. Another essential difference between them is that economic
chambers may accept not only persons into their membership but professional
4 Today in Hungary 11 professional chambers are operating (medical, veterinary, pharmaceutical,
engineering, architectural, accountant, hunters’, lawyers’, judicial experts’, notarial, personal and
property security guards’ and private detectives’ chambers).
5 Today in Hungary two chamber types can be differentiated: agricultural chambers and chambers
of commerce and industry. Some countries have chambers of handicraft operating independently
from the above two types and in some countries (Romania for example) the whole network of
economic chambers has been merged into a single chamber (chamber of commerce, industry and
agriculture).
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chambers can accept only humans as members. And finally, the legal supervision
of economic chambers is performed by the Public Prosecutor6 while professional
chambers are supervised by the ministry of the relevant sector.
1.3 Chamber models in market economies
In market economies two models of chambers exist generally: private law and
public law chamber models. Chambers are designated for promoting professional
aspects and for representing the interests of local economy and local entrepre-
neurs on the grounds of local businesses. Their primary objective is increasing the
competitiveness of their members and of the local economy. To achieve this tar-
get they are providing various services preferably for the SME sector. In this as-
pect there are no major differences between the two chamber models. The major
difference between them stands in their legal status and the majority of differ-
ences are originating from this situation.
The private law chamber model – often cited as the Anglo-Saxon model – can
most clearly be identified in the USA. As it is a lobbying organisation without
public duties it can be interpreted as a pluralistic model on the basis of the above-
mentioned pluralist and corporate features. From corporate aspect these chamber
types can be regarded as associations, their corporate structure is not affected by
outsiders.
The private law chamber model has been introduced in several European
countries. The British chambers are a typical example but the private law chamber
model has been established in Scandinavian countries, Ireland, Belgium, Swit-
zerland and Portugal and this model is also applied in the Baltic States. These
chambers are regulated by the Act of Union and they can freely select their insti-
tutional model but in the majority of cases they are incorporated into an associa-
tion of chambers. Chambers above all have interest representational functions
they are representing entrepreneurial interests against the Parliament and the cen-
tral government. They have significant role in the governance of certain commer-
cial bodies; they are maintaining courts of arbitration and providing assistance in
professional training and education.
They are operating in a strong competitive environment under a constant pres-
sure for improving their services. They must meet the new challenges and the
general requirements of their business community. The limitations in the number
of members, the changing quality and competence of chambers may raise prob-
lems and limit the potentials of chambers in exercising influence on central or
regional policymakers. Private law chambers are dependant on their voluntary
6 Since the amendment of the 2003 Act on Chambers.
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members and their financial existence is based upon the revenues of their own
services and on the incomes yielding from their membership fees only (Kiss,
1994).
Public law chambers (continental model) are regulated by rules relevant to the
public body model and serve for the balancing of interests and they generally re-
quire automatic membership. This model has been introduced in the majority of
West-European countries. This model is the most common in Austria, Germany,
France, Greece, Spain, Italy and the Netherlands. It is characterised by a corpo-
rate style regulation principally in Austria with the most extensive network of the
self-governmental type chamber system: even employees are incorporated into
chambers with automatic membership.
‘The principle of self-government and self-governance is one of the major
features of public bodies. Another is that public bodies perform such public duties
that are relevant with their members or their activities’. (Civil Code Paragraph
65). Public bodies are operating for the achievement of designated economic tar-
gets in the members’ preferred institutional form of self government in compli-
ance with the principle of self-governance. The central government nominates
public body governments for the performance of duties that cannot be imple-
mented by the state’s bureaucratic system and the actors directly involved could
manage these duties better in a form of self-government. Yet the majority of pub-
lic duties have features like that. Although Illés (2001) is warning that the decen-
tralisation of decisions may imply some threats there are more arguments for
bringing decisions closer the areas directly affected because this will yield more
advantages. Such advantages may be as follows: policymakers will have better
information on their local area, an easier assessment and utilisation of local re-
sources and a better management of the interests and the collaboration of local
economic organisations in different sectors (Illés, 2001). Thus public bodies –
through their policymakers’ better orientation, professional competence and
higher involvement in building a more efficient management of administrative
affairs may achieve better results in the management of some public administra-
tive duties than central governmental or municipal bodies. For this reason there is
a high demand for such organisations and personal associations that – through
their members – are capable for the performance of public duties transferred from
the state or from municipalities (Berényi, 2000; Bíró, 1999; Révész–Szakáll, 1994;
Román, 1994).
Thus, self-governance is nothing else than a solution of the common problems
of society (and its communities) through the direct involvement of actors which is
not only a more democratic solution standing very close to the principle of sub-
sidiarity but at the same time a more cost efficient solution for the majority of
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cases. And it is not a marginal aspect7 from the point of executing (public) duties
in the organisation of economy. The reduction of the public administration system
is everywhere initiated by the motives of efficiency and cost minimization but the
intensifying trends of territorial decentralisation also play an increasing role in it
(Pálné, 2004).
Public body legal status and automated membership guarantee sufficient
funding for chambers and can also cover the costs of services. The rights of
chambers operating by this model for the representation of the interests of econ-
omy and for exercising influence on national and local decisions are secured by
law. Although their corporate structure is partly determined by outsiders they
have their own internal rules and orders and their management is also elected
internally (Fehérvári, 2000). They are also entitled for exercising certain author-
ity functions but their authority scope varies by countries. Their membership cov-
ers industrial, commercial and servicing enterprises and represents the total pal-
ette of the economy.
This trend is strongly integrated into the structure of the whole society fully
taking over the duties of the state in several areas. Besides professional training
and the development of commerce chambers are taking a growing part in the op-
eration of the whole infrastructure of the economy. In France and in the Mediter-
ranean countries airports (Strasbourg, Rodos, Paris-Bauvais, Montpellier for ex-
ample), ports (e.g. Mulhouse) and technology centres belong to this circle8. In the
Netherlands stock exchanges are also managed by chambers. In German territo-
ries professional training and its infrastructure are parts of the chambers’ assets
and in many countries (Romania for example) chambers are acting as firm regis-
try courts as well.
7 The Hungarian government at the same time did not have and still does not have a comprehensive
strategy what role it is going to play in economy, education, professional training, health system
etc. and what kind of authority scope it is going to maintain for the ‘traditional system of public
administration and what kind of tasks it is going to derogate (transfer) to public law entities and
civil organisations (Kilényi, 1999). These decisions by all means should be made because only a
more rationale organisation of public duties can bring the slogan of ‘cheaper state’ into reality.
However these issues are interpreted by the Hungarian political and public administrational elite
as a limitation of their power only’ – argued a chamber’s head official in an interview.
8 French economic chambers for example are actively participating in the preparation of plan con-
tracts between the state and the regions, in the preparation of regional and county level develop-
ment plans, agreements of investment zones and in the elaboration of concepts concerning the
management of European, national and regional level investment and transport infrastructure
(road, railroad, waterways) projects. Levesque (2000) in his paper is illustrating this with the data
as follows: chambers of commerce and industry maintaining 121 airports, 149 ports, 34 congress
and exhibition halls. They have built more than 400 activity zones, 246 industrial plants, 34 ser-
vice centres and 32 tourist and catering centres. Beyond these facilities regional chambers are
maintaining several economic, information and documentation centres and national databanks (a
registry of 37 thousand exporter and importer firms for example).
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The major differences between the two models are listed in Tables 2–4 and
Figure 2 is demonstrating what chamber models have been introduced in some
West-European countries.
Table 2
A comparison of private law and public law chamber models
Private law chambers
Public law chambers
Association (lobbying organisation)
Public body
Voluntary membership
Compulsory membership9
Performs no public duties
Performs public duties as well
Limited functions
Multiple functions
Their rights are not secured by law
Their rights for exercising influence on local and
national decisions are secured by law
Weaker enforcement of interests
Efficient internal enforcement of interests for
balancing conflicting interests
Source: Síkfıi, 1999.
Table 3
The major parameters of the public law chamber model
Features
Advantage
Disadvantage
Public law status
Legal security
Compulsory activity scopes
Compulsory membership
Full representation (and
Weakening initiation skills and
exclusion of the outsiders’
demand orientation
representation of interests)
Formal consultative status with
Difficulties in interest
the government
representation and
Institutional access to
consideration originating from
governmental institutions
the representation of general
interests
Regulated regional coverage
Sole local representation
Coordination of the
representation of public and
private interests
Source: The author’s own edition on the basis of Számely (1996) and Síkfıi (1999).
9 The closed model supposes compulsory membership but some countries are following a different
practice.
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Table 4
The major parameters of the private law chamber model
Features
Advantage
Disadvantage
Private law status
Independence, freedom of
Territorial overlaps, the threat
foundation and entry
of the fragmentation of
resources
Voluntary membership
Initiation skills, demand
Limited number of members,
orientation
changing quality, competence,
weaker influence power and
limited financial support
The absence of public functions
Freedom in the selection of
The absence of stable incomes
activities
Source: The author’s own edition on the basis of Számely (1996) and Síkfıi (1999).
1.4 The legal regulation of economic chambers in Hungary
In Hungary pursuant to the present 1999 CXXI Act on Economic Chambers in
force Hungarian chambers are public body self-governments. The Hungarian con-
stitution does not set up general provisions on self-governance but a special arti-
cle is devoted to self-governments as a special type of governance. This may be
one reason why (economic) chambers are identified as self-governments which
might be a surprising terminology for some experts. In my interviews I often ex-
perienced that many economists and entrepreneurs were unaware of the fact that
chambers are practically self-governments.
During the interwar period self-governance was flourishing in Hungary with
highly advanced civil sphere and besides local municipalities other self-govern-
ment bodies (different chambers, forest proprietors’ associations, wine-growing
communities) were participating in the management of public affairs. The central
government of the 1930s emphasizing the importance of central power and the
omnipotence of the state was doing its best to minimize the power of municipali-
ties and to abolish the majority of bodies operating under the principle of self-
governance. It became more and more obvious that public administration was
unable for the management of all the segments of public affairs (Kilényi, 1999).
With the development of the Hungarian economy into a modern market econ-
omy it became obvious that the state cannot sustain its privilege in the manage-
ment of public affairs and the retirement of the state from the public sector neces-
sitated the establishment of such organisations that are capable for the perform-
ance of public duties (Bíró, 1999). Economic chambers as the key elements of the
institutional background necessary for the successful operation of economy are
capable for satisfying these functions of high economic importance. The text of
the Act has been formulated as follows.
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Figure 2
Chamber models in the countries of Europe
Source: The author’s information. Mapping by Valéria Fonyódi.
‘For reducing the state’s role in the economy it is necessary to assign certain
economy oriented public duties to a public body of economic actors in a form of
self-government. The Hungarian Parliament – acknowledging the rights and in-
terests of social organisations ruled by the legal provisions of the Act of Union
and promoting the general interests of economy, European integration and re-
gional development and recognising the rights of economic actors for operating in
a corporate form of self-government’ – has passed the Act on Economic Cham-
bers. Economic chambers are responsible for ‘…promoting the development and
organisation of the economy, the fairness of business practices and the enforce-
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ment of the general and collective interests of economic actors through their
functioning and activities in a self-governmental structure.’10
The Act categorises the chambers’ duties into three groups: these duties are
targeted at the development of economy, at the security of business flow and
transactions and at the enforcement of the general and collective interests of
economy.’11
As regards the development of economy chambers are assigned with the duties
as follows:
− Initiating the development of the infrastructure of economic activities;
− Promoting the realization of objectives with strong impacts on the develop-
ment of economy, increasing the efficiency of national economy but sur-
passing the direct involvement of the entrepreneurial sector; To achieve this
target they are participating in the preparation of comprehensive decision
processes over economic development and economic strategy issues and
cooperating with local government bodies and organisations of economic
interest representation.
− Providing information on Hungarian and foreign legal rules associated with
the economic sector and on the decisions and measures of economic policy
concerned with the activities of business organisations. Promoting the de-
velopment of economic cooperation.
− Participating in the preparation of the economic development chapters of re-
gional development concepts and programmes;
− Participating in professional and master course training programmes;
− Undertaking various tasks in standardization, quality and industrial copy-
right issues;
− Undertaking commercial development duties for the improvement of for-
eign trade. Organisation of exhibitions, fairs, conferences fitting into the
members’ activity profiles.
− Participating in the preparation of decisions on the utilisation of state grants
and budgetary estimates earmarked for the designated tasks of their mission.
− Agricultural chambers are contributing to the organisation of agricultural
consulting services and participate in tendering procedures necessary for fi-
nancial grants and subsidies. They provide consulting services in tendering
for agricultural and rural development grants and subsidies which might
imply the preparation and submission of tender documents as well.
10 Source: The preamble of the 1999 CXXXI Act on Economic Chambers.
11 Pursuant to paragraphs 9-11 of the 1999 CXXI Act (Paragraph 12 includes provisions on the
duties of national chamber which I only refer to in my paper and I am not going to describe in
details).
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As regards the security of business flows and transactions:
− Preparation and authorisation of certificates of origin, testimonials and other
commercial documents related to goods and commodities;
− Preparation and publication of commercial standards;
− With the involvement of the bodies of economic interest representation
chambers work out the general ethical rules of fair business practices to be
applied for all business actors;
− Monitoring the business actors’ compliance to these rules and to the Act on
the Prohibition of Fraudulent Business Practices. In case of violating the
provisions and in case of any violations to the provisions of the Act of pro-
hibiting fraudulent competition chambers may initiate the necessary coun-
termeasures at the relevant supervisory authorities of economic competition.
In case of infringing the ethical rules of fair business practices chambers
may call the attention or issue a warning notice to non-chamber members.
− Issuing a warning notice to chamber members in case of infringing indus-
trial or personal copyright and –as specified by the ethical rules – a broader
publicity is given to warning notices.
− Issuing warning notices to chambers pursuing any business infringing con-
sumer interests or injuring the reputation of the wider business community.
In serious or repetitive cases chambers may suspend the infringer’s mem-
bership for a definite period.
− Cooperation with consumer protection authorities and with the Hungarian
Competition Authority;
− The 1997 CXLV Act on Company Registry, Corporate Publicity and Com-
pany Court Procedures authorises chambers for initiating legal supervisory
procedures or terminating the infringer’s business license;
− Maintaining courts of arbitration ruled by the provisions of the 1997 CLV
Act on Consumer Protection;
− Providing assistance in the management of quality protection and
transportation damage issues arising from the member’s international busi-
ness relations.
As regards the enforcement of the general and collective interests of business
organisations
− Chambers should provide assistance in economic legislation in the prepara-
tion of central and local governmental programmes and measures harmo-
nising with the common interests of the development and organisation level
of economy of the security of business flow and transactions and of the
principles of fair business practices by formulating proposals, viewpoints
and by providing information.
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− For the professional foundation of proposals and opinions – pursuant to the
provisions of the Act on Statistical Data Provision – chambers should col-
lect data and on the basis of collected data should prepare and publish re-
ports and analyses on the current trends of economy.
− For implementing their duties chambers may initiate the revision or abroga-
tion of statutes limiting or impeding the freedom of economic competition,
the normal mechanism of market economy or may initiate the legislation for
passing the necessary acts or taking the necessary steps for changing the un-
suitable legal status quo.
− For the discussion of legal rules and regulation concepts with an active in-
volvement of business organisations ministers assigned by the prime minis-
ter and national economic chambers should organise bilateral meetings of
professional consultation at least twice a year.
− For the performance of public duties and for the preparation of the above-
mentioned economic reports and analyses chambers are authorised for ac-
cessing the public data of business organisations registered at local authori-
ties (with the reimbursement of the costs charged by data service providers).
I would like to emphasize that pursuant to the Act ‘economic chambers – for
the performance of their public duties requiring business activities – may establish
business companies or non-profit companies’12. Hungarian regional chambers
have established such companies or became shareholders in them for exhibition,
fair organisation, industrial park establishment and maintenance purposes.
The public duties of chambers may vary by the legal regulation of chambers of
different countries and may also change by time passing. For example in Hungary
the activity scope of chambers sometimes widened and sometimes narrowed since
1994. It is also very important that the provision of business oriented public ser-
vices should not overlap with the responsibilities of the state therefore services
assigned to chambers should not be performed by the state or local governments
any more. The state or local governments should retire from areas falling into the
public service area of chambers. However since that time the performance of
transferred public duties is compulsory for chambers. Although chambers are
forced by law to provide business services for the whole entrepreneurial commu-
nity and represent the interests of the whole business sector the financial expen-
ditures of these duties can be funded by the voluntary members’ membership fee
only. This is a serious contradiction of the 1999 Act on Chambers.
Although the 1994 regulation of Chambers did not change the public body
status of chambers the new Act being in force now has abolished compulsory
chamber membership and introduced voluntary membership. Pursuant to new Act
passed in year 1999 Hungarian chambers do not fit into any of the two chamber
12 1999 CXXI Act on Economic Chambers § 35 (2).
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models but their public corporation regulation system and public law legal status
provide sufficient arguments against categorising them into a new third model.
Nevertheless, it should be treated separately from the first two ones because
automatic membership and the increasing number of members as a result will
yield higher reputation, more significant influence power and a more stabile fi-
nancial basis which increase the chamber’s activity level. Moreover several func-
tional problems may arise from compulsory membership which will be discussed
in the later part of this paper.
In Hungary – since the restructuring of the chamber system – the dilemma of
automatic or voluntary membership was always a key problem in debates over
chamber issues. Although compulsory membership may be supported by several
arguments nevertheless it was a motivating factor of turning a mass of entrepre-
neurs – being unaware of the working model of market economy – against the
chamber system right after the change of regime.
Various arguments can be brought up for and against both systems. Compul-
sory membership has essential role considering the interest representational func-
tion of chambers as the size and coverage of members represented are things that
strictly matter. From this aspect this is an argument for automated membership.
Another very important question is whether chambers have sufficient funding
resources for the performance of their duties. This is another ‘good argument’ for
compulsory membership. But in case when chambers are adequately funded by
the state the preference of compulsory or voluntary membership system does not
or does not seriously matter any more in the performance of their duties. It is
much more important to what extent they are authorized for and what kind of
guarantees are safeguarding their activities, how seriously chambers are taken in
local and national economy, how important their impact is in exercising influence
on the different levels of decision-making and how efficiently they can represent
and enforce the general interests of their business community.
As regards the issue of voluntary or compulsory membership it is worth men-
tioning that according to the legislator the principle of democratic self-governance
has strongly been curtailed by the introduction of compulsory membership in the
Act of Chambers in year 1994. I can only suspect that this rhetoric expression
means that our politicians were not always interested in supporting a strong and
well-organised chamber system (Szilágyi, 2003). Arguing with the principles of
democracy was not appropriate in this case as many West-European countries
standing on a higher grade of democracy have introduced a compulsory member-
ship based chamber model.
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The major arguments for compulsory chamber membership are generally as
follows:
− A business sphere equipped with a well-functioning business federation sys-
tem is more successful in EU level competitions even if this component is
only one and may be not the most determining factor. Anyway a economic
organisation with poor institutional organisation can get into handicapped
position.
− Chambers with voluntary membership – although authorised for it – are un-
able to authentically represent the interests of their whole business sector as
they are bearing only a partial group’s interests. Only full representation
may prevent the subordination of an economic chamber’s general interest
representation to sectoral, group or individual interests. Only economic
chambers with a full coverage of their economic sub-sectors are supposed to
formulate independent, comprehensive and objective opinions. Public body
chambers organised by territorial units have full coverage of their own sub-
sectors. In case of cross-sectoral conflicts of interests chambers should for-
mulate a neutral and balanced opinion. Compulsory membership has an ad-
vantage – there are no possibilities for terminating chamber membership on
the grounds of conflicting partial or individual interests.
− Compulsory membership should exclude the ‘ride on the cheap’ phenome-
non. No one should make profits from the business federation activities of
chambers without a financial contribution to the maintenance costs of
chambers.
− The size of membership seriously counts in the federative and lobbying
activities of chambers.
− The availability of sufficient financial resources is essential for chambers
for executing their economic development and economic service provider
functions. Compulsory membership implies compulsory membership fees.
This creates a stable financial basis for the operation of chambers so that
they won’t get dependant from the central government and from any of their
personal groups (Román, 1994).
− Chambers can more successfully perform their public duties if economic
chambers are integrating the whole community of economic organisations.
The major arguments for voluntary chamber membership are as follows:
− Voluntary membership stimulates competition and competition may posi-
tively affect the quality of services;
− Voluntary membership may encourage trust in businesses: this can less eas-
ily be achieved in a compulsory chamber membership system (by accredita-
tion procedures for example).
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− Chambers enjoy greater freedom in selecting their activity scope. Their
independence from central power they may increase their autonomy;
− No negative attitudes will be assigned to chambers on the grounds of
‘forced membership’.
Here I would like to remark that I don’t think that the Hungarian practice –
public law regulation and functions with voluntary membership – is largely dif-
fering from the public law model. This system can be maintained in the long run
provided the provision of public services can be funded by the state. If economic
chambers are expected to represent the overall and general interest of the business
world and beyond that chambers are assigned with economic development tasks
they can meet these requirements only with full coverage of different business
sectors in their membership because voluntary membership implies the private
law model. Even if a chamber is a public law business federation it cannot repre-
sent the general interests of businesses with a limited circle of membership. With
voluntary membership members represent only the interests of a partial group
consisting of their active members’ interests only. These aspects are clearly dem-
onstrating the major differences between the two chamber models.
On the grounds of these arguments I am on the opinion that we should follow
either the public law or private law model instead of creating a new third one. The
Hungarian legal regulation of chambers seems to be ambiguous bouncing some-
where between the two models. My ‘chamber concept ‘ would give greater pref-
erence for the public law model but naturally my views can be supported by ob-
jective arguments as well. I think if Hungarian legal regulation prefers the public
law model it should introduce a compulsory chamber membership system even if
it is unpopular for the majority of entrepreneurs. But if voluntary membership is
favoured by the law – pursuant to the Act on Associations – chambers should be
treated as private law business federations. All these – I would like to emphasize
– do not exclude the rights of chambers from pursuing economic development
and economic organizer activities or lobbying for their local member economic
organisations or participating actively in local economic development and in-
creasing the competitiveness of local economy. But the preservation of the above-
mentioned third model would contradict both to the general economic representa-
tional and to the economic development functions of chambers.
In the context of the low self-management skills of economic organisations
and the low interoperability of enterprises I think the private law chamber system
seems a more reasonable alternative and it may encounter a far less degree of
opposition as well. The public law model with compulsory membership can also
turn to be an adequate solution if a certain group of small enterprises – selected on
the basis of objective criteria – are exempted from the payment of compulsory
membership fee but still bound to registration and data provision.
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2 The economic development potentials of public law chambers
2.1 The different role of the local and national chambers in economic
development
Economy is built on local markets and regional chambers improve economic en-
vironment through these local markets. This means that economic chambers can
initiate local economic development through the support of local enterprises and
through creating a favourable business environment on the basis of assumption
that the existence of a strong competitive entrepreneurial society and dynamic
economic growth are inseparable from each other. At the same time the influence
of chambers on competitiveness is fairly strong: regional chambers initiate local13
economic development through channelling their members’ interests, through
representing the collective interests of local economy and through providing dif-
ferent services for local businesses. They are providing services for increasing the
competitiveness of businesses and may at the same time increase their region’s
competitiveness. On national level the national chamber as an umbrella organisa-
tion of regional chambers formulates proposals for shaping the general system of
economy through economic policies. The fact that increasing the competitiveness
of the European economic space is included in the objectives of Eurochambers is
anticipating the perspective of setting up a third spatial level of integration.
2.2 Economic development in Hungarian regional chambers
Due to the legal provisions defining the chambers’ duties in the field of the devel-
opment of economy some regional chambers conceive the scope of their duties in
a different way and there are also big differences in the group of tasks they are
ready to perform. While the activities of economic self-governments are very
frequently criticised (a detailed analysis on the reasons will be provided in the
later part of this paper) some regional chambers very often others less often per-
form extra duties or initiate extra actions – beyond their compulsory ones – which
directly or indirectly contribute to the development of local economy. Their func-
tioning is more or less successful and efficient but they do work at least and the
outcome of their activities generates positive impulses for the development of
their local economy.
13 Local level can be interpreted in various ways as some chamber functions initiate settlement level
development but several examples can verify their implications on county and regional levels as
well. The urban sections of regional chambers participate in the preparation of the local
development strategies of the relevant city or microregion with varying intensity.
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Regional but principally provincial chambers are facing serious problems
originating from the challenges of globalisation such as the concentration of mul-
tinational firms in Budapest. A growing number of firms are preserving their
manufacturing plants in provincial areas but they are relocating their administra-
tive seats into Budapest and terminating their chamber membership in the former
provincial city they had been seated in. Thus, their local managers’ weakening
contacts with the local business society are decreasing the importance of provin-
cial areas and increasing the role of Budapest both in their firm’s access to finan-
cial resources and in positioning themselves in the decision-making hierarchy.
For local entrepreneurs and chambers the recognition of the rule that there is
no global competition without local cooperation has essential importance. The
‘think global act local’ principle having been learnt in a different context is still
valid in this environment when chambers and their members are touched upon by
the challenges of globalisation.14 Increasing the competitiveness of local SMEs is
one of the major objectives of regional chambers. This can be achieved only by
integrating them into the global systems.
Regional chambers should be well aware of local entrepreneurs’ expectations
and should customise their services to their needs. Obviously, the different types
of businesses demand different chamber services. Small enterprises need a differ-
ent type of assistance from the big ones.
Generally big firms expect the following services from chambers:
− The monitoring and analysis of economic trends and processes;
− The monitoring of state and local level legal regulations and strategic plans;
− Analyses, information and data services on local and national economic
environment and background;
− Assistance in building local contacts;
− Labour market oriented information services etc.
SMEs create a very heterogeneous basis for chambers. Chamber members are
typically divided into three groups. The first group consists of medium-size busi-
nesses with abundant capital resources sufficient for investments and develop-
ments. In most cases these companies are integrated into big subcontractor sys-
tems. The members of this group consider the technical, commercial development
and contact building functions of chambers the most essential. The second group
consists of ‘multi-generational’ medium-size enterprises. They partially have
‘inherited’ chamber membership and consider chambers as an indispensable
agency for their socio-economic activities. The third group consists of newly born
small and medium size enterprises. As they are new businesses even local cham-
14 First and foremost it should be recognised by the general public that globalisation is an
unavoidable process and instead of being scared of it we should rather adapt ourselves to its rules
and should react by good responses on its challenges.
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bers are new phenomena for them and it seems reasonable for chambers to initiate
contact with them by offering their services. These new members are approaching
towards chambers through a strategy of rationality by reviewing their activities
and services and making up their minds on the entering into chamber membership
at a later time. It is important to remark that the typical ‘What can I get from the
chamber?’ question is asked not only in material or professional sense only. Their
positive attitudes towards chambers largely depends whether they can be plugged
into the local business community through a chamber or not. Thus, community
organisation and contact building are typical chamber profiles. In the community
of SMEs these functions are extended with personal business consultancy. Natu-
rally the growth of business consultancy sector will minimize the chambers’ role
in this sector or will redirect into special fields.
Palkovits (2000) in his paper summarises the major elements of an economic
development strategy bringing dynamic elements into local economic environ-
ment as follows:
− The identification and gravitation of ‘site compatible’ companies and indus-
trial sectors
− Supporting the foundation and expansion of local companies
− Infrastructure development oriented duties
− Training highly qualified labour force
− Building strong public-private partnership
− Building a service friendly environment
− Building a distinguished style of local attractions
− And finally a successful promotion of all these advantages.
These duties are practically matching with the activities of the West-European
chambers and the objectives of Hungarian chambers are targeted at emphasizing
and improving these elements. The economic development functions of chambers
can be well illustrated by the concrete activities of the Pécs–Baranya Chamber.
Pécs-Baranya Chamber of Commerce and Industry (PBKIK) has prepared and
managed several programmes of economic development. It has established Mo-
hács Business Zone, Komló and Environment Development Agency and partici-
pated in the foundation of the Industrial Park of Pécs. PBKIK is playing an active
role in the preparation of micro-regional and regional innovation programmes.
Within its corporate structure of Regional Innovation Centre the Chamber is pro-
viding financial assistance to the microregional development programmes of
Baranya County. It has established development funds for the support of innova-
tion, commercial and professional training development programmes.15
15 Since the introduction of voluntary membership the available financial resources are insufficient
for the funding of these activities though in my opinion the allocation of funds is not specified
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PBKIK is taking steps towards the establishment of such cooperation with
Baranya County’s major public procurement tendering organisations in which on
the grounds of its practical experiences it can successfully exercise some influence
on the formulation of tender invitations and can well prepare its member busi-
nesses for successful tendering. The Euro Info Centre with the co-financing of the
European Commission in Brussels is running a selective automated public pro-
curement monitoring system which is customised to the demands of member
businesses.
As regards the development of the subcontractor systems PBKIK started to
elaborate a subcontractor support system in year 1998. The chamber on the basis
of its experiences gained at the meetings of ‘Subcontractors’ Forum’ has recog-
nized the importance of a subcontractor system between big companies and the
SME sector. For marketing the programme in a wider circle the so far provided
information and forms of support seemed to be insufficient therefore the chamber
took further steps towards the further enhancement of its system for the benefit of
the target group of economic organisations. The Chamber surveyed the big firms’
subcontracting demands and tried to make use of its relations with its cooperating
partners (ITDH, the local Regional Development Agency and Business Develop-
ment Centre). Now the Chamber is actively participating in building regional
economic clusters as well.
PBK is a member of Baranya Pact16 regional employment partnership a pro-
gramme for improving employment and reducing unemployment in Baranya
County and also played an active part in conducting a survey – having recently
been published – on the expectations of economic organisations against their po-
tential labour market. This survey was implemented by the Institute of Economic
and Business Analysis of the Hungarian Chamber of Commerce and Industry on
behalf of the Ministry of Employment and Labour.
PBKIK was an initiator in the foundation of Danube-Drava-Sava Euroregion
and as it can be verified by the documents and minutes of the Euroregion’s activ-
ity it plays the most active and initiating role in it among the founders. Now
PBKIK is performing the Presidency of the Euroregion’s Executive Committee
until year 2007.
PBKIK has significant role in the preparation and coordination of the eco-
nomic development strategy of Pécs as a development pole of national competi-
tiveness as a sub-programme of National Development Programme II. During the
preparation of this strategy the principle that strategic policies should be formu-
among the duties of chambers. Therefore the limitation or termination of such activities –
theoretically – should not affect the missions of chambers. Nevertheless current entrepreneurial
attitudes do attach lower reputation and power of influence to chambers on the grounds of their
financial positions.
16 In fact Baranya County Government was the initiator of this project.
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lated and operative action plans should be implemented in close cooperation with
the real sphere of local businesses must be treated as a strategic guideline. Today
in the present institutional system of regional development the representation of
businesses is rather weak therefore neither the strategy building nor the imple-
mentation of the operative programme are facilitating the enforcement of the gen-
eral social interests of the development of economy.
The institutional role of PBKIK in the development pole programme of Pécs is
very important because the chamber is legally authorised for the representation of
the general interests of regional economy. For the achievement of this purpose the
chamber was striving to play an initiative in the management of the operative
programme and in the management of the business sector from the very beginning
of the pole programme.
The development pole strategy of Pécs has been born in the partnership of the
so-called local big autonomies (local municipalities, economic self-governments,
universities) namely by the teamwork of the Municipal Council of the City of
Pécs, Baranya County Government, the University of Pécs, Chamber of Com-
merce and Industry of Pécs–Baranya, and Centre for Regional Studies HAS
(from the research sector). Within the framework of this public partnership the
Chamber is a joint-proprietor of Pécs Development Pole Ltd and participates in
the activities of the programme’s Strategic Steering Committee and Management
Board and of the so-called cluster boards organised for the supervision of three
major sectors (health, environmental and cultural industries).
South Transdanubia’s economic development progress – by the majority of
economic indices – is one of the slowest in the European Union. The development
of the region and the complexity of development tasks require a broad coopera-
tion of partners a well-established development policy and coordinated execution
of tasks. For the achievement of these purposes beyond the above-mentioned
partnership – symbolising the project’s regional level dimension – the region’s
chambers of commerce and industry have signed an agreement on regional level
cooperation.
The chambers’ professional viewpoints in the strategic issues of the develop-
ment of economy are formulated by a forum consisting of the presidents and sec-
retaries of county chambers. The cooperating chambers involve the region’s agri-
cultural chambers, professional chambers, business development agencies and the
organisations of safeguarding economic interests and competent consulting firms
into their activities.
The cooperation agreement of the chambers of the region’s counties includes
all those commitments that they consider important to meet within the framework
of the development pole programme. They can be listed as follows:
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− The collection of the development projects of business enterprises. The or-
ganization of cooperation and innovation chains registered within the pro-
gramme together with their partner organisations of economic development.
− Participation in the organisation of partnership building between university
knowledge bases, spin off firms and economic organisations.
− Coordination in accessing funding resources, providing assistance to tender
submissions and to the involvement of other financial resources for devel-
opment projects.
A very important objective should be set up concerning the cooperation of
chambers. This should be targeted at building a more flexible training and profes-
sional training programmes as the training courses of the region’s professional
training institutions are unable to meet the requirements of a competitive econ-
omy both in regard to the palette of professional training courses and to the ex-
pected results. The strategic development objectives of the pole are targeted at the
opening new fields of professional specialisation and training courses and at in-
creasing the quality of professional trainings. The number of students graduating
at the region’s universities and knowledge centres and finding a job outside the
region is the highest here which means that the curriculum of professional train-
ing courses does not meet the region’s demands. Therefore the cooperation
agreement between chambers is emphasizing and at the same time undertakes the
tasks as follows:
− Assessing the labour demands of development projects with transferring
them to job centres, vocational schools, local governments and institutes of
adult education.
− Initiating new professional training programmes fitting into the thematic
profile of development pole programme.
− Integrated into the international division of labour launching new adult
education programmes fitting into the thematic profile of the development
pole programme which can serve as a basis for a complex professional
training system.
− Encouraging the region’s universities in launching graduate and postgradu-
ate training courses fitting into the strategy of the development pole pro-
gramme.
The improving competitiveness of businesses through the development pole is
assuming international transparency and good market relations. The programme
may boost economic development only through its implementation in the context
of international markets. For this purpose South Transdanubian chambers ex-
ploiting their good international relations are doing their best for improving and
facilitating their development projects having been implemented in the develop-
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ment pole programme by organising various events of trade marketing and by
building international business networks.
The participation of PBKIK in the development pole programme can be dem-
onstrated by several concrete results:
− About 1 year prior to the approval of development pole programme PBKIK
had started the assessment of businesses fitting into the programme’s strate-
gic objectives with the preparation and launching of a training programme
on clusters and other forms of entrepreneurial cooperation.
− With the involvement of members being experienced and skilled in project
management PBKIK has formed a working committee of experts. On
meetings held every two weeks members have expressed their views and
opinions on projects fitting into the strategy of the Pole project and formu-
lated a proposal on the preparation of the complex programme of each
‘business sector.
− A cooperation agreement has been established between the municipality of
Pécs and PBKIK clearing the concrete elements of the implementation of
the Pole Programme.
− Complex sectoral sub-programmes have been drafted with the involvement
of the management and staff of PBKIK during the summer of year 2006.
3 The funding problems of chambers in Hungary
Due to its wide activity scope PBKIK has extensive information on the majority
of the problems of local economy and local businesses. Their management is the
responsibility of the Chamber’s official apparatus and corporate head officials.
Only PBKIK in Pécs has more than 10 thousand visiting customers every year.
One of the major problems of funding is the subsidisation of state decreasing
until 2003 and increasing again through the subsidization of professional training
activities but state grants allocated for these purposes are covering less and less
percentage of the costs incurred. This puts chambers into a difficult situation as
their membership fee based revenues covers the ‘running costs’ only the financial
resources of any other activities must be earned by themselves.
If the provision of compulsory public services is showing deficit it should be
funded by tenders or in case chambers are excluded from tenders by the revenues
of their services. In other words the missing state funding resources for the provi-
sion of public functions chambers should earn from the market. The chambers
pressurised by financial side on the one hand and by their compulsory public du-
ties on the other hand due to their capacity problems are facing now the threats of
being unable to execute their compulsory missions. Síkfıi (2006) is warning that
31
Póla, Péter : The Economic Chambers and the Enforcement of Local Economic Interests.
Pécs : Centre for Regional Studies, 2007. 38. p.
Discussion Papers, No. 60.
this situation may result in a disharmony between voluntary membership and
public duties. Today the money to be spent for the chambers’ public duties is
earned by the executive bodies of chambers. By spending all the reserves either
the provision of public duties becomes virtual – as it has been seen in public ad-
ministration – or neglecting the provisions of law – these activities will simply be
terminated.
The role of tenders for accessing European funds has significantly increased in
the fundraising activities of chambers. As I have mentioned this is mainly origi-
nating from the exclusion of chambers from tenders of economic development
even if these tenders are targeted at the execution of tasks specially assigned to
chambers by law. Thus, only minimal state assistance is allocated for chambers
for the execution of their public duties while they are even excluded from tender-
ing for the performance of those legal duties they are bound by the law. This was
the primary reason of their decreasing revenues between 2000 and 2002. Hun-
gary’s EU accession bringing opportunities for chambers in tendering for EU
funds was a turning point in this trend.
Due to the earlier system of free of charge chamber services the introduction
of a payment service system at chambers was opposed by voluntary members for
a long time. Later on an agreement was made that even chamber members should
contribute to the costs of services with a moderate fee on a still lower level than
the original prime costs. Meanwhile some system-wide services were introduced
by chambers such as Széchenyi card, chamber trade mark or business@network
granting higher revenues for chambers than flat membership fees.
The operational-funding problems of chambers may be summarised as fol-
lows:
− One of the most contradictory elements of the funding system of chambers
is that on the one hand they are expected to represent the interests of the
whole community of economic actors and provide services for all enter-
prises while on the other hand all their activities can be funded from their
own membership fee revenues only.
− The provision of public duties is a continuous obligation of chambers. The
subsidization of the state to it is too low and this type of funding mechanism
requires an oversized administrative system.
− As it is fixed by the law calls for tenders invite non-chamber organisations
for the provision of the services of chambers. There are examples when
even chambers are excluded from tender invitations for the performance of
such duties that typically should be implemented by themselves and nobody
else.
− The fact that chambers are funding a large proportion of their operation
costs from tenders they had won keeps the whole system in the state of un-
32
Póla, Péter : The Economic Chambers and the Enforcement of Local Economic Interests.
Pécs : Centre for Regional Studies, 2007. 38. p.
Discussion Papers, No. 60.
certainty because – as some chambers suppose – decisions on the allocation
of state grants and subsidies are made mostly by political determinants. As
it has been recorded in a response for a questionnaire ‘plutocracy is doing
its best for preventing chambers from being funded and this is most
perfectly done through the tendering system.’
− While tenders may widen the activity scope of chambers they cannot be
used for covering operation costs and – as a part of membership fee reve-
nues are spent on the expenses of service provision – some financial restric-
tions may have to be introduced in the implementation of costly develop-
ment projects (such as the not easily calculable maintenance costs of the
chamber’s main headquarters building).
− Some chambers are facing problems even in the collection of their member-
ship fee.
4 The conditions of consolidating the positions of chambers
The future and social position of chambers do not depend any more on legal
regulations or advantages but rather on their responses on the challenges of com-
petitiveness (Kéri, 2006). Chambers should take the impacts of globalisation on
local economy into consideration when formulating their strategies.
One of the biggest challenges for chambers is that they are formulating a hori-
zontal (or rather regional) level system and must represent general regional inter-
ests in this environment while the world is going for building vertical systems.
On the level of regional chambers business-oriented operation should be the
primary element of strategy building. This should be based on the following parts
(Kéri, 2006):
− Decision-making competences assigned to chamber sections and bodies;
− Division of labour conforming with the aptitudes and ambitions of corporate
bodies with the inclusion of corporate staff;
− The clearance of general interest representation issues affecting non-mem-
ber businesses as well.
The high performance of economic organisations meeting the above-men-
tioned criteria of competitiveness – in other words organisational modernisation
– is indispensable for the sustainable good performance of the chamber system.
Contemporary society and economy are focusing not only on such issues as tech-
nology, information and productivity but also on building a well-organised insti-
tutional system that can be considered as units of society (Kéri, 2006). Also Kéri
in the same paper is declaring that ‘recapturing the living space of local politics
33
Póla, Péter : The Economic Chambers and the Enforcement of Local Economic Interests.
Pécs : Centre for Regional Studies, 2007. 38. p.
Discussion Papers, No. 60.
and economy is the essence and target of the inductive transformation of the
global system.’ I think this statement can be agreed with as there is a need for
creating a multi-level institutional system in which global and regional organisa-
tions are assigned with the primary duty of supporting and defending the aspira-
tions of local communities for building up their own rules of economy. Producers
utilising local resources and satisfying local demands should be supported in
maintaining their own markets and resources with the power of their own com-
petitiveness. Kéri sees the solution of this problem in the restoration of social
coordination in which the quality and quantity of the participants’ added value is
the main value indicator of community performance. The objective oriented ac-
tivity of business, research and educational organisations is the key factor of this
new type of partnership. The sufficient conditions of operation would be provided
by the cooperation of the actors of state and municipal public corporation organi-
sations.’ (Kéri, 2006 p. 7.)
In Hungary apart from some large cities the cooperation of local governments,
economic organisations and other partners have not yet established a durable and
formal partnership in this sense and we cannot really identify any local economic
development activities based upon the partnership of local actors (Mezei, 2006).
The principle of partnership implies that regional development is not merely a
result of separate actions and decisions but a common resultant of the simultane-
ous actions of a large number of market players. Partnership relations having been
formed through the implementation of programmes are strengthening the devel-
opment of a certain region and may result in stable cooperations intensifying the
division of labour among the actors of regional development (Horváth, 2000).
There are plenty of things to do both in the extension and intensification of
partnerships. Economic chambers may have vital role in the near future in gener-
ating and promoting partnership among the actors of local economy. The ex-
pected result is synergy instead of the isolated activity of actors.
Regional chambers have set up their main objectives as follows: strengthening
the medium-size enterprise sector on the basis of local programmes and increas-
ing the competitiveness of local SMEs. The major elements of the optimal (har-
monising with the trends of globalisation and being aware with the entrepreneurs’
typical demands) strategy relevant with these targets may be as follows:
1) A creative and flexible system of chambers staffed by initiative experts that
can guarantee professional improvement and perfection on a wide-scaled
portfolio of chamber functions (professional training, innovation, trade de-
velopment, regional development, market analysis). The widening of the
palette and improvement in the quality of services, the enhancement of the
collection and classification of information. All these require a further de-
velopment of technical infrastructure.
34
Póla, Péter : The Economic Chambers and the Enforcement of Local Economic Interests.
Pécs : Centre for Regional Studies, 2007. 38. p.
Discussion Papers, No. 60.
2) Initiating cooperation among the major bodies of local autonomy (munici-
palities, economic self-governments, universities), preparing strategies for
local economic development, building contacts, organisation of partner-
ships: preparation and coordination of subcontractor programmes, regional
clusters and micro-regional development programmes for improving the
region’s overall development level and for attracting foreign direct invest-
ments.
3) Facilitating networking between regional chambers both on national and in-
ternational levels. Hungarian regional chambers are adapting very well op-
erating systems from each other some examples of successfully running
projects are worth mentioning such as follows:
− The economic database hosted by the network of chambers contains the
data of 46 thousand economic organisations which is by far the largest
economic database of Hungary.
− The chambers’ homogenously structured web portal system is
recognised as Hungary’s largest economic portal.
− A technical service centre providing measurement and calibration ser-
vices is run at the Eger Chamber but available for all chambers through
the chamber network system.
− A local initiative in Pécs is being under preparation proposing the intro-
duction of a homogenous education system for chambers with a meth-
odological centre operating in 100 per cent chamber ownership. The
education centre is primarily targeted at providing training facilities the
best fitting to the demands of SMEs.
4) Strengthening community building functions, i.e. plugging in the maximum
number of local entrepreneurs into the local business community’s infor-
mation flow. This can be achieved by active chamber activities by setting
up and maintaining personal contacts. Individual entrepreneurs and the lo-
cal business community are both interested in this process. The first group
is getting new chances the second group is further increasing its power and
influence.
5) The importance of regionalisation in the system of Hungarian chambers:
Regional and economic development vindicating very important role for
themselves anyway can efficiently be implemented in regional dimension
only. This is also true in case of professional training. Today this very im-
portant function of chambers, their participation and legal authorisation for
these activities seems to be more and more dominant. My empirical re-
searches have verified that chambers of commerce and trade seated in cities
with functions of a regional centre are generally working better, employing
better qualified staff and initiating more development projects than the oth-
ers. Besides regionalization the role of other territorial levels should be
35
Póla, Péter : The Economic Chambers and the Enforcement of Local Economic Interests.
Pécs : Centre for Regional Studies, 2007. 38. p.
Discussion Papers, No. 60.
taken into careful consideration. This statement can be justified by the re-
sults of a research stating some actors involved in region building have sig-
nificant spatial connections with actors of the sub-regional sphere (Hor-
váth, 2006). I am on the opinion that on sub-regional level the establish-
ment of suburban chambers seems to be reasonable instead of county
chambers but even the county chamber system may prove operational if the
functions of the new territorial level and county level are clearly separated
and divided. The basic units of chambers (operating either on suburban or
county level) – on the basis of the principle of proximity – should primarily
concentrate their activities on service provision. On regional level the en-
forcement of interests, the organisation of economy, graduate and profes-
sional training are the most important tasks of chambers. It can be pre-
sumed that both the quantitative problems of management and the minimi-
sation of the differences of infrastructural supply can be achieved by a re-
gional restructuring of the chamber network. This may take place as a natu-
ral outcome of European integration and its succeeding regionalisation as
well.
36
Póla, Péter : The Economic Chambers and the Enforcement of Local Economic Interests.
Pécs : Centre for Regional Studies, 2007. 38. p.
Discussion Papers, No. 60.
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Discussion Papers 2007. No. 60.
The Economic Chambers and the Enforcement of
Local Economic Interests
The Discussion Papers series of the Centre for Regional Studies of the Hungarian
Academy of Sciences was launched in 1986 to publish summaries of research findings on
regional and urban development.
The series has 5 or 6 issues a year. It will be of interest to geographers, economists, so-
ciologists, experts of law and political sciences, historians and everybody else who is, in
one way or another, engaged in the research of spatial aspects of socio-economic develop-
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The series is published by the Centre for Regional Studies.
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P.O. Box 199, 7601 PÉCS, HUNGARY
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Papers published in the Discussion Papers series
Discussion Papers / Specials
BENKİNÉ LODNER, Dorottya (ed.) (1988): Environmental Control and Policy: Proceedings of
the Hungarian–Polish Seminar in the Theoretical Problems of Environmental Control
and Policy
OROSZ, Éva (ed.) (1988): Spatial Organisation and Regional Development Papers of the 6th Polish–
Hungarian geographical Seminar
DURÓ, Annamária (ed.) (1993): Spatial Research and the Social–Political Changes: Papers of the
7th Polish–Hungarian Seminar
DURÓ, Annamária (ed.) (1999): Spatial Research in Support of the European Integration.
Proceedings of the 11th Polish–Hungarian Geographical Seminar (Mátraháza, Hungary
17–22 September, 1998)
GÁL, Zoltán (ed.) (2001): Role of the Regions in the Enlarging European Union
HORVÁTH, Gyula (ed.) (2002): Regional Challenges of the Transition in Bulgaria and Hungary
KOVÁCS, András Donát (ed.) (2004): New Aspects of Regional Transformation and the Urban-
Rural Relationship
BARANYI, Béla (ed.) (2005): Hungarian–Romanian and Hungarian–Ukrainian border regions as
areas of co-operation along the external borders of Europe
ENYEDI, György – KOVÁCS, Zoltán (eds.) (2006): Social Changes and Social Sustainability in
Historical Urban Centres. The Case of Central Europe
KOVÁCS, András Donát (ed.) (2007): Regionality and/or Locality
SZIRMAI, Viktória (ed.) (2007): Social Inequalities in Urban Areas and Globalization. The Case of
Central Europe
Discussion Papers
No. 1
OROSZ, Éva (1986): Critical Issues in the Development of Hungarian Public Health with
Special Regard to Spatial Differences
No. 2
ENYEDI, György – ZENTAI, Viola (1986): Environmental Policy in Hungary
No. 3
HAJDÚ, Zoltán (1987): Administrative Division and Administrative Geography in
Hungary
No. 4
SIKOS T., Tamás (1987): Investigations of Social Infrastructure in Rural Settlements of
Borsod County
No. 5
HORVÁTH, Gyula (1987): Development of the Regional Management of the Economy in
East-Central Europe
No. 6
PÁLNÉ KOVÁCS, Ilona (1988): Chance of Local Independence in Hungary
No. 7
FARAGÓ, László – HRUBI, László (1988): Development Possibilities of Backward
Areas in Hungary
No. 8
SZÖRÉNYINÉ KUKORELLI, Irén (1990): Role of the Accessibility in Development and
Functioning of Settlements
No. 9
ENYEDI, György (1990): New Basis for Regional and Urban Policies in East-Central
Europe
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No. 10
RECHNITZER, János (1990): Regional Spread of Computer Technology in Hungary
No. 11
SIKOS T., Tamás (1992): Types of Social Infrastructure in Hungary (to be not published)
No. 12
HORVÁTH, Gyula – HRUBI, László (1992): Restructuring and Regional Policy in
Hungary
No. 13
ERDİSI, Ferenc (1992): Transportation Effects on Spatial Structure of Hungary
No. 14
PÁLNÉ KOVÁCS, Ilona (1992): The Basic Political and Structural Problems in the
Workings of Local Governments in Hungary
No. 15
PFEIL, Edit (1992): Local Governments and System Change. The Case of a Regional
Centre
No. 16
HORVÁTH, Gyula (1992): Culture and Urban Development (The Case of Pécs)
No. 17
HAJDÚ, Zoltán (1993): Settlement Network Development Policy in Hungary in the
Period of State Socialism (1949–1985)
No. 18
KOVÁCS, Teréz (1993): Borderland Situation as It Is Seen by a Sociologist
No. 19
HRUBI, L. – KRAFTNÉ SOMOGYI, Gabriella (eds.) (1994): Small and medium-sized
firms and the role of private industry in Hungary
No. 20
BENKİNÉ Lodner, Dorottya (1995): The Legal-Administrative Questions of
Environmental Protection in the Republic of Hungary
No. 21 ENYEDI, György (1998): Transformation in Central European Postsocialist Cities
No. 22 HAJDÚ, Zoltán (1998): Changes in the Politico-Geographical Position of Hungary in the
20th Century
No. 23
HORVÁTH, Gyula (1998): Regional and Cohesion Policy in Hungary
No. 24
BUDAY-SÁNTHA, Attila (1998): Sustainable Agricultural Development in the Region
of the Lake Balaton
No. 25
LADOS, Mihály (1998): Future Perspective for Local Government Finance in Hungary
No. 26
NAGY, Erika (1999): Fall and Revival of City Centre Retailing: Planning an Urban
Function in Leicester, Britain
No. 27
BELUSZKY, Pál (1999): The Hungarian Urban Network at the End of the Second
Millennium
No. 28
RÁCZ, Lajos (1999): Climate History of Hungary Since the 16th Century: Past, Present
and Future
No. 29
RAVE, Simone (1999): Regional Development in Hungary and Its Preparation for the
Structural Funds
No. 30
BARTA, Györgyi (1999): Industrial Restructuring in the Budapest Agglomeration
No. 31
BARANYI, Béla–BALCSÓK, István–DANCS, László–MEZİ, Barna (1999):
Borderland Situation and Peripherality in the North-Eastern Part of the Great Hungarian
Plain
No. 32
RECHNITZER, János (2000): The Features of the Transition of Hungary’s Regional
System
No. 33
MURÁNYI, István–PÉTER, Judit–SZARVÁK, Tibor–SZOBOSZLAI, Zsolt (2000):
Civil Organisations and Regional Identity in the South Hungarian Great Plain
No. 34
KOVÁCS, Teréz (2001): Rural Development in Hungary
No. 35
PÁLNÉ, Kovács Ilona (2001): Regional Development and Governance in Hungary
No. 36
NAGY, Imre (2001): Cross-Border Co-operation in the Border Region of the Southern
Great Plain of Hungary
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No. 37
BELUSZKY, Pál (2002): The Spatial Differences of Modernisation in Hungary at the
Beginning of the 20th Century
No. 38
BARANYI, Béla (2002): Before Schengen – Ready for Schengen. Euroregional
Organisations and New Interregional Formations at the Eastern Borders of Hungary
No. 39
KERESZTÉLY, Krisztina (2002): The Role of the State in the Urban Development of
Budapest
No. 40
HORVÁTH, Gyula (2002): Report on the Research Results of the Centre for Regional
Studies of the Hungarian Academy of Sciences
No. 41
SZIRMAI, Viktoria – A. GERGELY, András – BARÁTH, Gabriella–MOLNÁR, Balázs
– SZÉPVÖLGYI, Ákos (2003): The City and its Environment: Competition and/or Co-
operation? (A Hungarian Case Study)
No. 42
CSATÁRI, Bálint–KANALAS, Imre–NAGY, Gábor –SZARVÁK, Tibor (2004): Regions
in Information Society – a Hungarian Case-Study
No. 43
FARAGÓ, László (2004): The General Theory of Public (Spatial) Planning (The Social
Technique for Creating the Future)
No. 44
HAJDÚ, Zoltán (2004): Carpathian Basin and the Development of the Hungarian
Landscape Theory Until 1948
No. 45
GÁL, Zoltán (2004): Spatial Development and the Expanding European Integration of the
Hungarian Banking System
No. 46
BELUSZKY, Pál – GYİRI, Róbert (2005): The Hungarian Urban Network in the
Beginning of the 20th Century
No. 47
G. FEKETE, Éva (2005): Long-term Unemployment and Its Alleviation in Rural Areas
No. 48
SOMLYÓDYNÉ PFEIL, Edit (2006): Changes in The Organisational Framework of
Cooperation Within Urban Areas in Hungary
No. 49
MEZEI, István (2006): Chances of Hungarian–Slovak Cross-Border Relations
No. 50
RECHNITZER, János – SMAHÓ, Melinda (2006): Regional Characteristics of Human
Resources in Hungary During the Transition
No. 51
BARTA, Györgyi – BELUSZKY, Pál – CZIRFUSZ, Márton – GYİRI, Róbert –
KUKELY, György (2006): Rehabilitating the Brownfield Zones of Budapest
No. 52
GROSZ, András (2006): Clusterisation Processes in the Hungarian Automotive Industry
No. 53
FEKETE, G. Éva – HARGITAI, Judit – JÁSZ, Krisztina – SZARVÁK, Tibor –
SZOBOSZLAI, Zsolt (2006): Idealistic Vision or Reality? Life-long learning among
Romany ethnic groups
No. 54
BARTA, Györgyi (ed.) (2006): Hungary – the New Border of the European Union
No. 55
GÁL, Zoltán (2006): Banking Functions of the Hungarian Urban Network in the Early
20th Century.
No. 56
SZÖRÉNYINÉ, Kukorelli Irén (2006): Relation Analysis in Rural Space – A Research
Method for Exploring the Spatial Structure in Hungary
No. 57
MAUREL, Marie-Claude – PÓLA, Péter (2007): Local System and Spatial Change – The
Case of Bóly in South Transdanubia
No. 58 SZIRMAI, Viktória (2007): The Social Characteristics of Hungarian Historic
City Centres
No. 59
ERDİSI, Ferenc – GÁL, Zoltán – GIPP, Christoph – VARJÚ, Viktor (2007): Path
Dependency or Route Flexibility in Demand Responsive Transport? The Case Study of
TWIST project
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