Acta Oeconomica 46. (1994)
1994 / 1-2. szám - Nagy András: Import Liberalization in Hungary
2 A. NAGY: IMPORT LIBERALIZATION IN HUNGARY wanted to get rid of the weak pressure for efficiency—emanating from the planning system. Many ideas of the reforms—such as a competitive market-economy, increased efficiency pressure, opening to the world economy—were frightening to the conservative managers, for such tendencies hurt their interests. At the same time, the elimination of the mandatory plan-targets by the reforms strengthened their positions and reduced the power of the central authorities.2 The system of protectionist import regulation that was developed in the early seventies was not so much exercised by tariffs, or explicit quotas, but by complex and informal methods of import rationing. These were kept strictly secret and were aptly called by Gács (1986) “a regulation based on consensus”. The “consensus” was reached in a bargaining process between the “user” enterprises of imports and the monopolist trading companies. In this process both partners were interested in maintaining cordial relations and, as a consequence, importers showed considerable self-restraint in their import requirements. This import control system used the “base-year” principle, meaning that the level of licensed imports was determined by the previous year’s imports. In order to acquire a higher volume of imports, a difficult bargaining process was necessary, where applicants had to show what losses would be created by the lack of higher imports in national economic priorities. This complicated system was developed mainly because one of the major aims .of the Hungarian government at the time was to convince international organizations and the main western trading partners that the economic reforms had created a market economy in Hungary and the foreign trade regime in particular was similar to those of the developed countries, i.e. it was liberalized. They especially wanted to get rid of the disadvantageous “state trading” status, in order to show the international community that Hungarian firms were autonomous in their decision-making. The international community let itself be misled, and accepted the picture offered by the Hungarian government, which was much more attractive than the reality. (Oblaih 1991b, p. 209; Nagy 1991, p. 224) Hungary became a member of the GATT, and later a member of the IMF and the World Bank. These institutions seemingly accepted that there were no import restrictions in Hungary, except those connected with tariffs and quotas for consumer goods and some basic raw materials. The régular increase of imports could be financed in the seventies, partly because import demand was strongly restricted or suppressed, and partly because there was no strong opposition to the growing import surplus, i.e. to increasing indebtedness. This did not mean that the shortage of convertible currencies diminished: with more contacts with the developed economies, there was an increase in the unsatisfied demand of the enterprises for modernization, and of the consumers for better quality goods. It was a generally accepted view that centralized foreign 2 Szalai (1989) provides a vivid insight of the struggles for power between the managers of the big firms and the bureaucrats of the central authorities after the introduction of the reforms. Acta. Oeconomica 46, 1994