In order to promote Hungary’s sustainable growth, we constantly analyze successful trends throughout the world economy. We are paying special attention to South Korea, Israel, Dubai, Singapore, successful Chinese cities, Poland, and the Baltic countries. We have recognized the fact that the post-World War II economic marvels (Bavaria, Baden-Württemberg, France, northern Italy, Austria, Switzerland, the Scandinavian countries, Catalonia) are no longer examples for our region to follow. One of the reasons for this, is that these areas – with certain exceptions – cannot keep up anymore with the achievements of the USA and East Asia.
However, there is an outstanding example nearby that we spotted long ago, and have not lost sight of since: the Czech Republic. At the heart of the winning 2010 domestic economic program was the goal of creating one million new jobs. This goal was set based on the employment rates of the Czech economy, nearly 1.2 million higher than ours.
Yet the Czech economic model offers a lot more to learn, making it worthwhile to compare the Czech-Hungarian conditions in depth. We focus on three aspects:
- What are the advantages of the Czech model and how can we resolve the disadvantages?
- What are the advantages of the Hungarian model in comparison that could strengthen our position even further?
- What are the possibilities for the future? How can the Hungarian model be even faster and more effective than the Czech?
The past has quite a strong effect on our opportunities today and in the future. This we cannot change – but the future we can, and we must take the necessary steps now. More importantly however, the past has a unique function: it can often operate in the present much like “compound interest”.
The current demographic conditions are an example of this. In 1990, the populations of the two countries were nearly the same, both around 10.4 million. Today, the Czech population has a demographic advantage of around 900,000 more people. This is due to two main factors (accompanied by comparable immigration rates): a higher Czech birthrate and a much higher Hungarian mortality rate. In the last three decades, there were about 200,000 more births and 700,000 less deaths in the Czech Republic than in Hungary. The concept of “compound interest” works here for the Czech fertility rate as the number of women of childbearing age was higher, resulting in higher birth rates; their fertility rate of 1.71 is tied for third place in the EU. Despite the significant growth achieved in Hungary, our rate is still only 1.55 percent (which is slightly higher than the EU-27 average of 1.53), thus the population gap between the two countries is widening. The Czech Republic has already reached 110,000 newborns per year while we are more than 15,000 newborns behind.