Regional Development inHungary Prior to the EU

Accession

Ms. Annamária Kékesi

International Centre for Democratic Transition

2015 March

Hungary in the region of Central-Eastern Europe

Hungary – General Information

• Area: 93.030 km2 (HU) / 603.500 km2 (UA)

• Population: 9.87 million / 44.21 million

• Ethnic majority: 83,7% ethnic Hungarian (2011 data) / 77,8% ethnic Ukrainian (2001 data)

• No. of regions: 19 counties / 27 regions-oblasts

• Memberships:

– Council of Europe- 1990 / 1995

– WTO – 1995 / 2008

– NATO - 1999 / -

– European Union/Schengen state – 2004 / -

Historical Background

• No historical trace of regionalism in Hungary

• Ordinary sub-state units: counties (19+1)

• Socialist era reinforces centralization efforts

• 1989-90: Constitutional guarantee of countyindependence

• 2013: Legal reform of local governments

– Loss of independence / financial competence

Timeframe of regionaldevelopment

1989 - Constitutional guarantee of loc. gvts.

1991 - Association Agreement of Hungary

1996 - Legal Framework of Regional Politics – Act XXI.

1998 - Introduction of the NUTS system

2004 – EU Accession (Pre-association funds stop, EU cohesion funds start)

2004-2006 – First National Development Plan (NFT I.)

2013 – Reform of local governments

General ChallengesHungary is Facing

1. Extreme inequality between Budapest –Countryside

2. Stagnating unemployment rate

3. Aging society

4. Low level of private investments inunderdeveloped regions

Map of counties and densityof population

Unemployment rate of Hungary (2013)

The NUTS system

• NUTS: Nomenclature of Territorial Units forStatistics – the introduction is obligatory for EU members

• The system consists of 5 levels– NUTS I: 3 regions

– NUTS II: 7 planning-statistical units

– NUTS III: 19 counties

– NUTS IV: 174 minor areas

– NUTS V: ~3100 settlements, towns, cities

NUTS I. map

NUTS II. map

NUTS III. map

Chronology of NUTS extension in Hungary

• NUTS II. – The basis of EU fund allocation

• 1996 – Regional development law – councils

• 1999 – Amendment of the law to increase theinfluence of the regions (NUTS II.)

• Annual country reports compiled by the EU

• General aim: NUTS II. instead of III.

Pre-Accession Funds

• PHARE (Poland and Hungary Assistance with Restructuring the Economy

• ISPA ((Instrument for Structural Policies forPre-Accession)

• SAPARD (Special Accession Programme for Agriculture and Rural Development)

• Their purpose was to introduce EU fundingsystems and to prepare regions for CohesionFunds

Hungarian Experiences withPre-Accession Funds

• PHARE – most successful, but complicatedapplication procedure

• SAPARD – unpredictable, regions could notaccomodate themselves to it

• ISPA – too large initiatives

• Generally: too much erroneous applications, but successfully „rehearsal” of EU funding

• Importance of SME (small-middle enterprises) support

How to prepare for

• Bureaucracy

• Corruption

• Proposal and tender writing

• Project management

Success stories_CBC

• https://www.youtube.com/watch?v=GFB9of5bdKE

Thank you for your attention!