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Structural and regional implications of the new economy in Hungary




Industrial transformation revolutionizing the economic and business models of former state-owned enterprises has barely got into an advanced stage when transforming economies are facing a new type of industrial revolution again: the "new economy" is hammering at their doors.

Beside the conventional challenge of closing the object and the idea gaps between Hungary and the developed economies also in this field, by promoting investment into the physical diffusion and the mental mastering of information and communication technologies, policy makers' greatest challenge is of structural and regional character.

Hungary's present incorporation into the global structure of the world manufacturing brought about a spectacularly increased share of high-tech products both in total Hungarian output and export. Can we conclude that the country is on the right track to face the challenges of the new economy?

Analyzing the lessons that can be drawn from the theses of the economics of networks and the characteristics of new economy's business models, the paper puts the apparent positive structural transformation performance of the Hungarian manufacturing industry into another perspective. The paper also examines the opportunities and the limits of supply and demand-based regional development policy methods to find out, whether we can ground regional development strategy on promoting an FDI-based shift from the old to the new economy, also in backward regions.