Dr. Endre Horvath (Deputy State Secretary, Hungarian Ministry for National Economy)

12.03.2011 - Interview conducted by Kim Cornett

Q1. Would you say that the integration of Hungary into the European Union increased competition on the Hungarian market? If so, how do Hungarian businesses and the general public feel about this?

Before joining the European Union we already had close ties with other European countries. After 1990, markets were opened, borders were opened and we have benefitted by moving from this goulash situation to being an integrated member of the European market. So integration is the key word. Higher quality standards, better ties in terms of supply chain management, better supplier integration, etc. For example, the old automotive industry with Audi, Opel and Daimler Mercedes have opened new plants. Thatís a great example of where you actually compete. You must compete but in that process you also become more competitive. Now how does the public view this? It depends on how many jobs this competition will create. Of course you lose jobs from the old structures but you regain some on the new demand side for jobs that are integrated within a global economy. There is no way to stop globalization, global networks or global industries. Itís one market.†

Q2. For many non-Europeans, Hungary might be considered ďjust another Eastern Bloc countryĒ. What is Hungary trying to create an internationally-recognizable national brand for itself to attract both tourism and change old stereotypes?

As I said in my speech, what we need to do is to find something that is unique, where we have a competitive advantage and where we have a focus. We think that from a tourism point of view that itís clear that therapeutic thermal waters and the diversity of these waters is unique. Of course there are other countries like Iceland and Japan that have an abundance of thermal waters but Hungary is number one in terms of the diversity of these waters. That means that whatever the diseases that you will have, there is a cure underwater in Hungary. Whatever your age is, you will find a program. As I mentioned, there is also† nightlife in the baths, where you visit and you party in the pool with other people are you have music, installations and projections. If you are with a family and have kids, you will find baths that will pertain to your needs. So Hungary is really number one in terms of the diversity of the healing power of these waters and also the services on top of these resources. Thatís how we think that we can change the old image of goulash communism. Thatís the past and you can find it in museums. In Berlin, there is a different situation. Collegium Hungaricum Berlin is one of the top exhibition sites in Berlin and itís a unique place because you donít even have to enter building to see projections on a huge canvas, lights and music. So the whole city knows that Hungary is a country of culture, not only Bartok but also contemporary artists.

Q3. Hungary seems to be a preferred location for foreign investment by large automotive manufacturers such as General Motors, Suzuki, Audi and Daimler-Benz. Are there any other industries you can see that are experiencing an increase in foreign direct investment in Hungary?

Definitely the hotel industry is one of the fields where we see increased interest because of the natural endowments of the country. Also the services industry is growing. You will see a tendency for many international companies to move their service centers to Hungary because there is a cost advantage and there is skilled labour. I mentioned the creative potential of the country, such as the rubix cube. You will find in everyday life that Hungarians are good at solving problems in a changing environment with limited resources. So itís a perfect place to move your service center to. And itís also a nice place to live in and that is also another reason why global corporations consider Budapest. Itís one of the places to be in Europe and especially in Central and Eastern Europe.

Q4. Most tourists that come to Hungary are from Europe. What can Hungary do to attract more international visitors?

Most tourists come from Germany, Austria, Italy and the Czech Republic recently. There has been a growth in the number coming from the US of over 10% and from Russia of over 20%. Vicinity is a big factor and that is why visitors from southern Germany, Austria and Italy are so abundant. What we need to do is to reach out to those markets like Asia. What we see is that in the US and Russia there is an increased interest and what we can do is to reinforce the image of Hungary as the place to be for a better quality of life at least for those one or two weeks that you can spend every year. We need to send a message that it will definitely improve your quality of life: not only the waters but also the gastronomy, such as our famous wines. I think the new government and the new Hungarian tourism promotion efforts of unifying this brand and making it unique are good, but thereís a long way to go. In the US, we sell it on price. But if you cut the price in half and you put this on a billboard on the east coast, I donít think that thatís the right strategy. I think that what we need to do is to reach the channel that is the tour operators and explain the added value we have, which is based on the therapeutic thermal water, the culture and the food. Those three together create a very clear image and a very strong product. In May, we are organizing a tourism conference on the topic of sustainable tourism and how to reduce the footprint of tourists and how service providers and locals can create a more sustainable tourism industry.

Q5. For many countries, the integration into the European Union raised questions of migration and national identity. With the Act of 2001 on Hungarians Living in Neighbouring Countries, the Motherland Programme and the general direction of Hungaryís national policy which seeks to support and help preserve the Hungarian linguistic and cultural identity, one can say that Hungary is working hard to maintain a unified national consciousness among its Diaspora. Do you think these policies are purely cultural in nature, or do they involve some larger economic considerations or consequences for Hungary?

I think itís very important that we maintain the Hungarian language. The Hungarian language is unique. Hungary is a linguistic island, so we have to learn all the languages to communicate with our Slavic neighbours, our Germanic neighbours and our Anglo-Saxon neighbours, not to mention our increasing Chinese, Indian and African visitors. To create an identity and to strengthen an identity with language, it will need to involve cultural identity. We have very good connections with all of our neighbouring countries and it is not only that there are Hungarians living in Slovakia for example, but there are also lots of Slovaks living in Hungary. I just met with the Croatian consulate and there are many tens of thousands of Croatians living in Hungary and also Romanians. They all have their cultural organizations, thereís TV programs and we try to strengthen that effort. Does this have economic consequences? Yes it does. There is increased cross-border cooperation and the so called EGTC organization that the EU supports. The EU supports cross-border cooperation and also transnational cooperation. By establishing closer ties with neighbouring countries, we can strengthen our relations and help those regions that have a GDP that is less than 75% of the EU average because the EU will direct funds to those areas. Itís a great opportunity for us all in Central Europe.†

Q6. With seven neighboring countries and several ethnic minorities in Hungary, do you think that cultural exchange strengthens or weakens the Hungarian sense of identity?

It does strengthen Hungarian identity. Cultural diversity will strengthen our nations. If you think of the first Hungarian King, Steven the First, he encouraged this and he said that a country becomes stronger if it welcomes foreigners. Even a thousand years ago that was a clear idea so I think itís very clear and itís been clear since the very first moment. Multiculturalism and multi-ethnicity will strengthen any local community be it a local municipality, a province or a whole country. The slogan for Europe is ďUnity in DiversityĒ and it is reality.