1. State Ownership: Are Hungarian nationalizations unique?
Éva Voszka, University of Szeged

2. Comparison with the EU countries
A snapshot: the lack of fully-fledged models
The starting position
Expansion after 2008
Timing
Declared goals
Sectors concerned
Methods
Directions
Conclusions

3. 1a. Rather low level of state ownership before the crisis
Government assets in % of GDP
1999
2007
2014
EU average
13,6
16,3
15,2
CEE average
32,1
19,9
18,9
Hungary
23,0
11,1
14,8
Poland
22,6
23,5
16,2
Source: Eurostat

4. 1.b. SOE share in selected EU countries, 2008-09
Number of firms
Share in employment
Asset share in GDP
EU 13 average 50
3,5
8,2
CEE 5
average
264
3,7
12,9
Hungary
379
4,4
7,4
Poland
712
23,7
Source: Christiansen (2011) OECD

5. 2a. Frontrunner in expansion
Recapitalization of banks/GDP
Nationalization
/GDP
EU avarage
3,4x/
2,4-3,1
CEE average
1,1xx/
n.d.
Hungary
0,0
5,2
Poland
n.d
x/ High: Ireland 38%, Greece 22%, United Kingdom, Spain, Belgium 5-6%
xx/ Slovenia 8,9%, Latvia 2%, Lithuania 1%, all others 0%
Source: Recapitalization DG Competition, Crisis related state aid used , Nationalization own estimation

6. EU 13 average 41 3,6 10,4 CEE 5 average 186 4,4 15,9 Hungary 373 10,6
2.B. SOE share in 2012
Number of firms
Share in employment
Asset share in GDP
EU 13 average 41
3,6
10,4
CEE 5 average
186
4,4
15,9
Hungary
373
10,6
Poland
336
1,5
15,6
Source: OECD (2013)

7. 3. Delayed nationalizations
(Per cent of total expenditure)
2011-
EU (recapitalization)
67,4
32,6
HU (nationalization)
0,0
100,0
Source: European Commission (2014): State aid scoreboard

8. 4. A new model of capitalism
Declared goals of nationalizations EU
smooth operation of financial markets
restoration of confidence
alleviate recession
crisis management HU
the crisis of neoliberal market economy; public interest, sovereign economic policy
remedy of market failures (monopolies)
rearrangement of property and income distribution (to correct „unfair” privatization)
“creation of a new system”

9. 5. Broader sectorial coverage
- financial institutions
- „aftershock”:
public services
energy sector EU
Non-tradable sectors:
- Banks (other than bailout)
-Public utilities
- Pension funds
Other sectors:
Energy manufacturing
transport
communication
real estate,etc. HU

10. 6. Ownership changes embedded into legislative and regulatory measures
- purchase (increase of capital in banks),
-termination of contracts
- ‘nationalization of profits’ (rarely) EU
- purchase – value of firms depressed by regulation (special taxes), administrative prices
- direct economic pressure
- ‘expropriation’ HU

11. 7. Nationalization accompanied by privatizationsEU
New state investments:
banks (to original and new owners)
Old state assets:
Other sectors (60% of total EU priv. income ) –Poland 2., following Portugal HU
New state ownership - to new owners:
Banks
Tobacco shops
Broadband spectrum
Airport services
Agricultural land
Soruce: Privatization Barometer

12. Conclusions Similarities Differences – quantitative indicators
The presence of state ownership before the crisis
It’s expansion after 2008
Different sectors, including banks
Mainly purchase
Nationalization and privatization parallely
Differences – quantitative indicators
Extent, proportions
Unique in qualitative aspects
the goal is to set up a new form of capitalism, with the decisive role of the state – rather than a short-term crisis management tool
embedded into a wide range of regulatory and policy measures

13. Is it really a new model? Counter arguments
State ownership is still around European average, although in some sectors (public services, energy, banking) it became rather high
Nationalization did not concern major sectors (construction, different kinds of services, export oriented manufacturing) – market economy and foreign ownership persist
Privatization is modest: income less than 1% of GDP, re- privatization to selected domestic groups insignificant
But
Constraints of the market (admin. prices, regulation, new monopolies, etc.)
Expansion in the role of the state (also by regulation and state subsidies), centralization of decision-making
Domestic entrepreneurial groups, selected by the government are being enriched also by making business with new or old state enterprises, by state orders or other subsidies.