RESTRUCTURING AND PRIVATIZATION OF THE HUNGARIAN MANUFACTURING-INDUSTRY

For the third time this century, Hungary is restructuring its industri al and export markets while managing a huge debt burden and a high rat e of inflation. The main difference between recent and former transiti onal periods is that the recent one was caused by an unprecedented wav e of political and institutional changes. Hungary wants to move rapidl y toward a market economy, develop a policy framework, change the fund amental character of its relations with other countries, and integrate fully into the global economy. In the latest transitional period, unp recedented changes both in the size and character of industrial organi zations have occurred. New businesses sprang up and insolvent ones wer e liquidated. Since this economic reorganization was supported by poli tical changes, privatization became one of the main targets and tools of the restructuring process. Under these circumstances, the transform ation of the legal status and organizational forms of business became a preparatory phase of privatization and influenced the reorganization of state enterprises. In this paper, the interaction between economic restructuring and privatization is summarized, the causes of the decl ine of Hungary's economy are examined, and the impact of foreign inves tment in Hungary is reviewed.