Hungary

   

Policy Performance

#33

Economic Policies

#37
Showing significant gains over time, but from a low level, Hungary falls into the bottom ranks (rank 37) internationally with regard to economic policies. Its score on this measure has improved by 1.0 point since 2014.

Real GDP growth has rebounded strongly after a slowdown in 2016, benefiting from the resumption of EU-funded investment, a fiscal stimulus, negative real interest rates and strong wage increases. Growth has primarily been driven by fixed capital formation such as large construction projects, as well as household consumption. Deficits are rising, and debt levels remain relatively high.

Unemployment rates have dropped significantly in recent years, in large part due to a broad public-works program that rarely produces long-term labor-market integration. Significant emigration has also played a role, creating a brain drain that has led to skilled-labor shortages in many fields.

Tax reforms have shifted the burden from direct to indirect taxes. Significant tax reductions have been implemented in recent years, with larger companies seeing particular benefit. However, frequent tax changes still complicate economic activity. The research sector remains fairly advanced, but is underfunded.

Social Policies

#38
Increasingly reflecting the state’s conservative ideology, Hungary’s social policies place it in the bottom ranks (rank 38) in international comparison. Its score on this measure has improved by 0.1 point relative to 2014.

Major education-system reforms, including spending cuts and centralization, have undermined student outcomes. A controversial higher-education act has sought to drive the Soros-funded Central European University out of the country. Poverty is worsening, and the middle class is being further weakened. Roma are deeply marginalized, particularly with regard to education and employment.

Health care is a highly conflict-ridden area, leading to a series of scandals and protests. Problems include widespread mismanagement and corruption, hospital debt, and a brain drain of medical staffers. Support for families is tied to anti-immigration policies. Child care has been expanded, and counseling centers created to help women combine parenting and employment.

Disparate pension systems have been merged, but pensioner poverty has increased. The government has taken a strongly xenophobic anti-refugee stance both domestically and in an EU context. However, non-EU citizens can obtain Hungarian passports in return for investments in the country.

Environmental Policies

#17
With implementation concerns despite an adequate legal framework, Hungary falls into the upper-middle ranks internationally (rank 17) in the area of environmental policies. Its score on this measure has declined by 0.2 points relative to 2014.

The country has comprehensive environmental laws, strongly influenced by EU policies. However, the issue has not been a focus for the government. Policy has thus been fragmented, and problems such as drinking-water contamination and waste-site mismanagement have grown. Rampant construction in Budapest has led to the loss of many trees.

The country is expanding its use of nuclear power, with work on a key plant still strongly contested by the Austrian government. This will likely help reduce CO2 emissions, but has also resulted in a neglect of renewable power sources.

Democracy

#40

Quality of Democracy

#40
Having taken large steps back in recent years, Hungary falls into the bottom ranks (rank 40) with regard to democracy quality. Its score on this measure has declined by 1.5 points since 2014.

Electoral procedures such as voting rights and party registration and funding are arranged to dilute opposition support. More than 90% of traditional media outlets are now controlled by the government or allied oligarchs. The internet has thus become the central forum for public discourse and information, but this does not reach the population as a whole.

Popular initiatives are used as an expression of opposition and dissent, but are typically refused by the government-controlled election board. Asylum-seekers are subject to forced detention. NGOs receiving more than about €24,000 from abroad annually must register as and present themselves as “foreign-funded NGOS.”

Opposition activists are defamed as traitors and foreign agents. Discrimination against minorities, especially Muslims, Roma and refugees, is widespread. The government’s anti-Soros campaign has invoked anti-Semitic stereotypes. Judicial independence has declined substantially, and corruption is pervasive.

Governance

#37

Executive Capacity

#34
Despite the state’s sweeping consolidation of power, Hungary scores relatively poorly overall (rank 34) with regard to executive capacity. Its score on this issue has declined by 0.2 points relative to 2014.

The size of the Prime Minister’s Office resources have steadily grown, but a focus on political loyalty has actually resulted in a decline in expertise. Line ministries largely follow orders from above, and are subject to detailed PMO oversight. Informal decision-making dominates, with Orbán guiding virtually all important decisions.

RIAs are not systematically applied, and quality is poor. Mass demonstrations have prompted some government meetings with selected stakeholders, but consultation is largely focused on “national consultations” in the form of manipulated citizen questionnaires. Hasty policymaking and loyalty-based hiring practices hamper the achievement of goals.

Institutional reform has centralized power, facilitating patronage and ideologically driven decisions. High-level government reorganizations seem aimed at creating elite rivalries. Agencies are closely monitored. The government’s conflicts with the EU have deepened over time, particularly with respect to the issue of refugees.

Executive Accountability

#40
With few checks on the powerful prime minister’s power, Hungary falls into the bottom ranks (rank 40) with respect to executive accountability. Its score on this measure has declined by 0.4 points relative to 2014.

Despite declining media freedom and propagandistic government-information policies, the public’s policy knowledge has actually increased, with crises particularly in education and health care leading to widespread discussions and social movements. The traditional media has engaged in self-censorship and a turn toward a focus on scandals. Social media and internet publications have gained importance.

Parliamentarians’ resources, particularly among the democratic opposition parties, are not sufficient, and oversight powers are in practice flawed. The audit office has acted relatively professionally despite its governing-party links. The ombudsman has not served as a check on the government.

The government party is centralized, with the opposition fragmented. While largely loyal to the government, some business associations have criticized economic policy. The government has set up a broad, well-financed network of false, pro-government civil-society associations and foundations.
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