Although Hungary is only the 108th most extensive country in the world, with an area of 35,920 square miles, it has one of the largest economies (57th largest) according to the IMF. It is a country in Central Europe with a population of approximately 10 million people and a member of the European Union. The capital, Budapest, is the largest city and the political and economic center. Other major cities include Pecs, Miskolc, Debrecen, Gyor, and Szeged. The country has seen the emergence and growth of several sectors including agriculture, transport, health care, industries, and service sectors. These sectors are key to the present and future growth of the country.
Major Sectors of the Economy
Hungary is not well endowed with natural resources like some of its trading partners. However, despite the lack of vital resources, the country’s economy is export-oriented with the main emphasis on international trade. The transitioning from a centrally planned economy to the market economy has facilitated economic growth and development. Although the country, like most Eastern Bloc countries, suffered great loss in market for goods following the fall of communism and the collapse of Soviet Union, Hungary has since recovered and is experiencing a period of sustained growth. The government no longer require any financial assistance from the IMF and has since repaid all its debt to the fund. The economy of Hungary can be described as OECD high income mixed economy with a skilled labor force and a very high human development index. It is an export-oriented market economy with major emphasis on foreign trade.
The Hungarian agricultural sector is one of the fastest growing in the agrarian sector in Europe. In the last 50 years, the sector has grown by almost 50% and created additional 700,000 jobs. However, the agriculture industry has gone through a long and difficult development since World War I including forced collectivization of the small farms. About 70% of the total land area is considered suitable for agriculture while only 48% is arable land. The land under agriculture decreased by 30,000 between 1996 and 2000. Prior to the economic and political transition, agriculture accounted for about 17% of the GDP and employed about the same percentage of the workforce. It also accounted for 22% of the total food export. However, following the transition and recent developments in Hungary, agriculture accounts for only 3.3% of the GDP and just 4.7% of the workforce. Its contribution to food export has also reduced to about 7%. The fall can be attributed to the growth of other sectors and the shrink in production. Despite the decline, the Hungarian agriculture is still self-sufficient and export-oriented. The major crops grown in Hungary include corn, wheat, potato, sunflower, sugar beet, and a wide range of fruits. The country is one of the leading producers of poppy seeds. Hungary also has a number of wine regions producing some of the famous wines such as the white dessert wine Tokaji. Extensive animal husbandry is also practiced in Hungary with about 33,000 farmers engaged in the industry. The country is the second-largest producer and largest exporter of foie grass.
Hungary is one of the most preferred destinations of foreign investors in the automotive industry. The automobile companies their plants in the country include Mercedes-Benz, Suzuki, Audi, and General Motors. Audi, Suzuki, and Opel account for about 17% of the total Hungarian export. The automobile industry in Hungary employs about 100,000 people in the over 350 car component manufacturing companies. The Audi engine manufacturing plant in Gyor is the largest in Europe and the third-largest in the world, investing over 3,300 million pounds in the plant. The Daimler-Benz has created over 2,500 jobs at their new plant in Kecskemet which has a capacity to produce 100,000 Mercedes-Benz compact cars annually. The Opel plant in Szentgotthard currently produces over 500,000 engines and cylinder heads annually.
Hungary is one of the most preferred travel destinations in Europe. It was the 13th most visited country in the world in 2002 and the 24th most visited in 2011. Because of the number of tourists visiting Hungary, the tourism sector has employed over 150,000 people and also offers additional indirect jobs, especially in the media industry. In 2008, the industry generated over 4 billion euros. One of the country’s preferred destination is Lake Balaton, Central Europe’s largest freshwater lake which attracts about one million tourists annually. Budapest, Hungary’s capital, is the most visited region, attracting over 3 million visitors annually. The city’s attraction includes Buda Castle, Andrassy Avenue, and the Danube River embankments. The spa culture of Hungary is also the world’s famous, with several thermal baths of all kinds.
Electronic and ICT Industry
The electronics industry is also one of the major industrial sectors of Hungary, accounting for about 22% of the manufacturing production. Hungary is the largest electronics maker in Central Europe and is responsible for about 26% of the entire regional manufactured electronics. This industry has directly employed about 115,000 people. The ICT segment comprises of telecommunication, IT outsourcing, hardware and software manufacturing, and IT services. The ICT sector is one of the major Hungarian businesses and is responsible for about 10% of the GDP and employs about 100,000 people. This sector has developed rapidly over the past years and is today the leading computer assembly and communication tools manufacturer.
Other Major Industries
Hungary has a stable and well-established health care system in the form of a universal healthcare system managed by the National Healthcare Fund. Pharmaceutical businesses are highly flourishing and contributing greatly to the economy.
The food industry is also one of the significant industries in the country. Despite its dropping shares in the output of the national industry, food processing continues to be a key sub-division of the agricultural sector. Revenue from food industry export is crucial to the nation’s general trade balance, accounting for 6% of the total export.
Industries such as mining, energy production, steel production, and construction also contribute significantly to the nation’s economy and are important sources of employment and foreign earnings.