Hungarian Tourism

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After 1989: Hungarian Tourism in Transition Period
Tourism is one of the most important industries in the Central and Eastern European transition economies. Tourism does not only bring in massive hard currencies, which transition economies desperately need, but also receives tremendous foreign direct investment (FDI), which transition states could possibly benefit from the spillover effects. This paper examines the tourism industry in Hungary after the collapse of Communism in 1989. Firstly, it outlines the important role tourism plays in Hungary during transition period. Secondly, it analyzes the economic impact brought by the European Union (EU) membership for Hungarian tourism. Thirdly, the paper discusses how FDI affects tourism in Hungary. After 1989, Hungary has taken great efforts to transform from a centrally planned economy to a market economy. Due to more than four decades of closed market, it was lack of hard currencies. Tourism has been viewed as one of the main sources of international currencies. In fact, tourism industry is a net contributor of national income. Also, it offers hundreds of thousands job opportunities in labour market. Securing steady growth of tourism would facilitate transition process in Hungary. Therefore, Hungarian government recognizes the importance of tourism in post-communist era and ranks it as one of the priority industries (Tourism in Hu 2010). To make further tourism development, the Hungarian government offers several business incentives to attract foreign investment. Those incentives include non-refundable subsidy, tax allowance for investment over HUF 3 million, up to ten-year corporate income tax break, and training subsidy covering 25% to 90% training costs (Tourism in Hu 2010). Moreover, Hungarian government develops closer links with other Visegrad countries such as the Czech Republic, Slovakia and Poland (Puczkó & Rátz, 2006). By further cooperation, the Visegrad group would enjoy economic of...
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