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A comparison of the social, economic and political systems of Hungary and Slovakia (2006)

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At the political level, Slovakia and Hungary come together on many issues. They are both undergoing instabilities. Slovakia recently saw the establishment of a coalition government comprising Socialist and extreme-right parties, which turns its back on liberal reforms. Hungary, meanwhile, is seeing its Prime Minister discredited with the revelation of lies about the country's financial situation.

In both the countries, after the excitement that accompanied their entry to the European Union in 2004, somewhat disillusioned people face a daily situation, which is improving, but creating various pockets of inequality. For example, income inequality was high in Slovakia in the year 2004. This can be calculated by the ratio between the share of total income received by the 20% of the population with the highest income, and the share of total income received by 20% of the population with the lowest income. This inequality in Slovakia was 5.8, against 4.8 in the entire European Union. Thus the reform fatigue is felt.

We note that Slovakia has a very high unemployment rate (among the highest in Europe) compared to Hungary and the EU-15, despite a marked improvement since 2004 and a worsening of the situation in Hungary. The unemployment issue is a major problem in Slovakia, and particularly affects young people. In 2003, 15.23% of the youth population (age 25) was inactive, against 6.62% in Hungary. This is an impediment to the proper development of the country.

The index of press freedom (developed by Reporters Without Borders) is better in Slovakia and Hungary, respectively, 0.75 and 2, noting that the scale ranges from 0 (completely free) to 100 (repression). This freedom of expression present in both countries supports the market economy.

Finally, the index of political rights (developed by Freedom House) is 1 in Hungary and Slovakia. The scale runs from 1 (for the most freedom) to 7 (for the maximum punishment); the two countries thus benefit from an optimal political, democratic element that can only encourage the roots in a market economy, despite the instabilities present in the moment.

This indicator developed by the U.S. Heritage Foundation "assesses the degree of importance of" informal economy ", that is to say, goods or services that flow illegally to circumvent an inappropriate intervention by governments. "

The informal economy in Hungary and Slovakia is important and far from having declined, it increased, and this, in parallel with the adaptation to the European market economy.

? The barter economy can be estimated on the basis of several criteria. First, it can be judged relatively present in both countries, given the weight of the informal economy, as we have seen.

? Second, the weight of the rural population remains strong in both countries (especially Hungary), despite a transition in the early 1990 that promoted opportunities in urban areas, still running around 35% of the total population in Hungary and 43% in Slovakia. It's a high figure in both cases, knowing that the major industrialized countries have a rural population of less than 20% in general (except France, whose weight remains very rural).

Tags: barter economy, unemployment rate, index of political rights, market economy

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