Book Launch: Hungary Must Step Up

Many in Hungary have recognized the necessity of this transition, yet the efforts toward achieving it remain insufficiently coordinated,

the book concludes. The volume titled Sodródásból feljebb lépés – Tudásalapú versenyképesség ’From Drifting to Progress – Knowledge-based Competitiveness’, published in 2024 by Akadémiai Kiadó, explores whether Hungary can ascend the steps toward a knowledge-based society. 

The Rector’s Hall at Corvinus University was filled to capacity during the event, organized in 16 January by the Labour Section of the Hungarian Economic Association. Moderator Tamás Halm, editor-in-chief of the Hungarian economic scientific journal Közgazdasági Szemle, welcomed the attendees. He expressed his appreciation for books that not only analyze the present situation but also offer insights and solutions for progress, which is precisely what From Drifting to Progress delivers. Drawing a parallel to medical researchers, he remarked,

We value doctors not only for diagnosing illnesses but for curing them.

Key Insights from the Book 

Among the book’s five authors (György Boda, Ferenc Kiss, Gábor Láncz, Zsolt Matyusz, and Regina Thék), György Boda presented the core findings. He framed his discussion around Austrian economist Roman Stöllinger’s model, which suggests that post-transition Hungary, alongside other V4 countries, successfully integrated into the German–Eastern European supply chains. Despite adequate foreign direct investment (FDI) inflows and their productive utilization, Hungary risks stagnating as a “factory economy” unless it transitions to a “headquarter economy,” characterized by higher added value. This transition, or “upgrading,” is vital for escaping economic stagnation, which the Kádár system, from historical aspect, barely could do, instead of just drifting. Boda suggested that the Orbán government’s historical legacy will be judged on whether Hungary can rise or continue to drift. According to Boda, the important question is whether Hungary wants to go towards upgrading. 

The book also delves into Hungary’s historical constraints, such as the “second serfdom” emerging after the wars of liberation from Ottoman rule. The authors argue that a deeply ingrained mentality, lacking entrepreneurial spirit and dynamism, has led Hungary to adopt a dependent variant of capitalism, an economic model post-transition, which can not solve the social problems permanently. Overcoming this is crucial to upgrading and avoid the “middle-income trap.” 

Perspectives from Contributors 

The book’s cover, depicting a canoe on wild waters, symbolizes Hungary’s precarious position. As Boda explained, the canoe (the nation) can only move safely if the rowers (its citizens) paddle in unison toward progress. This analogy highlights the need for coordinated efforts to steer Hungary toward a dynamic knowledge society. Can Hungary take this step towards this knowledge-based society? As Boda mentioned, many have already recognized this issue, but the efforts in this direction are still not sufficiently coordinated. 

Former Minister of Economy Attila Chikán, a former rector of Corvinus University, praised the book for its clear conceptual framework, extensive statistical analysis, and nuanced exploration of historical and social contexts. He said:

there is a broad consensus that we have not reached the destination we had hoped for.

He emphasized that Hungary’s structural issues and its position at the lower end of supply chains remain key challenges. Chikán also criticized the political prioritization over economic logic in decision-making, taking examples such the healthcare system and social policy. In his view, in a dependent market economy like Hungary, digitalization, adaptation to global challenges, and the approach to population trends are also critical factors. He also highlighted the importance of investing in human capital. 

György Bőgel, a professor at CEU, the chair of the Ecommerce Hungary Association described the book as thought-provoking. He underscored the need for innovation, greater productivity, and more medium-sized, competitive Hungarian companies, and advocated for investing in and retaining talented professionals. While agreeing with many of the book’s premises, he critiqued the title, arguing that Hungary is not merely drifting but being steered—albeit in the wrong direction. He missed the analysis of specific companies’ activities in the book and would have been interested in what and how companies like Audi or Bosch are doing well in Hungary. While he agreed that Hungary has almost always been dependent on someone, he feels that the historical determinism is not as strong as the authors suggest. In his view, Hungary possessed significant intellectual capital after Trianon, citing Tungsram and United Izzó as examples. 

György Boda thanked all the comments and suggestions for improvement. He added that moving towards a more modern structure requires greater knowledge capital, which is why investment in education is essential. Following this, many others contributed their thoughts. 

Economist Antal Nikodémusz emphasized the importance of digitalization, stating that the digital economy operates on a different logic. He argued that investments in so-called intangible assets yield returns. He also noted that artificial intelligence is transitioning from the discovery phase to the application phase. 

Former Minister of Labour László Herczog raised concerns about what will happen to manufacturing if everyone focuses on research and development and marketing.

We can’t live without garbage collectors,

he remarked, referring to those who might be left behind in such a shift. He added that this is not a problem of the present but rather of the future. 

Andrea Éltető, Senior Research Fellow and Research Group Leader at the HUN-REN Institute for World Economics, pointed out that while much has been written about the importance of human capital development, one must wonder whether this is a priority for the current ruling elite. She asked the audience what could be done to encourage investments in Hungary that may only pay off decades later. 

Closing Thoughts 

In response to comments, Boda emphasized that Hungary has not been entirely unsuccessful over the past 30 years.

The ship hasn’t completely sailed,

he remarked. What an economist can do is describe the situation and outline the alternatives. He stressed the need for policymakers to prioritize educational investments despite the lack of immediate political returns, citing Finland, Japan, and Singapore as exemplary models. Moderator Tamás Halm concluded by noting significant knowledge-related investments at Corvinus University, a hopeful sign for Hungary’s future. 

Török Katalin