MAGYAR NEMZETI BANK
3.3 Conclusions
It can be concluded that the economies of Hungary and other countries of the region are characterised by duality regarding productivity and that the productivity difference between small and large firms is relatively greater than in the developed members of the European Union. In the wake of the economic crisis, the reallocation processes slowed down, and the convergence of the productivity difference between the least and the most productive companies has been sluggish. This phenomenon is explained by a combination of factors. On the one hand, the productivity expansion linked to the economic transformation phase following the fall of communism
ended by the mid 2000s in the Hungarian economy. On the other hand, certain elements of the business environment may impede the efficient reallocation of resources in the process. Although new business startups in Hungary are relatively simple, the regulatory environment makes it difficult to start the operation, in addition the relatively slow liquidation practice the prevailing “zombie companies” hamper the process of productivity expansion and the cleaning of the firm portfolio. The previously shown financing constraints further inhibit the growth of businesses, as well as reducing the rate of aggregate fixed investments to GDP.
box 3-3 Transformation of export structure
The economic crisis and the recovery processes, as well as the reallocation among the enterprises and the sectors, also have an effect on the export structure. The link between economic growth and export concentration is important in several respects. On the one hand, concentrated exports raises the risk that economic processes related to a single sector or depending on a single buyers’ market may strengthen and the eventual negative shocks may impact the entire economy. On the other hand, the increase in export diversification may indicate that an increasing number of companies or an increasing number of multiproduct companies are able to enter the global market, which may suggest an increase in productivity.88 Goods exports In a regional comparison, the concentration of Hungarian goods exports is among the highest. This is reflected in Chart 3-23.a, which shows the concentration of the export value by products,89 expressed by the Herfindahl index. Apart from the slightly increasing export concentration of Slovakia, the concentration ratio of the other countries in the region has been relatively stable since 2005. By contrast, the concentration of the Hungarian goods exports has decreased significantly since 2010. This decrease is attributable to two opposite underlying processes (Chart 3-24). The share of machinery and electronic equipment in export value decreased significantly after 2010. More particularly, it is primarily the contraction of the export ratio for two technical articles that are the key factors: the ratio of telephones and their accessories (HS8517) and the monitors and projectors (HS8528). In parallel with this, the ratio of the value of automotive exports has significantly increased in exports, which is in line with the
The Olley Pakes decomposition is used, amongst other, in the recently issued thematic publication of the European Commission (2013) examining business dynamics. 88 For more details, see Cadot et al. (2013). 89 For the calculation of the concentration, we used the 2-digit Harmonised System nomenclature. 87
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GRowTh REpoRT • 2015
