SECTORAL PRODUCTIVITY IN HUNGARIAN ECONOMY: AN INPUT-OUTPUT LINKAGES APPROACH

Depending on the pace of economic development and structural reforms in an economy, the sectoral output level also changes. Usually, sectoral capital accumulation, labor reallocation across sectors, and total factor productivity contributes to sectoral performance. This paper explores the pace of economic development and sectors' role in the Hungary economy in the context of the demand and supply side. The current study aims to analyze input-output linkages to locate structural changes and interconnectivity in the Hungarian economy. The main findings have shown that on the demand and supply sides, key sectors, such as manufacturing, metals, wholesale and retail trade, and telecommunications, are prominent. These sectors have an important place in the economy and need continuous monitoring to enhance productivity and output levels. The results lead to an important recommendation that the Hungarian economy needs to implement careful planning in order to attract Foreign Direct Investment (FDI) to be a hub of investment. There is also utmost importance to promote education to have human capital in order to meet long-term challenges. Lastly, the country still has a high level of global competitiveness, which sheds light on its new economic policies and its readiness for technical innovation, a successful marketplace, and specialization processes.