What Have Been the Main Drivers of Growth in Poland and Hungary since around 2010

Dominika Basak & Dora Papp

Student thesis: Master thesis

Abstract

The thesis examines the factors that contributed to the recent high economic growth of Poland and Hungary. Around 30 years after the transition into the market economy and 15 after the EU accession, the countries have shown extraordinary performance relatively to stagnating Western Europe. Yet, the controversial political development and institutional change of the countries have created uncertainty that can jeopardize the countries’ international competitiveness and their future in the EU.
Due to the complexity of the study area of the paper – business environment of two case-study countries – a system view as a methodological approach is used that allows for reproducing a part of reality in a simplified form. In line with the view, the PIE model selected as an analytical framework treats the business environment as a system divided between political, institutional and economic subsystems, consisting of different components and relationships within them, and between them and the surrounding world, not treating the domestic economy in isolation but rather dynamically and with an international perspective. The holistic view adopted enables to draw conclusions in regard to factors that contributed to the relatively immense economic performance of countries.
The factors that stand behind the economic growth in Poland and Hungary are established divided between the short-run and long-run ones. In terms of the former, the fluctuations in demand are explained that have been shaping the recent economic performance of countries. In terms of the latter, the potential of the direct economic factors is established in connection to the political and institutional landscape. Hence, the dynamics unfolded in the analysis of two countries enables to highlight the power of political development and institutional change that is exerted on the economic and business activity of countries as well as on their international relations and competitive image.
It is concluded that both Poland and Hungary follow the pattern of solid short-run economic performance with Poland’s economy marching steadily, and Hungary with some deviances recognized in macro stability. When it comes to long-term growth, both countries still have potential of exploiting further their production inputs. Nonetheless the recent upheaval in politics may set obstructs on the future prosperity through the connectedness of the elements of politics, institutions, economics and the surrounding world.

EducationsMSc in International Business, (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2020
Number of pages214
SupervisorsNiels Mygind