An Evaluation of the Success of the Hungarian Economic Reform: An Analysis Using International Trade Data
The behavior of centrally planned economies (CPE's) will markedly differ from that of market economies (ME's). Tests of the success of decentralizing reforms in Hungary are based on comparing the behavior of post-reform Hungary to CPE's and ME's at similar levels of development. The basis of comparison is the pattern of comparative advantage. Discriminant analysis is used to examine whether there are significant differences between CPE's and ME's. The discriminant function, a linear function of the comparative advantages, is then used to classify pre- and post-reform Hungary. The results indicate that the reform has been effective.