The last couple of months have been very rough for certain countries. Initially Iceland went bankrupt and triggered a cascade of economic trouble for certain emerging countries. One of them is Hungary. Before we get deeper into the background of the current situation, let’s have a look at Hungary’s current economic history since the transition from socialism to capitalism.Before the transition, Hungary’s state owned economy was mainly focused on heavy industry which is a very strange idea in a country that hardly has any natural resources and is forced to buy everything in foreign markets. Hungary has been an agricultural country since its beginning and the forced shift to industry caused a lot of damage to the country and its people. Socialism became unsustainable, both socially and economically and had to face a dead end. However, the most important legacy of the previous era was a huge debt and it’s interests. This triggered a serious inflation in the mid 90s which could only be contained by imposing very strict fiscal and monetary rules that caused plenty of unemployment in the public sector and a lot of social tension.Once the crisis was tamed and the looming danger was over, business went on… Read full this story
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