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Hungary Planning
Under capitalism the market guides most economic
activity. In
a traditional command economy, however, a central planning
board
sits atop a hierarchy of ministries, branches, and
enterprises
and attempts to direct almost all economic activity. The
board
develops a national economic plan after bargaining with
ministries, enterprises, and others over production
targets and
resource allocations. The board then presents the plan to
the
country's highest political authorities for approval. The
plan
spells out, among other things, what goods will be
produced, who
will produce them, how much will be produced, and what
materials
and capital will be available. After the plan is approved,
the
planning board issues directives to ministries,
enterprises, and
other economic institutions. The directives, which have
the force
of law, contain production targets expressed in physical
units
for some items and in value terms for others. Although all
plan
targets are compulsory, enforcement is stricter on targets
for
higher-priority items such as military hardware and
producer
goods.
Under the NEM, which was instituted in 1968, the
government
abolished compulsory plan directives for most enterprises,
but
left its planning institutions intact. In the late 1980s,
the
plan was considered a framework rather than a law binding
managers of enterprises, and plans often stated targets as
ranges. The National Planning Authority developed long-,
medium-,
and short-term plans. Long-term plans reflected the
leadership's
overall economic objectives for national income,
industrial and
agricultural production, investment, and other areas. The
government used short- and medium-term planning to guide
the
economy toward the long-term objectives.
In the planning process, the central government
provided each
enterprise with information about forthcoming plan
objectives,
and each enterprise in turn furnished the government with
a copy
of its plan. In developing short- and medium-term plans,
the
National Planning Authority first projected supply and
demand
using enterprise production plans. If supply and demand
estimates
failed to balance or if enterprise production plans did
not
comply with broader plan goals, the authorities could
manipulate
any of a number of economic regulators in order to induce
the
enterprises to revise their production plans. For example,
the
management of each state and collective farm had to
prepare a
five-year plan according to instructions from the Ministry
of
Agriculture and Food. The ministry then aggregated the
plans of
all the farms. If the sum of the plan targets indicated
that the
agricultural sector could not achieve national production
goals,
the central authorities manipulated prices, credits,
subsidies,
or other economic regulators to induce farm managers to
alter
their plans toward fulfilling those goals. The party and
government supplemented these economic regulators with
direct
intervention to ensure plan fulfillment in such key areas
as
defense and energy production, extractive industries,
construction of key infrastructure projects, and foreign
trade.
Data as of September 1989
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