Hungarian Industrial Policy in an EU Framework

Éltető, Andrea (2025) Hungarian Industrial Policy in an EU Framework. In: The Path of Hungary's EU Membership. Studies in Economic Transition . Palgrave Macmillan Cham, Cham, pp. 169-200. ISBN 9783031940088; 9783031940095

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Abstract

In addition to EU funds, state aid financed from the national budget represents another key instrument of industrial policy. In recent years, the European Union has relaxed legal restrictions on state aid, and the COVID-19 pandemic has prompted the introduction of a new EU framework featuring innovative aid instruments. Under the pretext of supporting less-developed regions, Central and Eastern European member states—including Hungary—have been at the forefront of providing state aid. Prior to 2010, the Hungarian government allocated 1.3% of GDP to state aid; however, between 2010 and 2021, this figure increased to 2%. Although Hungarian industrial policy formally complies with the EU’s regulatory framework—with strategic documents assigning equal priority to supporting research, innovation, SME development, Industry 4.0, greening, and emission reduction—the implementation has not aligned with these strategic objectives. As this chapter demonstrates, state aid has primarily supported the automotive industry and low value-added manufacturing activities by foreign firms, thereby reinforcing the structural concentration of capital within these segments.

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