The nature of Hungary's comparative advantage: 1975-88

Abstract

In this work the aim is to analyze the Hungarian Foreign Trade performance during the period 1975-88 by using the Revealed Comparative Advantage (RCA) methodology. Hungary was the first centrally planned economy to introduce market - oriented reform, in 1968. This reform was called the New Economic Mechanism (NEM). The reform consisted of: price reforms, liberalized trade with the western economies, institutional reforms in the area of banking and taxation. The results of this study indicate that Hungary revealed comparative advantage in commodity groups such as: industrial machinery and equipment, foodstuffs and industrial consumer goods; and revealed comparative disadvantage with commodity groups such as: chemicals, building materials, fertilizers, rubber and raw materials of vegetable and animal origin, in her overall trade in the world.