Hungary can learn from Korea's state-led economic growth model, expert says
Participants to the Hungary's Economic Strategy: Lessons from Korea's Development Experience seminar pose at Sookmyung Women's University in Seoul, Thursday. Courtesy of Sookmyung Women's University
Korea's state-led economic development model offers important lessons for Hungary, which has relied heavily on foreign direct investment (FDI) to drive economic growth, according to a Hungarian expert.
Zoltan Pogatsa, a professor at the University of Sopron in Hungary, made the remarks during a seminar titled Hungary's Economic Strategy: Lessons from Korea's Development Experience, held at Sookmyung Women's University in Seoul on Thursday.
Pogatsa highlighted the contrasting economic development paths of the two countries, noting that Hungary has relied heavily on FDI since gaining autonomy over its economic policies following the end of Soviet domination, while Korea pursued a state-led development model, taking on substantial debt to subsidize domestic firms.
With an FDI development strategy, Pogatsa argued that Hungary has limited its ability to develop globally competitive domestic brands and control its own supply chains, while Korea's strong government intervention to support domestic companies helped the country establish globally recognized brands such as Samsung and Hyundai.
He also pointed to Korea's strong performance in innovation and education as key factors behind its economic success, contrasting it with Hungary's relatively low investment in education.
While Hungary has historically maintained economic output per capita slightly above the global average, Korea has transformed itself from a relatively poor country into one of the world's advanced economies, even overtaking Japan in terms of gross domestic product per capita, he said.
"The state is incredibly important," Pogatsa said, emphasizing Hungary should reconsider its reliance on foreign investment and learn from Korea's experience in building globally competitive domestic industries.
The seminar brought together around 30 participants, including Hong Kyu-dok, former Korean ambassador to Hungary and Istvan Medvigy, director of the Hungarian Cultural Center Seoul.
Hong highlighted the growing economic partnership between the two countries, noting that Korea is Hungary's third-largest foreign investor, with approximately 360 Korean companies operating there.
"Our ultimate aspiration is to establish a lasting framework of cooperation through which both countries can learn from one another and achieve greater prosperity together," he said.