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THE TRANSITION EXPERIENCE OF HUNGARY Hungary began its transition to a market economy earlier than other Central European economies, with a significant private sector developing well before the communist period ended. Its achievements were obtained because of a number of factors which first emerged under and out of the communist regime. Firstly, Hungary was one of the two most reformed countries among the communist bloc. Secondly, as a result of these communist-era reforms combined with post-communist electoral politics, Hungary was often cited as the leading example of gradualism in transition. Lastly, Hungary still remained among the most successful of the transition economy, even after facing a number of serious problems since the fall of communism. It is for these reasons among others which prove that the study of Hungary’s transition is especially rewarding. Hungary had a predominantly agricultural economy before World War II. Following the standard Stalinist pattern, industrialization was forced on Hungary in the post-war period. Under communist reforms, stretching from 1968 until the end of the communist regime in 1989-1990, most economic activity was conducted by state-owned enterprises or cooperatives, although various small businesses were allowed to operate. In the early 1960s, Kadar announced a new policy under the motto of "He who is not against us is with us." He declared a general amnesty, gradually curbed some of the excesses of the secret police, and introduced a relatively liberal cultural and economic course aimed at overcoming the post-1956 hostility toward him and his regime. In 1966,
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This note was uploaded on 04/13/2010 for the course ECONOMIC 11590 taught by Professor Nekbuzdar during the Fall '09 term at CSU Fullerton.

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