INSTITUTE FOR WORLD ECONOMICS HUNGARIAN ACADEMY OF SCIENCES

Hungary has taken an FDI-oriented development path during its tran-sition process. The economy has become highly internationalized and largely controlled by foreign-owned firms, which have contributed much by modernizing production, reorienting markets and transfer-ring expertise. However, the initial surge of development seems to be ending, at least in the form it took in the 1990s. Signs of saturation are visible, and the question now is how to open a new chapter of FDI-oriented development. Investment and operation will have to shift to-wards more sophisticated activities. To effect such changes, Hungary must offer enough qualified labour and an adequate infrastructure. Moreover the investment incentive system needs overhauling, as entry into the EU will outdate otherwise efficient incentives. Efforts must go into organizing the economy according to the National Development Plan, as a backbone for the EU assistance available. 5INTRODUCTIO