Hüttl Antónia

Measuring macroeconomic performance and the hidden improvement of terms for trade in Hungary during the transition to a market economy

The paper presents a revised set of data on growth and real income levels in Hungary in the 1985-1995 period. It searches for an explanation for why Hungary could keep its relative level of development in spite of the huge decline in the volume of GDP. It argues that the quality of products improved massively due to import liberalisation and the inflow of FDI, but price statistics were unable to measure it. It was not possible to separate price increase caused by quality improvement from genuine price changes. As during the first period of the transition such products derived mainly from imports, non-observed quality improvements distorted the GDP volume index less than the index of real domestic income. In this way, during the transition period final domestic use might have increased significantly and GDP volume decline was also less than presented earlier. It is very likely that economic development was similarly underestimated in other Central and Eastern European Countries as well.

LXX. évf., 2023. September (1021 - 1037. O.), DOI:10.18414/KSZ.2023.9.1021, Study

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