The role of state in development of socio-economic models in Hungary and Slovakia: the case of industrial policy

This contribution systematically evaluates patterns of change in socio-economic models in Hungary and Slovakia, highlighting the role of the state in the process. While the countries share general similarities in their type of capitalism, a closer overview of institutional domains reveals that important differences exist in the character of change and the role of key actors. In terms of the overall reform paths, Slovakia, especially since the late 1990s, is more coherent and overwhelmingly in a liberal direction, while Hungary appears less radical and encompasses a combination of liberal elements and active state involvement. In this contribution we focus on industrial policy and find that Hungary adopted more comprehensive and vertical industrial support geared towards upgrading, foreign-capital openness throughout the economy, and support of the domestic small and medium enterprise sector. Slovakia developed its industry more through regulation than a direct intervention, opened to foreign capital only in late 1990s, and since then eschewed any attempt to nurture domestic capital.