Discussion Papers 2008. No. 63.
The Role of Hungarian Local
Governments in Local Economic Development
CENTRE FOR REGIONAL STUDIES
OF HUNGARIAN ACADEMY OF SCIENCES
DISCUSSION PAPERS
No. 63
The Role of Hungarian Local
Governments in Local Economic
Development
by
Cecília MEZEI
Series editor
Zoltán GÁL
Pécs
2008
Discussion Papers 2008. No. 63.
The Role of Hungarian Local
Governments in Local Economic Development
ISSN 0238–2008
ISBN 978 963 9052 96 3
© Cecília Mezei
© Centre for Regional Studies of the Hungarian Academy of Sciences
2008 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 2008. No. 63.
The Role of Hungarian Local
Governments in Local Economic Development
CONTENTS
1 Introduction .................................................................................................................. 7
2 The background to the survey ...................................................................................... 8
2.1 Theoretical background ........................................................................................ 8
2.2 The questionnaire-based survey ........................................................................... 9
3 The regulation of urban and economic development in Hungary ............................... 10
3.1 Determining the tasks of local authorities .......................................................... 10
3.2 Financing local government functions ................................................................ 11
3.3 Settlement development planning ....................................................................... 13
4 Economic development practices of the Hungarian self-governments ...................... 14
4.1 Planning of local developments .......................................................................... 15
4.1.1 Preparation of plans by local governments .............................................. 15
4.1.2 Designation of local development direction ............................................ 19
4.1.2.1 Involvement of local enterprises in the designation
of local development direction.................................................. 19
4.1.2.2 Determinants affecting the designation of local development
directions ................................................................................... 21
4.1.2.3 The effects of regional differences ............................................ 23
4.2 Development of local infrastructure ................................................................... 25
4.3 Instruments of business development ................................................................. 28
4.3.1 Investments targeted at business development ........................................ 28
4.3.2 Impact of the central government industrial park programme ................ 30
4.4 The budgetary resources of local economic development .................................. 32
4.5 The target areas of local developments ............................................................... 36
4.6 Local tax policy .................................................................................................. 38
4.7 Networking practices .......................................................................................... 42
4.7.1 Partnership of self-governments .............................................................. 42
4.7.2 Partnership with the business sphere ....................................................... 44
4.7.3 Partnership with regional institutions ....................................................... 46
4.8 The organisational and personal background of local economic
development ....................................................................................................... 49
4.9 The success of settlement and local economic development .............................. 52
4.9.1 The mayor’s opinion on the settlement’s success ................................... 52
4.9.2 The mayors’ opinion on the local government’s local economic
development initiatives ........................................................................... 53
5 Summary .................................................................................................................... 56
References ........................................................................................................................ 58
Laws
............................................................................................................................ 60
Appendix .......................................................................................................................... 61
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Discussion Papers 2008. No. 63.
The Role of Hungarian Local
Governments in Local Economic Development
List of figures
Figure 1
Planning practices of settlements in percentage of the participating
settlements, by size categories ....................................................................... 16
Figure 2
Other plans of settlements concerning economic development, pieces ......... 17
Figure 3
The partnerships within local governments and regional businesses in
percentage of the participating settlements .................................................... 20
Figure 4
GDP per capita, 2001 ..................................................................................... 23
Figure 5
The rank of the factors effecting local development targets, by well
developed-underdeveloped regions, average values on a five grade scale ..... 24
Figure 6
Distribution of settlement governments’ infrastructural investments
by size categories, per cent............................................................................ 26
Figure 7
The form of local entrepreneurial participation in government’s
infrastructural investments by size categories, per cent ................................. 27
Figure 8
Settlements implementing investments targeted at the support of local
businesses by size categories (number of settlements)................................... 29
Figure 9
Resource structure of development expenditure in the respective size
categories, in the average of the years 1997–2001 ......................................... 34
Figure 10 Local governmental types of investments with definite economic
development target in 1998–2002 – in a breakdown by size categories,
number of settlements .................................................................................... 35
Figure 11 Most frequent ways of tax allowances and exemptions from local industry
and trade tax, in a breakdown by legal status, number of settlements ........... 41
Figure 12 ‘Twin settlement’ partnerships of settlements in percentage of the
participating settlements, by size categories .................................................. 43
Figure 13 The international contracts of local governments by size categories ............. 44
Figure 14 The local governments’ activity in the promotion of local products by
size categories ................................................................................................ 45
Figure 15 Partnerships between settlement governments and regional institutions
by size categories, average values on a five grade scale ................................ 47
Figure 16 The characteristics of partnerships between local governments and Labour
Offices, by size categories, in percentage of the participating settlements .... 49
Figure 17 Organisational and personal background of mayor’s offices,
by size categories ........................................................................................... 50
Figure 18 The characteristics of the staff employed in mayor’s offices and their
proportion within the size categories ............................................................. 51
Figure 19 The evaluation of settlement success factors by size category,
average values on a five grade scale ............................................................. 55
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The Role of Hungarian Local
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List of tables
Table 1
The order of determinants of identification of local targets and development
directions by their significance based on the opinion of the mayors
– in a breakdown by size category ................................................................ 22
Table 2
Information about industrial parks, 1997–2002 ............................................. 31
Table 3
Development of the accumulation and capital expenses in Hungary
and the sample, 1997–2003 ............................................................................ 32
Table 4
Development of the revenues of the local governments compared to
GDP, 1997–2002 ............................................................................................ 33
Table 5
Development of the local tax revenues and the proportion of local
governments levying them within Hungary, 1997–2003 ............................... 39
Table 6
Some characteristics of the sample ................................................................ 61
Table 7
Settlement categories applied during the study .............................................. 61
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1 Introduction
Local authorities, in a similar way to central governments, operate in an increas-
ingly globalised economic environment. Globalisation has led to a re-evaluation
of the local government level and this, in its turn, has been reinforced by the
ineffectiveness of central government policy in tackling regional disparities
(Campbell, 1990). Meanwhile, local authorities and self-financed developments
have come to play an ever-increasing role in the provision of public services.
In this environment a local authority has had to find individual solutions to fit
its own strategy, taking into consideration the criteria of sustainability, the need to
provide solutions to local employment problems and also the opinions of local
residents. It is, therefore, not surprising that local economic policy became hugely
important in the ’80s and ’90s.
As a result of these changes, and over and above the influences generated by
central economic development, the role of local economic development has also
gained in importance.
In addition to the relevant quantity and quality of local resources and to their
composition, the success of local economic development depends on the coopera-
tion of those participants who control the resources. Factors such as coordination
and partnership appear to be crucial in local economic development.
Naturally, cooperation does not mean unconditionally equal status for the part-
ners. The essence is that each participant should carry out his own tasks and
obligations in the process of local economic development – to provide sustainable
development. The contributor who, under normal circumstances, always partici-
pates in such local action is the local authority – which is, in any case, incapable
of operating independently of other levels of government and of non-government
actors (Bennett–Krebs, 1991).
We have, therefore, selected, from the various local development actors, the
actual settlement local authorities1 to help us in analysing the Hungarian situation,
and we have focused on their local development tool system, their economic
1 The current Hungarian local government system was established under the Local Government Act
of 1990. This Act classifies local authorities as: villages (2,883 in Hungary), towns (229), the
capital, together with its metropolitan districts (23), and counties (19). The Act defines county
authorities (County Councils) as territorial (or area) authorities, which, on the basis of their
functions, are distinct from those of settlements. For the purpose of our research, our questionnaire
was sent only to local authorities of settlements. Within this group, “towns” can be further
categorised as towns, county-rank towns (22) and the capital. The county-rank town – on its own
territory and within its own ambit – undertakes county-level activities and responsibilities. Within
the “village” category, we can segregate “large villages” (187 in Hungary), a status which might
be granted as the first step towards becoming a town for those settlements which satisfied these
conditions before 1990 (Data from 2003).
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development practice and the country-specific characteristics of their assumption
of responsibility in local economic development.
In the present study we offer an overview of the regulatory background relat-
ing to the economic development activity of the settlement authorities. In addi-
tion, we survey the extent to which local authorities have opportunities to create
the conditions necessary for economic development, and, on the basis of the
questionnaire used for our survey, we analyse, within this framework, the types of
tools, methods and strategies which are widely used – and also those which are
more rarely used.
The basic objective of our survey of the tool-system used in economic develop-
ment by local authorities was to analyse the approach of Hungarian local
authorities to local economic development in general and to detect the special
characteristics emerging in Hungarian local economic development practice.
2 The background to the survey
2.1 Theoretical background
First of all, we need to define clearly what is meant by local economic develop-
ment, since the literature offers a wide variety of definitions.
In our view, local economic development is a locally executed, conscious
intervention which influences the operation of the local economy and where local
participants initiate or, alternatively, accept, support and modify external
development concepts. In our case this local level is that of the settlement.
In the light of international practice, the form of organisation responsible for
economic development can vary over a very wide range from totally community-
owned to totally privately-owned organisations. In our opinion, in all cases the
initiation should be a community initiative and should be based on community
economic policy objectives, since any disparities brought about by normal market
reactions can be influenced on the authority of the community. However, public-
private cooperation, or even private enterprise, can participate in implementing
economic development objectives.
We shall, therefore, analyse only those local economic development initiatives
which are approved, initiated and controlled by the elected representatives of the
local community. This is the reason for the decision to survey the role of local
authorities.
A review of the literature indicates that the execution of local economic
development as undertaken by local authorities can be either endorsed or criti-
cised from the point of view of the theory. In the international literature the ques-
tion of intervention or non-intervention by the local authority is not resolved.
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Currently there is an ongoing debate about the advantages and disadvantages, and
the supremacy of market mechanisms. However, it can also be concluded that
intervention at local level in local economic development has become routine at
world level.
An examination of international practice shows that the problems of local eco-
nomic development should be dealt with, since, in all countries examined, local
economic development interventions concerning the improvement of the quality
of life of the local community, the improvement of local development strategies
and the rational use of local resources (with sustainability permanently in mind)
should have priority. In many cases it can be asserted that local economic
development flourishes alongside central institutions, decisions, resources and
programmes, although it sometimes occurs that the given system supports the
execution of ideas created on a bottom-up basis. It cannot be said that one is bet-
ter than the other, since everything is either system- or, even, society-dependent.
Defining domestic directions, therefore, depends most of all on the variegated
nature of local economic development opportunities – which delivers a productive
economic development tool system well-suited to Hungarian conditions into the
hands of local authorities.
2.2 The questionnaire-based survey
Our survey was conducted according to the research aims of the National Re-
search and Development Programme – The competitiveness of Hungarian regions
and settlements in the European Economic Area (NKFP 5/074/2001).
As we were focusing on the issue of local authorities in economic develop-
ment, our questionnaire was sent to all of the 3,134 local authorities and
metropolitan districts. We received 288 valid responses.2
The major economic re-structuring resulting from globalisation and the change
of regime has created new tasks for local authorities. However, neither the extent
of participation in economic development by domestic local authorities nor sur-
veys of local policies and the changes to the tool-system used at local level have
been adequately investigated in the past 10–15 years. Therefore, in our question-
naire we focused on issues which have only an indirect connection with local
economic development. In the focus of our research, however, were the economic
development tools and practices of the local authorities of the settlements, as a
result of which we can see the typical methods and intensity of local authority
participation in local economic development.
2 See Appendix I. for further details about the content of the sample and the methodological
background to the survey.
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Our research covered county councils and also offered a short introduction to
other potential participants in economic development – confirming our opinion
that successful local economic development requires the co-operation of many
actors. However, the main issue of the analysis – assuming a public-supervised, -
controlled and -monitored definition of economic development – concentrated on
an examination of local authorities and their attitude to – and opportunities for –
co-operation.
From this point on we focus on local authority economic development practice
between 1990 and 2003,3 following a discussion of the regulatory background to
their activities.
3 The regulation of urban and economic development
in Hungary
Even though settlement development is a complex task, there is no comprehen-
sive law which deals with its regulation. Sub-fields within settlement develop-
ment exist which are not subject to central regulation, but there are numerous
elements for which a legal framework has been established by legislation.
3.1 Determining the tasks of local authorities
The Hungarian Constitution contains numerous regulations which directly influ-
ence settlement development activity. These caution that property rights should
always be respected in the development process and they also set general goals
for development – by specifying citizens’ rights (Kökényesi–Madaras, 2002b).
These goals appear in the Local Government Act as mandatory tasks for local
authorities, and so these must be fulfilled during the development process.
The Local Government Act does not itemise the tasks that settlement local
authorities are obliged or may opt to carry out. The reason for this can be ex-
plained by means of one of the basic laws applying to local authorities, under
which local authorities are empowered to deal with any local public matter that is
not legally assigned to another body. A further significant requirement, however,
is that, even if the local authority chooses to involve itself in these such public
matters, it should not neglect attending to the compulsory functions and compe-
tences assigned to it by law.
3 Occasionally, different time-scales were applied to questions – and so the particular survey period
is mentioned in respect of each question. However, the main analytical objective was to track
changes following the change of the regime (1990).
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To narrow the range of tasks of local authorities, the Local Government Act
names mandatory tasks. These are:
− The provision of potable water,
− Kindergarten education,
− Primary school education,
− Basic health and social care,
− Public lighting,
− A guarantee of national and ethnic minority rights.
Since the tasks and obligations of local authorities may differ, depending on
the size of the settlement, the number of inhabitants and other circumstances,
tasks cannot be definitively categorised into compulsory and optional groups:
there are tasks which are optional for some local authorities although compulsory
for others.
The range of mandatory tasks set out in the Local Government Act – subject to
regulatory enactment – may be extended by other, for example, competence- or
sector-related regulations. However, an important guarantee of the autonomy of
local authorities is that mandatory tasks may only be assigned to them by law.
One of the optional tasks set out in the Local Government Act is that of settle-
ment development – which is important for our topic. However, details relating to
the content of settlement development and to the tools intended for implementa-
tion have not yet been fixed, due to problems in the regulations which have ap-
peared as a result of the suspension of the legislation4 process.
3.2 Financing local government functions
The functions which a local authority undertakes, if legally possible and consider-
ing that it has to give priority to its mandatory tasks, primarily depend on its own
revenues and its overall financial situation. Local circumstances limit freedom of
choice in selecting tasks, and, whilst it is of great importance to consider the
needs of the local population, in the final analysis it is the budget which creates
bottlenecks.
It is no accident that the Local Government Law imposes mandatory rules for
economic planning: for example, §.91 requires local authorities to formulate an
4 It would have been the task of the Act on Settlement Affairs to provide a harmonised regulatory
background to facilitate the functioning of local authorities (the Act on Spatial Development
required that a separate law should be created to regulate settlement development and its physical
aspects). However, in spite of a long preparation period, the bill was not enacted, and, as a result,
“the institutional structure of settlement development is haphazard, and its content changes
according to momentary sectoral or financial interests” (Kökényesi, 1997. p. 268).
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economic programme. The content of the economic programmes, however, is left
to the discretion of the local authority by the legislator, who does not prescribe
any mandatory elements, and there are no special background materials available
to help in compiling these programmes.5
Central budgetary rules set budget limits for a given year for local authorities.
This produces its own planning difficulties and, arising from the characteristics of
the local government financing system, significantly restricts the operative scope
of local authorities. The Public Finance Act and the Public Procurement Act also
have to be complied with when financing operative activities and settlement
development, and the freedom of local authorities to decide which economic
activities to perform is limited by these two Acts.
Settlement authorities are able to manage with relatively greater flexibility the
size and range of their own revenue, which makes up 25–27% of all local author-
ity income (Dobos–Szelényi, 2004. p. 945.). They are allowed to set the price for
the use of public services according to their tariff principles, and they are free to
choose the type of tax and the rate at which they levy this tax within the limits
laid down by the law concerning local taxation. “Own revenue”, particularly that
raised by local taxation, is a significant resource for local development, and so it
was most significant that modifications to the Act – in the light of the need for
legislative harmonisation within the EU – narrowed the scope of local authorities
in respect of the Local Business Tax. Local authorities are not allowed to exceed
the levels of exemptions and benefits set by law.
The funding of settlement development is a delicate issue in itself, since there
are no direct, comprehensive central funds for settlement development; local
authorities must raise the money either themselves, or from external sources (ten-
ders involving private capital) in order to realise developments. Target regions
and allocations of central development funds are always determined by annual
budgetary law. It is, therefore, difficult to plan ahead, and, in most cases, it is not
statutory.
The majority of spatial development decentralised funds finance settlement
development projects, and so the main issue is which objectives are supported by
county and regional development councils in that particular year (taking into
consideration the related central rules), and how government regulations control
which authorities are entitled to use the funds.
Targeted, earmarked subsidies comprise a significant settlement development
resource, and so, when compiling regional development objectives, what should
be considered is the types of development which Parliament will support in the
annual budget, and under what conditions – in accordance with the National Spa-
tial Development Concept (Kökényesi–Madaras, 2002b).
5 The regulation has changed from 2006.
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3.3 Settlement development planning
For local authorities there are numerous statutes which prescribe the mandatory
preparation of plans, concepts and programmes in relation to settlement develop-
ment planning.
The first of these to be highlighted is building regulations, which contain strict
rules concerning the planning of the physical side of development.
Building regulations define the basic concepts connected to the planning of
settlement development and they also set out the tasks of local authorities in the
physical part of settlement development. As physical settlement development
plans are based on settlement development concepts, building regulations essen-
tially prescribe the creation of such a concept for local authorities, although none
of the regulations actually lays down the content.
Although it is true that, in 2002, the Settlement Development Office of the
Home Office finally issued at least recommendations for the structure of settle-
ment development concepts, the almost 50 pages of the “perfectionist” document
provides only a pattern for drawing up plans, and, moreover, mainly for larger
towns (Kökényesi–Madaras, 2002a).
By way of comparison, the physical development of a settlement is one of the
well-regulated local planning tasks. The local authority assembly has the physical
development of a settlement elaborated and adopted in terms of:
− the settlement development concept,
− a settlement structure plan based on this settlement development concept,
− local building regulations and regulation plans based on the settlement
structure plan.
An important legal statute lays down that several settlements may collaborate
in settlement development projects of common interest.
It is self-evident that plans need to function effectively; and that, in conse-
quence, they should be constantly reviewed and updated. In fact, the building
regulations require the preparation of physical development plans for the settle-
ment based on the settlement development concept to be completed within a
specified time, although non-compliance with these legal requirements does not
incur sanctions.
It is understood that the more significant development undertakings and
investments usually require settlement structure and regulation plans (Kökényesi–
Madaras, 2002b). The same tendency is evident with EU and national subsidies,
as the requirement of the physical development plan may be stipulated in the ten-
ders by those allocating the resources. Likewise, other action and financial plans,
together with sectoral and functional concepts can also be prerequisites.
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Environmental protection laws define important rules regarding the planning
process and methods. Article 27 of the Law states that, for the sake of the coordi-
nated protection of the natural and man-made environment, in regional develop-
ment concepts the expected environmental impacts of physical development plans
at regional and settlement level should be disclosed during the preparation proc-
ess and subsequently evaluated. The necessary environmental protection meas-
ures should be defined in an environmental chapter or in a separate environ-
mental protection plan or programme. Settlement authorities should enforce the
requirements of environmental protection in their development process and they
should assist in the improvement of the environment.
For environmental protection, the local authority should develop, and have ap-
proved by its assembly, a separate settlement environmental protection plan for
its area of competence – conforming to the National Environmental Protection
Programme, which is updated every six years, and to the physical development
plan for the settlement.
The local authority ensures the implementation of the tasks defined in the
settlement environmental protection programme, even by the creation of individ-
ual local authority regulations, in the process of formalising the physical plans for
the settlement and making any other decisions. However, the environmental law
also makes it possible for local authorities to draw up a common environmental
protection programme.
Numerous other laws also contain important rules connected to settlement
development which restrict physical development, although some impose
development obligations on local authorities. Here we refer to a non-exhaustive
list of laws relating to arable land, forests, national monuments, mining, environ-
mental protection and the protection of the cultural heritage (Kökényesi–Madaras,
2002b).
4 Economic development practices of the Hungarian
self-governments
In the subsequent part of the study we undertake the presentation of the results of
the above mentioned empirical research. The circle of self-governments repre-
sented the survey consists of 288 municipalities returning our questionnaire.
The questionnaire was focused on the practice of local economic development
by pointing out the topics below:
− Planning,
− Financing,
− Business development,
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− Partnership,
− Institutional system,
− Infrastructure development.
This chapter is based on the results of empirical research, comparing them
with other data and information – trying to enlighten the most important aspects.
4.1 Planning of local developments
4.1.1 Preparation of plans by local governments
As we presented above, there are several types of plans, strategies, concepts and
programmes which must be prepared by local governments, a number of them are
encouraged or required by the application requirements of different supporting
funds and a number of plans are being prepared on a voluntary basis6.
Based on the above paragraphs we postulated that in the case of all larger and
small towns we will find at least one type of planning document establishing the
settlement development, or minimum one programme orienting the economic
management of the self-government. Further we supposed that in the case of
smaller settlements the planning activity rate will be lower.
Since the legislator did not lay down the formal, technical and professional re-
quirements even in the case of compulsory planning document types it is possible
that the persons filling in our questionnaire devote the same name to different
documents with completely different content of completely different quality. Thus
we cannot conclude from the number and type of prepared documents how far
these are able to orient the local decision-makers in reality and to what extent the
frequent revision of those plans is carried out, respectively what is the proportion
of plans prepared for the desk drawer.
Figure 1 shows the planning practices of Hungarian settlements of different
number of population in the survey period of 1990–2003.
While the settlement development concept as a part of the physical plan is
available at the majority of settlements, concretely at 54.5%, only 40% of the
settlements (50% of the big towns, 56% of the small towns, 54% of the large vil-
lages and 33.3% of small villages) have prepared the so called economic pro-
grammes which are also specified by the law. Twenty-eight per cent of the sample
settlements have both compulsory plan types, i.e. the settlement development
concept and the economic programmes.
6 The definition ‘plan’ is used as a collective term. It involves all concepts, programmes and plans
that the body of representatives commissions and approves. We indicate in the text if we mean any
concrete type of plan.
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The situation is more advantageous if the so-called cycle programmes are
considered, which on the other hand – due to their form and period – are unable to
provide for a basis for the longer term economic planning. Also in this case the
smaller settlements injure the average.
Figure 1
Planning practices of settlements in percentage of the participating settlements,
by size categories
100
80
60
40
20
0
Settlement
"Cycle"
Economic
Other plan
development
programme
programme
concept
Small village
Large village
Small town
Big town
Total
Source: Own construction.
The plans concerning other areas of economic development and implied in
Figure 1 are detailed in Figure 2.
The majority of the 103 local governments preparing “other” plans implied
more different types of plans in the questionnaire, while 36% of them reported on
the preparation of one type of planning document.
The coexistence of plans has a kind of thematic interconnection characteristic.
The significant part of marketing concepts is connected with tourist programmes.
The majority of business development plans is supported by an economic
development plan, and the employment concept shows a close relationship with
the other two. These interrelations may not carry any surprising information if
only that in some cases it is hard to understand the existence of two or three plans
with the same or similar functions. It is especially true for the tiny settlements,
where the preparation of a “complexity” of economy does not require the prepara-
tion of many divergent plans.
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Figure 2
Other plans of settlements concerning economic development, pieces
Other
Housing
Employment
Business development
0
10
20
30
40
50
60
Small village
Large village
Small town
Big town
Source: Own construction.
The most frequent type of plans is the tourism concept and the housing con-
cept. It is obvious that the adherent behaviour of the municipal self-governments
contributes to the dominance of these two fields and in the previous two years the
attachment of the majority of central development resources to these two objec-
tive areas and the announcement of tenders also influenced the preparation of
local level plans.
The uniform impact of the central development policy may be blamed for the
orientation of the functional and sectoral plans on one or other target area, since in
the lack of development resources the actual support priorities define the develop-
ment target areas in the case of several settlements (see Figure 10 below), simi-
larly a further reason is the general condition of self-governmental economic
management. However in the background a continuously deepening problem is
the lack of territorial co-ordination in the course of definition of local develop-
ment directions. With the help of territorial co-ordination parallel developments
and developments disqualifying each other could be avoided.
Turning back to Figure 2 the frequency of economic development plans and
related business development and employment plans implies that several settle-
ments attach special importance to the preliminary, complex planning of munici-
pal economic interventions by the self-government. This fact is also important
since strategy making has a key role in the European Union’s support system for
local initiatives.
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It is clear that the complex support of local economic development initiatives
(especially the treatment of employment difficulties) is a more and more accented
element of the European Union. The appropriate planning will be unavoidable in
the future in order to acquire resources from the European Union, and therefore
the solution may be the preparation of complex local development, economic
development, business development and job-creation programmes, respectively
the promotion of the local support of such programmes as well as the promotion
of the evolution of partnership.
The local governments have listed among the other plans in Figure 2 concepts
about infrastructure development, education, estate management and institute
development, most of them concerning the base tasks of settlement governments.
Only three settlements indicated the making of environmental protection con-
cept taking economic claims into consideration (see other plans in Figure 2). We
did not ask local governments about environmental protection concepts, on the
other hand it is to be feared that many of local governments do not make this type
of plans.
We may come to the conclusion that local governments must emphasise the
protection of environment, for example by planning. It is especially true because
of the membership of European Union, since in the present programming period
the EU lays stress on subsidy of development strategies which follow environ-
mental needs. In the present programming period that began in 2007, the reduc-
tion of local developments’ negative environmental effects became a more
emphasised part of EU’s policy (EC 2004). Justifying these, in the European
Commission’s Third Cohesion Report we find among the most important tasks
the sustainable development, and among the planned cohesion priority the protec-
tion of environment and the risk avoidance too (Horváth, 2004).
Summarising we may state as regards municipal planning that the smaller
communities stay away as regards the frequency of planning. The larger towns on
the other hand are in the vanguard of preparation of development plans (such as
settlement development concepts and economic development plans).
However at this point it may be misleading to draw conclusions from the num-
ber of plans to the presence of a strategic approach. Nevertheless the fact that
only 28% of the sample settlements have fulfilled their planning obligations set by
the law in any case bears information.
It is also remarkable that among the settlements having prepared more differ-
ent plans we can find tiny settlements and large cities, while the settlements hav-
ing no plans at all (55) are solely those with municipal status, and their majority
are tiny villages.
Planning is – visibly – becoming more and more accentual, therefore it is
possible to device significant advantages in the settlement competition with
appropriate planning routine, but in this case the simple observation of regula-
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Discussion Papers, No. 63.
tions is insufficient for the municipal self-governments. The preparation of
development plans and the actualisation of physical plans in accordance with the
regulations require expertise, appropriate planning teams, sufficient planning
mechanisms and reconciliation mechanisms etc.
The question who should prepare the plans for the local governments may
raise as a significant problem. While in case of the physical plans the circle of
planners (plan-makers) is fairly well defined and regulated, development type of
plans may be prepared practically by anyone (without any professional or practi-
cal background). Although the strict setting the circle of planners would violate
the planning freedom of self-governments, the preparation of an expert list and a
form of a recommendation could improve the quality assurance.
Moreover, in the interest of the continuous actualisation of plans and the
enforcement of the content of plans the employment of an expert in planning
strategy building by the self-government or by the association of self-govern-
ments would be suitable.
However the first and most important task in terms of planning activities is to
develop economic planning to a general practice. This could reinforce the
feasibility analysis of every local development. Also, it could domesticate a kind
of strategic thinking, which could effectively support the preparation of further
plans. The regulation of preparation of economic programmes as a compulsory
activity brought – obviously – no success, therefore the introduction of such
supporting activities as assistance, recommendations, increased monitoring and
holding out the prospect of sanctions would be necessary.
4.1.2 Designation of local development direction
4.1.2.1 Involvement of local enterprises in the designation
of local development direction
During the research of local economic development activity the local actors’ role
in the designation of development directions and making plans is a relevant ques-
tion. The wide reconciliation of development concepts during the planning proce-
dure can conduce to the viability, the social acceptation and the financial support
of several projects. From this reconciliation procedure we analysed only one ac-
tor’s, namely local entrepreneurs’ role – on the other hand we are aware that local
economic development has a lot of actors beyond settlement governments and
local businesses (Mezei, 2003).
Sixty-four per cent of municipal self-governments request the opinion of local
businesses prior to the formulation of local plans. The chance for taking local
businesses’ opinions into consideration during the planning procedure grows
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proportionately with the settlement size. From 76 settlements that gave negative
answer (from which 80% are small villages), at 65 settlements the number of pri-
vate entrepreneurs per thousand head was less than the national average, and at 71
settlements the same index of companies did not reach the national average. It
was found that the characteristics of partnership of local businesses and the role
of enterprises making local concepts are dependent on the settlement size and the
number of local businesses. When we are talking about the local actors’ involve-
ment in the course of making local strategy, important factors are the social fea-
ture and the composition and the partnership-making ability of local governmen-
tal management.
We did not ask how the local governments were doing the partnership-making
exactly, but we analysed the business partnerships’ formal/informal and fre-
quent/occasional features (see Figure 3).
Twelve per cent of settlements answered that there is not any partnerships. In
the towns the lack of partnerships did not arise as a problem, but sixteen per cent
of small villages had no business partners. Forty-two percent of big cities have
frequent and formal, other eight per cent of big towns have frequent but informal
partnerships. Half of big cities are making only occasional partnerships with the
local businesses. The smaller the settlements, the more dominant role the occa-
sional partnerships play, as regards the frequency of co-operations.
Figure 3
The partnerships within local governments and regional businesses in percentage
of the participating settlements
100
80
60
40
20
0
Small village
Big village
Small town
Big town
Frequent, formal
Frequent, informal
Occasional, formal
Occasional, informal
There isn't
Source: Own construction.
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Not considering the large towns, the frameworks of frequent and formalised
partnerships have not yet been established within the self-governmental structures
in general. The ad hoc opportunities for expressing opinions cannot appropriately
guarantee the full support and acceptance of local development initiatives by the
local business sphere and their integration into the local economy.
The owners and size of local businesses do not exactly determine the local
economic development activity, since the mayors of the participating settlements
referred to the location of such multinational businesses that influenced the local
development targets with their own activity, and there were such cases when local
firms remained outsiders and did not co-operate with the local governments. The
answers of SMEs out and away depend on the characteristics of local society, but
there are other factors too, so the categories of local businesses do not make
exclusive discriminative criteria when we talk about the intensity and the high-
lights of the co-operation between local governments and local businesses.
4.1.2.2 Determinants affecting the designation of local development directions
In the course of the inquiry of the local planning practice we attached importance
to the assessment of the weight of certain determinants affecting settlement
development in the process of the designation of development object areas –
based on the estimation by the mayors. The mayors had to classify the seven
impacting factors mentioned given by us on a scale of five degrees implying the
supposed volume of influence and setting at the same time the order of rank of the
factors. In the settlements of different size category there were differences in both
rank order and average values (Table 1).
The global order of rank was identical with the order of tiny municipalities,
obviously resulting from their weight. The transport-geographical situation has a
leading role in all four size categories. The actual priority system of the
governmental support policy took the second place while the status of local physi-
cal and human resources was mainly placed on the third rank. The opinion of the
larger towns differed from the main trend since they considered the quality of
local resources a more significant element than the governmental support policy.
This approach may obviously be attributed to the existence of own resources,7 to
the better financial deposits and to the better opportunities in terms of acquisition
of external resources.
The economic structure of the settlements received the fourth place in the
global rank order. The smaller towns graded it prior to the local resources. Possi-
bly this settlement category is not able to become a territorial economic centre
7 Only if we look at the amount of the money: as regards the proportion of development expenditure
within the total budget, the big towns are in the worst situation (see Table 3.).
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Discussion Papers, No. 63.
due to its size, since the propulsive sectors, innovations are concentrated in the
larger urban centres and therefore in the smaller towns the treatment of problems
deriving from the inherited and “forced” sectoral structures, the promotion of
restructuring and the elaboration of new, supporting strategies have a stressed
mission. There are at the same time a number of counter-examples, since some
small towns were able to exploit the advantages arising from their location or the
existence of other factors of attraction (such as the proximity of the state borders
or a motorway, etc.).
Table 1
The order of determinants of identification of local targets and development
directions by their significance based on the opinion of the mayors
– in a breakdown by size category
Small
Large
Small
Big
Total
village
village
town
town
Transport geographical situation
1.
1.
1.
1.
1.
Support policy of the government
2.
2.
2.
3.
2.
Local resources
3.
3.
4.
2.
3.
Economic structure
4.
4.
3.
5.
4.
Development level of the regional
5.
5.
5.
4.
5.
economy
Settlement size
6.
7.
7.
6.
6.
Competitiveness of SMEs*
7.
6.
6.
7.
7.
* Small and medium size enterprises.
Note: by arithmetical means measured on a five-degree scale.
Source: Own edition.
The smaller towns can in their strategy building rely preliminarily on the local
SMEs, and this is the reason why this factor received an extremely high value in
their case. In case a provincial town cannot get into the advantaged areas of
globalisation it will be forced to find the links on its own. In terms of economic
basis this mainly means the establishment of supplier networks and promotion of
a competitive basis of SMEs and therefore the performance of local SMEs may
receive special importance. A further important factor is the possibility of
acquiring supplementary (government) support and due to this fact the small
towns attached the greatest importance to the level of economic development of
the region.
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4.1.2.3 The effects of regional differences
The question when we research the determinants of identification of local targets
and development directions is whether there are any differences among the
answers of settlements in developed and underdeveloped regions.
In the underdeveloped regions the GDP per capita is less then the 75 per cent
of the national average, accordingly South Transdanubia, North Hungary,
Northern Great Plain and Southern Great Plain are the underdeveloped, while
Central Hungary, Central Transdanubia and West Transdanubia are the developed
regions8 (Figure 4).
First we must talk about the transport geographical situation. Because of
special industrial and infrastructural development practices, which were coherent
factors in Hungary in the past, in the country the infrastructural differences come
forward mainly not at regional level (Figure 5), but as village-town conflict or
question of proximity to motorway etc. For all regions and micro-regions the
main problem is the lack of good, appropriate or essential infrastructure. For this
reason the transport geographical situation was ranked at first place in our
questionnaire.
Figure 4
GDP per capita, 2001
Source: by KSH, 2003. Constructed by Valéria Fonyódi.
8 In Hungary there are no administrative, only planning-statistical regions.
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Discussion Papers, No. 63.
Figure 5
The rank of the factors effecting local development targets, by well developed-
underdeveloped regions, average values on a five grade scale
Support policy of the government
Development level of the regional
economy
Competitiveness of SMEs
Economic structure
1
2
3
4
5
Underdeveloped regions
Developed regions
Source: Own construction.
Before the change of regime we had been accumulating huge disadvantages in
the settlement infrastructure, and the problem concerning the development of
heavy industry was associated with this, because in our days this manufacturing
infrastructure is mostly non-usable. Further problems are the regional differences
of building modern communication infrastructure and the negative effects of the
change of administrative system on the quality of public utilities and so on. From
these problems we focused on the question of transport, because of its perceptible
main role, which was consequently ranked at first place.
It is notable that developed regions show less attention to local resources9, and
it is not an accident that the endogenous growth model is commonly referenced in
local development – related literature as a potential solution for underdeveloped
regions, as well as region which are excluded from the advantageous effects of
9 See average values (Figure 5).
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Discussion Papers, No. 63.
globalization, and which way therefore only build on their endogenous initiatives
(G. Fekete, 2001).
A country-specific feature is that the governmental support policy has
important position in the settlement governments’ priority. The reason why local
development programs are dependent on governmental sectoral, spatial and local
governmental support can be found in the financing form of the local government
system and insufficient amount of own resources by municipal self-governments.
So in Hungary the classical economic development investments take place to
limited extent, and in this process the local governments’ role may differ from the
Western European and American practice. Furthermore in Hungary the
stakeholder settlements are the towns, which have better allocation and financing
systems. It follows that in Hungary the local economic development partnerships
have different role, and there are special target areas of local developments too.
First and last we may point out that in Hungary there are no significant
regional differences in connection with the studied factors (Figure 5).
4.2 Development of local infrastructure
We have already spoken about the special and emphasised role of local infrastruc-
ture development in Hungary. This is the reason for the separate study of the local
infrastructural investments, the participation forms of local businesses and the
local conflict situations.
Sixteen small villages and only one big village indicated that since 1990 there
has not been any infrastructural investment with involvement of local govern-
ment. However, 94 per cent of settlement governments have been involved in – at
least one – infrastructure development project – but it is not an indicator of suc-
cess, because of the bad infrastructural situation (Figure 6).
As Figure 6 demonstrates, no respondent signified that meeting entrepreneu-
rial needs could be a primary goal in infrastructural development projects. On the
other hand, in the larger size category, the philosophy stressing the equal impor-
tance of the entrepreneurial and citizen needs is in the lead. Although the parallel
satisfaction of entrepreneur and citizen needs was also leading in small villages,
this was barely above the share of municipalities whose sole concern is the well-
being of their citizens. This – unsurprising – share can be correlated with the
particular role of small settlements, and the lack of local businesses.
Among the local infrastructural development projects aiming at the location of
new enterprises, or amending local businesses’ conditions there were some invest-
ment (6%), which created idle capacity or redundant infrastructure (e.g. empty
industrial parks), and there were some “underplanned” projects (4%), where the
government had to make urgent additional investments.
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Figure 6
Distribution of settlement governments’ infrastructural investments
by size categories, per cent
100
80
60
40
20
0
Small village Large village
Small town
Large town
Total
There weren't any infrastructural investments
Both community and entrepreneurial needs were important
Primary community needs
Source: Own construction.
Thirty-three settlements of those that had own infrastructural investment indi-
cated that there was local conflict situation during the implementation or after the
completion. More then 30 per cent of the towns and less then 20 per cent of the
villages mentioned local conflicts (in the towns there were more investments
too!).
The most frequent source of conflict was the resident population’s objection to
the implementation (quality or duration of investment etc.). The next reason was
the citizens’ disapproval of the local economic development (increasing vehicular
traffic, declining road-system etc.). The business conflicts, which are in connec-
tion with the lack of infrastructural development, came up only at the third place.
From time to time citizens have objected to supplier’s or local government’s tariff
or rate decision in connection with local investments.
To sum it up, 12 per cent of local governments that developed local infrastruc-
ture indicated that there was local conflict situation in connection with invest-
ments. Most of them came from the citizens’ objection, but in a few cases the
negligence of the consideration of business needs was a problem.
The quality of local infrastructure and access to it are the main issues in a
settlement, so the local business involvement in the infrastructural investments is
not a unique answer (Figure 7).
Seventy-three percent of small villages, 48 per cent of big villages and 38 per
cent of small towns indicated that there was no local infrastructural investment
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Discussion Papers, No. 63.
with business involvement. All the big cities have at least one infrastructural
development with business involvement.
Entrepreneurial participation in local infrastructure development is atypical
in small villages, monetary contribution or playing a role in construction was only
found in 10% of settlements in this category. Advisory and tendering activities
were even less common. Large villages and small towns reached a similar ranking
and shares. In these size categories – unlike large cities – discounted or free
construction was the dominant form of participation, the investment of entrepre-
neurs funding taking second place. Local entrepreneurial participation in the
local government’s infrastructural investments was most typical in the large city
category, predominantly through own funds or, in second place, construction.
Figure 7
The form of local entrepreneurial participation in government’s infrastructural
investments by size categories, per cent
60
50
40
30
20
10
0
Small village
Large village
Small town
Big town
Total
Garanteeing own financial resources
Construction
Creating tenders
Consultancy
Note: Each settlement could select more then one category.
Source: Own construction.
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4.3 Instruments of business development
4.3.1 Investments targeted at business development
Thirty-one per cent of the involved settlements indicated that the local govern-
ment initiated since the systemic change investments the target of which was the
assistance of the manufacturers and service providers (Figure 8). However the
distribution by size categories is not even, since while 92% of the involved larger
towns and 81% of the involved smaller towns were able to carry out business
development investments, this proportion remained in case of the larger
municipalities only 37% and smaller municipalities 21%.
It is not surprising that the towns and larger settlements are in a more advanta-
geous situation as regards the active business support policy. The investment
types listed by us did obviously not expel the individual solutions of smaller vol-
ume since theoretically all types of investments could be fitted at least in the
“other” category but the offered options somehow implied that we want to collect
information on wide-spread investments forms of larger volume requiring signifi-
cant own resources. The specification of grandiose investments has possibly
disfigured the result since the solutions applied by the medium and smaller size
settlements may possibly be abstracted. Nevertheless it is feared that the majority
of development resources in the smaller settlements are devoted to correction of
the lag in the public infrastructure and accession to fundamental services.10
The results imply that the implementation of economic development invest-
ments was characteristic for larger settlements. Within economic development
investments the most popular forms were the creation of industrial areas supplied
with public utilities, equipped with the title industrial park but created free from
commitments and the purchasing of industrial areas.
The content behind the notions “setting up of innovation centres and the
foundation of incubator houses” were – obviously – interpreted differently by the
persons answering and therefore we can only be sure that the innovation oriented
approach and the support of new businesses is existent in 4 and 16 involved
settlements, respectively. While the setting up of an innovation centre is obvi-
ously not part of generally applied business incentive strategies, in 60% of larger
towns there are already incubator houses operating.
The establishment of fair organising units could be an element fitting explic-
itly the development strategies of larger towns, and this opportunity even before
the systemic change had serious antecedents in the Hungarian larger towns. The
10 This is why we wanted to get specific information on the major investments implemented in
1998–2002 and proportion of development resources within the total of revenues (see
subchapters called Targeted areas of local development and Budgetary sources of local economic
development).
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low share may have evolved because we only indicated in our questionnaire the
newly founded fair organising organisations. We found examples of investments
implemented under the aid of the business development centre in 14 settlements.
Figure 8
Settlements implementing investments targeted at the support of local businesses
by size categories (number of settlements)
Establishment of fair organising units
Creation of industrial areas supplied
with public utilities
Establishment of innovation centres
Creation of industrial parks
0
10
20
30
40
50
Small village
Large village
Small town
Big town
Source: Own construction.
We also offered the opportunity to mention types of investments beyond the
basic categories set by us. In compliance with our expectations mainly the smaller
and medium size settlements took this opportunity. In many cases the answers
were hard to relate to investments and not appreciable (such as planning and
consulting activities etc.). However we can find among the answers activities like
preferential utilisation or letting of real estates and the infrastructure development
of industrial areas beyond supplying them with public utilities. Considering the
larger towns in one case the local government mentioned the establishment of a
logistic service centre, and similarly in one case the founding of an innovation
organisation and in further two cases the facilitation of innovation and marketing
organisation was mentioned in this category.
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4.3.2 Impact of the central government industrial park programme
During comparison of investment types the influencing impact of the central gov-
ernment industrial park programme is definitely apprehensible.11 However, the
number of industrial parks does not necessarily reflect the real picture of the suc-
cess of the industrial park programme, for example there are some empty parks
too.
According to the bulletin of the Ministry of Economy and Transport, ten per
cent of 160 operating industrial parks had not operated in accordance with the
instructions in 2003. These parks may be closed and the subsidies may be re-
turned (GKM, 2004). Until the end of 2002, there were 25 empty industrial parks.
However, the operating industrial parks have significant economic role (see
employment, export and investment activity of industrial parks) (Table 2).
It is not easy to make a balance of the central industrial park policy’s effects
and success. There are some successful industrial parks (Székesfehérvár, Gyır
etc.) with best practice of local development12, and there are some parks with
indicators under expectations (Nagykanizsa, Pécs, Dunaföldvár etc.). We already
are talking about the problems of empty industrial parks, too. But the labelling of
industrial parks depends on the survey aspect and the sensitivity (see Table 2).
According to regional distribution of industrial parks we can diagnose that the
settlements with industrial parks have a steady distribution, only South
Transdanubia and West Transdanubia have lower shares than the national average
(Nikodémus, 2002). The following important question is raised: does the steady
regional location of industrial parks mean that the parks can be successful without
the assistance of the state, the host settlement and reception area, or regional
dimension can play a dominant role in this field?
In 2000 the Terra Studio Ltd. studied this question. In their opinion there are
two dimensions for distinguishing the industrial parks. First we can mention the
state of development rank made by different indicators (e.g. number of busi-
nesses, number of employees), second we can talk about the settlements’ develop-
ments rank (population of the settlement, number of employees in the processing
industry, accessibility of Western Europe). By the above-mentioned study, the
most developed industrial parks were located in the most developed settlements,
11 The first industrial parks were established in Gyır and Székesfehérvár, right after the systemic
change. By the end of the 1990s not only in the northern part of Transdanubia but also in Pécs,
Kaposvár, Kecskemét and Ózd the planning of such parks started. The success of the industrial
parks made the Ministry of Economy initiate in a tender system a governmental industrial park
programme that resulted in the continuous growth of the number of industrial parks year after
year (Kullmann–Hegyi, 2000).
12 According to a survey in 1999, all the successful industrial parks were located in the northern part
of Transdanubia – these industrial parks were not connected with the governmental programme
(Kullmann, 2000).
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but in these areas were home to less prosperous industrial parks too. In the
underdeveloped areas there was not one excellent or appropriate industrial parks
(operating with the Ministry’s terms: at least 10 operating enterprises after four
years of beginning, and minimum 500 employees), but the proportion of empty
parks was low too. Accordingly, the sequitur was that making successful indus-
trial parks without appropriate background is hard, but excellent background in
itself is not enough for making well operating industrial parks. The settlement and
the area that make the background of the industrial park limit the growth poten-
tial of parks, so the less developed areas’ industrial parks can develop by special
methods (Kullmann–Hegyi, 2000).
Table 2
Information about industrial parks, 1997–2002
1997
1998
1999
2000
2001
2002
The number of areas with ‘industrial park’
28
75
112
133
146
160
title
The total area of industrial parks (ha)**
2,350
4,950
6,790
7,590
8,010
8,570
The number of industrial parks with busi-
19
51
56
109
120
135
nesses inside
The total area of industrial parks (with
1,500
3,200
4,000
5,400
5,650
6,170
businesses inside) (ha)
The number of businesses inside
320
685
980
1,495
1,760
1,924*
Area fullness (%)
21.5
30.0
34.5
32.9
38.4
39*
Inward investment (thousand million $)
0.7
1.2
1.8
2.6
4.0
4.1*
The total revenues of businesses inside
620
930
1,700
2,670
3,290
3,500*
(thousand million HUF)
Export (%)
83
75
78
83
78
76*
The number of employees (1,000 persons)
27
59
82
110
115
122*
*Estimated value. **In the meanwhile the law of minimum area has changed.
Source: LogSped, 2003.
At this point we have to mention that the central governmental policy with its
industrial park programme could appropriately adjust itself to supply central eco-
nomic development strategy generally applied by local governments. However,
for the settlement of foreign investors and filling up the industrial parks the sole
designation of the territory of the industrial park is insufficient, since the choice
of site by the foreign capital is influenced by several other factors too. In this re-
spect therefore the industrial park programme was a bad strategy since the
designation of the development area alone is not enough to result in successes in
job creation and local economic development, still the tender system could have
implied that currently in Hungary the key of success may be the creation of indus-
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Discussion Papers, No. 63.
trial parks. Therefore the programme had besides its undeniable achievements
deforming effects, although not only this one factor led to the evolution of the
supply-side local strategies.
4.4 The budgetary resources of local economic development
Since in larger settlements the implementation of economic development targeted
investments is rather widespread (Figure 8) it seems to be a fair question whether
the larger towns are also in a better situation as regards the development resources
than the other settlements.
If we study the trends of development resources on the basis of the many years
stagnant proportion of accumulating and capital type of expenditures by the local
governmental subsystem of the state finance, we may come to the conclusion that
there is no potential for the facilitation of increased investments targeted at
economic development in so far as the basic infrastructure is backward, since the
totality of these development resources must provide, guarantee for the own
contribution for all local governmental investments (Table 3). Moreover, the
share of local governments in the GDP has been continuously decreasing in the
period of 1997–2000, and has shown a moderate growth in 2001–2002, but it was
still short of the 14% in 199713 (Table 4).
Table 3
Development of the accumulation and capital expenses in Hungary
and the sample,* 1997–2003, %
1997
1998
1999
2000
2001
2002
2003
National proportion of accumulation
18.2
20.1
17.1
18.8
19.8
20.8
16.5
and capital expenses
Share of the development expenses in
14.2
14.8
15.4
16.5
17.5
***
***
the sample**
Small villages of the sample
13.8
15.1
15.6
17.6
17.2
***
***
Big villages of the sample
15.0
14.2
16.0
16.3
20.7
***
***
Small towns of the sample
17.1
16.1
13.5
10.7
10.7
***
***
Big towns of the sample
10.6
11.5
12.0
12.3
11.8
***
***
* Compared to all costs. ** Mean values. Only between 1997 and 2001. *** Lack of information.
Source: Own calculations based on Dobos–Szelényi, 1998. p. 441.; Dobos–Szelényi, 1999. p. 693.;
Dobos–Szelényi, 2000. p. 789.; Dobos–Szelényi, 2001. p. 763.; Dobos–Szelényi, 2002. p.
1021.; Dobos–Szelényi, 2003. p. 977.; Dobos–Szelényi, 2004. p. 955.
13 This figure reached 16–17% in 1992–1994 (Illés, 2002).
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Table 4
Development of the revenues of the local governments compared to GDP,
1997–2002
Year
GDP
Local governmental
Revenues of local
(billion HUF)
(GFS system) revenues
governments in per cent
(billion HUF)
of GDP
1997
8,541
1,200
14.05
1998
10,087
1,340
13.28
1999
11,393
1,499
13.16
2000
13,172
1,656
12.57
2001
14,849
1,904
12.82
2002
16,740
2,181
13.03
Source: Own calculation on the basis of HCSO, 2000. p. 26.; HCSO BCD, 2003. p. 60.; HCSO,
2004. p. 181.; Dobos–Szelényi, 2000. p. 779.; Dobos–Szelényi, 2003. p. 968.
The examination of development resources by settlement size justified that the
larger towns are in this field in a worse situation than the average (Table 3). The
same was concluded by Iván Illés in a comparative analysis in 2002 which was
conducted for the towns with county rank. While the share of the towns with
county rank in the self-governmental revenues decreased from 25% in 1997 to
17% in 2001, some 20% of the population was living here and therefore the reve-
nue per capita in these towns was below the national average (Illés, 2002).
If we accept that the larger towns have less and less share from the decreasing
self-governmental revenues while their tasks are not decreasing so they are in a
worse and worse financing situation, the result is not surprising that the develop-
ment targeted expenditure of larger towns in the sample does not even reach the
national average. Also in the case of smaller towns we can experience an explic-
itly declining tendency due to which the proportion of the development expendi-
ture of the smaller towns was even lower than that of the larger towns in 2000–
2001. Based on the above data it seems that the “winners” of these changes are
the smaller and larger settlements, villages even though the proportions are not
suitable for demonstrating all aspects (such as the level of backwardness, the vol-
ume of income per capita, the difficulties and malfunctions of servicing etc.).
Furthermore it is a very important question in what proportion the own re-
sources are available for financing developments and what is the proportion of
state financing, respectively of loans, in the implementation of investments. Fig-
ure 9 implies the division of development resources in the sample and the average
division in the certain size categories.
It is clear that the proportion of own contributions is the highest in the larger
towns (74%) if all the development expenditures considered and also the loans
are the most characteristic here (13%), while the state contributions and subsidies
33
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Discussion Papers, No. 63.
play a dominant role in smaller and larger settlements, in their case 35–41% of
development expenses are financed by central resources. While the larger towns
are rather forced to increase their own incomes (due to the mentioned modifica-
tions of the central financing), the smaller and larger settlements, municipalities
receive a significant amount of central finances for their larger scale develop-
ments. This fact alone projects the tendency of the structure of development
expenditures (Figure 10): the significant state subsidies are obviously accompa-
nied by the appearance of central priorities in the designation of development
directions and vice versa.
Figure 9
Resource structure of development expenditure in the respective size categories,
in the average of the years 1997–2001, %
Small village
100
80
60
40
Total
Big village
20
0
Big town
Small town
Loans
State subsidies
Own resources
Corrected value, proportioned to 100%.
Source: Own construction.
The self governments were compelled to borrowing up to 4-5% of their invest-
ments’ budgets – in the period 1997–2001 – besides the continuously growing
proportion of state subsidies and the decline of own resources. However the
borrowing with development target is still not of alarming volume but the forfei-
ture of credibility may result in the decline of developments and therefore the
accumulation of the financing problems (and the multiplying of functional prob-
lems) of the self-governance system may have a serious effect on the tempo of
settlement development and economic development in the future.
34
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Discussion Papers, No. 63.
The tendency of the development expenditure by self governments and the
development constraint focus the attention of the municipal management on the
domestic and European tenders. Ninety-three per cent of the self-governments
gave a positive answer to the question whether they carry out a continuous obser-
vance of tenders. The same proportion in the case of smaller towns and larger
towns was 94% and 100%, respectively, in the case of larger municipalities 95%
and in the case of smaller municipalities 92%. We suppose that this activity may
be of different intensity, depth and techniques but the recognition of the necessity
is to be experienced at all levels of the settlement hierarchy.
Figure 10
Local governmental types of investments with definite economic development
target in 1998–2002 – in a breakdown by size categories, number
of settlements
Plan or programme prepared by local
government
Agricultural development
Tourism development
Location of a concrete enterprise
Establishment of industrial parks and
innovation centres
Waste deposit and incinerator
Development of cleaning plant
Develoment of telecommunication and
information technology system
Gas pipeline development
Development of basic infrastructure
0
20
40
60
80
100
120
Small village
Big village
Small town
Big town
Source: Own construction.
35
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Discussion Papers, No. 63.
4.5 The target areas of local developments
The proportion of state subsidies within the development targeted local
governmental expenditures (Figure 9) justifies the investigation of the question of
up to what extent the central governmental targets do influence the tracks of local
developments.
The governmental development resources accessible for self-governments
through tenders are mainly targeted at compulsory self-governmental tasks, basic
services.14 In the local tier the primary target is the provision for the compulsory
tasks and therefore this type of development enjoys priority among the local
governmental development priorities, especially if additional governmental subsi-
dies are accessible for this aim.
The impacts of the state supported target system can be detected on the actual
municipal development activities (Figure 10). Even though we asked the sample
settlements to list the five most important developments from those implemented
in the period 1998–2002 as targeted local economic development, the result rather
reflects that the persons answering the question comprehended the economic
development target fairly wide since besides the development of basic infrastruc-
ture even the planning activity was listed as such, and the location of a concrete
enterprise did not mean the creation of the conditions of location, i.e. the location
of the given enterprise was not accompanied by a real investment. Based on the
answers that we received we did not get the information that we expected, but
basically this was the point where we could identify the progress in the past 5
years in these settlements.
The priorities in the circles of the investigated state subsidies and the enor-
mous lags in the field of basic infrastructure cause such development “obliga-
tions”, mainly in the small villages, which absorb the main part of available own
resources. Fifty-seven per cent of the small villages could not indicate any invest-
ment activity targeted at economic development at all, the remaining 35% of them
spent significant resources on the development of the basic infrastructure. In this
sense we considered as basic infrastructure development the renovation or
establishment of roads, public lighting, drain (waste-water, drink water, rain) and
public institutions. We listed the establishment of waste deposits and incinerators,
as well as the cleaning plants separately, since in many cases the precondition of
14 Those central (governmental or sectoral) decisions that are made with the exclusion of the local
tier cannot be considered as local economic development interventions, so we did not consider
them in our survey. We only focused on a part of the resources available through tenders,
concentrating on the possibilities regularly available during the period of our investigation, i.e. the
priorities of addressed and targeted supports, development grants for territorial equalisation and
targeted decentralised supports.
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Discussion Papers, No. 63.
these investments is the territorial collaboration, but anyhow an important aspect
of consideration is the appropriate and economical size.
In the field of the development of the telecommunication and information
technology system a rather vital activity could be detected in the smaller and lar-
ger villages, obviously due to their backward or lacking networks and the slower
reactions to the new challenges (of the information society). In the larger towns
and towns – mainly subsequent to the entry of different cellular phone suppliers
and due to the continuous developments by the MATÁV Hungarian Telecom and
some other regional service providers – no significant lag could be detected in the
field of satisfying the telecommunication network development demands and the
establishment of internet connections.
We investigated the investments in connection with gas pipeline developments
since these investment types cover such developments that are not in connection
with the compulsory local governmental tasks but they at the same time definitely
contribute to the improvement of life quality in the given settlement.
However the problem is that the local governments encourage the establish-
ment of gas-pipeline networks for the replacement of traditional heating technolo-
gies which further injures the structure of domestic energy inputs, usage. Also the
distribution of gas investments by settlement size categories implies that mainly
the small and large settlements, villages made efforts in this field in the investi-
gated period – which is not at all surprising.
The agricultural development category concerning mainly the small villages
(and occasionally the large villages) includes the purchasing of agricultural
machinery by the local government, plantation, purchase of land, and road
construction in the outskirts, drilling of irrigation pumps and the draining off of
the inland waters. These investments are perfectly fitting into the priorities of
local-governments in rural areas and therefore it is not surprising that the larger
settlements are not really present in this category.
According to the classification in Figure 10, only two categories could match
the criterion of investments directly targeted at economic development (of course
the improvement of the quality of life or the infrastructure development also in-
creases the attractiveness of the settlement but the preliminary target in this case
was not local economic development):
− The first category included the establishment of industrial parks and busi-
ness zones, establishment of innovation or information centres and the
provision of industrial zones,
− The other category, tourism development included, besides the lake, bath
and pool development, other types of development in the field of tourism
industry.
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Discussion Papers, No. 63.
Six per cent of small villages, 15% of large villages, 50% of smaller towns and
75% of larger towns implemented investments belonging to the first category in
the period 1998-2000. These investment types are obviously accessible for larger
settlements and regions, since the quality of local services, the accessibility of the
given settlement, the availability of an appropriate size labour market district etc.
are as important aspects of considerations when launching an investment as the
availability of own contribution. In case of these investments requiring the
appropriate planning of local, regional resources, capacities and effects the
cooperation with smaller settlement is suitable not only in the course of procure-
ment of resources but the assurance of optimal utilisation of local resources and
avoiding parallel developments and the investments extinguishing each other
would be also necessary during the planning phase, the preparation of the re-
gional economic development strategy.
The tourism developments on the other hand may very well fit into smaller
settlements’ strategy aimed at diversification or at the creation of economic basis,
but in the case of larger investments the introduction of territorial reconciliation
would be desirable even in this tier. In this category – during the examined five
years – 6% of the small villages, 8% of larger villages, 50% of small towns and
17% of larger towns excelled.
4.6 Local tax policy
The most significant element of the local economic development policy is the
taxation policy, since the legal regulation of local governments as well as the act
on local taxation provide for fairly large freedom for the self-governments in this
field, both as regards the tax assessment and the volume of taxes as well as the
application of tax allowances15.
The tax policy is an especially important element of local policy, since the
volume of local tax revenue determines the scope for action of local governments
to a large extent, as the amount of their resources available without restrictions is
fairly limited, while the state subsidies cannot even cover the maintenance costs
totally and therefore the development opportunities of self-governments and the
volume of own incomes are often interconnected. It is especially true in the case
of voluntary tasks such as local economic development which is really financed
by “residues”.
15 In accordance with the expectations of the EU, the freedom of action of the local governments in
matters of local business tax significantly decreased, as the local governments cannot freely give
allowances in this tax, on the basis of the act on local taxes.
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Municipal self-governments can influence the tax burden of local enterprises
and undertakings through the combination of different eligible tax categories and
the application of allowances. However it is inevitable that the key element of
local taxation system is the so-called trade and industry tax which gives the most
significant proportion of local incomes – 84-86% of local tax revenues (Table 5),
and therefore we have selected this tax category for investigation too.
Table 5
Development of the local tax revenues and the proportion of local governments
levying them within Hungary, 1997–2003, %
1997 1998 1999 2000 2001 2002 2003
Proportion of local taxes within total revenue,
9.3
10.4
12.9
13.0
13.4
12.8
12.4
%
Proportion of trade and industry tax within
84.0
84.0
86.0
84.0
85.0
85
85.0
local taxes, %
Share of local governments levying local
81.0
85.0
89.0
94.0
96.0
97.0
97.0
taxes, %
Share of local governments levying trade and
industry tax within all local governments
57.0
60.0
67.0
75.0
78.0
79.0
81.0
levying taxes, %
Share of local governments levying the maxi-
mum of trade and industry tax within local
26.0
22.0
22.0
26.0
35.0
36.0
36.0
governments levying this kind of tax *, %
*Since then both the method of calculation of the tax and the volume of the ceiling of the tax
changed!
Source: Own calculations based on Dobos–Szelényi, 1998; 1999; 2000; 2001; 2002; 2003; 2004.,
different pages.
We paid special attention to the impact of the tax strengths capacity based
territorial equaliser system16 on the local taxation policy, although we do not want
to declare that all the settlements where the local trade and industry tax were first
issued after 1999, have decided for the taxation of the businesses due to the
calculation of the potential tax revenues. In any case it is a fact that in the years
1999 and 2000 the “inclination” towards tax assessment grew and this circum-
stance can be detected in the tendencies of tax revenues and the number of tax
assessing self governments.
At the national tier, in 2002 23% and in 2003 21% of the settlements did not
issue local trade and industry tax, while the same value concerning the other tax
16 It is a central re-distribution calculated on the basis of the potentially collectable local trade and
industry tax, designed for the decrease of the territorial disparities.
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Discussion Papers, No. 63.
categories remained under 3%. Switching to the examination of the sample settle-
ments we may state that 19% of these settlements – all municipalities (95% of the
small and tiny municipalities) – did not take the chance of the assessment of local
trade and industry tax at the time of the polling. In the majority of these settle-
ments (i.e. except for 3 settlements) the number of individual and joint undertak-
ings, businesses per thousand capita does not reach the national average and in 9
settlements there are no joint undertakings at all. The predominant majority of the
settlements introducing the local trade and industry tax subsequent to 1999 are
small municipalities, villages (78%), and some larger villages and only one town
colour this picture. Twenty-one per cent of the sample settlements belong to the
latter category.
The majority, concretely 59% of the sample settlements issued in their own
administrative territory the local trade and industry tax before 1999. In the case of
larger towns this proportion is above 80% in the case of smaller towns 100%,
considering small villages 47% and larger villages 74%. The majority of the
municipalities considered that most of local businesses are either subsistence
enterprises, such as servicing small business, the cessation of which is not at all in
the interest of the settlement and therefore they did not assess the local trade and
industry tax in lack of solvent taxable businesses. The redistribution of the tax
ability based personal income tax has modified the situation to a certain extent,
however for the smaller villages it still does not seem to be a real opportunity to
acquire revenues from the local trade and industry tax. If there is no subject to
taxation the freedom of the municipality remains illusory.
Some 72% of settlements applying the local trade and industry tax, which
makes the 58% of the sample settlements, indicated that they exert different types
of tax allowances (Figure 11). The majority of the settlements have obviously
chosen the supply-side strategy in the course of their economic development
activities. This means that their primary target is to increase the attractiveness of
their settlement for external investors, and therefore it is not accidentally that the
tax exemption (fiscal immunity) and the different tax allowances provided for
newly settling businesses are fairly preferred solutions. The tax allowance pro-
vided for SMEs at the second place and the so called capital investment tax allow-
ances at the third place are targeted besides the attraction of new businesses and
enterprises at the maintenance of existing businesses and the support of their
developments. Within the latter category the proportion of small villages is fairly
high and this is not accidental, since the application of tax policy as investment
incitement is not really a mean of development for small and tiny villages.
The different tax allowances targeted at designated industrial areas are applied
preliminarily by larger and smaller towns – having mainly industrial parks with
infrastructure. Fifty per cent of the settlements possessing industrial parks have
assigned different tax allowances to the designated industrial area.
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Discussion Papers, No. 63.
Figure 11
Most frequent ways of tax allowances and exemptions from local industry and
trade tax, in a breakdown by legal status, number of settlements
Others
Tax allowances and exemptions targeted
at designated industrial areas
Tax allowances and exemptions provided
for external investors
0
20
40
60
80
100
120
Small village
Large village
Small town
Big town
Source: Own edition.
However the above proportions are influenced by the requirements of the
European Union. In the course of the accession negations by the end of 2002 it
was clear that municipal self-governments may not provide for local trade and
industry tax allowances after 31. December 2007 and even until this date only for
such businesses which do not enjoy any corporate tax allowances. These
requirements are already included in the local taxation orders in the better case
and this means that the local decision-makers were forced to give up the most
widespread form of business attraction. The main track after the EU accession and
before 2007 will remain the investment and development tax allowance which is
in harmony with the EU recommendations – focusing on the SMEs. The range of
this form of advantage is verified by the fact that 40% of the sample settlements
applied it at the time of the inquiry.
Since the amendment of the act on local tax assessment in 2005, only one
allowance may be connected with the local trade and industry tax, the so called
tax base immunity connected with the promotion of employment which is not
qualified as a state subsidy by the European Union since any person subject to
taxation can be the beneficiary of it.17 When the transitory regulation expires, i.e.
17 In Figure 4 we featured the local governments applying employment-related tax allowances (11
municipalities) in the ‘Other’ category, as this is not a typical form of tax allowance.
41
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Pécs : Centre for Regional Studies, 2008. 61. p.
Discussion Papers, No. 63.
from 2008 this form will be the only form of trade and industry tax allowance,
moreover withdrawn from the competency of local governments.
4.7 Networking practices
4.7.1 Partnership of self-governments
In the light of the principles of the European Union, in our opinion it is important
to take a look at the enforcement of the principle of partnership and the real
inclination, willingness to make partnerships in Hungary. Therefore first we
investigated the forms and frequency of the partnerships by local governments.
Networking
Main forms of co-operation:
− Co-operation with a general economic target (such as the harmonisation of
the employment policy, job creation policy, measurement of the potential
supplier network and available business potential of the region)
− Cooperation explicitly connected with tourism development
− Cooperation, common thinking in the course of public servicing targeted at
the maintenance and development of institution
− Cooperation in concrete (and therefore often short term) programmes
(micro-regional programmes, programmes implemented in the framework
of development associations, lobby activities, common tendering etc.)
Forty-two per cent of the total of 158 settlements reporting on regional
networking did not indicate the concrete form and field of cooperation. The most
frequent (30%) type was the project oriented cooperation, which is actually
encouraged by the majority of regional development subsidies.18
The second most frequent form, with 25%, was the harmonisation of develop-
ments creating the general preconditions for economic development, and these
activities cannot be bound with one single sector. Eighteen settlements indicated
the existence of cooperation in the field of service provision, while only the settle-
ments in the medium size settlement category, concretely 12 of them, voted for
partnerships in the field of tourist industry development.
Ninety-three per cent of the replying self-governments are members of one or
another national association of local governments. We can find self governments
“absent” from these associations only among the small and large villages.
18 The spreading of these associations was encouraged among others by the fact that in the case of
certain state subsidies the territorial cooperations enjoyed priority.
42
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Discussion Papers, No. 63.
The associative willingness of self-governments is fairly high, 80% of the
municipal self-governments are members in a self-governmental association.
Concerning the types of associations by their aims, the participation in associa-
tions targeted at institution maintenance is at the first rank. Fifty-two per cent of
the sample settlements are members in such associations; 48% reported on
membership in permanent municipal development association, while only 16%
participate in associations connected with one single investment. Twenty-two per
cent of the sample has a membership in other types of associations.
Fifty-six per cent of the sample settlements have partnerships with other settle-
ments in the form of “twin town” or “twin village”. International partnerships,
especially with European settlements, are dominant in every size category. In the
case of smaller towns the weight of partnerships with Western-European and
Eastern-European “twin settlements” is nearly the same and those partnerships are
characteristic for 10% of the total number of selected settlements, while in two
categories (larger villages and smaller towns) the Eastern-European linkage (to-
wards the countries of the former eastern block) plays a leading role. The majority
of the settlements in the large town category have partnerships with Western-
European “twin towns”, the Eastern-European partnership is characteristic for
only 42% of them. Thirty-three per cent of the towns in this category have a
partnership with a Hungarian town (Figure 12).
Figure 12
‘Twin settlement’ partnerships of settlements in percentage of the participating
settlements, by size categories
60
50
40
30
20
10
0
Small village
Big village
Small town
Big town
Total
Western-European countries
Eastern-European countries
Hungary
Other countries
Source: Own construction.
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Discussion Papers, No. 63.
4.7.2 Partnership with the business sphere
In this title we examine the involvement of the business sphere in planning, strat-
egy building. The majority of municipal self-governments, concretely 64%, re-
quest the opinion of local businesses prior to the formulation of local develop-
ment targets (Figure 3). It seems that the chance for close and active relationship
with the business sphere grows proportionately with the settlement size.
We have distinctly investigated the practices of application of self-governmen-
tal international partnerships for marketing and mediatory purposes.
In the urban categories the lack of international relationships seems not to be a
problem, 17% of larger towns and 31% of the smaller towns do not use their
existing international relationships in the interests of local businesses, for the
marketing of local productive and service providing businesses (Figure 13). How-
ever the predominant majority of towns took the opportunities provided by
networking.
The generally used methods of mediation and marketing were:
− promotion of participation in international fairs,
− marketing activities,
− concrete agreements,
− promotion of networking,
− encouragement of exchange of experiences.
Figure 13
The international contracts of local governments by size categories, %
100
80
60
40
20
0
Small village
Big village
Small town
Big town
Total
Promoting local businesses by using own networks
Having but not using international contracts
Without international contacts
Source: Own construction.
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Some 62% of smaller villages have no international contacts at all; the same
figure is only 28% in the case of larger villages. However it is a fairly more
important problem that the majority of small and larger villages having interna-
tional contacts do not utilise these partnerships in the interest of marketing of
local businesses. Only 11% of smaller villages and 25% of larger villages pro-
mote the local businesses through their own relationship networks. It is probable
that the main obstacles of the establishment of this mediatory role are the local
conditions (e.g. the lack of appropriate and vital business sphere, capacity prob-
lem etc.) and the quality of the evolving system of relationships.
The prioritised treatment of international relationships is – due to the export
constraint of the businesses in small and open countries – a key factor of
competitiveness. For that very reason, through supporting the presence of local
businesses at regional or local fairs the self-governments can contribute to the
better marketing of local business sphere and to its better access to the market.
The local government can provide for the promotion of unique local products and
manufacturers in the course of its own marketing activity.
Fourteen per cent of small villages, 40% of large villages, 94% of smaller
towns and 92% of large towns participate in the performance or assistance of
regional or (mainly in the case of larger towns) local fairs. A total of 28% of the
settlements indicated the incitement of some industrial, agricultural fair or a fair
of other profile which was organised in their region (Figure 14).
Figure 14
The local governments’ activity in the promotion of local products by size
categories, %
100
80
60
40
20
0
Promotion of regional fairs
Promotion of local products and
manufacturers
Small village
Big village
Small town
Big town
Total
Source: Own construction.
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Discussion Papers, No. 63.
Thirty-eight per cent of local governments take part in the dissemination or
propaganda for local manufacturers and products. This rate was 28% in small
villages, while in the large villages 49%, in small and large towns 75 and 83%,
respectively. This type of activity by local government may intensify in the future
since they must recognise that this is a cost effective way of contribution to the
improvement of competitiveness of local businesses. This is especially true due to
the general use of internet presentation of settlements and micro-regions,19 but the
utilisation of other promoting materials, leaflets for these purposes is also more
and more characteristic.
4.7.3 Partnership with regional institutions
There are many regional institutions operating at the meso-level (between the
central governmental and the local level) of the Hungarian public administration
system, with which the local governments maintain connections with variable
intensity, tightness and quality.
We asked the mayors of the sample settlements to label on a five grade scale
the partnerships with some regional institutions. We wanted to map the typical
forms of local partnerships. Figure 15 demonstrates the average values, although
with higher proportion of received questionnaire we should have researched the
regional differences too, because there are some regional factors, e.g. the quality
of regional institutions’ management.
The bigger the settlements, the wider regional functions they have. It means
they must have continuous partnerships with many regional organisations. Figure
15 also shows that the small and big towns indicated much closer average
connections than the villages, in all researched categories.
The function of county governments justifies that they maintain closer linkage
with the villages than the towns. This connection can be soft in particular between
the county governments and the towns with county rank, because of the
regulation. For this reason, while the county government stands at the third place
in all categories, the big cities rate them on the fifth place, only (although there
are many legally binding connections between them).
In the micro-regional associations – because of their evolution – mainly the
villages and small towns are active, the big cities initially were out of the
voluntary associations.
19 Thirty-nine per cent of the sample self-governments had their own homepage, concerning the
category of small villages, 27% were in some form represented on the internet, which figure
significantly debased the 90–100% proportion of urban categories and the 50% proportion of
larger villages.
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Discussion Papers, No. 63.
Figure 15
Partnerships between settlement governments and regional institutions by size
categories, average values on a five grade scale
County government
Micro-regional association
Regional Development Council
County Development Council
Business Centre
Other chambers
Chamber of Trade and Commerce
Chamber of Agriculture
1
2
3
4
5
Small village
Large village
Small town
Large town
Total
Note: ‘1’ means: there is no linkage; ‘5’ means: there is close, bilateral, continuous partnership.
Source: Own construction.
47
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The altering regulatory background20 has changed the participants of the regional
and the county development councils, but the micro-regional associations still
have significant importance for the settlements with low population. Accordingly
settlements in all categories (except big cities) indicated the closest average
partnerships with the associations.
The regulatory background of the spatial development institutions, the amount
of allocated financial resources and the allocation mechanism together determine
the operating circumstances of County and Regional Development Councils. The
deficiency of spatial development’s financial resources regulation also contributes
to the main role of the resources allocated by County and Regional Development
Councils. This role in the long run influences the labelling of partnerships be-
tween the settlements and the Development Councils. The resources distributed by
the County Development Councils – contrary to the Regional Development Coun-
cils – serve mainly settlement development targets. This is the reason why the
settlements have labelled the partnerships with them in different ways. The may-
ors of the big towns indicated that they have the closest relationships with the
Regional Development Councils, while the County Development Councils stand
at the second place in every category (except small towns). The villages and the
small towns have weaker connections to the Regional Councils than to the
County Councils.
Chambers are also judged on the basis of settlement size, only small villages
considered cooperation with agricultural chambers, closer than with chamber of
trade and commerce (industrial chambers). Predominantly industry and service-
based areas consider industrial chambers more important, and accordingly de-
velop closer links with this group vis-a-vis agrarian and other types. On the other
hand, relations can be considered uniformly weak with the exception of urban
categories, as an average close to two demonstrates.
The Business Centres and the other chambers are usually located in towns,
therefore in the villages the lack of partnerships has determined the answers.
We separately researched the partnerships between the Labour Offices and the
local governments, which came into existence because of the problems of local
labour market (Figure 16).
The improvement of the local employment situation is one of the local
governments’ most important functions. It can account for the close connection
practice with the Labour Office, so the area of partnership can determine the
quality of connection. In this study area we also should have researched the
regional differences, if we had received a higher proportion of questionnaires,
20 The financial resources of County and Regional Development Councils made the local
governments establish micro-regional associations. Aside from statistical (compulsory) micro-
regions’ associations there are a lot of (optional) voluntary micro-regions’ associations too.
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Discussion Papers, No. 63.
because the ability, quality and structure of regional institutions’ management can
be a relevant influential factor.
The solution of the local employment problems can be provided not only with
the help of the Labour Offices. Sixty-three per cent of small villages and 50 per
cent of large villages do not play any part in the improvement of the local
employment situation – so it is the typical attitude. Thirty per cent of large
villages’ governments send own recommendations to the outsider educational
institutions. The towns do not keep out of the local employment problems. They
principally make concrete proposals for the structure of vocational training, and
(mainly in the big cities) participate together with the educational institutions in
projects.
Figure 16
The characteristics of partnerships between local governments and Labour
Offices, by size categories, in percentage of the participating settlements
100
80
60
40
20
0
Small village
Large village
Small town
Large town
Total
Frequent
Occasional
Non-existing
Source: Own construction.
4.8 The organisational and personal background of local economic
development
The activity of municipal self-governments in the local economic development
means a functioning beyond the basic activities, and therefore the entrepreneurial
behaviour and the knowledge on market conditions is not necessarily the property
of self-governmental management and the staff of mayor’s offices. The
employment of at least one economic expert within the mayor’s office, and in
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larger settlements the establishment of an independent organisational unit of
economic development and the optimisation of its functioning in the course of
preparation of decisions could to a great extent contribute to the better
enforcement of market, efficiency and entrepreneurial aspects.
In the case of the decisions by the body of representatives, the composition of
the representative body may be an influencing factor – and the proportion of
members with entrepreneurial experiences may determine the “dominating
viewpoints” (for instance efficiency versus equity).
Twenty per cent of the municipal self-governments indicated the employment
of an expert supporting economic development within the mayor’s office and a
further 5% had an independent economic development unit or department (Figure
17). The economic development is organisationally supported mainly in larger
towns (92%), but the majority of smaller towns (88%) employed at least one
economic development expert. Sixty-six per cent of larger villages and 87% of
small villages have no expert equipped with economic development knowledge
who would be able to support the economic development activity within the
mayor’s office.
External, separate marketing, tourism or economic development organisation
supporting the economic development activities of the self-government are
functioning only in 30% of settlements. There is a separate organisation with this
profile in 63% of smaller towns, 75% of larger towns while this rate is only 29%
in large villages and 24% in small villages.
Figure 17
Organisational and personal background of mayor’s offices,
by size categories, %
100
80
60
40
20
0
Small village
Big village
Small town
Big town
Total
Independent economic development unit
Economic development expert
No economic expert
Source: Own construction.
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If we draw a wider scope for our investigation and we examine the economic
development staff with higher education degree in economics within the mayor’s
office, we will receive a much more advantageous picture (Figure 18). Although
only 35% of small villages employ such an expert, this rate is higher than 90% in
the larger size categories. Concerning the staff participating in different economic
and entrepreneurial (European or domestic) training, the situation is slightly better
in the small villages, on the other hand, this type of further education of the staff
is only typical in 60% of larger towns. In the case of small and large towns more
than 80% took the opportunities offered by the different trainings.
In the 1998–2002 elective cycle there were no members in the representative
body of 29% of the sample self-governments who were concerned with profit
oriented enterprises and in the case of the remaining 71% at least one person with
entrepreneurial experiences participated in the decision making.
The lag in the field of foreign language skills is a fairly significant obstacle of
communication. We must admit that the data measured by the number of language
tests is fairly simplified; however it implies the trends (Figure 18). The 17% re-
sult of small villages testifies a fairly unfortunate situation in this field, further-
more in more than half of small villages the conditions for the employment of
staff with knowledge of foreign languages are not given. At the same time in
small and large towns 88% and 92% of the persons answering indicated that the
self-government employed at least one colleague with at least intermediate lan-
guage exam.
Figure 18
The characteristics of the staff employed in mayor’s offices and their proportion
within the size categories
100
80
60
40
20
0
Small village
Big village
Small town
Big town
Total
Staff participating in different economic and entrepreneurial training
Staff with higher education degree in economics
Colleague with at least intermediate language exam
Source: Own construction.
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Thirty-seven per cent of the mayors speak no foreign languages at all, 29% can
speak one language a little bit and only 18% claimed that he or she could speak at
least one foreign language (while 16% did not answer this question at all).
4.9 The success of settlement and local economic development
4.9.1 The mayor’s opinion on the settlement’s success
Sixty-four per cent of the mayors of sample settlements consider their settlement
successful,21 3% admit partial success only, and 22% consider their settlement
unsuccessful. Within all settlement size categories the proportion of mayors
considering their settlement successful is over 70%, while 20–25% think their
settlement belongs to the category of unsuccessful places.
The surprisingly high rate of settlements within the small and large settlement
categories is mostly explained by the long period of the investigation going back
to 1990. Obviously, an autonomous local government consisting of an elected
body of municipal representatives with independent governance and decision-
making licenses received a better reputation compared to the secondary role in the
past. This was topped by the results of public infrastructure development and the
realisation of other investment projects.
The most important success and failure factors given by respondents were as
follows (sequenced by the frequency of occurrence):
Success factors:
− The establishment of good infrastructure;
− Continuous or an adequate development level with the potentials and with
the micro-region’s overall development level;
− Improving local image, or turning into tourist spot and the realisation of
tourism-oriented investments;
− Gaining an independent status, or the obtainment of city rank, manifesting
through the realisation of local development concepts;
− The settlement of concrete enterprises, successful creation of new jobs, the
ignition of economic development;
− The satisfaction of local population, an increasing number of local residents;
− The formation of local partnerships, good community, the development of
civil organisations;
− Success is achieved by the appropriate management of local municipals.
21 The survey inquired whether the mayor was considering the development of his/her own
settlement successful in the whole period since the change of regime. Thus the term success – in
this case – is a subjective category.
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Failure factors:
− The absence of new enterprises, the growing problems of unemployment;
− The local government’s low funding sources, failure is the outcome of the
general management problems of the municipality;
− Failure is the result of public discontent and the decreasing number of local
residents;
− Failure is the outcome of the mismanagement of the earlier municipality;
− Unsatisfactory development progress;
− Deteriorating image of settlement, unfulfilled tourism development projects.
In case of large cities the location of new concrete enterprises was the most
frequent success factor, while in small towns the relative development level
(compared to that of the micro-region’s) and the continuity of development
(without fallbacks) were the major success factors.
Both success and failure factors included the same categories, which proves
that in a Hungarian settlement the most important ranking factors are attached to
the location of new enterprises, the creation of new jobs, the realisation of tourism
development projects, the quality of local living conditions and the operation of
local government.
4.9.2 The mayors’ opinion on the local government’s local economic
development initiatives
To evaluate the local government’s local economic development initiatives we
collected such success and failure stories from mayors that had key importance in
the recent past of settlement. A total of 101 mayors reported success stories and
88 presented failure stories (though these two categories were not excluding each
other).
The categories of success stories were as follows in the sequence of their
frequency of occurrence:
− The location of new enterprises, the growing number of entrepreneurs, the
creation of new jobs;
− The realisation of infrastructure development projects;
− The realisation of successful tenders and programmes;
− The establishment of industrial parks, industrial districts or enterprise zones;
− The realisation of tourism development projects, the increasing number of
visitors;
− The improvement of local image.
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The major categories of failure stories were as follows (also in the sequence of
their frequency of occurrence):
− The absence of new enterprises, the lessening number of local businesses,
the rise of unemployment;
− Cancelled local government projects (e.g. residential resistance, municipal
decision, or unused resources);
− Cancelled infrastructure investments;
− Problems with the establishment of industrial parks, industrial districts or
enterprise zones;
− Ageing population, decreasing number of inhabitants;
− Missing tourism development projects;
− Poor local government funding;
− Agricultural crisis.
The supply-side dominance of local economic development strategies in local
government programmes may be verified here – at an earlier part of this paper we
mentioned the general trend of applying supply-side strategies (Figure 11) – as in
both categories (success- and failure stories) the external, immigrating enterprises
had key importance.
We also wanted to get information what kind of indicators local mayors would
use for benchmarking the success of local economic development programmes
(Figure 19).
The ranking of responses is clearly reflecting the fundamental thesis of the
relevant literature on local and regional competitiveness (Enyedi, 1997; Lengyel–
Rechnitzer, 2000; Lengyel, 2002), putting the quality of living conditions on the
top of a pyramid. The category of city is – seems to be – excluded from this rule,
as the fallback of unemployment is a more important factor there than the quality
of living conditions – but at the same time more importance is attached to its
average value than in any other categories. The quality of living conditions is on
the absolute top of ranking, it is followed by the successful treatment of
unemployment and the appropriate level of personal incomes is the third in the
ranking. At the same time, Figure 19 also shows that all the three categories are
strongly correlated with each other but it is not the same which one is put on the
top of the pyramid.
Beyond the three categories that we nominated, mayors were offered to
mention further success categories. Other categories were marked by 10% of
respondents, attaching great importance to the selected success factor on average
level (this was a natural outcome of our querying methodology). Among these
categories we can find some measurable and comparable factors concerning local
resources but some immeasurable and elusive categories as well (e.g. image,
future perspectives).
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Discussion Papers, No. 63.
Figure 19
The evaluation of settlement success factors by size category,
average values on a five grade scale
The increase of
personal incomes to
an appropriate level
The improvement of
living conditions
The fallback of
unemployment
1
2
3
4
5
Small village
Big village
Small town
Big town
Total
Source: Own construction.
Among the other factors of success factors the following categories were men-
tioned:
− The state of local infrastructure;
− The state of public security;
− The quality of human infrastructure;
− The general situation of the young generation;
− The degree of the willingness for outmigration;
− The formation of local image;
− The existence of future perspectives and their content;
− The stability of local government finance;
− The success of local government tenders;
− The success of the local government’s housing provision;
− Other economic indices: the number of major investors, the number of visi-
tor nights, the increase of land prices, the inflow of direct investments.
From the above results we can draw the conclusion that the majority of mayors
think that local governments should actively formulate their local economic
environment, as through this way they may improve living conditions and pro-
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mote the emergence of success factors. At the same time the above-mentioned
local success and failure stories are also indicating that settlements of different
size have different local endowments, potentials and instruments for undertaking
this task.
5 Summary
In the course of the presented empirical study we have seen that concerning the
planning activities of municipal self-governments large lags can be detected in
comparison with the necessary, optimal or even the legally required quality. The
lack of planning and especially economic planning also contribute to trends that
municipal self-governments try to conform to the actual priorities of the
governmental subsidy policies in the course of the employment of their invest-
ments and developments or they even decide on significant issues (such as dis-
posal of properties or infrastructure development etc.) without having done a seri-
ous planning work.
A further problem is the financing form of the local government system and the
insufficient amount of own resources by municipal self-governments.
However an answer, a solution for these problems may be the widening of lo-
cal-governments’ networking, partnership both towards other self-governments or
towards local businesses or other local or regional actors; local governments may
manage, coordinate and encourage the successful local economic development
process but without the cooperation of other actors of local economic develop-
ment the system can not be viable.
The implementation of the successful local initiatives can be promoted by an
appropriate organisational and personnel background in the mayor’s offices or at
competent external units.
We examined several aspects of the economic development practices at
Hungarian local governments. The settlements use the opportunities deriving from
the legal background and connected with the municipal conditions to a different
extent by their sizes, potentials and management. We have seen that different
factors may be emphasised in the development strategy of different settlements
and they may use different tools to in order to implement their targets. Some self-
governments are more active in the initiation of economic development interven-
tions and in the creation of the partnerships connected to these, and these local
governments achieve fairly spectacular results. Some other self-governments, on
the other hand, cannot demonstrate a progress ever since the systemic change.
While the settlements of the former category are mainly larger towns, we can
state that in every size category we can find self-governments participating ac-
tively in local economic development. The lack of initiatives connected with local
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Pécs : Centre for Regional Studies, 2008. 61. p.
Discussion Papers, No. 63.
economic development is rather characteristic for settlements with lower number
of population.
Finally, our research verified our hypothesis that mainly the larger settlements
and towns have the tools for the facilitation of classical economic development
investments and the smaller settlements can participate in special economic
development initiatives within the frameworks of their opportunities. In their case
the regional networking and partnership may be a solution – starting at planning
and finishing with the implementation.
We think it will be important in the future for the local economic development
to become universal to create the local system of conditions adapted to the
international practices, both as regards the necessary community resources and
the freedom and opportunities of indispensable local economic development ac-
tors.
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Discussion Papers, No. 63.
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Az épített környezet alakításáról és védelmérıl szóló 1997. évi LXXVIII. törvény. [Act on
the Shaping and Protection of the Built Environment.]
Az épített környezet alakításáról és védelmérıl szóló 1997. évi LXXVIII. törvény
módosításáról szóló 1999. évi CXV. törvény. [Revision of the Act on the Shaping and
Protection of the Built Environment.]
Az épített környezet alakításáról és védelmérıl szóló 1997. évi LXXVIII. törvény módosí-
tásáról szóló 2002. évi XXXVIII. törvény. [Revision of the Act on the Shaping and
Protection of the Built Environment.]
A közbeszerzésekrıl szóló 2003. évi CXXIX. törvény. [Public Procurement Act.]
9/1998. (I. 23.) Kormányrendelet a helyi önkormányzatok címzett és céltámogatásának, a
céljellegő decentralizált támogatásának igénybejelentési, döntéselıkészítési és elszá-
molási rendjérıl, valamint a Magyar Államkincstár finanszírozási, elszámolási és
ellenırzési feladatairól, továbbá a Magyar Államkincstár Területi Igazgatóságai
feladatairól. [Government decree 9/1998 (23-01) on the rules of statement of claim,
preparation of decision and setting apply to local governments’ targeted and
earmarked subsidies, and targeted decentralised subsidy, and on the setting and
monitoring functions of the Hungarian State Treasury, and on the functions of
Regional Offices of Hungarian State Treasury.]
32/1998. (II. 25.) Kormányrendelet a területi kiegyenlítést szolgáló fejlesztési célú támo-
gatások felhasználásának részletes szabályairól. [Government decree 32/1998 (25-02)
on the rules of allocation of development subsidies serving regional equalisation.]
23/2000. (VII.21.) GM rendelet az „Ipari Park” cím elnyerését szolgáló pályázati rendszer
mőködtetésérıl szóló 19/1997 (V.14.) IKIM rendelet módosításáról. [Ministry of
Economy’s Decree 23/2000 (21-07) on the revision of the Ministry of Industry,
Commerce and Tourism’s decree 19/1997 (14-05) on the tender procedure of the
Industrial Park Programme.]
7/2003. (I.14.) Kormányrendelet a társadalmi-gazdasági és infrastrukturális szempontból
elmaradott, illetve az országos átlagot jelentısen meghaladó munkanélküliséggel
sújtott települések jegyzékérıl. [Government decree 7/2003 (14-01) on the register of
settlements either underdeveloped from a social-economic and infrastructural point of
view or suffering from an unemployment rate significantly exceeding the national
average.]
60
Mezei, Cecília : The Role of Hungarian Local Governments in Local Economic Development.
Pécs : Centre for Regional Studies, 2008. 61. p.
Discussion Papers, No. 63.
Appendix
Methodological background
Table 6
Some characteristics of the sample*
Characteristics
Data
Sent questionnaires (number)
3134 (settlements)+
1 (capital city) +
23 (capital city districts)
Received questionnaires** (number)
288 (valid) + 4 (anonym)
Propensity to reply (%)
9.2
Propensity to reply of villages (%)
8.6
Propensity to reply of towns (%)
11.8
Propensity to reply of towns with county rank (%)
59.1
* The regional distribution of the sample settlements compared with all settlement’s regional map
results in similar picture. ** Budapest has a special position. We had to exclude the city from the
essay, because only one district sent back our questionnaire. The capital city has special local
economic development conditions, accordingly in case of better propensity to reply we should
have processed it separately.
Source: Own construction.
Table 7
Settlement categories applied during the study
Category
Population (persons)
Small village
– 41,999
Large village
2,000 – 49,999
Small town
10,000 – 49,999
Big town
49,999 – 49,999
*The basis of categorisation was the grouping used in two empirical
researches of similar topic (Horváth–Péteri, 1993; Horváth–Kiss, 1996).
Source: Own construction.
61
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The Role of Hungarian Local
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Discussion Papers 2008. No. 63.
The Role of Hungarian Local
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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
63
Discussion Papers 2008. No. 63.
The Role of Hungarian Local
Governments in Local Economic Development
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
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
64
Discussion Papers 2008. No. 63.
The Role of Hungarian Local
Governments in Local Economic Development
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
No. 60
PÓLA, Péter (2007): The Economic Chambers and the Enforcement of Local Economic
Interests
No. 61
BUDAY-SÁNTHA, Attila (2007): Development Issues of the Balaton Region
No. 62
LUX, Gábor (2008): Industrial Development, Public Policy and Spatial Differentiation in
Central Europe: Continuities and Change
65