People's Republic of Hungary - Economy

Economy

As a member of the Eastern Bloc, initially, Hungary was shaped by various directives of Joseph Stalin that served to undermine Western institutional characteristics of market economies, democratic governance (dubbed "bourgeois democracy" in Soviet parlance), and the rule of law subduing discretional intervention by the state. The Soviets modeled economies in the rest of the Eastern Bloc, such as Hungary, along Soviet command economy lines. Economic activity was governed by Five Year Plans, divided into monthly segments, with government planners frequently attempting to meet plan targets regardless of whether a market existed for the goods being produced.

Producer goods were favored over consumer goods, causing consumer goods to be lacking in quantity and quality in the shortage economies that resulted. Overall, the inefficiency of systems without competition or market-clearing prices became costly and unsustainable, especially with the increasing complexity of world economics. Meanwhile, other Western European nations experienced increased economic growth in the Wirtschaftswunder ("economic miracle"), Trente Glorieuses ("thirty glorious years"), and the post-World War II boom.

While most western European economies essentially began to approach the per capita Gross Domestic Product levels of the United States, Hungary's did not, with its per capita GDPs falling significantly below their comparable western European counterparts:

The per capita GDP figures are similar when calculated on PPP basis:

Housing shortages also emerged. The near-total emphasis on large low quality prefabricated apartment blocks, such as Hungarian Panelház, was a common feature of Eastern Bloc cities in the 1970s and 1980s. Even by the late 1980s, sanitary conditions were generally far from adequate. Only 60% of Hungarian housing had adequate sanitation by 1984, with only 36.1% of housing having piped water.