Philipp Fink, Hungarian Social Dichotomy in:

Philipp Fink

Late Development in Hungary and Ireland, page 194 - 195

From Rags to Riches?

1. Edition 2009, ISBN print: 978-3-8329-4173-4, ISBN online: 978-3-8452-1720-8

Series: Nomos Universitätsschriften - Politik, vol. 168

Bibliographic information
194 The definition of poverty became locally discretionary with eligibility requirements, programmes and definitions displaying wide local differences. The lack of a concerted effort to understand and address structural poverty, therefore, resulted in the assistance instruments to only guarantee the subsistence of the poor instead of attempting to tackle the underlying reasons of poverty (Szalai 2002: 41-42). Finally, although the period of large wage volatility has subsided, meaning that wage earners are less prone to experience large declines or increases in their incomes, relative and income positions have become increasingly rigid (Molnár 2004: 24). Hence, the possibility to escape from low pay and poverty has become more remote. Therefore, the danger to remain in the low wage sector and thus to possibly experience poverty and social exclusion has increased. The importance of educational attainment has increased for new entrants on the labour market (Róbert 2005: 85). However, despite a substantial expansion of higher education since 1990 in Hungary, the permeability of access to higher education is increasingly constrained (Lannert 2005: 53). Pupils from socially disadvantaged households are finding it increasingly difficult to enter upper secondary and third level institutions as a result of financial constraints (Liskó 2005: 93). The level of parental educational attainment is of increasing importance. The higher the level of education of the parent, the larger are the chances for the child to access higher educational institutions (Varga 2005: 81). Hence, the revaluation of educational credentials since 1990 has increased the social determinism of the educational system. Thus, institutional imbalances increasingly contribute to the social reproduction of success and failure in post-1990 Hungary. 4.3.5 Hungarian Social Dichotomy Hungary’s transition from a socialist planned to a market economy unleashed a dramatic reconfiguration of income and wealth positions. Post-socialist Hungarian society is characterised by a dichotomy defined foremost by the level of skills, nationality of employer and increasingly social status. The large inflows of FDI have contributed to a distinct labour market demand shift in favour of younger and skilled employees to the detriment of low skilled and older workers. Institutional deficiencies of the Hungarian wage bargaining process additionally amplify direct market income inequality. The market-generated inequalities feed through into the dispersion of household incomes. The household income position is defined by the educational profile and employment status of the main earner. Initially the Hungarian state was able to avert the widespread marginalisation of the population via extensive social transfers. The resumption of economic growth after 1995 has disproportionately benefited higher income households. The situation of those households experiencing low pay and poverty has difference only marginally improved. Moreover, lower income groups disproportionately 195 carried the social costs of the social transfers. In contrast, as a result of political efficacy, middle and higher income groups additionally befitted from the increasingly regressive tax system and social provisions complementing their marketgenerated incomes. The lower incidence of wage mobility suggests that the transitional effects on the labour market are subsiding. As a result, income and therefore social positions are becoming rigid and hence the importance of access to educational attainment is increasing. However, the permeability of the educational system for members of disadvantaged social groups is declining. Consequently, the danger of remaining socially disadvantaged and experiencing social exclusion is growing. Hence, success or failure of social mobility is increasingly the result of social reproduction. 4.4 The Irish Stepping Stone Beginning with the analysis of the Irish industrial structure, the explicit aim of the Irish Republic’s FDI-led development strategy has been to create employment, increase exports and induce industrialisation via the attraction of FDI (McAleese/Foley 1991: 3). Hence, the developmental contribution of investing TNCs will be analysed. It will be shown that the Irish industrial structure is characterised by a distinct duality. Again, growth inputs stem from foreign, primarily efficiency-seeking and US-owned manufacturing firms using Ireland as a stepping stone to produce high-technology exports for EU markets. The superior performance of the TNC-dominated export sector masks the comparative underperformance of indigenous enterprise. Two sectors reside side by side with only a low level of interdependence. 4.4.1 Foreign-Owned Growth in Ireland Economic growth during the 1990s was footed on the expansion of the manufacturing sector, which tripled its output between 1991 and 2000 and increased its employment by 30% (DETE 2003: 65). The growth of manufacturing output was inturn the result of FDI inflows. A total of 10% of all greenfield investments in the EU were located to Ireland during the 1990s (Forfás 2002: 32). Internal and external factors made Ireland an attractive location for predominately US TNCs in 1990s. Beginning with internal factors, of critical importance were artificial factors in the form of low corporate tax rates and extensive investment and employment grants, which effectively subsidised production in Ireland (Jacobson/Kirby 2006: 30).155 Furthermore, since the 1980s industrial policy was specifically targeted towards the 155 In total, the IDA dispensed grants amounting to € 1.39 billion between 1992 and 2002 (Paus 2005: 72).

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Irland und Ungarn verfolgen eine Entwicklungsstrategie, die in bewusster Abhängigkeit von Globalisierungsprozessen in Form von ausländischen Direktinvestitionen steht und sich als Paradigma in der Peripherie durchgesetzt hat. Doch dieser Entwicklungspfad hat zu einer ungleichen und abhängigen Entwicklung geführt. Dies ist laut dem Autor das Resultat des mangelnden Gestaltungswillens beider Staaten, für einen gleichgewichtigen Wachstumsprozess zu sorgen. Die historische Analyse zeigt, dass eine auf ausländische Firmen fußende Entwicklungsstrategie nicht ausreicht, um traditionelle Peripheralität zu überwinden. Der Autor fordert eine Reform des Entwicklungsparadigmas, um eine gleichgewichtige Entwicklung zu ermöglichen.