THE COMPETITIVENESS OF HUNGARIAN INDUSTRY

Using an RAS update to 1990 of an 86-sector input-output table, for Hungary in 1986, and corresponding data on world-to-domestic price ratios for 1990, this paper calculates domestic resource costs (DRCs) for Hungarian industries. The disaggregated results are compared with corresponding estimates for a more aggregated model, using a 21-sector input-output table. The paper discusses limitations of the data, but finds that the main results are quite robust, since very similar rankings of sectors are obtained under a variety of conditions. Hungary's trade relationships and constraints on trade make it uncertain whether particular sectors, like agriculture, should be treated as tradeable or non-traded, Results are therefore estimated for both possibilities. Finally, the paper analyses the likely impact of the recently concluded Association Agreement between Hungary and the EC on Hungary's competitiveness, finding that some sectors will be strengthened, e.g. forestry, agriculture and food processing; and others will face more difficult conditions, e.g. extraction. Other sectors are not greatly affected.