BUDAPEST - Economy
A further strengthening of the services sector
Budapest is the economic centre of the country. All branches of its economy, except agriculture, have national significance. Its leading role had already been established in the 18th century, and has strengthened particularly since the last third of the 19th century.
A fundamental transformation in the economic structure began in the 1990s. The changes in the branch structure of the economy are characterised by the decreasing importance of the producing branches (especially industry and the building industry) in favour of services. In 2001, the primary sector accounted for 0.3% of the Gross Value Added, while this share was 0.5% in 1995. The secondary sector has also declined over the same period from 22.4% to 20.4%. Thus, the share of the tertiary sector has expanded from 77.1% to 79.2%, which is the highest share of any county in Hungary.
Although economic policy is intent on reducing the difference in the level of infrastructure development between Budapest and the counties, during the nineties the capital continued to grow faster than the other regions of the country, thus the difference was not reduced. The per capita GDP in Budapest is double than the country?s average. The economic transformation of the capital is driven by the dynamics of business, financial services and trade, with foreign investments being mainly directed to the services sector. Over the past few years Budapest has grown into one of Europe's financial centres.
The tourist industry occupies a very important position in the Budapest economy. Its hotels and other accommodation facilities receive a third of all guests requiring accommodation in Hungary, and half of all such foreign citizens. Apart from the multitude of monuments, the scenery, and the medicinal and thermal waters, many visitors are drawn to Budapest by the cultural programmes, the national and international conferences, and the increasingly vibrant business activity.
Budapest gives priority to the promotion of small and medium-sized enterprises. This is proved by the fact that from among 22 cities, the Small Enterprise Credit Programme of Budapest was chosen for Eurocities? Innovative Urban Strategies award in 2001.
263 thousand active businesses are located in Budapest, in 2002, which is 28% of the national figure. Although the problems following the economy's restructuring culminated here, it was the most flexible area to adjust to the new requirements. The role of foreign capital is very important: Share of Budapest from businesses with foreign direct investment was 52% in 2002.
Industry always played an important role in the development of Budapest. For decades the rate of industrial development in the capital always surpassed that of the provinces and, consequently, a larger and larger proportion of the nation's industry came to be concentrated in Budapest. The industrial significance of the capital began gradually to decrease in the 1960s, but it remained the country's industrial centre. 16% of all industrial production and 24% of industrial exports are accounted for by Budapest-based industry.
The structural change in the economy affected primarily large-scale industry. The loss of the Eastern markets led either to the disappearance or the splitting-up of many of the large and prestigious socialist enterprises such as the Ganz Mávag Engine and Machine Factory, the Hungarian Ship and Crane Factory and the Láng Machine Factory.
Budapest has since 1985 hosted the Budapest International Trade Fair, displaying mostly the latest industrial products. In the last few years, the city has been organising more and more specialist international fairs as well.
The centre of research
Hungary is an important contributor to international research and boasts a fine record in research and development, in spite of its small population. Budapest is the centre of research and development, and the entire range of research and development activities is carried out here. The Hungarian Academy of Sciences, with its central organisation and most of its research institutes, and the majority of the university and business research units operate in the capital.
The structural change in the economy led to changes in the area of scientific research as well. Side by side with the state-funded research establishments, much research and development activity is funded by private enterprise. In relation to Budapest's weight in the other industrial sectors, its importance in research and development is disproportionately high. More than two-fifths of the country's research establishments are located in Budapest, employing 53% of its researchers and receiving nearly two-thirds of the funds devoted to this sector.
An important tourist destination
The unique features and ambience of Budapest make the city a favoured destination for both European and overseas tourists. Tourism in Budapest has been steadily rising over the past years. Two million visitors sought commercial accommodation in 2001, spending a total of 4.4 million nights. The number of foreign visitors was 1.6 million, 55% of whom came from European Union member countries. In the recent years, the largest number of visitors arrived from Germany, Italy, the United States, the United Kingdom, Israel, France and Austria. The average stay is relatively constant at 3 nights.
Budapest has become a popular destination for conference tourism over the past few years. In addition to the Budapest Convention Centre built specifically for this purpose, there are countless facilities, which are capable of housing even the largest events.
The hub of Hungary's transport system
Budapest is the centre of the country's transport system. It is from here that the rail and road networks branch out, linking the counties and Europe's larger cities to Budapest, and also linking the western and eastern, as well as the northern and southern parts of Hungary. This situation has its roots in the past, as all other important transport routes were closed, and transport centres were isolated from the country after the territorial changes following the First World War.
The transport connections between Buda and Pest are provided by the northern and southern railway links and the seven bridges across the Danube. The city has a total length of more than 4 000 kilometres of roads, providing an urban road density ten times higher than the national average. This network has to satisfy the needs of a nearly two million people, the day-time population of the capital. There are more than 1 100 kilometres of public transport routes. The modern 30-kilometres long underground has revolutionised Budapest's public transport and the 100-year old Millennium underground railway line was the first of its kind on the European continent, and remains an important factor in the transport system. Commuter traffic is fairly high in Budapest in comparison to other cities of its size. Of the annual 1.4 billion trips made on Budapest's various public transport services. The public transport in Budapest, including subways, buses and tram, is recognized as secure, low-priced and well organized. Public transport in Budapest is the responsibility of the Budapest Transport Company. Between 1991 and 2001 the Budapest Municipality spent 35% of its revenues, Euro 4.2 billion, on transport development.
It is not so much an advantage as a great source of problems that all important transport routes, both road and rail, end at, or start from Budapest. The ring road (the M0 motorway) allowing traffic to bypass Budapest is under construction. Once completed it will significantly reduce traffic congestion and air pollution over Budapest. There are almost 30 railway stations of various sorts in the capital and the Eastern, Southern and Western Railway Stations link Budapest to the whole of Europe. The length of the railway network was 206 kilometres in 2001, out of which 65% were electrified.
Although the Ferihegy Airport is among the smaller airports of Europe. 40 thousand aeroplanes used the airport, and number of passengers were 4.6 million in 2001. An important amount of freight is carried to/from the port situated on the Csepel Island, which is located on the Danube.
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