Abstract
Hungary was the first transition economy to make serious and sustained efforts to transform its economy, first from central planning to a form of market-guided socialism of the New Economic Mechanism of 1968, then, in response to sluggish growth in the 1980s, increasingly towards the West European model. A key objective of the reform strategy was the replacement of annually renegotiated bilateral bargaining relationships between ministries and their client enterprises by a stable, legal, and uniform set of taxes and market institutions for allocating resources, to provide better incentives for longer term investments in efficiency and productivity. Hungary therefore embarked on major reforms of indirect taxes in 1987 and direct taxes in 1988, before the fall of the Berlin Wall signalled a wider and more irresistible commitment to transition in Central and Eastern Europe (CEE). Whereas Hungary has continued its gradual, government-directed reform programme, which stretches back to the decentralisation reforms of 1968, Poland and Czechoslovakia chose a more radical approach to transition with a ‘Big Bang’ of price and trade liberalisation, current account convertibility, economic stabilization, and, as rapidly as feasible, the attendant institutional and fiscal reforms to create the institutions of a market economy.
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Newbery, D.M. (1997). Reforming tax and benefit systems in Central Europe: lessons from Hungary. In: Zecchini, S. (eds) Lessons from the Economic Transition. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-5368-3_24
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DOI: https://doi.org/10.1007/978-94-011-5368-3_24
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