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Country Commercial Guides FY 2000: Hungary Report prepared by U.S. Embassy Budapest, released July 1999 Note*

CHAPTER I. EXECUTIVE SUMMARY

Country Commercial Guide (CCG) FY 2000 presents a comprehensive look at Hungary's commercial environment, using economic, political, and market analysis. The CCGs were established by recommendation of the Trade Promotion Coordinating Committee (TPCC), a multi-agency task force, to consolidate various reporting documents prepared for the U.S. business community. Country Commercial Guides are prepared annually at U.S. embassies through the combined efforts of several U.S. Government agencies.

Over the past 10 years Hungary has developed a leading economy in Central Europe, attracted one of the highest per capita foreign direct investment levels in the world and, as a full NATO and soon-to-be European Union (EU) member, created a commercial environment that is stable and reliable. The private sector currently produces over 80 percent of GDP with key sectors such as energy in private hands through a program of strategic privatization that in many cases exceeds energy privatization in Western Europe. Over 80 percent of Hungary's trade is carried out with Organization for Economic Cooperation and Development (OECD) countries. The United States is the 5th most important trading partner for Hungary. In terms of total trade levels, Hungary is the United States most significant commercial partner in the region.

Hungary's growing economy and expanding marketplace generates strong opportunities for U.S. exporters. Over the past several years, U.S. exports of information technology, consumer goods, telecommunications, services, medical equipment and healthcare technology have been in demand. For the immediate future, the "Best Prospects" section outlines seven top categories of high trade and investment potential. U.S. exporters should also be aware that with Hungary's membership in the European Union, Hungary will be an excellent platform for value added production of U.S. products destined for the enormous European markets. Finally, Hungary also provides an excellent and stable base for U.S. exporters considering market expansion to more challenging markets east and south of Hungary.

For investors, Hungary's well-educated, productive and skilled labor force, liberal economic policies, relatively low-cost labor rates (by OECD standards), and close proximity to western European markets have already attracted $19 billion in foreign direct investment. U.S. investors contributed over one-third, or more than $7 billion of the total. A strong pace of investment is expected for the next several years with industry focus on the tourism, franchise, automotive, electronics, and general manufacturing sectors.

Hungary's first ten years of foreign investment have clustered in Budapest and major areas in Western Hungary. At the same time, areas in Eastern Hungary, particularly the northeastern cities of Nyíregyháza, Debrecen, and Miskolc are drawing increasing interest from foreign investors. There are incentives and special support facilities in the region including the U.S. Embassy's Eastern Hungary Program. (Further information is available on: http://www.invest-ehp.com.)

Hungary, as a whole, has drawn a significant U.S. presence due to several market advantages. First, Hungary has a developed commercial environment with primary strengths in human capital. Second, Hungary is an efficient and economical entry point to neighboring markets. Third and last, Hungary is a proven successful location for U.S. investment coupled with an attractive and secure location for American companies to conduct business.

Country Commercial Guides are available for U.S. exporters from the National Trade Data Bank's CD-ROM or via the Internet. Please contact STAT-USA at 1-800-STAT-USA for more information. Country Commercial Guides can be accessed via the World Wide Web at http://www.stat-usa.gov, http://1997-2001.state.gov and http://www.mac.doc.gov. They can also be ordered in hard copy or on diskette from the National Technical Information Service (NTIS) at 1-800-553-NTIS. U.S. exporters seeking general export information/assistance and country-specific commercial information should contact the U.S. Department of Commerce, Trade Information Center by phone at 1-800-USA-TRAD(E) or by fax at (202) 482-4473.