Impoverishment in Northern Hungary

Abstract

The economic transition initiated deep-going changes in Hungary, which have fundamentally changed the territorial inequalities within economic development, prosperity and financial position in the country. The economic performance of the region of Northern Hungary, which was considered to be one of the determinant industrial centres in the 1980s, decreased dramatically after the change of regime. The region still has not managed to come out of this unfavourable situation. The poverty rate in the region exceeds the national level. In Hungary the segregation of the poor is typically concentrated in particular villages or groups of villages. This is particularly true of the phenomenon in the region of Northern Hungary. The situation of impoverished villages and small regions is becoming increasingly unfavourable. Economic growth plays a major role in the eradication of poverty, for economic growth (measured either in terms of changes in real income, or in those of real GDP) is able to moderate poverty considerably in two respects. As a result of economic growth the rate of people living under the poverty line decreases, and the poverty of those living in poverty also decreases. Today, however, the opposite of these favourable tendencies is prevalent: accordingly, the economic recession that can be seen since September 2008 has also contributed to an increase in poverty in addition to its many other negative consequences. Owing to the economic recession, the rate of the poor is expected to increase and so is the penetration of poverty. Taking into account the expected indicators of economic recession, from the second quarter of 2009 to the end of the year an increase close to 70 % can be expected in the rate of the poor and an increase of 13 % is to be expected in the poverty gap. With an improvement in the economic situation, however, from the second half of 2010 the process of the increase in poverty can be probably stopped.