Taux de change, prix extérieurs et efficacité du commerce extérieur hongrois depuis 1968. Marge de manœuvre de la politique économique hongroise
Authors: Dezsényi -Gueullette Agota 
Published: November 2010

Exchange Rates, External Prices and the Effectiveness of Hungary's Foreign Trade Since 1968. What Room for Manœuvre in Hungary's Economic Policy?
The austerity measures promulgated by the Hungarian government in December 1978 show clearly the dependence of the Hungarian economy on the international political and economic situation, and how small is the room for manœuvre for Hungary in the face of external shocks.
However, the notion of dependence is a partially subjective one, and the conventional measures of the influence of foreign trade on the internal economic situation produce widely divergent results. Thus the level of indebtedness and the balance of payments deficit look different according to the exchange rates applied to trade with different currency zones (rouble, dollar, etc.), if these are related to national economic aggregates.
There are two possible ways of assessing the effective influence of Hungarian foreign trade on the internal economic situation. The first concentrates attention on the economic and commercial links which, at the macro-economic level, determine the influence of indirect economic regulators (e.g. customs duties, exchange rates, subsidies), and direct economic instruments (interstate trade agreements, quotas, export licences, etc.). The exchange rate policy practiced by Hungary is then examined, with "dollar-zone" countries and with the transferable rouble area.
The second approach concentrates on the micro-economic aspects. The volume of exports considered necessary at the macro-economic level should be profitable to enterprises. However, the variation in customs duties, the system of subsidies and of the largely centralized investment financing make the position of the enterprises both comfortable and secure. Since the real effectiveness of the enterprises' relations with foreign countries is not reflected in these enterprises' monetary revenues, the role of exchange rates is substantially reduced.
The revaluations of the forint, supposedly related to changes in foreign prices, have taken the form of a complex and subtle redistribution of subsidies between exports and imports, without any serious attempt to link internal and external prices. If one also takes into account all the various exceptions and exemptions, one could say that there are as many special cases as there are enterprises, which is not so very different from the old system of "price equalization" (Preisausgleich). Anyhow, the Hungarian enterprise seems well protected against all changes in the external environment, while the balance of payments shows an ever larger deficit.
In conclusion, no real improvement is possible without a fundamental reform of the control over foreign trade, based on a necessary and sufficient price reform. This was provided for in the reform of 1968, and repeatedly postponed. These delays and hesitations can have unfortunate consequences for a country so dependent on international trade, more unfortunate indeed than the social-economic consequences of boldly facing up to the problems of linking the national economy with the outside world.