A decade of transformation: Russia and Hungary compared

The study attempts to resolve why Russian and Hungarian transformations have taken different routes and different dynamics. The author offers eight stylised facts describing the most important components of divergence. In the interpretative part he argues against using path dependency as a cheap excuse for mistaken policies, highlights the role of social learning and the need to put proper institutions in place of fostering savings and investments. This helps endogenising capital formation and thereby making realistic forecasts of future growth potentials of the two countries that are likely to remain different for the long run.