ABSTRACT
Hungary became an independent country in 1918 as a result of the disintegration of the Austro-Hungarian Empire. Although the New Economic Mechanism (NEM) was introduced en bloc on 1 January 1968, there were earlier changes of note. The NEM has not transformed Hungary into a model of market socialism, where state-owned enterprises operate in a market environment. There is a labour market in Hungary and ‘full employment’. Enterprises were allowed to compete within those totals, and greater use was made of interest rates and forecasted rates of return. One of the major problems that arose over time was the narrowing of the levels of producer and consumer prices. Hungary overcame the trauma of the 1956 revolution to introduce overnight on 1 January 1968 the most radioed reform in Eastern Europe outside of Yugoslavia. There has been pioneering work in elected management, while the ‘second economy’ is large and flourishing.
