The Pillars of a New State Management Model in Hungary. The Renewal of Public Finances as a Precondition of a Lasting and Effective Cooperation Between the Hungarian State and the Economic Actors

Kolozsi, Pál Péter and Lentner, Csaba and Parragh, Bianka (2018) The Pillars of a New State Management Model in Hungary. The Renewal of Public Finances as a Precondition of a Lasting and Effective Cooperation Between the Hungarian State and the Economic Actors. POLGÁRI SZEMLE: GAZDASÁGI ÉS TÁRSADALMI FOLYÓIRAT, 14 (Spec.). pp. 12-34. ISSN 1786-6553

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Abstract

Cohesive society, trust and social cooperation are among the social arrangements and meta-institutions required for building good institutions and a well-managed state. Before the global financial crisis, Hungary was characterized by unsustainable public finances, a flawed and irresponsible fiscal policy, and consequently, weak economic fundamentals. This represented a suboptimal state management, with the basics of cooperation between the state and the economic actors were seriously damaged. For this reason, by the beginning of the decade, the renewal of state management and, above all, public finances had become imperative. The first step was the adoption of the Fundamental Law (new constitution), including a chapter on public finances. The stabilization of Hungarian public finances is built on the Fundamental Law and the debt rule, and the monetary policy reforms (after 2013) and improvement in competitiveness (launched in recent years, but partly ahead of us) can also be associated with these regulations. The renewal of public finances after 2010 enables a lasting and effective cooperation between the Hungarian state and the economic actors. The new cooperative framework needs to be institutionalized and can be an appropriate basis for the creation of a well-managed state and an attitude change potentially leading to a state management actively leveraging positive incentives and seeking partnership with the relevant stakeholders.

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