國立中山大學中國與亞太區域研究所碩士論文政治與經濟的抗衡

Transcription

國立中山大學中國與亞太區域研究所
碩士論文
National Sun Yat-sen University
Department of China and Asia-Pacific Studies
Master Thesis
政治與經濟的抗衡：匈牙利─斯洛伐克21世紀之關係
Politics versus Economy: Contradictions of
Hungarian-Slovakian Relation in the 21th Century
研究生：歐詩怡
Kovacs Orsolya
指導教授：印永翔博士
Dr. Yung-hsiang Ying
顧長永博士
Dr. Samuel C. Y. Ku
中華民國101年7月
July 2012
Abstract
This paper presents an analysis of the linkage between Hungary’s and its neighbouring
country, Slovakia’s special kind of political-, and economic relations over the past two
decades. The author searches for an answer to the question what fundamental factors,
internal and international, determine the long-term growth of the two countries’ bilateral
trade and the often tensed bilateral interstate relation as well as how the latter influences
economic development in the common cross-border areas. Applying the models of
mathematical economics, the author carried out an econometric investigation to prove
her hypothesis on the bilateral political relation affects bilateral trade.
Keywords: Hungarian-Slovakia, trade dependency, correlation, SWOT analysis
i
Table of Contents
1 Chapter 1 – Introduction ....................................................................... 1
1.1
Motivation ........................................................................................................... 1
1.2
Literature Review ................................................................................................ 2
1.3
Methodology ..................................................................................................... 13
2 Chapter 2-Qualitative Research.................................................................... 16
2.1
1996 – 2002 ....................................................................................................... 17
2.2
2002 – 2006 ....................................................................................................... 22
2.3
2006 – 2009 ....................................................................................................... 25
3 Chapter 3- Economic relations between Hungary and
Slovakia ................................................................................................. 32
3.1
Bilateral economic relations after 2004 ............................................................ 34
3.2
Capital ties between Hungary and Slovakia ..................................................... 36
3.3
Impact of the economic crisis on the bilateral trade relations in 2009............. 38
3.4
Comparison of macroeconomic indexes ........... Error! Bookmark not defined.
4 Chapter 4- SWOT Analysis ................................................................. 45
5 Econometric Research ......................................................................... 54
5.1
Multiple regression ........................................... Error! Bookmark not defined.
5.2
Hypothesis test in the multiple regression ........ Error! Bookmark not defined.
5.3
Omitted variables .............................................. Error! Bookmark not defined.
6 Chapter 6- Conclusion ......................................................................... 96
References .................................................................................................. 97
ii
List of Figures and Tables
Figure 1: Volume of Hungarian export-import with Slovakia between 1998 and 2008Error! Bookmark not d
Figure 2: Hungarian trade towards Slovakia in M.$ ....... Error! Bookmark not defined.
Figure 3: Hungarian-Slovakian direct investment 2002-2007Error! Bookmark not defined.
Figure 4: Commodity structure of export from Slovakia to Hungary in first quarter 2009Error! Bookmark n
Figure 5: Commodity structure of export from Hungary to Slovakia in first quarter 2009Error! Bookmark n
Figure 6: Deficit in public finance and government’s debt in Hungary and SlovakiaError! Bookmark not de
Figure 7: GDP growth and GDP/capita of Slovakia and Hungary (in % of EU27, PPS)Error! Bookmark not
Figure 8: Slovakian-Hungarian cross-border area .......... Error! Bookmark not defined.
Figure 9: SWOT analysis ................................................ Error! Bookmark not defined.
Figure 10: Normal P-P Plot of Regression Standardized Residual ................................. 74
Figure11: P-P Plot of Regression Standardized Residual ............................................... 75
Figure12: Scatterplot ....................................................................................................... 76
Figure13: Scatterplot ....................................................................................................... 77
Figure14: Scatterplots relations ....................................................................................... 85
Table 1: Political conflicts between Hungary and Slovakia from 1996–2010 ................ 16
Table 2: Macroeconomic data in Hungary and Slovakia Error! Bookmark not defined.
Table 3: GDP and GDP per capita in PPP for Hungary .................................................. 55
Table 4: GDP on current prices in M€ and in M$ in Slovakia from 1995-2010 ............ 56
Table 5: GDP growth rate in percentage change on previous year in Hungary and in
Slovakia ............................................................................................................. 57
Table 6: Slovakia’s trade dependency on Hungary (M$) ............................................... 58
Table 7: Hungary’s trade dependency on Slovakia (M$) ............................................... 59
Table 8: Trade dependence (%) of Slovakia and Hungary ............................................. 60
Table9: Descriptive Statistics .......................................................................................... 62
Table10: Descriptive Statistics ........................................................................................ 62
Table11: Corralations ...................................................................................................... 63
Table12:Corralaions ........................................................................................................ 64
Table13:Model Summary ................................................................................................ 65
Table15:ANOVA ............................................................................................................ 67
Table16:ANOVA ............................................................................................................ 67
Table17:Coefficients ....................................................................................................... 69
Table19:Collinearity Diagnostic ..................................................................................... 70
Table20:Collinearity Diagnostic ..................................................................................... 70
Table21:Residuals Statistic ............................................................................................. 71
Table22: Residuals Statistic ............................................................................................ 72
Table23:Residuals Statistic ............................................................................................. 73
Table24:One-Sample Statistic ......................................................................................... 78
Table25:One-Sample Test ............................................................................................... 79
Table26:Group Statistics ................................................................................................. 79
Table27:Independent Samples Test ................................................................................ 80
Table28:One-Sample Statistic ......................................................................................... 82
Table29:One-Sample Test ............................................................................................... 82
Table30:Group Statistic................................................................................................... 83
Table31:Independent Samples Test ................................................................................ 83
iii
Table32:Correlations ....................................................................................................... 87
Table34:Descriptive Statistics ......................................................................................... 88
Table35:Descriptive Statistics ......................................................................................... 89
Table40:ANOVA ............................................................................................................ 93
Table41:ANOVA ............................................................................................................ 93
iv
1
1.2
Chapter 1: Introduction
Motivation
Slovakia and Hungary are neighboring countries sharing a long range border of 676 km.
Due to the territory redistribution set up by the Treaty of Trianon1 in 1920, a large group
of Hungarians, around half million, became the largest ethnic minority living in Slovakia. The percentage of Hungarian-Slovakia has remained between 8.5% and 8% between the 1920s and 2000s, respectively.
However, the fusion of culture between the Hungarian-Slovakians and Slovakians has not evolved accordingly, and the conflicts regarding the use of native Hungarian
language in Hungarian-Slovakia has caused indignation for many Slovakians. The tensions have not decreased but escalated in recent decades. Despite the cultural disputes,
Hungary is one of the most important trading partners for Slovakia, and Slovakia for
Hungary. Regarding the total trade in GDP, Slovakia had 161.69% in 2005, while Hungary 134.89%2. While Slovakia is Hungary’s sixth relevant trading partner, Hungary is
listed in fourth place of Slovakia’s most important trading partners. Therefore, maintaining and strengthening bilateral trading relation is mutually beneficial for both nations in the long run.
1
Agreement followed the World War I in which the Allies disposed of Hungarian territories. The treaty,
which was signed on June 4, 1920, at the Grand Trianon Palace at Versailles, France, reduced the size and
population of Hungary by about two thirds. Hungary lost land to Austria, Czechoslovakia, Romania and
Serbia (Yugoslavia) reducing its size from 283,000 km2 to less than 93,000 km2. Population was reduced
from 18.2 million to 7.6 million. Romania received Transylvania, part of the adjoining plain, and part of
the Banat, including Timisoara. Czechoslovakia was confirmed in possession of Slovakia and Ruthenia.
Yugoslavia (then the Kingdom of the Serbs, Croats, and Slovenes) obtained Croatia, Slavonia, and the
western section of the Banat. Austria was awarded the Burgenland.
2
UNWTO World Tourism Organization Statistics Database and Yearbook. (1995). Retrieved May 3,
from http://europe.unwto.org/en/search/node/Slovakia
1
Given this controversial background, containing cultural disputes and the economic interests mentioned above, this paper attempts to study such issues in a more careful way
and provide a systematic framework. In addition, the author believes that understanding
of the issues is both of interest and urgent.
1.2
Literature Review
The relationships between Hungary and Slovakia are not only interesting but also complicated. The relationships have evolved in a somewhat irregular and unpredictable
fashion from the past to the present. Hungarians have lived on the lands of the current
Slovakia Republic since the Austro-Hungarian Empire (1867-1918). Because of the territory redistribution set up by the Treaty of Trianon in 1920, many Hungarians have become Hungarian-Slovakians since then. Hungary has sustained continuous claim to revision of the treaty, which demand was fulfilled in the First Vienna Award 3of 1938.
Hungary thus regained some of the territories4 that it had lost due to the Treaty of
Trianon
in
present-day
Slovakia,
gaining
290, 107
Slovaks
and
506, 208
ans5.During a short time between1939 and 1945 Slovakia became independent6. However with the nullification of the Vienna Award of 1947 the frontier between Hungary
and Czechoslovakia was set back to the former borderline as it existed after proclaiming
the Treaty of Trianon.
3
The First Vienna Award in 1938 enforced the territorial claims of Hungary, in revision of the Treaty of
Trianon of 1920. The award stated the separation of largely Hungarian populated territories in southern
Slovakia and southern Carpathian Rus from Czechoslovakia and awarded them back to Hungary.
4
”11 927km2” ( Retrieved April 11, from http://www.historyonthenet.com/WW1/versailles.htm)
5
Magyar (Hungarian) Census. For Present-Day Slovakia&Most pre-1918 Hungary Territories. Retrieved
April 4, 2012, from http://www.iabsi.com/gen/public/CensusMain.htm#1930
6
Hitler pressured Slovakia to declare its independence, as he wanted to establish a strategically base in
Slovakia to his plan of invading Poland.
2
In order to analyze the relationship between the two countries the definition of relationship must be clarified. International relations can be divided into two different parts, an
interstate and an interethnic one7. Interstate relations are considered to be any official
diplomatic connection between Slovakia and Hungary both in terms of politics and
economy, while interethnic relations refer to the overall opinion of everyday Slovaks
and Hungarians of the other nation. The latter definition hides the fact that opinions
could vary within the Slovak and Hungarian societies. Therefore the aspect of interethnic relations provides a possibility of creating a situation full of tensions, which actually characterized the interethnic relations between Slovakia and Hungary for almost a
decade. Hungarians-Slovakians receive unfavorable treatments from Slovakian citizens
and government in areas of language, education, territorial administration and culture,
while the geographically unfavorable frontiers are disadvantageous from the point of
view of bilateral economic cooperation. Clashes between Hungarians and Slovaks,
fights during soccer matches etc., continue in both Hungary and Slovakia. In 2006 three
physical attacks against Hungarian speaking students took place in the cross-border areas. In the same year a banner urging “Death to Hungarians” was unfurled by three
young men during a soccer game in BanskaBistrita/Besztercebánya, in Slovak territories. Politicians keep accusing the neighboring state of human rights violations. In 1996
Slovakia passed a law by which the Slovak language became the only official language
of the country and imposed limitations on using other languages in public life.
7
Kollai, I. (2006). Shattered Past. Socio-psychological aspects of Slovak-Hungarian relations – from the
Hungarian point of view. International Issues & Slovak Foreign Policy Affairs Vol. XV, No. 3-4, pp. 27
– 43.
3
In this paper the assumption will be made that interethnic relations can affect interstate
relations between Slovakia and Hungary. Therefore it is crucial to understand how the
circumstance of social disparities between the neighboring countries developed.
The reason for Slovakians presently mistreating Hungarian-Slovakians can be found in
the centuries-long Slovak attempt on becoming free of Hungarian influence. The Slovak
people emerged within the Hungarian Kingdom before 1918. The two nations enjoyed
peaceful relations until the Reform Era started in 1825 when, along with the quick
spread of nationalism, the first attempt on Slovakian cultural autonomy emerged, resulting in the first tension between the two nations. The dominant Hungarian nation’s political leaders were reluctant to fulfill the Slovakian demands supporting the emerging
priority of Hungarian identity. Conflicts came to such an extent that Slovakian attempts
to become free from the Hungarian leadership emerged. This wish from the Slovakians
partly came true when Hungarian and Slovakian common history was separated by the
establishment of Czechoslovakia in 1918. Under the institution of Czechoslovakia the
Slovakian nation became a legally constituent nation. After Slovakia and Hungary were
separated, Hungary improved economically and built up its own institution while Slovakia’s industrial development stayed behind. In the meantime Hungary could individually form its opinion but Slovakia, to the contrary, lacked significant politicians who
could represent Slovakian interests. Slovakia had only one field in which it could hold
step with the Hungarian development; the cultural dimension. The Matica Slovenská8
re-opened in 1918, after being closed down by Kálmán Tisza, Hungarian prime minister
in 1875, who declared it an anti-Hungarian institution. After World War II, the institute
served the basis of the large-scale emergence of Slovakian nationalist thoughts.
8 Institution established to serve Slovakia's public-law cultural and scientific issues focusing on topics
around the Slovak nation in 1863. It was allowed by the Austrian emperor.
4
After World War II Hungary, along with the Allies, was treated as war criminal and
thus had to approve the measures introduced at the Potsdam Conference: 80 thousand
Hungarian-Slovakians were forced to resettle to Hungary in exchange for Slovaks resettled to Czechoslovakia. Due to the population exchange agreement the anti-Hungarian
policy pursued by the Slovak Communists resulted in anti-Slovak feelings in Hungary.
After World War II the Central-East European region was brought under Soviet occupation hence the growing presence of left-wing parties changed the political structure in
the Soviet bloc countries. Therefore Hungary and Czechoslovakia performed one-party
system and dictatorship until 1949. Czechoslovakia came under Soviet Union’s influence and the Warsaw Pact introduced by Soviet Union in 1948. Czechoslovakia was occupied by the Warsaw Pact forces including Hungarian troops in 1968. The Slovakians
remain sensitive about the memory of Hungarians giving support to occupying Slovakia. This sensitivity can be seen as the reason for the case of a diplomatic snub in
2006, when the Slovakian prime minister stopped the Hungarian president before crossing the border to the predominantly Hungarian- Slovakia populated city of Komarno.
The Slovakian prime minister questioned the tactfulness of the chosen date when the
Hungarian visit was planned because that day was the Slovak anniversary of the Sovietled invasion in Czechoslovakia, in which Hungary also took part.
Since 1987 both Hungary and Slovakia underwent a lot of changes that allowed them to
gradually become free from Soviet rule. Along with the ceasing of Czechoslovakia,
Slovakia declared independence in 1993. Putting an end to the communist ruling dictatorship culminated in both Slovakia’s and Hungary’s accession to NATO and the European Union in 2004. From that time forth these states could develop new relations de-
5
termined by freedom, liberalism and solidarity, although there have remained several
inequalities not only between the EU member states but also within the countries.
The issue of administrating balance between state Slovak and minor Hungarian language in public relations became the subject of fierce domestic political debate in 2009.
This controversy led to deterioration in interstate relations between Slovakia and Hungary. According to the first hypothesis of our paper the trend of the HungarianSlovakia’s social polarization causes political polarization which has a negative effect
on the bilateral economic cooperation. Political polarization of Hungarian-Slovakia can
be seen when the Hungarian attempt of offering Hungarian citizenship to HungariansSlovakian was declined by the Slovakian government in 2009. Moreover, Slovakians
declared the consequence of losing Slovakian citizenship if taking citizenship elsewhere
(i.e. Hungary).Hungarian-Slovakians are Slovakian citizens, but only have limited rights
to participate in Slovakia’s political system. As a consequence extremist political forces
in Hungary began to escalate disputes over national political issues in Slovakia. Elimination of border controls has allowed demonstration marches of extremist groups (such
as the Hungarian Guard) to the Slovak Republic (e.g. Kráľovský Chlmec). This concerns all citizens of Slovakia, including the Hungarian minority.
Lampl9 gives a unique description of the intense feeling of being a victim of disadvantageous discrimination because of nationality. She undertook empirical research mostly
among Hungarian origin university students studying in Slovak universities. According
to her findings the Hungarian students –the target group of her research- are not in each
9
Mészáros –Lampl Zs. (2009). Magyars and Slovaks in Southern Slovakia – Exercising Language Rights.
National Populism and Slovak – Hungarian relations in Slovakia 2006 – 2009,pp. 167-178.
6
case negatively discriminated because of using the Hungarian language, but because of
the prejudice of being Hungarians.
A rather radical point of view on Hungarian minorities living in Slovakia has been published by Mannová10. In her understanding Slovakia never existed in historical meaning
where nowadays the confrontation between Hungarian and Slovakian cultures takes
place. Hence there is only a region called Slovakia after the dissolution of Czechoslovakia which is managing the newly acquired large Hungarian minority population
though aggressive assimilation agendas in policy areas of religion, economy and culture.
To the question of why the ethnic conflict could emerge and continue, Jokay (1996)
provides an answer with the theory of the three factors model.11 The three factors which
fuel ethnic conflicts and tensions are the following: competing interests regarding the
territories outlining the national borders between Hungary and Slovakia; Slovakia’s
non-democratic practices such as discriminating policies and lack of transparency,
which offer the opportunity for discriminating policies and weak treaties where rights
may be acknowledged but in ambiguous language or no measure of enforcing such
rights12. The future of the relation of the two countries is uncertain, mostly because Slovakia’s internal affairs are full of internal uncertainties since Slovakia became independent only in 1993. Before that it was always part of developed countries- Hungary
10
Mannová, H. (1997). Bürgertum und bürgerliche Gesellschaft in der Slowakei 1900–1918. Bratislava:
AEP. pp. 37–59.
11
Jokay, C.Z. (1996). Nationality/Ethnic Settlement Patterns and Political Behavior in East Central Europe. Nationalities Papers, Vol.24(2),pp. 78-93.
12
Tóth, P.P. (1996). Hungarians in the Successor States: From World War I to World War II. Nationalities Papers, 24(3), 425-436.
7
and Czechoslovakia- hence Slovakia could not gain sufficient experience in implementing political policies. This could be the reason why ethnocentrism in Slovakian politics
remains. Slovak political life keeps focusing on dangers that might threaten their national life. This fear, however, leads to aggressiveness practiced towards ethnicities living in Slovakia, first of all Hungarian people.
Resolving all kinds of differences between countries, cultures and languages has been
always a crucial question of human thinking. The European Union recommends its
member states resolve differences between countries, peoples and cultures by negotiations. Reisch13 emphasizes the strong external influence of the European Union and its
institutions, as strong normative power during the pre and post-accession period. However Slovakia insists on the principle of being a national state14 which creates the majority of conflicts in its neighboring relation with Hungary. The Slovak democratic state
meets the principle of bourgeois democracy and the majority principle, but it is always
the interests of the national majority that take priority over the interests of the native
minority. Such interpretation of democracy precludes the possibility that the population
belonging to the national minority can exercise their right of self-determination. In the
beginning, existing laws did not make it possible for villages and towns to develop
cross-border cooperation in the field of economy.
According to Sartori’s findings15democracy could be defined as a system in which the
government protects minority rights. The state’s relationship to minorities is very im13
Reisch, A. (1996). Hungarian Foreign Policy and the Magyar Minorities: New Foreign Policy Priorities. Nationalities Papers, 24(3), 447-466.
14
Tóth, P.P. (1996). Hungarians in the Successor States: From World War I to World War II. Nationalities Papers, 24(3), 425-436.
15
Sartori, G. (1987). The Theory of Democracy Revisited. New Jersey: Chatham House.
8
portant within objective assessment of the level of democracy. His ideas are implemented and developed by Polácková. In her research paper16 the author argues that the term
“minority” occurs in the language of Slovak politicians as well as scientists the most.
She also emphasizes the “power” of using minority as a political instrument for mobilizing voters by terms of aggressive verbal attacks against the Hungarian minority. According to the author minority is defined as a “marginalized, oppressed or discriminated
group of people which should be protected”. It must be noted that the author uses the
term minority from an ethnic or national point of view, not taking into consideration religious minded or socio-economic minorities. She sees the only efficient way of integration policy is multiculturalism, not mentioning assimilation or ethnic segregation as a
possible way of integration policy.
There are several important lessons to be learned from the decade of active EU involvement in mentoring and evaluating the transition to democracy and free market of
the East Central European applicants. First, through the pre-accession conditionality
process, the EU has undoubtedly helped both the region’s frontrunners and the slower
reformers become more democratic, especially Slovakia, where the initial domestic
conditions were not as advantageous as in Hungary. According to the survey of Freedom House in 2009, extension of democracy in Slovakia has significantly raised and
has caught up with that of Hungary, which is considered to be one of the best East Central European democracies since the EU accession. However, since the EU accession relations between Slovakia and Hungary have not improved, even worsened, which led
16
Poláčková, Z. (2010). Democracy and Minority issues in Slovakia: Analyzing Western European Perspectives and Stereotypes. Studies in Contemporary International Relations and Politics: new Europe
and Beyond , pp.190-204.
9
Schöpflin17 to name this situation “a cold war”. Worsening Hungary-Slovakia relations
became a subject of hot discussion both in the media and in political circles.
From an economic point of view neither Slovakia nor Hungary could benefit from the
territorial changes of the Treaty of Trianon. On one hand Hungary lost some of its upland raw material sites and one of its most developed industrial areas, moreover its previous infrastructural system became scattered. On the other hand Slovakians had to face
the difficulties caused by newly gained industries since merely 17% of the Slovakian
population was working in the industrial sector while the infrastructural network was
built to connect Hungary. According to this paper’s second hypothesis the historically
redrawn borderlines between Hungary and Slovakia has a negative effect on the bilateral economic relations. The number of unemployment of cross-border areas increases
from year to year. In 2008 the percentage of unemployment measured in the crossborder region was 8.4% while in the 2nd quarter of 2009 it increased to11.8%.18
After analyzing the indexes of foreign trade between Hungary and Slovakia in the 21th
century it can be stated that the amount of exports and imports grew continuously from
a low level. From 2005 to 2008 the proportion of export to Slovakia grew by 3%, reaching 5%, in comparison to the total Hungarian export19. The Hungarian trade towards
Slovakia mainly consists of exporting mechanical engineering since Slovakia has become one of the leading car producers in Central Europe, owing to the presence of three
17
Schöpflin, Gy. (2009). The Slovak-Hungarian cold war. EUObserver. Retrieved April 21, 2012, from
http://euobserver.com/9/27404
18
Ministry of Finance of the Slovak Republic. (2009). Retrieved April 23, 2012, from
http://www.finance.gov.sk/en/Default.aspx?CatID=10&id=52
19
National Bank of Hungary Annual Report. (2009). Retrieved
http://www.gfmag.com/gdp-data-country-reports/257-hungary-gdp-countryreport.html#axzz1zOQq0PMt
10
May
1,
2012,
from
world-class automotive companies; Volkswagen Slovakia, Bratislava; PSA Peugeot Citroën Slovakia, Trnava and Kia Motors Slovakia, Žilina. The automotive industry in
Slovakia is heavily export-oriented and is the driving force behind the Slovak economy.
Other than that, according to the data of the Slovak National Bank in 2007 Hungary
ranks 12th place regarding the Slovak export of active capital stock. Hungary was the 5th
largest investor in terms of the active capital stock invested in Slovakia at the end of
2007, which shows Hungarian investors are significantly more active in Slovakia than
Slovakians are in Hungary. The Slovak export to Hungary in 2008 reached €3,054 million, which was mostly due to export of machinery, mechanical appliances and electrical equipment.
According to Šášikova, Filus, Takács and Szalai20 the growth of Hungarian export to
Slovakia is due to sectors and possibilities such as the cooperation between automobile
industry and electrical industry clusters, the continuous increase in real wages which induces buying power both in public and private sector, growth in trade and service as the
borders of passenger traffic due the EU accession in 2004 disappeared, appropriate organizational systems, information technology building, industrial construction industry
services and tourism, more active participation in public procurement and further expansion of small-and medium-sized enterprises. This paper will reveal the key factor to
improve trade relations between Hungary and Slovakia lies in improving the border areas through regional cooperation and common projects such as the Hungary-Slovakia
Cross-border Cooperation Program in 2001. Market competition has led to a high rate
20
Analysis of bordering region of Hungary and Slovakia. Hungary-Slovak Small and Medium Enterprises
(SMEs)
Co-operation
Support.
(2010).
Retrieved
May
2,
2012,
from
http://smehusk.eu/docs/HUSK_Analysis_EN.pdf
11
of unemployment in cross-board areas therefore it is urgent to develop cross-border
economic cooperation and ensure the suitable conditions for commuting labor force.
In order to strengthen bilateral trade it is important to support cross-border cooperation
to promote the closest cooperation of local government and municipalities, promoting
legal, economic, financial and business conditions. Building a common highway linking
the two regions is a particularly frequent topic of discussion. Tóth21 makes clearer in his
work how cross border relations between Hungary and Slovakia could develop to its
present extent. His model defines a controlled socialist form of cross-border relations.
The centralized state and party control did not make it possible to develop cross-border
relations either at a local or a medium level. If they wanted to develop relations, both
parties had to have their plan approved of by the central party and state authorities in
both countries, and if they managed to do so, then the leading bodies checked it with the
party and state leaders from the other country. From then on they were allowed to maintain a representative kind of contact rather than a practical one, which was always controlled and depended on the prevailing political relations between the two countries.
This theory explains how the present bilateral business relations work as business relations existed exclusively at national level, between state-owned companies, since privately-owned enterprises were forbidden by law.
21
Tóth, P., Tóthová, M., & Lukáš, J. (2009). Natural Enemies of Diuraphis Noxia (Sternorrhyncha:
Aphididae) in Slovakia, 10(2), pp.159-166.
12
1.3
Methodology
By the elaboration of this paper various methodologies and their combinations have
been applied:
•
The analytical-synthetic methodology. This is a logical method composed of two
components: analysis and synthesis. Analysis is a method used to unfold a problem, to loosen or separate things that are tied together. In this paper the method
of analysis is used to describe the examples of interstate tensions between Hungary and Slovakia which have taken place in the last decade. Synthesis in the
opposite method of analysis, and proceeds from known to unknown, and thus is
the complement of analysis. Synthesis is the method of placing together things
that are apart; it starts with the data available and connects the same with the
conclusion. The method of synthesis is used to identify the Slovak minority policy towards Hungarians living in Slovakia. The research will apply various
sources of information involving interpretations of primary sources provided by
agreements, laws, legal documents and official letters exchanged between Hungary and Slovakia collected in both Hungarian and Slovakian National Archives.
The latter provided free access to the data collection from the 1990s.
In the Slovakian scientific literature the first objective writings about the Slovak
State were published in the 1990s.Besides this, analysis of Slovak constitution is
conducted to determine how ethnic policy was framed.
13
The Hungarian historical science started revealing documents about HungarianSlovakian bilateral relations from the 1990s as it was an untapped issue before
due to state control practiced by the state power.
•
The method of comparison. This methodology compares two or more similar
facts of a certain point of view. This methodology is used in the case of depicting a comparison of economic co-operation in terms of the proportion of export
and import of the foreign trade relationship and the industrial structure of foreign trade between Hungary and Slovakia. Data is implemented from the databases of Slovakian and Hungarian National Banks, Statistical Offices, the Eurostat and the organization Economic Intelligence Units.
•
Method of hypothesis. This method is a proposed explanation for an observed
phenomenon which is empirically tested. In this paper the hypothesis is set: the
often tensed Hungarian-Slovakian bilateral political relation has a negative effect on the bilateral economic cooperation between Hungary and Slovakia. In
this research mostly secondary sources are applied, writings of acknowledged
experts Tilkovszky, Kovács, Popély, Molnár are Szarka are implemented.
•
Method of SWOT analysis.
•
The assumption of this research is that historically redrawn borderlines between
Hungary and Slovakia have a negative effect on the bilateral economic relations
in the cross-border areas.
•
SWOT analysis is a strategic planning method used to evaluate the Strength,
Weaknesses, Opportunities and Threats involved in a project or in a region. It
involves specifying the objective and identifying the internal and external factors that are favorable and unfavorable to achieving that objective.
14
•
Objective of the project is the coherent development of the bordering regions of
Hungary and the Slovak Republic and supporting the cross-border SME cooperation. Based on this objective, the SWOT analysis for the common crossborder is composed of following parts:
Strengths: internal attributes of the region which are helpful to achieving the objective.
Weaknesses: internal attributes of the region which are harmful to achieving the
objective.
Opportunities: external conditions which are helpful to achieving the objective.
Threats: external conditions which could do damage to the objective.
•
Method of multiple regression: The hypothesis of Hungarian-Slovakian bilateral
political relation has a negative effect on the bilateral economic cooperation was
formulated as a multiple regression and run by using software SPSS as well as
tested by using t-test.
15
2 Chapter2: Qualitative Research on bilateral interstate relationship from 1996-2009
The table below indicates the political tensions between Hungary and Slovakia from
1996-2010. This finding is used as data in the empirical research that follows, seeking a
relationship between political tensions between the two countries, and the revenues
from bilateral trade.
The evaluation of 0 and 1 is based on the following concept: a year with a political conflict brought to the court of European Union is declared to be a year with political tension. This evaluation reflects when political conflicts are from a great, international importance threatening the sovereignty principle of the European Union member states.
According to that concept all of the cases marked with number 1 (the case of political
conflict) were judicial reviewed by the European Court of Justice.
For example the year 2007 when the incident of the Hungarian student occured is
marked by 1 because her case was taken to the European Court of Human Rights in November 2007.
Table 1. Political conflicts between Hungary and Slovakia from 1996–2010
Years
Political tensions
1=conflict;
0=no conflict
1996
0
1997
0
1998
1
16
1999
1
2000
1
2001
1
2002
0
2003
1
2004
0
2005
1
2006
0
2007
1
2008
0
2009
0
2010
0
2.1
1996 – 2002
The relationship between Hungary and Slovakia is based on a persistent mutual mistrust, which on the Slovakian side results from the fear of a Hungarian threat to the territory of Slovakia, while on the Hungarian side results from the suspicion of the Slovak
assimilation pressure on Hungarian-Slovakia. All developments, phenomena and general events of this relationship, both positive and negative, have always been a form of
17
expression of this fundamental dual problem. The most important and long lasting problem is the large Hungarian-Slovakian population living in Slovakia with the suspicion
of being urged to assimilate. Those suspicions are embedded in legal form, primarily in
Slovak laws and regulations; the Slovak government adopts laws and regulations to restrict the usage of Hungarian language among Hungarian-Slovakia, as well as their cultural rights, in order to urge the assimilation of the Hungarian-Slovakia. Meanwhile the
Hungarian government adopts counter measures trying to offset the assimilation pressure. One such act is the Treaty of Good Neighborly Relations and Friendly Cooperation22 between Hungary and Slovakia signed in 1995, and ratified in 1996. This
agreement contains a solution framework for the fundamental problems of the bilateral
relationship, and confirmed the legitimacy of existing borders between Hungary and
Slovakia. Moreover it provides the minority protective rights of Hungarian-Slovakia,
enabling them to participate in decision making, both at state and regional levels, to use
Hungarian language in public and private spheres, to have equal access to the media in
Slovakia, and to sustain their cultural traditions. After ratification of the treaty however
the Slovak government announced a declaration stating that the former ratified treaty
did not presuppose autonomy for Hungarian-Slovakia. In response the Hungarian government refused to recognize the declaration and prepared a communiqué, calling for
autonomy for Hungarian-Slovakia. This led to Slovakian protests, culminating in Slovakia’s government passing a law which states the Slovakian language is the primary
and official language of Slovakia and limiting the usage of minority languages in public
life. This measurement from Slovak government violates the Treaty of Good Neighborly Relations and Friendly Co-operation of 1995.
22
Hungarian-Slovak Joint Committee on Environmental Protection and Nature Conservation. Retrieved
April 23, 2012, from http://www.huskenv.org/
18
The main conflict of bilateral relations in 1996 resulted from the long spanning dispute
regarding the construction of a hydro power plant on the River Danube, which would
affect both Hungary and Slovakia. The problem with the hydro power plant has been a
bilateral issue since 1989, while the dam construction system was conceived during the
Socialist era in 1977. At that time due to the lack of a necessary financial background,
construction was postponed and restarted in 1980. Later in 1988 Hungary terminated
this treaty, claiming that the construction could result in severe environmental damages.
This led the Slovakian government to declare that this termination was a violation of
that same treaty. Therefore Slovakia started to construct the power plant individually in
1992. The conclusion of this was that both Hungary and Slovakia took unilateral actions: while Hungary terminated the treaty, Slovakia started the construction anyway,
thus diverting a 40km-long stream of River Danube. As Slovakia started to use the dam
on its own territory to generate electricity, the natural flora and fauna began to gradually
decay in Hungarian territories as a result of the diversion. In order to find a more effective method of power production, the Slovakian government urged the Hungarian government to start constructing a dam or a power plant on the Hungarian side of the river.
As Hungary declined this demand, both sides agreed on take the issue to The International Court of Justice in Hague. The outcome of this was the court deeming the termination of the treaty by the Hungarian government unlawful, but not obliging the Hungarian government to construct a dam on the river. Regardless of the verdict neither
Hungary nor Slovakia has since changed its position regarding the issue.
Hungarian-Slovakian political relations show an unbalanced structure in the past decade. Both Slovakia and Hungary went through regime changes followed by the parliamentary elections held in 1998. As a result, in Hungary a right-wing regime came to
power whose foreign policy was committed to support Hungarian-Slovakia. Meanwhile
19
a democratic party stepped into power in Slovakia, whose priority was set to gain access
to the European Union and to acquire NATO-membership. The Party of the Hungarian
Coalition (MKP) became part of the Slovakian ruling coalition, thus it could take control of tensions between Hungary and Slovakia. Moreover the newly elected regime
changed from the formerly implemented nationalistic policy to a soft, democratic policy
favoring not only the Hungarian-Slovakia but also Slovakian inhabitants. However, the
newly set regime altered the former administrative provisions, which had a negative effect on the Slovakian territories inhabited mostly by Hungarian-Slovakians. This regime
didn’t work out any unified policy concerning the Hungarian-Slovakian minority, as the
only party in the government coalition that had these kinds of political concepts was the
Party of the Hungarian Coalition. Based on the government program minority issues did
arise, promising positive changes regarding the minorities’ rights in the future. However
the program of Party of Democratic Left included the minority issues it was not as in a
great importance as in the program of the Party of Hungarian Coalition. This has led to
several conflicts about the minority issues between the coalition parties. For example,
tensions between the Party of Democratic Left (SDL) and the Party of Hungarian Coalition arose when the former was assigned to take over the agriculture portfolio which
was formerly dedicated to the latter. The reason why the agriculture portfolio was dedicated to the Party of Hungarian Coalition was that the overwhelming portion of agricultural production of Slovakia was mainly due to the South-Slovakian territories populated by Hungarian-Slovakians. In response, coalition parties advocated the Party of Hungarian Coalition and promoted the appointment of a Hungarian-Slovakian as a chairman
of the Executive Board of Slovak Land Fund. Following that, during the drawing up of
the budget in 1999, the Party of Hungarian Coalition boycotted the negotiations, finding
the planned budget spend on preserving, maintaining and promoting minority cultures
20
to be too small. Regardless of the success of boycotting the negotiations, the cooperation between the Party of Hungarian Coalition and the other coalition parties temporarily stopped; public perception of which was amplified by the mass media, bringing negative impacts to Hungarian-Slovakia. This made the Party of Hungarian Coalition being
judged by the assumption of placing the interests of Hungarian-Slovakian ahead of Slovakia’s interests. Meanwhile the Hungarian foreign policy was modified compared to
the previous years. Thus the process of Hungary’s accession to NATO completed by
1998 in the meanwhile negotiations about EU accessions were set on the right track.
The main objective set by the Hungarian government was to improve the political and
social situations of Hungarian-Slovakia. This successfully led to the signature of the bilateral agreement Treaty on Good Neighborly Relations and Friendly Co-operation, between the Republic of Hungary and the Slovak Republic in 1995. This meant that eleven joint committees were set up in 1999. In addition bilateral diplomatic presence was
expended, which is shown by the establishment of the Hungarian Consulate General in
Kassa in 2000, and also the opening of the Slovakian Consulate General in Békéscsaba,
in which city the population of Slovakian-Hungarians is the highest. Another successful
contribution was the reconstruction of the Maria Valeria Bridge, connecting Eszergom
in Hungary with Párkány in Solvakia, between 2000 and 2001, as well as the construction of motorway in Budapest-Bratislava distance.
In the period of 1998-2002 the only source of tension between Hungary and Slovakia
originated in the Hungarian Status Law approved by the Hungarian parliament. This law
entitled Hungarian-Slovakians to discounts, most importantly to employment free travel, academic activities, social care, healthcare and education. According to the law Hungarian-Slovakians can apply for Hungarian I.D.s and student I.D.s, which will entitle
them to get discounts in Slovakia. In response, Slovakia objected that the law has extra-
21
territorial and had discriminatory effects. However, it was not just the Slovakian regime,
which showed a negative attitude, but the neighboring countries too. The Slovakian
government then concluded that the Hungarian policy making as an intervention in Slovakia’s internal affairs. At last the Slovakian government brought the issue to the international platform which resulted in Brussels’ and Strasbourg’s criticism on Hungary.
2.2
2002 – 2006
After the parliamentary elections held in 2002, Hungary’s former right-wing regime was
followed by a left-wing regime, while Slovakia’s former democratic regime stayed in
power in coalition with the Hungarian Coalition Party23. In early 2002 the bilateral relation was characterized by the debates around the Hungarian Status Law. Moreover the
newly elected left-wing party in Hungary officially expressed its intention to adopt the
Hungarian Status Law, which made the existing tensions even more serious. In the end,
both Hungarian and Slovakian Ministers of Foreign Affairs signed the Preference Act,
an agreement about mutual cultural and educational assistance for HungarianSlovakians and Slovakian-Hungarians in 2003. This convention already includes
amendments from international organizations. In the same year bilateral relations further strengthened due to the institution of Visegrad Group’s24 Council, which is a group
of the countries of Visegrad Group’s EURO-regions. More specifically, seven Hungari-
23
The Hungarian Coalition Party received 11,16% of the votes, which means not only HungarianSlovakia voted on the party.
24
The Visegrad Group was formed on 15th February 1991 among Poland, Czechoslovak Republic and
Hungary. The central motif of the Visegrad Group’s establishment is the desire to intensify mutual cooperation and friendship among the three- today four- Central European states.
22
an-Slovakian EURO-regions25 joined the Visegrad Group’s Council. Also in 2003 a
joint committee was established with the desire of further improvement between Hungary and Slovakia. During the 2002-2006 government term a Hungarian University in
Slovakia was established as an achievement of the Hungarian regime. The Slovak government approved the law establishing the Hungarian University teaching in Hungarian
language in 2004, so that it could start operating from the same year.
Another almost 50 year dispute between Hungary and Slovakia, over the right of using a
particular brand name for wines, was resolved in 2004, just before the EU accession.
The conflict was over the right of Slovakia to use the name “Tokaj”
26
for labeling the
wines they had produced. Finally the two countries came to an agreement, under which
wine produced on land of Tokaj in Slovakia was able to use the “Tokaj” label in Slovak
translation. Moreover the agreement provides that Slovaks accept the Hungarian quality
control regulations and that the “Tokaj” brand along with its Slovak translations, was
given Protected Designation of Origin status after Slovakia’s and Hungary’s EU accession. Currently wine producers from both the Hungarian Tokaj region and the Slovak
Tokaj region may use the “Tokaj” brand name. However, even though this agreement
seemed to resolve conflicts around the wine dispute, tensions renewed in 2006 and
2007.
In 2004 Ivan Gašparovič got elected as the Slovakian president, which had a great importance on the bilateral political relations. In 2004 both of the countries accessed the
EU. After the accession there was a change in Slovak internal affairs. Once there was no
25
Hungarian-Slovakian EURO-regions by names: Vág-Duna-Ipoly-, Ipoly-, Nógrádi-, Kassa-Miskolc-,
HármasDunavidék-, Rima-Sajó-, Zemplén EURO-region.
26
Tokaj is a wine region mostly found in Northern territories of Hungary but a small part of it remained
part of Slovakia due to the Treaty of Trianon.
23
longer any pressure for integration on the Slovak government, it no longer concentrated
on nationalism issues, and the proposals made by the Hungarian Coalition Party for the
Hungarian-Slovakian’s rights were ignored.
In early 2004, bilateral relations deteriorated once again. This was due to the referendum held in Hungary on 5th December, 2004. The referendum27was about to allow
Hungarian-Slovakians to get Hungarian citizenship. However the referendum failed due
to low voter turnout. The new legislation would have made it easier for HungarianSlovakians to obtain Hungarian citizenship by removing the obligation to have permanent residence in Hungary. Hungarian-Slovakians would have only needed to prove
their ancestors were Hungarian citizens or demonstrate some obvious Hungarian origins, and be able to speak the Hungarian language. Although the referendum failed, it
deteriorated bilateral relations as well as the relation between Hungarian-Slovakians and
Hungarians.
Getting closer to the parliamentary elections in 2006, tensions in both Hungarian and
Slovakian coalition party escalated. Moreover both Hungarian and Slovakian citizens’
dissatisfaction rose due to the governments’ restrictive economic measures. Finally in
2006 the government coalition of Slovakia collapsed, since the Christian Democratic
Movement Party quit the coalition, thus the regime left in minority could not fulfill the
needs of a country’s governance. Early presidential elections were therefore needed in
Slovakia in spring 2006.
27
Voters were asked the question: Do you want the Parliament to pass a law that enables ethnic Hungarians with non-Hungarian citizenship and residence, who affirm their Hungarian nationality, either with a
Hungarian identity card described in Par. 19 of Act LXII/2001, or in a way specified in the forthcoming
law, to apply for and be granted Hungarian citizenship.
24
In summary, the 2002-2006 government term can be considered as an improvement in
Hungarian-Slovakian relations. It appears that there were a lot of unsolved disputes between Hungary and Slovakia, but despite this more intense political relations developed.
For instance a few Hungary-related memorials were restored.
2.3
2006 – 2009
In 2006 parliamentary elections were held in both Hungary and Slovakia. In Hungary it
was the first time since the regime change in 1989 when a party could reign in power
twice in a row. This allowed the Hungarian Socialist Party to form a coalition again.
Meanwhile in Slovakia the elections resulted in a victory for Social-Democratic Party.
For the first time since independence in 1993, one political party obtained an overall
majority in Parliament. In summary, it can be concluded that the Slovakian government
coalition represented an enormous nationalist ideology since all the parties creating the
coalitions were characterized by nationalist features. After elections in 2006, extremist,
nationalist groups arose and this had a negative effect on Hungarian-Slovakia. From the
beginning of the 2006-2009 government term there was a visible tension between Hungary and Slovakia which originated from the efforts of adopting the Hungarian Status
Law from the Hungarian side. Thus Slovakia ranked Hungary as a security risk towards
Slovakia’s territorial and national identity.
The first serious conflict between Hungary and Slovakia occurred when Hedvig Malina,
a female Hungarian-Slovakia student from Nitra, Slovakia got first berated by two Slovakians than robbed and beaten up for speaking Hungarian language on her mobile
phone on the street. Over 1.5 years after the case took place, the Slovakian authorities
had still failed to identify and charge the perpetrators in the case. Moreover Slovakian
25
authorities indicted Ms. Malina for allegedly providing false testimony when she detailed the crime committed against her to the police. This case drew worldwide attention. The Slovakian government office published a statement in 2012 expressing regret
over the case of Hungarian-Slovakian Hedvig Malina. She took her case to the European Court of Human Rights in 2007, while at the same time, an investigation was
launched by the Slovak chief prosecutor’s office, on the ground of false testimony,
which is still under way. The European Court of Human Rights in Strasbourg approved
the Slovak government’s apology so the case was officially closed and neither Ms.
Malina nor the Slovak authorities can file new proceedings.
According to the Slovak government’s evaluation28 on bilateral relations in 2007 there
were a few contradictions and conflicts in the political platform, however in other platforms there are improvements to be shown. Transferring too much political context to
Ms. Malina’s case, and interpreting the violation of minority rights from Hungary’s
side, are considered to be a conflict. In addition, the evaluation document also mentions
the Hungarian-Slovakian prime ministers’ meeting in summer 2007 which is from great
importance from the Slovak’s point of view since the last official meeting between the
Hungarian and Slovakian prime ministers took place in 2002. In the bilateral meeting in
2007 a declaration containing 14 specific tasks was approved by both Hungary and Slovakia. This joint program was named as Common Past, Common Future in the Mirror
of Common Projects29. The agreement declared the construction of two bridges over the
28Forgács,
I. (2007). English Summaries. Európai Tükör, XII(11), p.140. Retrieved May 13, 2012, from
http://www.kulugyminiszterium.hu/NR/rdonlyres/F2458186-E0AB-4670-95A197CC5F7BB7A4/0/et_2007_11.pdf pg.22.
29
Annual Report 2008 Ministry of Foreign Affairs of the Slovak Republic. Foreign Policy in 2008. Retrieved May 1, 2012, from
http://www.foreign.gov.sk/App/wcm/media.nsf/vw_ByID/ID_26F6CAF4D5E965C0C1257648004F7A
4E_EN/$File/Annual_report_2008_EN.pdf pg.10
26
Ipeľ River on the common state border as well as the construction of a motorway connecting Hungary in Miskolc and Slovakia in Kassa.
The dispute between the countries over the right of Slovakia to use the name “Tokaj”
1958 for its wines was resolved in 2004. The two countries came to an agreement in
June 2004 under which wine produced on 565 hectares of land in Slovakia would be
able to use the “Tokaj” label, providing that common regulations were applied.
The basis of the agreement was that both countries would consider both wine regions
as one single region again. In effect, this should have reintegrated the two wine regions, but would require a substantial adjustment to the current Slovakian wine region.
In the absence of this adjustment tensions among Slovakian and Hungarian wine producers rose again. According to the European Union’s regulation of one country’s regulation prevails for the territory of Tokaj which has the vast majority of Tokaj’s territory. Based on that finding Hungary was responsible for setting regulation over Tokaj. In
effect there hadn’t been any measure set regarding the interstate common regulation.
Slovakian winemakers met Slovak legislation while Hungarian winemakers obeyed
Hungarian regulation settings. This resulted in heated dispute and accusation among
winemakers of Hungary and Slovakia. Slovakia looked upon the “Tokaj” issue as a
shut case, and it applied its own regulation on the minority part of Tokaj which belongs
to Slovakia.
The Slovak law on education which was approved in 2008 caused HungarianSlovakian relations to move in a negative direction as it affects Hungarian nationality
schools operation in Slovakia. The newly introduced law reduces the amount of classes
taught in Hungarian language meanwhile increasing the amount of classes taught in
Slovakian language. This measure not only threatens the education in the Hungarian
27
language but also the rights of Hungarian-Slovakians for being educated in the Hungarian language. Moreover the extent of EU financial support received for Hungarian
nationality schools was much less than the previous years.
According to the evaluation of the Slovak Ministry of Foreign Affairs on 2008, the relations between Hungary and Slovakia became strained in the second part of 2008. In
November 2008 a football match took place in a South-Slovakian city,
Dunaszerdahely. A lot of Hungarian-Slovakians went to see the match. During the
match Slovak police forces stormed the Hungarian-Slovakian fans and started to assault them. The Hungarian government demanded that Slovak authorities investigate
allegations of police violence against Hungarian-Slovakians at the football match. As a
result of the Slovak police’ attack sixty Hungarian-Slovakians were left injured; one
severely. The Hungarian Coalition Party in Slovakia demanded that Slovakian police
leaders explain their actions to the Bratislava Parliament’s domestic security committee. However there is still no satisfactory explanation for the riot since the Slovak police didn’t provide any evidence or video tapes, which could certify the eligibility of
the police’ intervention.
Finally the tensions were brought to the mutual prime ministers’ meeting where the
Hungarian prime minister assured the Slovakian prime minister that Hungary would
respect and accept the borders between the two countries. This step was an important
one to take, as the Slovakian prime minister had expressed his concerns about the increasing sense of nationalism and revisionism in Hungary.
Due to the global economic crisis the tension between Hungary and Slovakia seemed
to diminish, however new problems emerged in 2009. According to a newly adopted
law in Slovakia the Hungarian language broadcasting Pátria Radio frequency was abol-
28
ished making Hungarian-Slovakia unable to listen to Hungarian broadcasts. After the
petitions and protesting against this law, the frequency started operating again.
In March 2009 the indirect president election took place in Slovakia. Ivan Gašparovič
the former president, and Iveta Radičova the former minister for social affairs, were the
two candidates with the highest chance of winning the elections. While Gašparovič
represented social-democrat as well as nationalist values, Radičova emphasized conservative politics, therefore Radičova enjoyed the support of government opposition
and the press. Meanwhile Gašparovič could count on the government coalition parties.
Although Gašparovič won the elections, it is surprising that Radičova was left behind
by just 11%, which can definitely be looked on as a good sign regarding HungarianSlovakia.
The National Council of the Slovak Republic passed an act in 2009, modifying earlier
regulations applying to the use of the Slovak language as the state language of the Slovak Republic. The new regulations restricted the use not only of other languages, but also variants of the Slovak language, threatening violations of the law by imposing fines
of €100 to €5000 on individuals and businesses, running to €165.000 in the case of media organizations. In order to eliminate the above mentioned law the Hungarian government turned to the Council of Europe and the Organization for Security and Cooperation in Europe for judicial remedy. High Commissioner of the Organization for Security and Cooperation in Europe, Knut Volleabak heard both Hungary’s and Slovakia’s arguments and proposed amending the law. However to begin with the Slovak government took the view that the High Commissioner’s proposal was unnecessary, as the law
was originally correct and didn’t prejudice anyone’s interest, and there were no necessary amendments suggested. At last it was made clear that the law needed amendments,
concretization and definition of some of the concepts included in it. The power of the
29
Department of Cultural Affairs had to be clarified since it was the only organ which was
responsible for complying with the law.
The tense bilateral relations escalated in August 2009 when a political crisis occurred.
At this time the atmosphere between the two countries was cold due to the newly adopted law about the restricted usage of Hungarian language among Hungarian-Slovakia.
Moreover when Hungarian President, László Solyom attempted to cross the bridge connecting Slovakia and Hungary, Slovakia refused his entry. The Hungarian President was
about to attend the inauguration of a statue to Hungary’s first king, St. Stephen I. For
both countries the timing of the inauguration and the visit by Solyom was significant.
On the one hand Hungarians celebrate 21th of August as a national holiday, more specifically St. Stephen’s Day, and on the other hand for Slovakians it is the anniversary of
the 1968 invasion of Slovakia by five armies, including Hungary’s. This case suddenly
caught the EU’s attention, since in international diplomatic affairs politicians and diplomats are only refused entry if they are on a blacklist because of sanctions. The Hungarian President however was not on the Slovak blacklist. In addition both Hungary and
Slovakia are parties to the Schengen Agreement which guarantees the free movement of
individuals between member states. The official explanation from Slovakia for the incident is that Slovakia considered the date of visit as inappropriate, despite the fact that
the preparations for the visit were made in advance and both parties agreed upon it. Finally the EU called on both Hungary and Slovakia to settle the conflict and normalize
their bilateral relations in the frame of an official high level conference. This conference
took place in a Hungarian city, Szécsény where the Hungarian and Slovakian prime
ministers met. The conference concluded with a declaration which included both countries’ regrets of Hungarian President’s case. Thus both parties indicated the future path
of bilateral relations, in order for them to flourish, rather than deteriorate in the future.
30
In summary, Hungarian-Slovakian bilateral relations flourished until 2006 with some
interruptions, while suddenly deteriorating rather intensively after 2006. This was mainly due to the extremist, nationalist party which gained influence in the Slovakian government regime. In addition the Slovakian prime minister overshadows minority issues,
including Hungarian-Slovakia. The Hungarian side meanwhile attempted to neutralize
and resolve bilateral tensions, while defending Hungarian-Slovakia’s interest on international platforms, prompting promulgating acts, laws and agreements favoring Hungarian-Slovakia. The only factor clouding Hungary’s negotiating capacity was that
some Hungarian politicians criticized the Hungarian government’s policy towards Slovakia. The bilateral relations tended to further deteriorate due to the increasing extremist
ideologies in Hungary. Hungarian right-wing parties did not focus on improving the political relationship between Slovakia and Hungary. This could be noticed when Hungarian extremist groups burned a Slovakian national flag in front of the Slovakian embassy
in Hungary or when the same extremist groups gathered in the cross-border territories of
Hungary and Slovakia, recruiting new members to follow their ideology.
31
3 Chapter 3: Economic relations between Hungary and
Slovakia
The Hungarian-Slovakian relations are characterized by close economic and trade relationships, due to both countries having similar geographical location, similar history and
the similar industrialization process that took place in the socialist era. HungarianSlovakian bilateral economic relation however only began in 1993, as Slovakia before
was an independent country only for a short while30. The bilateral economic relations
were defined by the ratification of the Central European Free Trade Agreement for the
revitalization of Visegrád Group Cooperation31, and EU membership. As a result of the
above mentioned facts economic relations have not followed the development of political ones. Both Slovakia and Hungary had interest in accessing the European Union,
therefore implied provisions were set by the framework of the CEFTA, and duties and
tariffs between their borders were gradually cut back. The organization of CEFTA was
the main indicator of the bilateral trade rules until 2004, when both Hungary and Slovakia accessed the European Union.
30
31
1939-1945 Slovakia got independent country.
Visegrád Group or V4 cam to existence as an alliance of Czech Republic, Hungary, Poland and Slovakia for the purposes of cooperation and furthering their European integration in 1991.
32
Figure1. Volume of Hungarian export-import with Slovakia between 1998 and 2008
Source: Data retrieved from United Nations Commodity Trade Statistics Database, April 23, 2012 from http://comtrade.un.org.
Figure2. Hungarian trade towards Slovakia in M. $.
Source: Data retrieved from United Nations Commodity Trade Statistics Database, April 23, 2012 from http://comtrade.un.org.
The bilateral economic relation dropped in 1998 and 1999 as the Slovak export towards
Hungary stagnated in 1998 and the Hungarian export fell by 15% in 1999 over the previous year’s volume. This decline was a consequence of a regime change in both Hungary and Slovakia. In Slovakia the new government introduced economic adjustment
measurements which caused the decline in the country’s exports and imports. Meanwhile the Hungarian-Slovakian agricultural exports and imports showed a similar declining trend. The Hungarian agricultural export towards Slovakia dynamically grew
until 1996 then dropped back in 1997 and 1998, at the end fatally declining by 2000.
Slovakia was the fifth largest export partner of Hungary in the early 2000s. The main
products of Hungarian agricultural export are canned food, drinks, sugar, corn, sugar
33
beet, sunflower, vegetable and fruit products as well as meat. It was Slovakia who had
agricultural trade balance surplus over Hungary until 2006, when Hungary started to
export more agricultural products than it imports, therefore acquiring a positive trade
balance over the Slovakians. During the 2000s a transformation occurred in the trade
composition. The bilateral trade was characterized by Slovakia’s surplus. However
along with the appearance of foreign capital, the Slovakian industry started to move towards automobile production. This trend revised the two neighboring countries’ trade
structure and trade of machinery and transportation equipment became significant.
3.2
Bilateral economic relations after 2004
The EU accession put the Hungarian-Slovak economic relations on a new platform. It
was the first time in 2005 when the Hungarian trade balance performed positively and
since then the bilateral economic relations have increased this tendency. In 2005 and
2006 the Hungarian export volume to Slovakia expanded by 63% and 64%, while in
2007 and 2008 increased by an average of 33%. Hungarian import has also been a
growing trend in recent years, however it was lower than the export growth. The value
of products imported from Slovakia grew by 33.5% per year from 2004 to 2008. One of
the reasons for the expansion in economic relations is the favorable economic environment created by the government, which led to a number of Hungarian citizens founding
an enterprise in Slovakia, and a number of products could be purchased at a cheaper
price in Slovakia than in Hungary, therefore a tremendous amount of people from the
Hungarian cross border region went over to Slovakia for shopping. Another reason for
the increase in bilateral trade might be the increasing Hungarian supply-chain built
34
around the automotive industry in Slovakia, thus the largest share of Hungarian exported products to Slovakia are machineries and transportation equipment.
Hungarian-Slovakian economic relations had a 50% increase in 2006 in comparison to
2005. This large increase was due to the wide selection of business activities: energy
and transportation infrastructure development and cooperation, merchandise and service
trade, bilateral capital investments, regional cooperation with particular focus on connecting development plans and EU tenders. One of the specifics in business relations is
the growing number of small and medium enterprises (app. 8000 in 2006). In 2008
Hungary ranked 5-6th in Slovakia’s largest trading partners after Germany, Czech Republic, Italy and Russia with the same volume as Poland’s above average growth rate of
40%.32
Regarding export volumes to Hungary, Slovakia ranks in 8th place, overtaking Russia,
Czech Republic, Spain and the Scandinavian countries. Hungary’s export growth was
driven by the growing amount of supplies in machinery products; within it the automotive industry and chemicals industry, the private and public purchasing power increasing due to the growth in real wages, and the increasing activities of small and mediumsized enterprises. The export of machinery products doubled, representing 58% of the
total exports, while machinery imports shared a high level of 24%. The export of processed products increased by 28% while imports only by 16%. Export of food products
increased by 41%, but its proportion still remained at 6%, remaining Hungary’s negative trade balance in this product group.
32
Foreign trade detailed data in June and over the first six months of 2008. Slovak Statistical Office. Retrieved May 2, 2012, from http://portal.statistics.sk/showdoc.do?docid=4
35
In 2007 the bilateral relationship remained on the same track it was on since 2005. The
total sum of Hungarian exports exceeded imports; the largest share (53%) of trade was
the machinery and transport equipment. The bilateral trade within the Hungarian export
growth exceeded the trade with other countries. In 2008the global economic environment changed, since the world economic crisis infiltrated the Hungarian and Slovakian
economy. Despite this Hungary’s sixth largest trading partner in 2008 was Slovakia.
According to the commodity structure, processed products were the most important in
the bilateral trade relations. It is also noticeable how food products’ trade grew by 51%
in 2008.
3.1
Capital ties between Hungary and Slovakia
The importance of capital ties between Hungary and Slovakia has been particularly decisive since 1998, when a process of large-scale privatization, also allowing foreigners
to participate, started. Since 2000 Slovakia has been the primary target for Hungarian
SMEs to invest in. The amount of Hungarian capital export to Slovakia is bigger than
the total capital exports from Slovakia to Hungary.
36
Figure3. Hungarian-Slovakian direct investment 2002-2007
Source: Data retrieved from”Direct capital investment statistics Hungary” by National Bank of Hungary, 2007, May 4, 2012, from
http://www.mnb.hu/Root/Dokumentumtar/MNB/Kiadvanyok/mnbhu_statisztikai_kiadvanyok/mukt_hu.pdf.
The Hungarian direct investment in Slovakia jumped to a great extent in 2003. This was
partly due to the EU accession of Slovakia, as well as the Slovak government setting
measures to improving business environment. Many Hungarian investors are operating
in Bratislava and other major Slovakian cities. The high proportion of HungarianSlovakians also plays an important role in Hungarian capital export flowing to Slovakia.
The volume of the Hungarian capital stock reached $1.112 million in 2006. According
to the cumulative value based on the cash flow Hungary is ranked as the number
5investor in Slovakia, with a share of 6% of total foreign investment. Since 2006 Hungarian SMEs have stronger interest towards the Slovakian market and therefore have increased their direct investments in sectors of service, manufacturing, construction industry, tourism, information technology, environmental protection and management and
security technology. Recently a claim for establishing network and logistics centers for
commodity transportation arose which is of great importance in the process of goods
exchange, where service trade has a relatively low share. According to the National
Bank of Hungary, the total amount of capital stock in Slovakia was €2.8 billion while
the Slovakian capital export in Hungary was €37 billion.
37
3.2 Impact of the economic crisis on the bilateral trade
relations in 2009
The economic crisis of 2008 had significant impact on Hungarian-Slovakian bilateral
trade. Hungarian export fell by 17.9 %, and Hungarian import by 8.4% in the first quarter of 2009 compared to the first quarter of 2008.The extent of the drop however was
smaller than the decrease in total commodity exchange, where export dropped by 25%,
and import 30%.
As a result of the economic crisis, the structure of Hungarian commodity export
changed only slightly. The volume of processed goods exported dropped by 6%, while
the export proportion of machineries and transportation equipment increased by 10%,
despite Slovakian automotive industries being strongly affected by the crisis in a negative way. A similar tendency can be found in the structure of Hungarian import. The
import proportion of manufactured products fell by 3%, while machineries and transportation equipment increased by 5.5%.
Figure4. Commodity structure of export from Slovakia to Hungary in first quarter of
2009
Source: Data retrieved from ”Statisztikai Szemle” by Hungarian Central Statistical Office, 2009, May 5, 2012, from
Figure5. Commodity structure of export from Hungary to Slovakia in first quarter of
2009
Source: Data retrieved from”Statisztikai Szemle” by Hungarian Central Statistical Office, 2009, May 5, 2012, from
In the first quarter of 2009 the most important export products regarding the commodity
structure of export from Slovakia to Hungary were telecommunication products, diesel
engines, automobile components, propylene and oil. The main export products from
Hungary to Slovakia were automotive wire kits, electronic components, steel products
and gasoline. Hungary and Slovakia have developed an evolving bilateral trade relation
since 1993, from the point of view of both commodity and capital trade. The Visegrád
Four Cooperation, the CEFTA and the European Union have created a framework for
39
the continuous dynamic development for the Hungarian-Slovakian bilateral trade relationship. Slovakian and Hungarian citizens both took advantage of the economic opportunities arising in the other country. In Slovakia the advantages were in the conditions
of company foundation and in cheaper prices, while in Hungary it was cheaper to purchase land. These processes are not influenced by the politics of either side because the
following bilateral ministerial meeting of 2001took place only eight years later in 2009.
During these eight years both country’s ministers had unofficial meetings, but none of
them ended with a detailed review on Hungarian-Slovakian trade relation, while the
volume of bilateral trade grew tenfold until 2009.
Due to a different taxation system implemented in Hungary and Slovakia, the two countries reinforce bilateral economic relations. Thus Slovakia applies a better condition of
taxation over Hungary, and also provides a better economic environment for businesses.
Hungarian entrepreneurs preferably move their businesses to Slovakia in order to take
advantage of the simple taxation system, as well as from the simple legal environment
which allows easy procedures of founding businesses at low administrative and additional costs, helping Slovakian unemployment rate to drop from a significant level of
20% in the early 1990s.Favorable factors for Hungarian businesses expanding to Slovakia’s border region are the convenience of the language environment, as the proportion of Hungarian-Slovakians is high in the border area, and the cheap, skilled and relatively reliable Slovak labor force. Other than Hungarian companies, multinationalmainly related to automotive production- corporations also started to run subsidiaries in
West Slovakia where Hungarian companies have a chance to serve as a supplier.
Meanwhile Slovakian companies also try to expand their business activities in the Hungarian market taking advantage of the size and the purchasing power of the Hungarian
40
market through filling in market gaps. Since the price level of Hungary is higher than
Slovakia’s, Slovakian entrepreneurs could realize higher profits in Hungary. However
the number of Slovakian businesses operating in Hungary is much smaller than the
number of Hungarian businesses in Slovakia. The reason for this can be found in the
disadvantageous, less business friendly, environment in Hungary than in Slovakia,
therefore it is only worthwhile for a Slovak company to locate to Hungary if it can be a
supplier to a multinational corporation.
After making comparison in economic indexes between Hungary and Slovakia it can be
seen that Slovakia has the advantage over Hungary. In respect of all the other indexesexcept the unemployment rate-Hungary has a disadvantage over Slovakia, the tendency
of which is predicted to grow in future. The development of the Slovakian economy
started to accelerate when complex reforms such as; the complete conversion of tax system (introducing single tax rate), paring down social expenditures, and reforming the
pension system were implemented. As a consequence of all these measures Slovakia introduced the Euro as its official currency in 2009. A relevant component of the reforms
is the requirement set that the income from employment in double-income families cannot be less than the amount of social assistance received. This regulation is meant to
promote the honor and importance of employment and work as well to significantly decline social expenditure in Slovakia. The above mentioned Slovakian policy measures
brought positive increments to the economy: employment increased between 2002 and
2007 by 270 thousand people, the amount of export doubled between 2002 and 2006,
and the unemployment rate dropped from 18,7% in 2002 to 11,1% in 2007.
Successful projects on innovation and attracting investors to particular territorial units,
regions or sub regions take the business environment and the state regulators as tax sys-
41
tem, social net, administrative burden etc. into account. These commitments of the Slovakian state influence investors, labor force and all the actors of civil society and the
economy, market opportunities and investors’ site selection as well as in the foothold of
foreign capital and investors. In this respect Slovakia creates a much more favorable
condition for economic growth, than Hungary. This tendency can be seen in Slovakia’s
GDP growth and the year by year decline in unemployment rate. Some of the reforms
which helped the booming Slovakian economy could be implemented by Hungary as
well, especially in terms of decreasing bureaucracy and state expenditures, creating employment etc.
Table 2. Macroeconomic data in Hungary and Slovakia
Employment
Unemployment
GDP/capita
Labor productivi-
The indi-
Administration
rate (2010,
rate (2010, % of
(2010, Cur-
ty/employee
rect tax
costs ( 2005,%
%)
labor force)
rent Pric-
burden
of GDP)
(2006, EU27=100)
on labor
es,$)
(2006, %
of income)
Hungary
57.3
11.245
16.103
74.8
40.5
6.8
Slovakia
59.4
14.375
12.863
70.4
33.7
4.6
Note. Data retrieved from Eurostat database, 2005, May 5, 2012, from
epp.eurostat.ec.europa.eu/portal adm.költségek: European Compet. Rep. 2006. EC.
Hungary’s figure of the indirect tax burden on labor is one of the highest in the EU and
shows irrationality as the employment rate is relatively low. Rates of tax burden in such
developed countries as Luxembourg (29.5), Holland (30.7) or Ireland (25.6) are significantly smaller than Hungary’s. However Hungary has the one of the EU’s highest rates
42
in administration costs compared to its GDP. One of the main sources of Hungary’s
economic and social problems can be found in the deficit of public finance. Despite the
high incomes, constant imbalance is characteristic to the Hungarian economy which is
due to the unrealistically high public expenses. State expenditures compared to the GDP
were around 60% in the beginning of the 1990s. This percentage started to rise again
from the 2000s.
Figure6. Deficit in public finance and government’s debt in Hungary and Slovakia
Source: Data retrieved from Eurostat database, 2005, May 5, 2012, from epp.eurostat.ec.europa.eu/portal adm.költségek: European
Compet. Rep. 2006. EC.
Moreover Hungary faces high deficit in Hungarian public finance and the level of government’s debt exceeding the limit set by the Maastricht convergence criteria. These
figures show Hungary is lacking of real reforms in regards to decreasing bureaucracy.
The Slovakian economy, due to its policy of prompting investments (automobile production, telecommunication) by giving a favorable environment, reached remarkable
speed of economic growth in the last years of 2000s. There is a significant difference to
43
be seen between Slovakia’s and Hungary’s GDP growth’s process. In regards of per
capita GDP in purchasing power parities Slovakia already overtook Hungary. However
in both countries cases the main part of the growth can be seen to be due to the development of the capital cities Budapest and Bratislava, and their direct surrounding areas.
In the rural areas there are some differences but Slovakia’s more favorable macroeconomic environment (tax system, administration system, investment environment) shows
Slovakia’s advantage over Hungary.
Figure7. GDP growth and GDP/capita of Slovakia and Hungary (in % of EU27, PPS)
Source: Data retrieved from Eurostat database, 2005, May 5, 2012, from epp.eurostat.ec.europa.eu/portal adm.költségek: European
Compet. Rep. 2006. EC.
According to Lengyel, Rechnitzer33 the competitiveness of a city is stronger in the case
of an open economy where personal incomes are sustainably high and growing, and the
employment rate is stagnating. The concept of competitiveness can be described as
more economic performance, which can be measured partly by the incomes, and partly
by the high level of employment. From these factors Slovakia has an advantage over
Hungary. In Slovakia, the formerly heavy-, and military industry boosted by the social33
Lengyel, I., Lukovics M. (2008). A regionális fejlődés erőforrásainak átrendeződése, új súlypont: a
tudás. Kérdőjelek a régiók gazdasági fejlődésében, pp. 13-25. Retrieved May 2, 2012, from
http://www2.eco.u-szeged.hu/region_gazdfejl_szcs/pdf/konyv8/Rechnitzer.pdf
44
ists have transformed and are the present suppliers for the automobile companies, which
is one of the main accelerators of the Slovakian economy.
4
Chapter4: SWOT Analysis
In general, border regions in Europe are characterized by poverty resulting from the
constant tension between the states during the period of World Wars. Thus the lack of
capital inflow accounts for the gradual transformation of these regions into peripheral
territories. Based on that logic, Hungarian-Slovakian cross-border regions are among
both Slovakia’s and Hungary’s most underdeveloped territories, facing a high unemployment rate and infrastructure of poor quality.
Before analyzing the cooperation in border regions between Slovakia and Hungary, the
definition of a cross-border area needs to be clarified. This research applies the generally accepted concept which defines cross border areas in both Hungary and Slovakia as
territorial unities along the borderline between Hungary and Slovakia.
Slovakia and Hungary share a 679 km long border section, which is Hungary’s longest
border section, constituting almost Hungary’s entire Northern frontier running on an
East-West axis. The Danube River lies on the western part of the Slovakian-Hungarian
border, while the Ipel River marks the borders on the East part. The boundary also
45
crosses the Carpathian Mountains and runs east towards the Ukrainian-SlovakHungarian borderline.
The cross border region faces several structural problems including the high rate
of unemployment, unbalanced structure of industry in particular, the predominance
of heavy industry sectors, the disproportionate localization of factories, and the general lack of job
opportunities in rural areas. The post-communist economic and social transformation has worsened existing regional disparities. The government after the collapse of Communism paid more attention to the center than to peripheral regions. It seems that the growing disparities did not prompt
an acceleration of efficient regional policy formulation; rather, it was the effort to join the EU and
gain access to EU pre-accession funds.
Slovakia is divided into eight administrative divisions, called regions. Of those five regions belong to the cross-border area: Bratislava, Trnava, Nitra, Banská Bystrica and
Košice. The regions’ names are identical to their principal cities.
According to the Hungarian territorial structure there are five counties on the crossborder area: Győr-Moson-Sopron, Komárom-Esztergom,Nógrád, Pest and BorsodAbaúj-Zemplén.
Figure8. Slovakian-Hungarian cross-border area
46
Source:
Adapted
May
4,
2012,
from
http://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=HU&gv_reg=ALL&gv_PGM=1290&gv_p
er=2&gv_defL=7.
However the border section doesn’t follow ethic borders. As a result border areas are
multi-ethnic areas populated by a significant number of Hungarian-Slovakians as well
as Slovakian-Hungarians. On the western part of the Slovakian border there is a large
proportion of Hungarian-Slovakians; in the southern districts of the Nitra and Trnava
regions reaching over 80% of the inhabitants. On the eastern part of the Slovakian border the proportion of Slovakian and Hungarian-Slovakian inhabitants are 50:50.In Hungary’s border areas there are also villages, especially in the Komárom-Esztergom,
Nógrád and Pest counties populated by Slovakian-Hungarians, however the proportion
of Slovaks reaches only 0.17% of the Hungarian population.
SWOT analysis is a micro-environmental analysis suitable for exploring the characteristics and potential for development of a sector or a region. Micro-environment stands for
a relatively small territorial environment, which directly interacts with the institutions of
the country. Components of the micro-environment are the internal and external envi-
47
ronments. The former are seen as Strength and Weakness while Opportunities and
Threats refer to the latter.
The SWOT analysis method, introduced by Humphrey, is applied in offices of businesses in order to rationalize market reality, bring together elements that make it analytically functional, to identify the internal and external factors that are supportive or unfavorable to achieving a business objective, identify the most appropriate actions to be
undertaken to limit the effects of negative elements, and to maximize the possible effects of positive ones. To understand Slovakian-Hungarian cross-border relations and
promote its development, SWOT analysis is crucial to be proceeding, because it attains
relevant indicators from cross-border co-operation processes which can influence future
scenarios positively. The main function of the SWOT analysis is to evaluate the
Strengths, Weaknesses, Opportunities and Threats involved in a project or in a region
and also determine cross-border region’s prospects.
Fiure9. SWOT matrix on Hungarian-Slovakia cross border area
Natural resources
Field
Strength
Weakness
¾ The largest drinking water reserve
in Central Europe
¾ Bio-deversity and 14 nature parks
with rich natural resources
¾
48
¾ Environmental pollution from
the bigger towns
¾ Bipolar spatial structure
¾ Different forms of industries
¾ Developed tertiary sector
cross-border clustering
with financial and market
¾ Poor level of entrepreneurial
skills
services
Economy
¾ Poor cross-border co-operation in
¾ Underdeveloped business infra-
¾ High inflow of FDI and
growing innovative clusters
structure: lack of business incubators, logistics centres, industrial sites
Labour market
¾ Cross-border co-operation
between Hungarian and Slo-
inhabitants of non-productive
vakia hospitals
age
¾ Low labour costs, available
¾ The high unemployment rate
in the eastern part
labour force
¾ River Danube as the most
Transportation/ Infrastructure
¾ Aging society, high number of
important transportation route
¾ The motorway M1 and M3
and the high-speed railway
¾ Narrow and low number of
bridges
¾ Poor road and railway transport accessibility in rural areas
connect the two countries
Opportunities
Threaths
49
Natural resources
Infrastructure
market
Economy
Labour
Transportation/
¾ Opportunity in develeoping
cross-border cooperation by
common planning and institutional building
¾ A high potential for renewable energy sources
¾ Social and economic drop
back of areas lagging behind
in rural areas
¾ Lack of further co-operation in
strategic planning in environmental protection
¾ Development of clusters
¾ Further access to foreign investment
¾ Further immigration from peripheral and rural areas
¾ Decline of foreign investments
¾ Pullouts of multinational enterprises
¾ Integrated labour market and
joint labour services
¾ Increase of unemployment in
the border region
¾ Brain drain: migration of
qualified experts abroad
¾ Development of TransEuropean transport corridors
¾ Increasing costs of developing
the infrastructure negativel affect the feasibility
¾ Environmental cost of transport
The Hungarian-Slovakian cross-border area shares similar problems and challenges on
each side of the border. The most significant challenge of the cross-border area is the
poorly-developed road infrastructure. Although the transportation and communication
infrastructure has significantly improved in both sides of the border in the past few
years, there are still some deficiencies remaining in regards to the transportation from
Slovakia to Hungary, mainly due to the two rivers on their frontier line, presenting a
further obstacle to the development in the cross-border area.
50
From an economic point of view the area has its strength in the rapidly developing economic centers, where dynamically growing, competitive companies, multinational companies and competitive small and medium-sized enterprises are located.
However the number of Hungarian-Slovakian business connections is fairly small,
which certainly weaken the region’s competitiveness. Other weakness in the crossborder area can be found in the very low-level cooperation of the labor market as some
areas of the cross-border region face large-scale unemployment, and some economic
centers lack employees.
One of the main strengths of the cross-border area lies in the remarkable number of colleges and universities providing high quality education as well as bases for research and
development activities.
The level of cooperation between companies and colleges/universities is quite low,
which stands as an obstacle for the cross-border region’s competitive and integrated development.
Tourism plays an important role in the two countries’ relations and provides opportunities for future development. This potential however is not sufficiently exploited yet. The
region neither provides marketing and promotional activities nor tourist programs. The
landscape of the cross-border area is rich in environmental conservation areas, however
as a result of the previous heavy industrialization activities, there are several areas affected by serious environmental contaminants on both sides of the border.
Along the border on both Slovakia and Hungary’s sides there is an advanced-level service industry established, including health service, however there is only a low-level
cooperation among the institutions on either side of the border.
51
In summary, the Hungarian-Slovakian cross-border area offers a number of areas in development. In order to take advantage of these potentials, encouragement of both areas’
actors for cooperation is crucial.
In order to increase the level of cooperation in the Hungarian-Slovakian border area
there have been several programs implemented in the last decade. Among those the
largest scale project is the “Operational Program Hungary-Slovak Republic” approved
by the European Commission, operating from 2007-2013.The main goal of the cooperation is to strengthen economic competitiveness in the cross-border area, as well as increase social, cultural cooperation and communication among Hungarians and Slovakians.
The expected outcomes of the programs are development in business infrastructure facilities, increase in number of business start-ups, implementation of new projects in
tourism and healthcare sectors, encouragement of joint actions in environmental protection, development of public transportation and border-crossing facilities across rivers.
The Operational Program has a total budget of €208 million34.
The strengths of the Slovakian-Hungarian cross-border area are the following: the area
includes the largest cities of the two countries, Budapest and Bratislava, has an advantageous geographical location in terms of foreign direct investments (FDIs). Further advantages are notably in the automotive industry and electrical engineering. The area is
characterized by varied landscapes which is boosting tourism, has different forms of industry and architecture as well as natural resources, ever-increasing co-operation be-
34Operational
Programme ’Hungary-Slovak Republic’. Regional Policy- Inforegio. Retrieved April 19,
from
http://ec.europa.eu/regional_policy/country/prordn/details_new.cfm?LAN=7&gv_PAY=HU&gv_reg=
ALL&gv_PGM=1290&gv_per=2&gv_defL=7
52
tween Slovakia and Hungary at government and at municipality level, also intertwined
with the lower levels of individual NGOs, businesses, cultural and ethnic minority organizations and institutions. The companies in the cross-border region have transnational co-operation moreover there is an emerging number of public-private partnerships (PPP) in form of clusters, incubators, technology and industrial parks. The weaknesses lie in the environment pollution due to the weak environmental consciousness,
the lack and low diversity of skilled workforce, the relatively high unemployment rate,
the migration of educated workforce, and bad health conditions. The number of socially
disadvantaged minorities (Romas) is also higher than EU average. From an economic
point of view weakness are the majority of low added value businesses, the weak internationalization and low added value of exported industries, weak presence of Slovakian
and Hungarian companies in international markets, difference in currency, low-scale innovation (knowledge intensive industries are underdeveloped). It is also disadvantageous that the structure of the cross-border region is dominated by very small enterprises which are financially weak and have lack of management know-how. Moreover
companies often are characterized by low competitiveness, regional imbalances in terms
of demographics, development, employment and concentration of added value. In terms
of infrastructure the weaknesses can be seen in the underdevelopment of transport and
communication infrastructure in the smaller towns and rural areas, the insufficiency of
interconnection of academy and industry and insufficiency in information dissemination
and promotion of the region. The transportation needs development on both sides of the
border. In the western regions the Danube presents a natural obstacle to transportation,
and in the eastern, less developed regions the quality of the road network hampers cooperation efforts. The non-governmental organizations are very much dependent on the
funding by governments, enterprises and individuals, which is often an obstacle to ef-
53
fective co-operation. The information bases related to both sides of the border are not
comprehensive enough to provide information on the highly complex and differing administrative structures and processes involved on both sides of cross-border activities.
Opportunities firstly are on an economic and cultural level. There is potential for reviving the economic and cultural forms of co-operation and co-existence that have developed for centuries in the region. Another potential is in developing the tourism sector.
Along with the EU accession a path for large-scale projects of regional development has
opened. Furthermore, increasing focus on regional development, opening new programs
and initiatives in research, innovation and technological development would help improving cross-border relations.
The threats are the low level of the co-ordination of cross-border programs and projects
at different levels, and the inefficient programs.
5
Chapter5: Econometric Research
In this part a multiple linear regression analysis is conducted to examine the relationship
between the GDP growth rate of Hungary and Slovakia and two potential predictors.
The latter also called independent variables are the trade dependency (%) in Hungary
and in Slovakia on each other and the factor of political conflicts between Hungary and
Slovakia.
The term ‘linear’ is used because in multiple linear regressions we assume that the dependent variable Y is directly related to a linear combination of the explanatory variables. In the following tables we provide the data used in the regressions. Table 2 and 3
show the GDP figures in Hungary and Slovakia from 1994-2010. GDP growth (%) data
54
in Table 4 are calculated from these figures which are the actual data for our dependent
variable used by running the regression.
Table 2. GDP and GDP per capita in PPP in Hungary from 1994-2010
GDP (M$)35
PPP ($)36
1994
42,363
8,672
1995
45,561
8,997
1996
45,931
9,300
1997
46,533
9,942
1998
47,952
10,639
1999
48,255
11,059
2000
46,386
11,884
2001
52,721
13,394
2002
66,389
14,669
2003
83,538
15,343
2004
101,926
16,188
2005
110,322
16,975
2006
112,533
18,299
Year
35
current M$
36
current M$
55
2007
136,102
18,933
2008
154,233
20,432
2009
126,632
20,154
2010
128,632
20,545
Note.
Data
retrieved
from
World
Bank
Database,
May
7,
2012,
from
http://data.worldbank.org/country/hungary.
Table 3. GDP on current prices in M€ and in M$ in Slovakia from 1995-2010
Years
GDP
M€
1994
M$
PPS $
19,705
7,725
1995
19,319
25,254
8,322
1996
21,527
27,284
9,040
1997
23,867
27,039
9,753
1998
26,171
29,278
10,328
1999
28,109
29,948
10,406
2000
31,177
28,724
11,008
2001
33,881
30,319
12,070
56
Note.
2002
36,807
34,638
12,965
2003
40,612
45,837
13,598
2004
45,161
56,073
14,654
2005
49,314
61,328
16,175
2006
55,002
69,002
18,381
2007
61,450
84,109
20,873
2008
66,842
98,041
23,241
2009
62,795
87,379
22,613
2010
65,743
87,268
23,303
Data
retrieved
from
World
Bank
Database,
May
7,
2012,
from
http://data.worldbank.org/country/slovak-republic.
Table 4. GDP growth rate in percentage change on previous year in Hungary and in
Slovakia37
37
Year
GDPtH growth (%)
1995
7.549
0.021
1996
0.811
8.042
GDPtS growth (%)
GDPtH =(lnGDPt1H-lnGDPt0H)x100; GDPtS =(lnGDPt1S-lnGDPt0S)x100
GDP data retrieved from Table 1and Table2 in M$.
57
1997
1.312
-0.899
1998
3.048
8.282
1999
0.633
2.287
2000
-3.874
-4.087
2001
13.658
5.552
2002
25.926
14.247
2003
25.831
32.332
2004
22.011
22.331
2005
8.237
9.372
2006
2.005
12.512
2007
20.944
21.893
2008
13.322
16.564
2009
-17.896
-10.875
2010
1.579
-0.127
Note. Data retrieved from Figure1 and Figure2.
Data in Table 5 and Table 6 are the basis data for computing the date of our first independent variables: the trade dependency of Hungary and Slovakia on each other (please
refer to Table 7).
Table 5. Slovakia’s trade dependency on Hungary (M$)
Export
Import
1993
113,897,000
1994
143,633,000
355,589,000
1995
199,322,000
363,153,984
1996
217,960,000
376,996,992
1997
241,684,992
399,582,016
1998
325,977,984
421,731,008
1999
279,005,000
474,743,000
58
2000
288,476,000
574,897,000
2001
411,482,000
602,593,000
2002
496,858,000
679,753,000
2003
846,917,000
929,434,000
2004
1,070,965,000
1,204,942,000
2005
1,765,522,000
1,490,498,000
2006
2,886,500,000
2,120,761,000
2007
3,983,267,000
2,885,920,000
2008
5,104,987,000
3,838,583,000
2009
4,133,208,000
3,251,820,000
2010
4,900,655,000
3,407,191,000
2011
5,968,384,000
Note. Data retrieved from United Nations Statistics Division Commodity Trade Statistics Database, May 8 2012, from http://comtrade.un.org.
Table 6. Hungary’s trade dependency on Slovakia (M$)
Export
Import
1994
365,679,008
110,684,120
1995
383,386,176
189,154,480
1996
368,421,536
198,533,184
1997
430,583,168
242,514,048
1998
468,457,568
318,316,864
1999
451,480,988
260,978,936
2000
578,650,496
268,309,104
2001
679,574,491
377,011,687
2002
789,129,541
454,073,542
2003
1,067,965,457
775,919,344
2004
1,431,352,633
998,002,792
2005
1,891,777,749
1,228,832,699
59
2006
2,486,490,578
1,952,593,350
2007
3,648,001,248
3,040,803,342
2008
3,648,001,248
3,599,398,541
2009
3,828,648,493
2,609,520,960
2010
4,255,321,107
2,758,178,169
Note. Data retrieved from United Nations Statistics Division Commodity Trade Statistics Database, May 8 2012, from http://comtrade.un.org.
From the figure above we can calculate the trade dependency in percentage using the
following formulas:
100
GDP
100
Table 7. Trade dependence (%) of Slovakia and Hungary
Trade dependency of
Year
Trade dependence of Slovakia %
1994
Hungary%
1.12
1995
2.53
1.26
1996
2.23
1.23
1997
2.18
1.45
1998
2.37
1.64
1999
2.55
1.48
2000
2.52
1.83
2001
3.01
2.00
60
2002
3.34
1.87
2003
3.40
2.21
2004
3.88
2.38
2005
4.06
2.83
2006
5.31
3.94
2007
7.26
4.91
2008
8.17
4.70
2009
9.12
5.08
2010
8.45
5.45
Note. Data retrieved from Figure4 and Figure5.
The figure of the other independent variable for the political conflict between Hungary
and Slovakia can be found in part qualitative research.
5.1 Multiple regressions
In this multiple linear regression, there are two explanatory, independent variables; the
relationship between the dependent variable and the explanatory variables is represented
by two
Equations:
∆GDPtH=β0+β1trade dependencetHt+β2conflicttH,S +
H
t
∆GDPtS =α0+α1trade dependenceSt+α2conflicttS,H +
t
S
here ∆GDPtH is the GDP growth rate (%) in Hungary and ∆GDPtS stands for GDP
growth rate (%) in Slovakia;
t
H
and
t
S
stands for standard errors.
Applying this two equations by using the data from Table 17 and Table 18 are:
61
GDPtH = 11.387-2.928 x1-7.70 x2
GDPtS =10.461-4.072x1+0.095x2
The correlations between the variables in this model are provided in the Correlations
figures in Table 11 and Table 12 which show that the independent variables have at
least some relationship with the dependent variable. In case of GDPtH the scales are: 0.150 and -0.123 while in case GDPtS they are -0.181and -0.035 which are far from the
preferably 0.3 therefore they don’t show substantially correlation among the independent and the dependent variable.
Also substantial to check whether the correlation between the two independent variables
is too high so the model needs to be adjusted by omitting one of the two highly correlated variables. The correlation between the two independent variables β0+β1trade
dependencetHt and conflicttH,S in equation GDPtH is 0.271 while in case of equation
GDPSt .0.298. Both of the values are less than 0.7 therefore all variables will be retained.
To eliminate the chance of multicollinearity Tolerance and VIF values from Coefficients figure shown in Table 17 and Table 18 need to be analyzed. Tolerance is an indicator of how much of the variability of the specified independent is not explained by the
other independent variables in the model and is calculated using the formula 1-R
squared for each variable. This values are 0.926 (GDPtH) and 0.911 (GDPSt) which are
way higher than the critical value of 0.10 indicating that there is no possibility of
multicollinearity in the two matrix.
The other value VIF is the inverse of the Tolerance value. This value in the two equations are 1.079 (GDPtH ) and 1.097 (GDPSt). The two values both are less than the critical value of 10.
62
Table9. Descriptive Statistics
Descriptive Statistics
Mean
GDP growth rate in Hungary
Conflict
Trade dependence in Hungary
Std. Deviation
7,8185
11,90850
16
,56
,512
16
2,4956
1,38126
16
Mean
GDP growth rate in Slovakia
Conflict
Trade dependence in Slovakia
Std. Deviation
N
8,5903
11,16370
16
,56
,512
16
4,3982
2,45695
16
63
N
Table11. Correlations
Correlations
Pearson Correlation
Sig. (1-tailed)
1,000
-,150
-,123
Conflict
-,150
1,000
,271
-,123
,271
1,000
,289
,324
.
N
Conflict
Conflict
,289 .
,324
,155
,155 .
16
16
16
Conflict
16
16
16
16
16
16
64
Correlations
Pearson Correlation
Sig. (1-tailed)
N
Trade dependence in
Conflict
Slovakia
1,000
-,181
-,035
Conflict
-,181
1,000
,298
-,035
,298
1,000
,252
,449
.
Conflict
,252 .
,449
,131
,131 .
16
16
16
Conflict
16
16
16
16
16
16
Table 13 and Table 14 are the Model Summary figures containing the value of the RSquare and the Adjuster R-Square. The former indicates how much of the variance in
the dependent variable is explained by the model (which includes the variables of Political conflict between Hungary and Slovakia, Trade dependence Hungary; Political conflict between Hungary and Slovakia, Trade dependence Slovakia). In case of the equation GDPtH R-Square is 0.03 while this value is 0.033 in equation GDPtS.
Both of the R-Squares are small therefore it is highly possible that the Adjusted RSquare will become negative.
Table13. Model Summary
65
Model Summaryb
Std. Error of the EstiModel
R
R Square
,173a
1
Adjusted R Square
,030
mate
-,119
12,59876
a. Predictors: (Constant), Trade dependence in Hungary, Conflict
b. Dependent Variable: GDP growth rate in Hungary
Model Summaryb
Std. Error of the EstiModel
1
R
R Square
,182a
Adjusted R Square
,033
mate
-,116
11,79202
a. Predictors: (Constant), Trade dependence in Slovakia, Conflict
b. Dependent Variable: GDP growth rate in Slovakia
R-Square can take on any value between 0 and 1, with a value closer to 1 indicating that
a greater proportion of variance is accounted for by the model. R-Square values ( please
refer to Table 13 and Table 14) of 0.030 and 0.033 show that the fit explains 3% and
3.3% of the total variation in the data about the average.
The adjusted R-Square statistic is generally the best indicator of the fit quality when a
small sample is involved providing a better estimate of the true population value, rather
than the normal R-Square value. The adjusted R-Square statistic can take on any value
less than or equal to 1, with a value closer to 1 indicating a better fit. In the both case of
GDPtH and GDPtS the value of Adjusted Squares are negative -0.119 and -0.116 respectively-. Negative values can occur when the model contains terms that do not help to
predict the response. To assess the statistical significance of the result, it is necessary to
66
look in the figure ANOVA (please refer to Table 15 and Table 16). This tests the null
and the alternative hypothesis, if all the coefficient values could be zero. If the coefficient values all happen to be zero the outcome will interpreted as none of the independent variables have a relationship with the dependent variable of GDPtH and GDPtS. In
case of the null hypothesis will be rejected that has an interpretation that none of the
variables chosen as factors to try to predict values of GDPtH and GDPtS has a relationship with the dependent variable. The alternative hypothesis states that at least one of
the independent variables is not zero:
H0:β1+:β2
HA: βi
0
0
The value of significance (α) is 0.821 (GDPtH) and 0.804 (GDPtS). By 10% level of significance both of the significance values are higher than 0.100 so the null hypothesis
cannot be rejected which means that neither independent variables of trade dependency
Hungary/trade dependency Slovakia nor the independent variable of Political conflict
between Hungary and Slovakia has a relationship with the dependent variable of GDPtH
and GDPtS .
67
Table15. ANOVA
ANOVAb
Model
1
Sum of Squares
Regression
df
Mean Square
63,712
2
31,856
Residual
2063,475
13
158,729
Total
2127,187
15
F
Sig.
,821a
,201
a. Predictors: (Constant), Trade dependence in Hungary, Conflict
Table16. ANOVA
ANOVAb
Model
1
Sum of Squares
Regression
df
Mean Square
61,750
2
30,875
Residual
1807,673
13
139,052
Total
1869,423
15
F
Sig.
,222
,804a
a. Predictors: (Constant), Trade dependence in Slovakia, Conflict
Although the independent variables don’t show much relationship with the dependent
variables in the model, it is defined which of the variables included contributed to the
prediction of the dependent variable by applying the Coefficients figure shown in Figure 17 and Figure 18. The beta coefficients from the column Beta -0.089 and -0.187 respectively- regard to the variable “political conflict between Hungary and Slovakia” in
both equations, which mean this variable has the strongest unique contribution to explaining the dependent variable, when the variance explained by all other variables in
68
the model is controlled for. The Beta value for “trade dependence Hungary/trade dependence 18 Slovakia” shown in Table 17 and Table was slightly higher (-0.089; 0.021)
indicating that it made more of a unique contribution. For each of these variables, by
checking the value in the column Sig. can be concluded that the variables less than 0.05
make a statistically significant unique contribution to the equation. As none of the variables’ “Sig.” values are less than 0.05 the variables are not making a significant contribution to the prediction of the dependent variable.
Each of the variables has a test statistic value in column “t” which is compared to the
critical value to see if they are significant or not. Conducting t-test for coefficient of
each of these independent variables is important to know if that particular independent
variable has a significant relation with the dependent variable. Each of the independent
variables has a test statistic value listed and a p values listed in column “Sig” in Table
17 and Table 18. However the p value is in none of the cases less than .010 (10%), so
that the independent variables are insignificantly related to the dependent variable. Beta
values shows the average change can be expected on the dependent variable given a one
unit change in the independent variable while holding the other independent variable
constant. In the equitation GDPtH one % change in the trade dependence Hungary independent variable causes 0.089% drop ( result is shown in Table 17) in the annual GDP
growth of Hungary. In the same equitation change of the value in political conflict between Hungary and Slovakia results in 0.126% drop in the annual GDP growth of Hungary.
In the equitation GDPtS one percent change in the independent variable “trade dependence Slovakia” causes 0.021% increase ( please refer to Table 18) in the value of GDP
69
growth in Slovakia while change on the value “Political conflict between Hungary and
Slovakia” is due to a 0.187% drop in the dependent variable.
Table17. Coefficients
Coefficientsa
Unstandardized Coef-
Standardized
95,0% Confidence Inter-
ficients
Coefficients
val for B
Model
1
B
Std. Error
(Constant)
11,387
6,977
Conflict
-2,928
6,596
-,770
2,447
Beta
t
Sig.
Collinearity StatisCorrelations
Lower
Upper
Zero-
Bound
Bound
order
tics
TolerPartial
Part
ance
VIF
1,632
,127
-3,687
26,461
-,126
-,444
,664
-17,179
11,322
-,150
-,122
-,121
,926
1,079
-,089
-,315
,758
-6,056
4,516
-,123
-,087
-,086
,926
1,079
Trade dependence in
Hungary
a. Dependent Variable: GDP growth rate in Hungary
Coefficientsa
Model
1
Unstandardized Coeffi-
Standardized
95,0% Confidence Interval
cients
Coefficients
for B
B
Std. Error
(Constant)
10,461
6,453
Conflict
-4,072
6,226
,095
1,298
Trade
dependence
Beta
t
Sig.
Collinearity StatisCorrelations
Lower
Upper
Zero-
Bound
Bound
order
tics
TolerPartial
Part
ance
VIF
1,621
,129
-3,479
24,402
-,187
-,654
,524
-17,522
9,377
-,181
-,179
-,178
,911
1,097
,021
,074
,943
-2,709
2,900
-,035
,020
,020
,911
1,097
in
Slovakia
a. Dependent Variable: GDP growth rate in Slovakia
Table19. Collinearity Diagnostics
Collinearity Diagnosticsa
70
Variance Proportions
Trade dependence in
Model
Dimension
Eigenvalue
Condition Index
(Constant)
Conflict
Hungary
1
1
2,587
1,000
,03
,05
,03
2
,295
2,962
,10
,95
,11
3
,119
4,671
,87
,00
,86
Table20. Collinearity Diagnostics
Collinearity Diagnosticsa
Variance Proportions
Trade dependence in
Model
Dimension
1
1
2,590
1,000
,03
,05
,03
2
,289
2,992
,12
,95
,11
3
,120
4,638
,86
,00
,87
a.
Eigenvalue
Condition Index
(Constant)
Conflict
Slovakia
Dependent Variable: GDP growth rate in Slovakia
Table21. Residuals Statistics
Residuals Statisticsa
Minimum
Predicted Value
Std. Predicted Value
Maximum
Mean
Std. Deviation
N
6,5970
11,1539
8,5903
2,02896
16
-,982
1,263
,000
1,000
16
71
Standard Error of Predicted Value
3,948
6,615
5,047
,798
16
4,3479
15,5884
8,8684
3,37875
16
-18,13414
21,54611
,00000
10,97777
16
Std. Residual
-1,538
1,827
,000
,931
16
Stud. Residual
-1,858
1,974
-,011
1,042
16
-26,46288
25,15100
-,27809
13,82458
16
-2,083
2,267
-,002
1,114
16
Mahal. Distance
,744
3,783
1,875
,919
16
Cook's Distance
,001
,528
,090
,133
16
Centered Leverage Value
,050
,252
,125
,061
16
Adjusted Predicted Value
Residual
Deleted Residual
Stud. Deleted Residual
a.
Dependent Variable: GDP growth rate in Slovakia
Minimum
Maximum
Mean
Std. Deviation
N
Predicted Value
4,3431
10,5398
7,8185
2,15113
16
-1,616
1,265
,000
1,000
16
4,436
7,266
5,394
,787
16
1,1664
12,8181
7,8721
3,57620
16
-22,53672
18,69078
,00000
11,71261
16
-1,791
1,486
,000
,931
16
Residual
Std. Residual
72
Stud. Residual
-2,052
1,614
-,002
1,037
16
-29,58795
22,06102
-,05366
14,58951
16
-2,398
1,734
-,007
1,107
16
Mahal. Distance
,927
4,065
1,875
,867
16
Cook's Distance
,000
,439
,084
,119
16
,062
,271
,125
,058
16
Deleted Residual
Minimum
Predicted Value
Maximum
Mean
Std. Deviation
N
6,5963
11,1373
8,5903
2,02798
16
-,983
1,256
,000
1,000
16
3,951
6,608
5,047
,799
16
4,3319
15,5375
8,8652
3,37015
16
-18,11775
21,54521
,00000
10,97795
16
Std. Residual
-1,536
1,827
,000
,931
16
Stud. Residual
-1,855
1,974
-,010
1,042
16
-26,41207
25,14974
-,27481
13,81174
16
-2,078
2,266
-,002
1,114
16
Mahal. Distance
,746
3,773
1,875
,918
16
Cook's Distance
,001
,525
,090
,132
16
,050
,252
,125
,061
16
Residual
Deleted Residual
73
In the Normal P-P Plot as shown in Table 10 and Table 11 points are lying in a reasonably straight diagonal line with sharp sloping from bottom left to top right which means
there is no major deviation from normality.
Figure10. Normal P-P Plot of Regression Standardized Residual
.
Figure11. Normal P-P Plot of Regression Standardized Residual
74
In the Scatterplot ( please refer to Table 12) of the standardized residuals the residuals
are roughly rectangularly distributed, with scores concentrated in the center. There are
no outliers in the matrix since according the definition of outliers the standardized residuals take place further than 3.3 and before -3.3. Due to the small sample size of our
analysis the residuals all fall between -2 and 2 which have the connotation of eliminating the presence of outliers.
75
Figure12. Scatterplot
In Table 13, the Scatterplot of the standardized residuals the residuals are roughly
rectangularly distributed, with scores concentrated in the center. There are no outliers in
the matrix since according the definition of outliers the standardized residuals take place
further than 3.3 and before -3.3. Due to the small sample size of our analysis the residuals all fall between -2 and 2 which eliminates the presence of outliers.
76
Figure13. Scatterplot
5.2 Hypothesis test in the multiple regression
In this part of our research we provide a statistical hypothesis test for the multiple regressions:
∆GDPtH=β0+β1trade dependenceHt+β2conflicttH,S +
∆GDPtS =α0+α1trade dependenceSt+α2conflicttS,H +
t
H
t
S
.
We hypothesizes that the independent variables: trade β1dependenceHt / α1trade
dependenceSt and β2conflicttS,H / α2conflicttS,H have an effect on the dependent variable:
∆GDPtH /∆GDPtS. In order to testify whether these independent variables have a statistically significant effect on the dependent variable(s) we use the following hypotheses:
77
I. ∆GDPtH:
II. ∆GDPtS:
1.,
H0= β1>0
HA= not H0
2.,
H0= β2<0
HA= not H0
1.,
H0= α1>0
HA=not H0
2.,
H0= α2<0
HA=notH0
In the hypothesis testing, we are using two hypotheses: the null hypothesis (H0), and the
alternative hypothesis (HA). In both equations’ cases our expectancy is the null hypotheses to be proved which means the independent variable of trade dependency has a positive effect on the GDP growth; a year when political conflict occurs between the states
has a negative effect on the GDP growth of both countries.
After running a one-sided test on the hypothesis number I./1., we got the following outputs:
Table24. One-Sample Statistics
One-Sample Statistics
N
Mean
16
Std. Deviation
2,4956
1,38126
Std. Error Mean
,34532
The column “N” (Table 24) refers to the sample size of 16 years being inspected from
1995-2010. These 16 observed years show a mean of rounded 2.5% of trade dependency of Hungary on Slovakia. The rounded amount of standard deviation is 1.4 while
standard error mean is 3.5.
78
Table25. One-Sample Test
One-Sample Test
Test Value = 0
95% Confidence Interval of the Difference
t
df
7,227
Sig. (2-tailed)
15
Mean Difference
,000
Lower
2,49563
Upper
1,7596
3,2316
The actual result of our t-test is shown in Table 25. The associated significance level of
t-value 7.227 is 0.000 with a degree of freedom of 15. Thus the value of significance
level is less than 0.05 and the t- value is in the acceptance region, and the null hypothesis is accepted. Therefore the alternative hypothesis is rejected which can be interpreted
as the increase of trade dependency does have a statistically significant effect on increasing the annual GDP growth of Hungary.
In order to test hypothesis I./2., we run an independent samples test, where the independent variables are defined:1= political conflict between Hungary and Slovakia;
0=otherwise.
Table26. Group Statistics
Group Statistics
Conflict
N
Mean
Std. Deviation
Std. Error Mean
1 conflict
9
6,2910
13,05800
4,35267
0 otherwise
7
9,7824
10,91710
4,12627
79
In Table 26 we can find the sample size of 9 years loaded with political conflicts and 7
years without bilateral political conflicts occurred. The 9 years with political tensions
had a mean of 6.3% GDP growth, while the 7 years without tensions showed 9.78%
GDP growth in Hungary. For the 9 years of political conflicts the standard deviation is
13.06 while the 7 years of peace is signed by the standard deviation value of 10.92.
Looking at the means there is a difference about 3.5 while the difference between the
standard deviation values is 2.68 which assumes that a year when political tensions take
place has a negative effect on the same year’s GDP growth.
Table27. Independent Samples Test
Independent Samples Test
Levene's Test for Equality
of Variances
t-test for Equality of Means
95% Confidence Interval
of the Difference
F
Sig.
t
df
Sig. (2-
Mean Dif-
Std. Error
tailed)
ference
Difference
Lower
Upper
GDP growth rate Equal variances as,054
in Hungary
,819
-,568
14
,579
-3,49142
6,14147
-16,66358
9,68073
-,582 13,886
,570
-3,49142
5,99765
-16,36498
9,38214
sumed
Equal variances not
assumed
According to the Levene’s Test for Equality of Variances columns ( results found in
Table 27) we find a small value of F-value: 0.054. The significance value of the F-value
is 0.82 which is not statistically significant. Because the significance value is not equal
80
to or less than 0.05, in this homogeneity of variance Leven’s Test for Equality of Variances test we can interpret the t value and the significance level associated with it. The
t-value is -0.568 with a degree of freedom 14 and a significance level of 0.579. Hence
this value is more than 0.05, we reject the null hypothesis. Therefore the hypothesis of
bilateral political conflict between Hungary and Slovakia is not causing reduction in
GDP growth of Hungary statistical significantly.
The same hypothesis testing procedure was conducted for the equation referring Slovakia:
II. ∆GDPtS:
1.,
H0= α1>0
HA=not H0
2.,
H0= α2<0
HA=notH0
The first hypothesis test is one-sample t-test, while the second one is an independent
samples t-test. According the assumptions the null hypotheses will be accepted, thus the
independent variables have an effect on the dependent variable.
After running a one-sided test on the hypothesis number II./1., we got the following
outputs:
Table28. One-Sample Statistics
One-Sample Statistics
N
Mean
16
Std. Deviation
8,5903
81
11,16370
Std. Error Mean
2,79092
The inspected 16 years show a mean of rounded 8.6% of trade dependency of Slovakia
on Hungary. The rounded amount of standard deviation is 11.2 while standard error
mean is 2.8.
Table29. One-Sample Test
One-Sample Test
Test Value = 0
95% Confidence Interval of the Difference
t
df
3,078
Sig. (2-tailed)
15
,008
Mean Difference
8,59035
Lower
Upper
2,6416
14,5391
The value of t-value is 3.078 (shown in Table 29). The associated significance level of
this t-value is 0.008 with a degree of freedom of 15. Thus the value of significance level
is less than 0.05 and the t- value is in the acceptance region, and the null hypothesis is
accepted. Therefore the alternative hypothesis is rejected which can be interpreted as the
increase of trade dependency of Slovakia on Hungary does have a statistically significant effect on increasing the annual GDP growth of Slovakia.
In order to test hypothesis II./2., an independent samples test is run, where the independent variables are defined:1= political conflict between Hungary and Slovakia;
2=otherwise.
Table30. Group Statistics
82
Group Statistics
Conflict
N
Mean
Std. Deviation
Std. Error Mean
1 conflict
9
6,8684
10,55792
3,51931
0 otherwise
7
10,8043
12,36033
4,67177
The 9 years with political tensions had a mean of 6.87% (shown in Table 30) GDP
growth, while the 7 years without tensions showed 10.8% GDP growth in Slovakia. For
the 9 years of political conflicts the standard deviation is 10.56 while the 7 years of
peace is signed by the standard deviation value of 12.36. Looking at the means there is a
difference about 7.11 while the difference between the standard deviation values is 1.8
which assumes that a year when political tensions take place has a negative effect on the
same year’s GDP growth.
Table31. Independent Samples Test
of Variances
of the Difference
F
Sig.
t
df
Sig. (2-
Mean Dif-
Std. Error
tailed)
ference
Difference
Lower
Upper
in Slovakia
,854
-,687
sumed
83
14
,503
-3,93594
5,72764
-16,22051
8,34863
of Variances
of the Difference
F
Sig.
t
df
Sig. (2-
Mean Dif-
Std. Error
tailed)
ference
Difference
Lower
Upper
in Slovakia
,854
-,687
14
,503
-3,93594
5,72764
-16,22051
8,34863
-,673 11,874
,514
-3,93594
5,84901
-16,69485
8,82296
sumed
Equal variances not
assumed
According to the chart above the F-value is 0.35 ( please refer to Table 31). The significance value of the F-value is 0.85 which is not statistically significant. Because the significance value is not equal to or less than 0.05, in this homogeneity of variance Leven’s
Test for Equality of Variances test we can interpret the t value and the significance level
associated with it. The t-value is -0.687 with a degree of freedom 14 and a significance
level of 0.503. Hence this value is more than 0.05, we reject the null hypothesis. Therefore the hypothesis of bilateral political conflict between Hungary and Slovakia is not
causing reduction in GDP growth of Slovakia statistical significantly.
5.3 Omitted variables
In this part we run our original multiple regressions: ∆GDPtH=β0+β1trade
dependencetHt+β2conflicttH,S+
t
S
t
H
; ∆GDPtS =α0+α1trade dependenceSt+α2conflicttS,H +
including a new independent variable, which could have an influence on the de-
pendent variable as well. This new independent variable is called omitted variable, since
this potentially important determinant was ignored. The omitted variable we selected to
84
run the regression with is the GDP growth lag of Hungary and Slovakia from 19962010. Other omitted factors include annual bilateral FDI, the numbers of Slovakian/
Hungarian migrants or the annual revenue from tourism between Slovakia and Hungary.
Adding the new independent variable into our regression the equations are the following:
∆GDPtH=β0+β1trade dependencetHt+β2conflicttH,S+ β3GDP growth lagtH+
t
∆GDPtS =α0+α1trade dependenceSt+α2conflicttS,H + α3GDP growth lagtS+
t
H
;
S
The output of the regression can be seen on the following scatter plots which are helpful
for visually detecting relationships between the variables. In these scatter plots relationship between every independent variable against the dependent variable is showed.
In both of the scatter plots variables show a non-linear relationship with each other.
Figure14. Scatterplots relations
Before starting our multiple regression analysis, it is important to compute the correlation matrix with the selected three independent variables.
85
This preliminary step is important because independent variables should not be correlated with one another. If independent variables are correlated, this might affect the robustness of our results and being referred to as the issue of multicollinearity. Using a
multiple regression analysis, we attach a weight to any of the independent variables in
order to explain the variation in the dependent variable. If two independent variables are
strongly correlated, it becomes very hard to attach a weight to those variables because
they basically convey the same information. As correlation is significant at the 0.01 level in case of 2-tailed significances, there is no correlations among the independent variables
below
since
all
those
amounts
are
significantly
higher
than
0.001(0.31;0.795;0.31;0.792;0.795;0.792;0.792;0.679;0.262;0.679;0.531;0.262;0.531).
86
Correlations
GDP growth rate lag in HunTrade dependence in Hungary
,271
-,073
,310
,795
16
16
15
,271
1
,075
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
,310
N
GDP growth rate lag in Hungary
gary
Pearson Correlation
1
Conflict
Conflict
,792
16
16
15
-,073
,075
1
,795
,792
15
15
Pearson Correlation
Sig. (2-tailed)
N
87
15
Correlations
GDP growth rate lag in
Trade dependence in
Slovakia
Slovakia
Conflict
Conflict
Pearson Correlation
1
,117
,298
,679
,262
16
15
16
Pearson Correlation
,117
1
,176
Sig. (2-tailed)
,679
Sig. (2-tailed)
N
GDP growth rate lag in Slovakia
N
,531
15
15
15
Pearson Correlation
,298
,176
1
Sig. (2-tailed)
,262
,531
16
15
N
16
Mean
Std. Deviation
N
7,8185
11,90850
16
,56
,512
16
2,4956
1,38126
16
8,2344
12,20557
15
Conflict
88
Table 35. Descriptive Statistics
Mean
Std. Deviation
N
8,5903
11,16370
16
,56
,512
16
4,3982
2,45695
16
9,1715
11,30222
15
Conflict
Correlations
GDP growth rate in
Hungary
Pearson Correlation
N
Hungary
Hungary
1,000
-,150
-,123
,396
Conflict
-,150
1,000
,271
,075
-,123
,271
1,000
-,073
,396
,075
-,073
1,000
,289
,324
,072
,155
,396
Sig. (1-tailed)
Trade dependence in GDP growth rate lag in
Conflict
.
Conflict
,289 .
,324
,155 .
,072
,396
16
16
16
15
Conflict
16
16
16
15
16
16
16
15
15
15
15
15
89
,397
,397 .
Correlations
GDP growth rate in
Slovakia
Pearson Correlation
N
Conflict
Slovakia
Slovakia
1,000
-,181
-,035
,424
Conflict
-,181
1,000
,298
,117
-,035
,298
1,000
,176
,424
,117
,176
1,000
,252
,449
,058
,131
,339
Sig. (1-tailed)
Trade dependence in GDP growth rate lag in
.
Conflict
,252 .
,449
,131 .
,058
,339
16
16
16
15
Conflict
16
16
16
15
16
16
16
15
15
15
15
15
,265
,265 .
In Table 38, the R2 also called the coefficient of determination is shown. It measures
the proportion of the total variation in the dependent variable about its mean explained
by the regression of the dependent variable on the independent variables. In this case,
our regression explains -0.029% and 0.027% ( shown in Table 39) of the variation of
GDP growth per year in Hungary and in Slovakia. R2 is a descriptive measure between
zero and one, indicating how good one variable is at predicting another. Typically, val-
90
ues of R2 below 0.2 are considered weak, between 0.2 and 0.4, moderate, and above 0.4,
strong. This can be interpreted as in Hungary’s case the relation among variables is considered weak while in Slovakia’s case there is a moderate relation. Also if we compare
the R2s from the original regressions to these regressions we find that the relations between the variables show a higher significance in the latter regressions. In the original
regression for Hungary R2 was 0.03 ( see Table 38) which moved to 0.192 by adding
one more independent variable to the regression. Meanwhile the amount of R2 was also
0.33 in the first regression run in Slovakia’s case which changed to 0.235. In both cases
the R2 are slightly greater than we obtained earlier. The Adjusted R2 is greater than the
ones obtained in the former regressions. Therefore, the extra information brought by the
new variables is greater than the penalty of adding variables.
Model Summaryb
Model
R
R Square
,438a
1
a.
Adjusted R Square
,192
Std. Error of the Estimate
-,029
Predictors: (Constant), GDP growth rate lag in Hungary , Trade dependence in Hungary, Conflict
Model Summaryb
91
12,07967
Model
R
R Square
,485a
1
Adjusted R Square
,235
Std. Error of the Estimate
,027
11,01355
a. Predictors: (Constant), GDP growth rate lag in Slovakia, Conflict, Trade dependence in Slovakia
Table 40 and Table 41 are the ANOVA figures, where the column marked by “F” regarding to the F-statistic shows if it is large enough to conclude that all of the independent variables explain the variation in the dependent variable. In order to find that out we
test the hypothesis that none of the explanatory variables help explain variation in dependent variable about its mean. This information is showed in the “Sig.” column of the
figure. Since this probability is above 0.0 5-0.486 and 0.380 ( see Table 40 and Table
41) respectively-, we conclude that the F-statistic is not large enough so that we cannot
reject the hypothesis that none of the explanatory variables help explain variation in the
dependent variable.
Table40. ANOVA
ANOVAb
Model
1
Sum of Squares
Regression
df
Mean Square
380,271
3
126,757
Residual
1605,104
11
145,919
Total
1985,375
14
a. Predictors: (Constant), GDP growth rate lag in Hungary , Trade dependence in Hungary, Conflict
92
F
Sig.
,869
,486a
Table41. ANOVA
ANOVAb
Model
1
Sum of Squares
Regression
df
Mean Square
410,514
3
136,838
Residual
1334,280
11
121,298
Total
1744,795
14
F
Sig.
1,128
,380a
a. Predictors: (Constant), GDP growth rate lag in Slovakia, Conflict, Trade dependence in Slovakia
Finally, the figures in Table 42 and Table 43 are to determine whether the annual GDP
growth in Hungary and Slovakia are significantly related with the independent variables
of trade dependency, political conflict and annual GDP growth lag. Furthermore it
shows the direction and strength of their relationship. The first important thing to note is
that the sign of the coefficient political conflict in both regressions and trade dependency in Hungary is negative. That means the annual GDP growth in Hungary and Slovakia
decreases as there is a political conflict between Hungary and Slovakia. Moreover the
annual GDP growth in Hungary further decreases as the trade dependency on Slovakia
increases.
However
these
relationships
93
are
statistically
not
significant.
Coefficientsa
Standardized CoeffiUnstandardized Coefficients
Model
1
B
(Constant)
Conflict
Std. Error
7,792
7,334
-3,889
6,579
-,417
,395
cients
95,0% Confidence Interval for B
Beta
t
Sig.
Lower Bound
Upper Bound
Correlations
Zero-order
Partial
Collinearity Statistics
Part
Tolerance
VIF
1,062
,311
-8,350
23,934
-,167
-,591
,566
-18,368
10,591
-,150
-,175
-,160
,917
1,090
2,440
-,048
-,171
,868
-5,787
4,954
-,123
-,051
-,046
,918
1,090
,267
,405
1,483
,166
-,191
,982
,396
,408
,402
,985
1,015
94
Coefficientsa
Standardized CoeffiUnstandardized Coefficients
Model
1
B
(Constant)
Conflict
Std. Error
8,126
6,384
-4,775
6,033
-,227
,452
cients
95,0% Confidence Interval for B
Beta
t
Sig.
Lower Bound
Upper Bound
Correlations
Zero-order
Partial
Collinearity Statistics
Part
Tolerance
VIF
1,273
,229
-5,925
22,177
-,219
-,792
,445
-18,053
8,503
-,181
-,232
-,209
,907
1,103
1,269
-,050
-,179
,861
-3,020
2,567
-,035
-,054
-,047
,891
1,122
,265
,458
1,706
,116
-,131
1,036
,424
,457
,450
,965
1,037
95
Chapter Six: Conclusion
The main aim of this thesis is to provide an analysis of the relation between the politically tensed bilateral relationship of Hungary and Slovakia and their bilateral economic
–trade–relations since Slovakia has become a national state in 1993, until the most recent bilateral political conflict in 2010. Detailed study has been conducted on the last
two decades’ mainly by minority issues generated bilateral tensions and the two countries’ economic relationship.
In this research a hypothesis of bilateral political disputes can influence bilateral economic relations was made. Although by conducting multiple regressions this hypothesis
cannot be sustained at a statistically significant level, tendency show bilateral trade dependency tightens and the number of bilateral agreements on improving co-operation
increases year by year.
The Slovakians’ hostile attitude towards Hungarian-Slovakia can be found in Slovakia’s
history itself. It is the result of the fact that it is just for a short period of time it has existed as a state. After being part of the developed Austro-Hungarian Empire the newly
formed Slovakia had to secure its position thus accelerated ethnocentrism. As a result of
the qualitative research it can be found out that the majority of attacks towards Hungarian-Slovakia occurred under the Slovakian Social-Democratic Party’s regime, which
sympathizes with nationalist views. Moreover both countries being EU members fall
under the EU’s conflict resolution mechanism which has not fully developed yet. Therefore in the future similar tension can be expected parallel with a strengthening bilateral
economic tie.
96
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