Gazdasági Ismeretek | Világgazdaságtan » Bálint Sánta - The effects of the Hungarian-Austrian regional cooperation on Hungarys economy

http://www.doksihu Budapest Business School FACULTY OF INTERNATIONAL MANAGEMENT AND BUSINESS INTERNATIONAL BUSINESS ECONOMICS COURSE INTERNATIONAL BUSINESS ENTERPRISES specialisation AVANS HOGESCHOOL INTERNATIONAL BUSINESS SCHOOL BREDA BUSINESS ADMINISTRATION COURSE The effects of the Hungarian-Austrian regional cooperation on Hungary’s economy Prepared by: Bálint Sánta Budapest, 2009 http://www.doksihu Table of contents: 1. Introduction page 3 2. The Hungarian-Austrian cross-border region page 6 2.1 The Western-Transdanubian region page 10 2.2 The Eastern-Austrian region page 19 3. Cross-border regional co-operations in Central-Eastern Europe page 23 4. The history of the Hungarian-Austrian regional cooperation page 25 5. The Hungarian-Austrian Regional Coordination Forum page 27 5.1 Fields of cooperation and their results and effects page 28 5.11 Economic and economy related cooperation page 29 5.2 5.111 Renewable energy sources page 29 5.112

Technological cooperation page 31 5.113 Employment page 31 5.114 Regional development - territorial cooperation page 32 5.115 Transport page 35 5.116 Cooperation between universities page 36 5.12 Environment and water management page 36 5.13 Cultural cooperation page 37 SWOT analysis of the Hungarian-Austrian Regional Coordination Forum 5.3 Evaluation of the Hungarian-Austrian Regional Coordination Forum’s work 5.4 5.6 page 40 Realisation of objectives/priorities from the perspective of Western-Transdanubia 5.5 page 39 page 42 Critical issues in the work of the Hungarian-Austrian Regional Coordination Forum page 47 Recommendations for the future activity of the Forum page 50 6. Hungarian-Austrian economic relations page 52 6.1 Austria’s perception of Hungary as an economic partner page 52 6.2 Bilateral trade and capital investment page 54 7. Conclusion page 56 8. Bibliography page 58 9. Appendix page 59 2 http://www.doksihu 1.

Introduction The objective of my dissertation is to find links between the Hungarian-Austrian regional cooperation and dominating trends in the Hungarian economy. I would like to answer the question if cross-border regional cooperation can have significant effects on the economy of either the whole or at least parts of the country or not. As I spend my compulsory internship at the International Department of the Ministry of Local Government, which is the responsible coordinator of the Hungarian-Austrian Regional Coordination Forum, I decided to investigate the cross-border regional cooperation of the two neighbouring countries. The Hungarian-Austrian Regional Coordination Forum serves as the institutionalised body for almost all cross-border co-operations in the region, so when analyzing the relations between the border areas of Austria and Hungary the Forum’s fields of cooperation have to be the starting point. During my internship I had the opportunity to participate in meeting of

the co-chairs of the Forum and I was also involved in the preparatory works of the next reunion of the members. Therefore my daily routine also helped me in assessing and evaluating the activity of the Forum and to characterise its significance in the regional cooperation. It is a historical fact, that there have been undeniable connections between Hungary and Austria throughout the centuries. Such historical bonds arose, that it is impossible to separate one’s history from the other. Although after World War I these connections loosened due to end of the Austro-Hungarian Empire and the Treaty of Trianon, it also created a different situation with a part of former Hungary becoming Austrian territory. This resulted in an everlasting social link between the Eastern part of Austria and Western-Hungary Most probably this was one of the reasons not to terminate trade relations with Austria during the cold war. After the fall of the Iron Curtain in 1989 the opportunity to build up a

stronger economic cooperation between the two countries appeared, which was started by the opening of the borders. Administrative borders could no longer be an obstacle for having joint projects and co-operations in several fields of the economy. 3 http://www.doksihu In order to upgrade former cross-border co-operations, the Hungarian-Austrian Regional Coordination Forum was brought into life in 2004. Trade figures between the two countries showed a developing tendency for years, however there was a need to bring border regions closer in other areas of the economy, as well as, in environmental protection, education and culture. The Forum features some elements of the cooperation which either did not exist before or were neither strong nor institutionalised before. Since the Forum has been functioning for 5 years already it is time to asses whether it has lived up to expectations formulated at its foundation or not. It is of great importance to find out if the current level of

effectiveness of the Forum fits future initiatives. Sufficient time has elapsed to evaluate the effects, achievements and problems that have occurred in the past years. From the Hungarian point of view the activity of the Hungarian-Austrian Regional Coordination Forum is expected to bring more openness regarding labour movement, new highflyers of economic development (e.g renewable energy utilisation) and a closer relationship between local governments on the two sides of the border. One of the future goals of the cooperation should also include finding a solution for the problems and difficulties arising from the different level of development of the two countries. The Western-Hungarian region is already more developed than the Hungarian average; however the cross-border cooperation with Austria carries the possibility of even improving this situation and making the region’s economy more competitive, even compared to Austrian standards. To analyze the situation and potential

achievements, the available statistics of the border region were reviewed and evaluated. The results of cross-border cooperation between the two countries were assessed and conclusions were drawn in the aspect of the Hungarian economy. In my dissertation I also assess the activity and the role of the Hungarian-Austrian Regional Coordination Forum in the cooperation and the development of the two countries. In the course of elaborating my topic I utilized both Hungarian and English specialized literature of printed and Internet sources, as well as internal documents of the Ministry of 4 http://www.doksihu Local Government and the Hungarian-Austrian Regional Coordination Forum. Analysing of laws and legal requirements also composed part of my working methods. For assessment and evaluation I used statistical and SWOT analyses. For proving my findings I prepared tables, charts and diagrams. 5 http://www.doksihu 2. The Hungarian-Austrian cross-border region Source:

http://ec.europaeu/regional policy/country/prordn/imagecfm?id=1022 Today’s Western-Transdanubia i.e the Western border region of Hungary (namely GyőrMoson-Sopron, Vas and Zala counties) and the Eastern part of Austria (Burgenland, Lower Austria and Styria) have composed a common region for centuries despite the changes in the political situation of the territory. In this region, it has become clear that it is meaningless to talk about national economies, because the economic life does not take administrative borders into account. The Central European economic area was “cut into pieces of national economies in the former political system. The long-lasting separation from the processes of the world economy has made the economic life of Hungary seriously ill. Slowly, the economy of Western-Hungary is recovering from the illness of those decades and is becoming a participant of the flows of the world economy.”1 This process has accelerated significantly since Hungary’s accession

to the European Union on the 1st of May, 2004. 1 Source: Economic development strategy of the West-Pannonia EuRegion2004-2006; editor: István Palkovits phD; September, 2003 page 5 6 http://www.doksihu The economies of Western-Transdanubia and Eastern-Austria show differences in their structure however a lot of areas can be found where joint development can be enforced based on the similarities in the geographical conditions, cultural heritages and common economic interests despite the fact that while Burgenland is considered as a developing region of Austria, Western-Transdanubia is the second developed area in Hungary. Since the mid 1990s, Burgenland first of all has concentrated on developing its tourism especially at the Fertő Lake and its surroundings, and using its thermal values. Renewable energies, sustainable production and mild technologies also had top priorities. A number of different technological centres, i.e ‘knowledge-islands’ were established and operated In

the same time in Western-Transdanubia, disproportionate structure of economy could be observed due to the growing dominance of the multinational firms (especially in the car manufacturing and electronic industries). They decided to settle in the region mainly due to the cheap local level of costs which could make the production more cost-efficient. Playing great role in the Hungarian export and employing about the one fifth of the total employees of the region they contributed to the fast economic grow of the region after the economic and political changes of the 1990s.2 Great difference appeared between the performance of the big foreign companies and the local small and medium-sized enterprises functioning in the region. It is interesting to mention that the volume of foreign capital invested to the Hungarian car industry almost has equalled to that of the Austrian capital invested to the Hungarian economy in each year since 2000 as it is shown in the tables below. (the last data are

from year 2007). Table No. 1: Austrian capital invested in the Hungarian economy 2000-20073 Austrian capital in billion HUF 2000 2001 2002 2003 495.4 678.5 763.3 976.8 2004 2005 2006 2007 1,129.7 1,3100 1,5982 1,9672 2 Source: Economic development strategy of the West-Pannonia EuRegion2004-2006; editor: István Palkovits phD; September, 2003 3 Source: KSH on-line database; http://portal.kshhu/pls/ksh/docs/hun/xstadat/xstadat eves/tabl3 02 11ibhtml (14.122009) 7 http://www.doksihu Table No. 2 Foreign capital invested in the Hungarian car industry 2000-20074 foreign capital in the car industry in billion HUF 2000 2001 2002 2003 439.9 697.9 766.1 986.4 2004 2005 2006 2007 1,079.0 1,2272 1,4339 1,6387 The past experience has shown that multilateral projects are of rising importance for regional development and territorial cohesion in all border regions. Therefore Austria and Hungary realised the importance of joint programming, the widening of cross-border

cooperation and the opportunities of the multilateral projects. The Austrian-Hungarian border region covers 13.5% of the total area and 204% of total population of the two countries. On the Austrian side 33% of the country’s total population is living. Regarding the Hungarian side this share is 10% only Almost 4 million people live in this region.5 The region is characterized by a mix of ethnic groups on both sides of the border, differences can be observed only in terms of proportions of the given nationalities. Communication and travelling lines follow geographic and morphological facilities in the southern parts of the region, they usually follow river valleys (Raab). Compared to the West-East direction, NorthSouth directions were less important during periods of history and this is the case even nowadays – causing problems in strengthening regional economic cohesion. The Hungarian-Austrian border region has a dual character regarding the urban network. The north part of the

region is an industrial growth pole of central Europe while the southern part of the region is rather the periphery of this growth region with medium sized centres in the Hungarian and small centres in the Austrian side, having more rural characteristics. 4 Source: KSH on-line database; http://portal.kshhu/pls/ksh/docs/hun/xstadat/xstadat eves/tabl3 02 11ibhtml (14.122009) 5 Source: Economic development strategy of the West-Pannonia EuRegion2004-2006; editor: István Palkovits phD; September, 2003 8 http://www.doksihu The level of urbanisation is decreasing from north to south, the average size and economic capacity of towns and villages becomes smaller along the same pattern. 9 http://www.doksihu 2.1 The Western-Transdanubian region Source: http://en.wikipediaorg/wiki/File:HU NUTS 23 NDpng The Region of Western-Transdanubia includes the counties Győr-Moson-Sopron, Vas and Zala. The region borders on four countries: on Austria in the west, on Slovenia and Croatia in the

southwest and on Slovakia in the north. The region is neighbouring with the region of Central-Transdanubia in the east and with Southern-Transdanubia in the south. The territory of the region is 11,183 km2, which is 12 % of the territory of Hungary. GyőrMoson-Sopron County occupies 36 % of this terrain, while Vas County 30 % and Zala County 34 %.6 The Western-Transdanubian Region is rich in natural resources, which should be preserved because of economic and environmental interests. Their careful utilisation is a great opportunity and task of sustainable development. In spite of the establishment of business parks, the region is not endangered by serious environmental problems. After the political system change in Hungary, the production of many out-of-date industrial branches that polluted the environment seriously (e.g textile industry, engineering industry) was stopped, decreased or transformed. Therefore, natural resources remained relatively unharmed The conservation of the high

biodiversity is important in the aspect of environment, economy (renewable energy utilization, tourism) as well as society (quality of life). 6 Source: http://www.westpahu/cgi-bin/westpa/newscgi?view=ck&tID=95&nID=2682 (15112009) 10 http://www.doksihu In many aspects, the economy of Western-Transdanubia is the typical example of economic development in Hungary after the political and economic changes. In the 1990s, the Hungarian economy has undergone a fundamental transformation, and this can be well exemplified by the changes in Western-Hungary’s economic structure. Therefore it seems necessary to first outline the primary characteristics of the Hungarian economy, and then within this topic, position the economy of Western-Transdanubia. The Hungarian economy is a widely open, export-oriented economy. Significant development was observed in the first decade after the political system change. The export capacity of the country has tripled in the period from the

opening in 1990 to 2000; it increased from 10 billion to 28 billion dollars. (Also see the Diagram No 1 below) Diagram 1: Hungarian export and import in proportion to the GDP (1991-2000)7 60 E x p o r t/G D P 50 I m p or t/G D P 40 % 30 20 10 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 Diagram 2: Hungarian export and import in proportion to the GDP (2001-2008)8 70% 60% Export/GDP Import/GDP 50% 40% 30% 20% 10% 0% 2001 2002 2003 2004 2005 2006 2007 2008 7 Source: based on KSH (Central Statistics Bureau) The national invoices of Hungary and MNB (Hungarian National Bank) monthly reports, GM (Ministry of Economy), Customs Statistics 8 Diagram made by the author of the dissertation based on data of the KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14112009) 11 http://www.doksihu If we look at the export and import data of the period 2001-2008 we can see that the growth characterising the 1990s has not

stopped and results have improved every year since 1993. In the mid 1990s there was a rather significant gap between import and export figures, which got better by the time of the millennium; however this gap still existed in the beginning of the 2000s. But since 2006 the two figures have come so close to each other that now there is no big difference between Hungary’s import and export figures. (See Table No 3 and Diagram No. 3 below) Table No. 3: Hungary’ export and import in billion HUF (2001-2008)9 . 2001 2002 2003 2004 2005 2006 2007 2008 export 8 748 8 874 9 644 11 232 12 425 15 591 17 345 18 440 import 9 665 9 704 10 695 12 219 13 146 16 225 17 374 18 503 Diagram 3: Hungary’s export-import curve of years 2001-200810 Export and import of Hungary 20 000 000 18 000 000 16 000 000 million HUF 14 000 000 12 000 000 import 10 000 000 export 8 000 000 6 000 000 4 000 000 2 000 000 0 2001 2002 2003 2004 2005 2006 2007 2008 year The main

catalysers of export growth were the transnational companies that have settled in the country. Since the beginning of the transition to democratic market economy at the end of the 1980s, Hungary has attracted a steady stream of foreign capital, well-balanced across the various sectors of the economy. In 1999, the transnational companies produced the four-fifth 9 Source: KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14.112009) 10 Diagram made by the author of the dissertation based on data of the KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14112009) 12 http://www.doksihu of Hungarian export. The companies functioning in customs free zones were especially dynamic in this period. The two mostly dynamic sectors were the car industry (Audi, Opel/GM, Suzuki, Delphi, ZF) and electronics (IBM, Philips, GE, Flextronics, Samsung). The proximity of the European Union as buyer’s

market, and the preferential access to these markets as part of the accession process was a great advantage for Hungary. Meanwhile Foreign Direct Investment has also multiplied by more than five times (1990: USD 311 million, 2000: USD 1.6 billion) Hungary was one of the first transforming countries to actively support Foreign Direct Investment. Diagram 4: Foreign capital investments in proportion to the GDP11 12 FDI/GDP 10 8 % 6 4 2 0 1991 1992 1993* 1994 1995* 1996 1997 1998 1999 2000 * The great jump in 1993 is connected to the partial privatisation of Matáv, and that in 1995 is related to the partial privatisation of the energy sector. As the figures show, the Foreign Direct Investments have stabilised above 4% of the GDP by the end of the 1990s. In 2001, due to the significant GDP increase, the proportion of capital arriving to Hungary even increased by approximately 40%. Despite the decrease in world tendencies, the investment directed at the whole of the

Central-Eastern European region remained more or less stable. Though there was a decline in the flow of Foreign Direct Investment after 2001, the figures of year 2003 more than tripled by 2005 and remained at the same high level in the following year, as well. Both in 2007 and 2008 the FDI was still above 4,000 million EUR. 11 Source: based on KSH (Central Statistics Bureau) National invoices of Hungary and MNB Monthly reports, GM (Ministry of Economy), Customs Statistics 13 http://www.doksihu Diagram 5: Foreign capital investments to Hungary in million EUR12 Hungary, a country of 10 million inhabitants, can currently boast of having attracted Foreign Direct Investment of more than 60 billion Euros to date which represents the highest per capita rate in the Central-Eastern European region. FDI inflow data in 2008 did not show the effect of the global economic crisis yet. In the early 1990s, market-based privatization, a unique phenomenon in the region at that time, was the main

incentive for foreign investment - although even then investments in new industrial facilities were becoming increasingly frequent. Foreign Direct Investment has been crucial in boosting economic performance and remains the driving force behind Hungarys economic success, fuelling its strong export growth and significantly increasing productivity. One of the greatest challenges of the Hungarian economy is the organic integration of foreign investment into the Hungarian economy (e.g suppliers’ chains, clusters), and also switching from production based on cheap paid work of low added value to production of higher added value. The inflow of foreign capital and the increasing presence of multinational firms have fundamentally affected the employment: it naturally had a positive influence on employment rates, but had a contradictory effect on employment structure and waging. In comparison with Central Europe and the rest of the European Union, the proportion of economically active people

within the total population of Hungary is rather low. In Hungary, the employment rate was 56.7% in 2008, compared to an average of 659% in the Union It is 12 Source: ITD Hungary’s web page: http://www.itdhcom/engineaspx?page=Itdh Foreign 14 http://www.doksihu important to point out that the employment rate of Western-Transdanubia (62.1%) is significantly higher than the Hungarian average; it comes close to the EU average. WesternTransdanubia could still preserve its higher than average position despite the fact that the decrease in employment rate in since 2007 was 1.3%, while the average decrease in Hungary was only 0.6% Since the end of 2002, an increasing number of company decisions to lay off employees was made, and this process does not seem to have ended. All this has not yet fundamentally altered the relatively favourable unemployment indicators, but in certain smaller regions the tension has increased (and also within the region, e.g in Körmend, in Szentgotthárd, and in

Kapuvár). From the aspect of the labour market, these reductions can only be considered serious in local terms, but not nationally. This is even true if the actual number is higher due to suppliers’ relations and the practice of contractual employment. In addition to specific discharges, an important aspect is the trend that is forecasted: for certain activities (and for their foreign owners) Hungary (and the Western-Transdanubian Region) is beginning to lose its attractiveness. Table No 4: GDP of the Western-Transdanubian Region at purchasers’ price in million HUF13 GDP 2002 2003 Győr-MosonSopron county 780 198 865 848 979 266 1 037 814 1 064 375 1 190 622 1 258 825 Vas county 405 945 445 707 526 615 547 845 544 744 611 599 623 084 Zala county 387 544 434 409 518 652 557 946 551 939 555 978 594 378 1 573 687 1 745 964 2 024 533 2 143 605 2 161 058 2 358 199 2 476 287 Total WesternTransdanubia Hungary in total 15 238 369 17 148 449 18 914 944

2004 (at purchasers’ price million HUF) 2005 2006 2007 2001 20 803 797 21 988 587 23 455 487 25 408 080 13 Source: KSH’s database http://portal.kshhu/portal/page? pageid=37,594202& dad=portal& schema=PORTAL (14112009) 15 http://www.doksihu As far as the gross domestic product is concerned both in the Western-Transdanubian counties and in the total of Hungary the GDP figures have showed continuously increasing curve since 2001 with the exception of the slight drop in 2005 in Vas and Zala counties. The diagram below clearly shows that Győr-Moson-Sopron county is by far the most developed part of the region with a GDP of 1,258,825 million HUF in 2007, which is approximately 2 times more than in Vas and 2.1 times more than the GDP figures in Zala county. Diagram 6: The Volume of GDP in the three Western counties14 1 400 000 1 200 000 1 000 000 million HUF 600 000 Győr‐Moson‐S opron county Vas county 400 000 Zala county 800 000 200 000 0 2001 2002 2003 2004

2005 2006 2007 If we look at the development tendency of the GDP of the region, we can see that GyőrMoson-Sopron and Vas counties more or less determine the development of the WesternTransdanubian region together. Between 2002 and 2005 Zala county also followed a similar development tendency to those of the other two counties, but while Győr-Moson-Sopron and Vas experienced a significant increase in the period of 2005 and 2006, Zala suffered from a rather stable downturn, out of which it was only able to recover by mid 2007. 14 Diagram made by the author of the dissertation based on data of the KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14112009) 16 http://www.doksihu Diagram 7: Tendency of development of GDP in the three Western counties15 Győr-MosonSopron county Vas county 25% 20% 15% Zala county 10% Total WesternTransdanubia Hungary in total 5% 0% 2001 2002 2003 2004 2005 2006 2007 ‐5% It is also

important to note that while Hungary as a whole has been experiencing a continuous downturn in terms of GDP development since 2001, the figures of the WesternTransdanubian region were highly fluctuating throughout these years. Table No 5:Proportion of GDP of the Western region comparing to Hungarys total16 . 2001 2002 Győr-MosonSopron county 5,12% 5,05% 5,18% 5,01% 4,86% 5,05% 4,96% Vas county 2,66% 2,60% 2,78% 2,64% 2,49% 2,59% 2,46% Zala county 2,54% 2,53% 2,74% 2,67% 2,50% 2,32% 2,33% 10,33% 10,18% 10,70% 10,32% 9,85% 9,96% 9,75% Total WesternTransdanubia 2003 2004 2005 2006 2007 The proportion of the Western region from the Hungarian total has been decreasing since 2004. It means that the tendency of growth has become slower though the increase remained continuous. In 2007 there was a great fall in the growth of the GDP: it fell back to less than one third of the data of 2006. The drop continued and turned to a decrease in 2009 Parallel with

this the 15 Diagram made by the author of the dissertation based on data of the KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14112009) 16 Source: KSH’s database http://portal.kshhu/portal/page? pageid=37,594202& dad=portal& schema= PORTAL (14.112009) 17 http://www.doksihu inflation rate doubled in 2007 comparing it to the previous year and it remained at about the same level also in 2008. Table No. 6: Growth of the GDP and the inflation rate in Hungary 2005-200817 Hungary Real GDP growth (%) Inflation (%) 17 2005 3.87 3.55 2006 3.97 3.88 2007 1.22 7.93 2008 0.61 6.07 Source: OECD publication 18 http://www.doksihu 2.2 The Eastern-Austrian Region Source: STATISTICS AUSTRIA, last changed: 08 January 2009 “Austria has a well-developed market economy which assures a high standard of living for its inhabitants. Its economy features a large service sector, a sound industrial sector, and a small, but highly

developed agricultural sector. Following several years of solid foreign demand for Austrian exports and record employment growth, the global economic downturn in 2008 led to a recession that persisted through 2009 as well. The governments stabilization measures could increase the budget deficit to about 2.8% of GDP by the end of 2009 and above 3% in 2010, from about 0.6% in 2008”18 The Austrian economy has benefited greatly in the past from strong commercial relations, especially in the banking and insurance sectors, with central, eastern, and south-eastern Europe, but these sectors have been vulnerable to recent international financial instabilities, and some of Austrias largest banks have required government support. Even after the global economic outlook improves, Austria will need to continue restructuring, emphasizing knowledge-based sectors of the economy, and encouraging greater labour flexibility and greater labour participation to offset its aging population and exceedingly

low fertility rate. “Austria is one of the 12 richest countries in the world in terms of GDP per capita and has a well-developed social market economy, and a high standard of living. Many of Austrias largest industrial firms were nationalised; in recent years, however, privatisation has reduced 18 Source: https://www.ciagov/library/publications/the-world-factbook/geos/auhtml 19 http://www.doksihu state holdings to a level comparable to other European economies. Labour movements are particularly strong in Austria and have large influence on labour politics. Next to a highlydeveloped industry, international tourism is the most important part of the national economy Germany has historically been the main trading partner of Austria, making it vulnerable to rapid changes in the German economy. However, since Austria became a member state of the European Union it has gained closer ties to other European Union economies, reducing its economic dependence on Germany. In addition,

membership in the EU has resulted an inflow of foreign investors attracted by Austrias access to the single European market and proximity to the aspiring economies of the European Union. Growth in GDP accelerated in recent years and reached 3.3% in 2006”19 In 2004, at the time of EU accession of Hungary, Austria was the fourth richest country within the European Union, having a GDP per capita of approximately EUR 27,666, with Luxembourg, Ireland, and the Netherlands leading the list. The Eastern-Austrian border region includes the following territories: • Burgenland: Burgenland is the third smallest region of Austria after Vienna and Vorarlberg with its geographical territory of 3,966 km2. Although Burgenland is a small province, within its north-south long territory major development differences can be observed. If we look at the GDP figures measured in 2006 in the 3 parts of Burgenland we can see that Northern-Burgenland’s GDP is 4.6 times bigger than Central-Burgenland’s

and 1.8 times bigger than Southern-Burgenland’s GDP However these figures are a little misleading as the population of these 3 regions is completely different. Based on population figures from 2009 the population of Northern-Burgenland is 147,805, which is about 3.9 times more than in Central-Burgenland (37,504) and around 15 19 Source: http://en.wikipediaorg/wiki/Austria#Economy 20 http://www.doksihu times more than the population of Southern-Burgenland (97,809). For this reason GDP/capita figures would be more appropriate for measuring development in this case.20 Table No. 7: GDP of the Eastern region of Austria at current price21 .Region Central-Burgenland Northern-Burgenland Southern-Burgenland Lower Austria - South Wiener Umland Südteil Vienna Eastern-Styria Austria in total 2001 2002 2003 2004 Absolute, in million EUR 598 615 645 658 2 583 2 749 2 809 3 070 1 574 1 678 1 694 1 693 4 730 4 821 4 966 5 136 9 006 9 393 9 600 10 320 58 421 60 815 61 542 63 021 4 578 4 678

4 716 4 948 212 499 218 848 223 302 232 782 2005 2006 680 3 164 1 729 5 314 10 911 66 179 5 075 244 453 706 3 266 1 768 5 574 11 729 68 743 5 340 257 294 In spite of this information the northern part of Burgenland still remains the most developed part with a EUR 22600 GDP/capita measured in 2006, which is 20% more than in the central part and 24% more than in the southern part of the province. If we compare Burgenland’s GDP/capita figures with those of the rest of the Eastern-Austrian region we can clearly see that Central- and Southern Burgenland are the most underdeveloped parts of the whole territory. Moreover there are only 2 NUTS III regions with a smaller GDP/capita in the whole country, Mühlviertel and Weinviertel. Table No. 8: GDP per capita of the Eastern region of Austria in EUR22 Region 2001 2002 2003 2004 2005 2006 Central-Burgenland Northern-Burgenland Southern-Burgenland Lower Austria - South Wiener Umland Südteil Vienna Eastern-Styria Austria in total

15 700 18 700 15 700 19 000 30 700 37 500 17 700 26 400 16 400 19 500 17 200 19 500 31 900 38 600 17 400 27 100 17 200 19 800 17 400 20 000 32 300 38 700 17 600 27 500 17 500 21 500 17 400 20 600 34 300 39 100 18 400 28 500 18 200 22 000 17 700 21 200 35 800 40 400 18 900 29 700 18 800 22 600 18 100 22 200 38 000 41 500 19 900 31 100 • Lower Austria - South and Wiener Umland Südteil: 20 Source: http://www.statistikat/web en/statistics/population/indexhtml 21 Source: STATISTICS AUSTRIA, last changed: 08 January 2009 22 Source: STATISTICS AUSTRIA, last changed: 08 January 2009 21 http://www.doksihu Lower Austria - South and the Southern part of Wiener Umland are two NUTS III regions in Lower Austria, which is the biggest province in Austria with a territory of 19, 186 km². Lower Austria - South is the third biggest and Wiener Umland Südteil is the second smallest part of the province. Despite its rather small territory, Wiener Umland Südteil is the most developed in

the region with a EUR 38,000 GDP/capita. It is interesting to note that this figure is quite high within the whole country, only the city of Vienna, Salzburg and its surroundings and Linz-Wels has higher numbers. On the other hand Lower Austria - South is roughly on the same development level as Northern-Burgenland and is rather average in terms of GDP/capita. • Vienna: Vienna is the capital city of Austria with a population of 1,680,266 (by far the largest in Austria) and is the cultural, economic and political centre of the whole country. It is also unquestionably the most developed city with a GDP of 68,743 million Euros, which is nearly 6 times more than in Wiener Umland Südteil, the second most developed part of EasternAustria. 22 http://www.doksihu 3. Cross-border regional co-operations in Central-Eastern Europe Before investigating the Hungarian-Austrian regional cooperation in details, it is worth to have a look at the co-operations active in Central-Eastern Europe in

general. The intensity of cross-border regional cooperation in Central-Eastern Europe compared to Western-Europe is much smaller. Countries of the region used to have really closed borders, which were almost totally closed until the 1990s and excluded the possibility for western type co-operations. When borders are more open, movement is freer between two countries and their bordering territories and it is easier to foster the development and integration of these regions. On the other hand if borders tend to be closed then it can easily divide an ethnic or religious group geographically. There is no such thing as a completely closed border as it is nearly impossible to carry out and would be politically pointless even in the most anti-democratic countries. A completely open border is also something, which does not exist either. A completely open border would mean the ultimate demolition of its basic functions as filtering and separating and would lead to no borders at all. In many

cases the meeting of different cultures, economic co-operations could help the mutual utilization of advantages deriving from closeness to the border. Open borders can mean greater willingness for cooperation and to better knowing of the other country. Political disputes between two countries can however lead to a disadvantageous situation. Although the political system in Central-Eastern Europe was more or less the same in the countries of the region, separation was so strong as if they had adverse ideological systems and completely different economic structures. Central-Eastern Europe’s countries were isolated not only from Western-Europe but from each other as well. Regionalism and cooperation between border regions before 1989 were not created by local communities and did not facilitate mutual development, but were the actions of local and centralised political bodies for either propaganda or their own purposes. The idea of regionalism spread quickly among Central-Eastern

European regions after the changes in political systems in 1989-1990 and became significantly more important. All newly elected 23 http://www.doksihu governments gave great attention to the development and the foundation of a political framework for such regional cooperation concepts in the region. By the opening of borders there was not only a chance for cooperation, but also legislative and financial support became available for such actions just like in the European Union. Because of this, by the late 1990s, when EU accession seemed to become a reachable goal for the countries of Central-Eastern Europe, many cross-border cooperation agreements came into life. Unfortunately these agreements were rather unorganized, had no real content and in many cases were unable to function properly and their sole goal was just to generate as many EU funds as possible. The aim of such co-operations should be to achieve the capability of cooperating as a participant of the world economy and that

a busy and humane economic life, which has collectively been renewed by participants of the economy, will evolve. The actors of the political and administrative field should also recognise their role in creating the possibility of autonomous economic development which is different from what we are used to.23 23 Source: Soós Edit, Fejes Zsuzsanna: Határon átnyúló együttműködések Magyarországon / Cross-border cooperation in Hungary (p.22-23) 24 http://www.doksihu 4. The History of Hungarian-Austrian Cross-Border Co-operations Within Central-Eastern Europe the Hungarian-Austrian border region has a special feature. Austria’s relationship with Hungary is the smoothest compared to its relationship with its other neighbours that are also members of the European Union. The inter-state relationship between Hungary and Austria is based on mutual sympathy and trust, which are inevitable for a successful and diverse cooperation and dynamic development. The Austrian-Hungarian

border region is playing a bridging role between Western and Eastern areas of Europe and is also located along the connection route between the Baltic and the Adriatic space. The border region is at the cross-road between these two corridors: the traditional West-East Trans-European route and the reviving historic “North-South Amber” route. This excellent geographic position has resulted in a faster economic growth of this region than the European average over the past 10 years.24 Cross-border cooperation between these two countries has a long lasting history already. Relations between Hungarian and Austrian citizens have existed in a continuous way equally in the last decades due to shopping, visits by friends, acquaintances and relatives and to (often illegal) employment. The extension and especially deepening of the institutional relations is however greatly hindered by the lack of compatibility between the different territorial levels. The numerous existing local governmental

co-operations are often only formal; they only deal with the cultural area, and only rarely economic and infrastructural co-operations. Regarding economic relations, there have been some significant co-operations in the community sphere, but their actual intensity is primarily determined by the network of the private sphere, which unfortunately is not yet really extended. For the future of the regions on both sides of the Austrian-Hungarian border it is of key importance to have mutual interests, which would transform the geographical neighbourhood into an organic co-habitation. The first such attempt was set up in 1978, in the framework of the Alps-Adriatic Working Community. Members of the Alps-Adriatic Working Community include Italian and Austrian provinces, Croatia, Slovenia and five Hungarian counties. The 24 Source: internal documents of the Ministry of local Government 25 http://www.doksihu participating provinces from the Austrian side were: Burgenland, Carinthia, Upper

Austria and Styria, while the participating counties from the Hungarian side were the Western and South-Western counties i.e Vas, Zala, Baranya, Somogy and Győr-Moson-Sopron counties (the last two left the community later). As the Alps-Adriatic Working Community was formed due to an Austrian-Italian proposal, it was primarily important in the Austrian-Italian border region and not so much in the Hungarian-Austrian border area.25 Then the two countries also worked together in the INTERREG IIA-Phare CBC 1995-1999 and the INTERREG IIIA-Phare CBC 2000-2006 programs. Due to these programs the cooperation between Hungarian and Austrian border regions became stronger. Among the European Territorial Cooperation programs the Austria-Hungary European Territorial Cooperation Program 2007-2013 is the first to have started its activity in January, 2008. About 100 million Euros will be expended in the target period It is important for both countries to continue the development programs of these

regions. In order to help this process the Hungarian-Austrian Regional Coordination Forum was established a few years ago. 25 Source: Soós Edit, Fejes Zsuzsanna: Határon átnyúló együttműködések Magyarországon / Cross-border cooperation in Hungary (p.41) 26 http://www.doksihu 5. The Hungarian-Austrian Regional Coordination Forum In the course of cooperative activity of the border regions of Hungary and Austria the Hungarian-Austrian Regional Coordination Forum has a special role. The Hungarian-Austrian Regional Coordination Forum is one of the bodies that could possibly support the development process of this region. First it should eliminate physical and mental obstacles in order to give the possibility for those living at both sides of the border to seek relationship also in the area of economy. The idea for the Hungarian-Austrian Regional Coordination Forum was first envisioned by the Hungarian Ambassador in Vienna, Dr. István Horváth and was adopted on the meeting

of Hungarian Prime Minister Ferenc Gyurcsány and Austrian chancellor Wolfgang Schüssel in October, 2004. The basic document (Memorandum) was signed in December, 200426 The creation of the Forum aimed such a cooperation framework, which could facilitate the sustainable development of the Western-Hungarian and Eastern-Austrian region. The objective of the Forum is to serve as platform for the harmonization of Hungarian and Austrian concepts and could help the implementation of regional plans on both sides of the border. Members of the Forum are Burgenland, parts of Styria and Lower Austria and the city of Vienna from the Austrian side and Vas, Zala, Győr-Moson-Sopron counties from the Hungarian side. Beside the local governments of the mentioned territories there are economic institutions and ministries also involved in the Forum’s work from both sides. The basic document of the Forum (the Memorandum) gives opportunity to perform a flexible cooperation. This flexibility can be

ensured by one of the essential concerns determined in the Memorandum, according to which the local, regional and governmental level representatives are equal participants in the cooperation. With this function the different competence levels of the two countries can be integrated, which can bring more success both in administration and in cooperation in the border regions. 26 Source: internal document of the Ministry of local Government 27 http://www.doksihu In order for further improvement in the Forum’s work the Hungarian party applies a routine, which plays a great role in making the Forum’s activity more fluent and effective in general. This routine is that before each meeting of the Forum, the Hungarian co-chair of the Forum organizes a meeting for all the institutions involved in the Forum’s work, who then develop a uniform Hungarian viewpoint, which can be submitted to the Austrians. The Forum mainly deals with issues concerning local governments, economy,

transport, border crossing, environmental protection, territorial development, tourism, employment policy and culture. Moreover, referring to the Memorandum, it is important to note that any subject of co-operation can be adopted if it helps the development of the region or the Hungarian-Austrian relations. Since 2004 there have been 4 Forum meetings. The first meeting took place in Sopron, Hungary on the 5th of April, 2005. Then in 2006, as the Forum can’t have a meeting in the same country twice in a row the members of the Forum gathered in Eisenstadt, Austria. In 2007, Szombathely was the place of the meeting. The last one was in January, 2009 in Eisenstadt once again and the next meeting will take place in Sopron on the 24th of February, 2010. 5.1 Fields of cooperation and their results 5.11 Economic and economy related cooperation: Economic cooperation is generally a very important segment of the Hungarian-Austrian cross-border cooperation; however there are not many well

developed, ongoing projects with direct economic effect. The emphasis is rather on other fields, which are not downright economic co-operations, but they still have strong effects on the region’s economy (e.g renewable energy exploitation, technology, employment, infrastructure, education). One good example for fostering the region’s economy is the program called Regionet Aktiv, which was adopted within the framework of the Austria-Hungary Cross-border Cooperation 2007-2013. The participants of the program are Vas and Győr-Moson28 http://www.doksihu Sopron counties from the Hungarian side and Lower-Austria, Styria and Burgenland provinces from the Austrian side of the border.27 The economic development of this broad cross-border region is highly dependant on small and medium sized enterprises (SMEs), which are the main elements of the region’s economic structure. For this reason the main goal of this given project is the planning and implementation of an innovative network

for the SMEs of the region. Enterprises participating in the network’s activity will surely gain competitiveness on the markets of the region, which will provide great base for their further development. Within the Regionat Aktiv project the quality and quantity of business relations between SMEs of the region should increase significantly, which will most probably imply an upswing in the economy of the area. Currently the program is in its preliminary stage; SMEs are being informed and recruited for the program, but the setting up of a well functioning network takes longer time. Cooperation between the Hungarian Chamber of Commerce and Industry and the chambers in Styria, Lower Austria and Burgenland is intended to strengthen mutual economic relations and ensure exchange of information and experience. Cooperation can be extended in the automotive, thermal industry and wood industry clusters. Cooperation between innovation centers and technological centers has been started upon

chamber initiative. Upon a joint initiative, programs about the exchange of professional experience, study tours and consultation days were organized in the region that were very popular. 5.111 Renewable energy sources – elaboration of new cooperation possibilities; energy programs, biomass programs (R&D cooperation): The three core areas of the cooperation include: technology, motivation/consultancy programs and finance. 27 Source: http://www.regionet-aktiveu 29 http://www.doksihu Both the Eastern-Austrian and Western-Hungarian region are obliged to familiarise each other with their efforts and experience concerning renewable energy resources. The identification of potential areas of cooperation in order for the submission of joint applications for projects is also very important in this field as there are many applicable projects that are highly financed by the European Union. Mostly because of this reason the two countries are planning on setting up a Hungarian-Austrian

working group regarding renewable energy consumption and project application by the beginning of 2010. On 27 September 2007 the European Union accepted the New Hungarian Rural Development Plan (NHRDP). NHRDP treats the utilization of bioenergy as a priority issue. Biomass production is at a very early stage in Hungary, although there is considerable demand for renewable energy. By the end of the 2007-2013 planning period, Hungary intends to increase the usage of renewable energy up to 5% with the integration of small-plant capacity, biogas developments and the use of solid biomass potential. Currently there is one ongoing project in this field, which is an INTERREG cooperation project aiming at the creation of an Information-Center for Energetics, Research and Development and Innovation; as well as the creation of a Renewable Energy Theme Park, both in Kehidakustány (Hungary). Participants of the project include the Agency for European Integration and Economic Development (AEI), Your

European Systems Agency (YESA) and Burgenland’s Job Development Institution (Berufsförderungsinstitut Burgenland) from the Austrian part and the Agricultural and Machinery Institute of the Ministry of Agriculture and Rural Development, Energy Agency, Forest Science Institution, Development Agency of Zala County and Kehidakustány Foundation from the Hungarian side. The creation of a multifunctional centre in Kehidakustány is inevitably necessary in order to help to spread new, effective and environment friendly technologies and to facilitate the region’s integration into the research circulation of the European Union. It will promote the extension of cross-border cooperation and the development of innovation technologies in order to make them become competitive on the market. It 30 http://www.doksihu also supports the distribution of the best technologies in the environmental friendly, energy effective, productive and sustainable development sectors. This is very important,

because research and development activity in Hungary is concentrated in the Central-Hungarian region, especially in Budapest. Around 2/3 of all funds dedicated to R&D are being spent in this area. As far as rural areas are concerned only two cities, Debrecen and Szeged are of significant importance. The amount invested on R&D activity in Hungary increased by 8% in current prices in 2008 and its proportion to the GDP was 1%. With the construction of this new multifunctional information centre the distribution of R&D activity will be much more balanced throughout the country.28 Austria is prepared to involve Hungary in the Austrian quality assurance system related to biomass. 5.112 Technological cooperation: On June 27, 2006, as a result of the Hungarian-Austrian cooperation, the MedAustronInterreg project was awarded the EUREGIO innovation prize in economy category. It was highlighted that MedAustron was one of the first joint projects in the area of R&D. In the course

of this project, an ion beam technological research center was set up in Austria, primarily for the treatment of cancer patients and for clinical research. The Physics Institute of the Western Hungary University and the Innovation Without Frontiers Non-Profit Association participated in this project as partners. 5.113 Employment: By 2011, the year in which Austria will open its labor market towards Hungary, the two countries should gradually harmonize the issue of employment and professions much sought after so that they can both prepare for workforce mobility issues. 28 Source: KSH study: Regional Differences of Economic Processes in Hungary in 2008 (KSH tanulmány: A gazdasági folyamatok regionális különbségei Magyarországon 2008-ban), editor: Mária, Malakucziné Póka 31 http://www.doksihu In relation with professional education the mutual acknowledgment of the certificates of vocational qualifications is a top priority issue. In the period of 2007-2008 the Hungarian

Ministry of Social Affairs and Labour has approved 23 qualifications and has already agreed on continuing this process by accepting 33 more qualifications, which are awaiting approval from the Austrian authorities. Since May 2008, the NetLab project has been in operation, which is an EU financed labour partnership project with the active participation of Hungarian and Austrian state and civil organizations. The main goals of this project are to facilitate professional cooperation and knowledge transfer between the two countries, the creation of a multilingual web page for the purpose of making Austrian and Hungarian professions and qualifications comparable, the optimising of the cross-border labour exchange, the development of a regional strategy aiming at the termination of the shortage of skilled labour force and the elaboration of a bilateral analysis of regional labour markets. The exchange of labour force in the Hungarian-Austrian border region has been regulated by two

intergovernmental agreements since 1998, the trainee and the commuter agreement. Both of them are considered positively among job seekers and employers as well. Since these agreements have come to force, around 1,800 trainees and approximately 150-200 Hungarian employees receive job permission and get the opportunity to work in Austria each year. After years of preparation the EURES-T Pannonia Cross-border Association was finally set up in June, 2008. The primary functions of this association are to ensure information exchange between employers on the two sides of the border, to give information about vacant jobs and the life and working conditions that those jobs would mean for potential future employees, to promote mobility, to exploit vocational training facilities and to familiarize the inhabitants of the region with EURES (European Employment Services). Since June, 2009 the association is supported by the European Commission. 5.114 Regional development - territorial cooperation:

European Territorial Cooperation – cross-border cooperation 2007-2013 32 http://www.doksihu In regard to the subject of Cross-border European Territorial Cooperation a program was submitted to the European Commission in July 2007, and was approved in late December 2007. A sum of 100 million EUR (out of which 82 million is from EU contribution) is granted for implementing various project initiatives as from the beginning of 2008. The Managing Authority of the Hungarian-Austrian Cross-border European Regional Cooperation is based in Burgenland, while the technical secretarial services are provided by the Hungarian VÁTI KHT. o Priorities for the Hungarian-Austrian Cross-border European Territorial Cooperation: 1. Innovation, Integration and Competitiveness (approximately 38.1% of total funding) ƒ The objective of this priority is to improve the competitiveness of the entire region and stimulate cooperation and innovation among its economic and social actors. This requires

efforts focused on promoting economic cooperation, continuing the sustained growth in employment, and improving social infrastructure and public services. 2. Sustainable Development and Accessibility (approximately 52.1% of total funding) ƒ Fostering sustainable development, enhancing the accessibility of the region and improving equality within the region are the main objectives of this priority. This requires interventions and activities aimed at improving eco-mobility, transport and regional accessibility, enhancing the cross-border governance system and improving natural resource management. There are strong links between environmental quality and economic development, and evidence shows that sustainable development – balanced economic, social and environmental development – is a common feature of regions that use knowledge and (technological) innovation effectively. 33 http://www.doksihu 3. Technical Assistance for the Process of Cross-border Cooperation

(approximately 9.8% of total funding) European Territorial Cooperation – transnational cooperation 2007-2013 In conjunction with the Central European Transnational European Territorial Cooperation the first round of projects has already been selected and approved. 300 million EUR assistance is available in this program. Regarding the South-Eastern European Transnational European Territorial Cooperation program 95 projects out of 700 eligible proposals have been pre-selected for approval. Launching ETC CENTROPE projects In September 2003 the top politicians of 14 cities of the region containing the Czech Republic, Slovakia, Hungary and Austria signed the ”Köpcsény (Kittsee) Declaration” in which they decided to promote the CENTROPE based development of the CentralEuropean Region. In March 2006 they confirmed their cooperation in a joint declaration („We grow together”). Founders on the Hungarian side were the city of Győr, the city of Sopron, and Győr-Moson-Sopron county.

Then membership expanded to include the city of Szombathely, and Vas county. The project was welcomed favorably in the entire region. The last six years brought new cooperation in the areas of politics, public administration, the economy, research, culture, tourism, and the labour market. The EU funded project enabled the creation of a Vision for the region. At the same time one may claim that as a result of the lack of regional political cooperation the partners at the periphery do not really feel a sense of ownership of the Centrope cooperation. Stronger cooperation would be necessary as part of which Győr-Moson-Sopron county would wish to strengthen its ties with Steiermark. 34 http://www.doksihu In the spring of 2006 16 partner regions and partner cities accepted the “Vision 2015 CENTROPE” program. The “Vision 2015 CENTROPE” serves as the basis of strengthening present and future cooperation. The project “Centrope Capacity” was approved under the European

Territorial Cooperation programme “Central Europe”. Under the lead-partnership of City of Vienna the project shall enable to manage the transnational integration process of the 4-country region CENTROPE. This should be achieved by the contracting of a multilateral consortium of external experts as operational staff and the build-up of decentralised offices. The approximate budget of the Centrope Capacity project is 45 million EUR. 5.115 Transport: There are several ongoing projects in the field of transport that will have an immediate economic effect on the region by the time they are concluded. The Hungarian Government approved the indicative project list of the Transport Operative Program for 2007-2013 in January 2007, among which there were several highway projects. The most important ones are the connection of highway sections A3 and M9 between Klingenbach (A) and Sopron (H) and connecting S7 and M8 between Heiligenkreuz (A) and Rábafüzes (H). In connection with the road

projects, the Vienna-Bratislava section had been built, and the Vienna-Eisenstadt-Sopron section of highway S31 would be built by 2016 according to the Austrian development plans. The S7 Furstenfeld highway project will create a link with Heiligenkreuz, and will be built by 2016. The “Environmentally sustainable transport and tourism in sensitive areas – Lake Neusiedl/Fertö” project was finished with success. As part of this AustrianHungarian-Slovakian umbrella project many improvements of the areas local transport systems could be implemented such as an innovative bicycle rental system around Lake Neusiedl/Fertő or a new mobility centre in Eisenstadt. 35 http://www.doksihu 5.116 Cooperation between universities: The Bolognese process equally affected both countries. Similar challenges had to be answered in the area of labor division, education and elite training. Regulation for “small/non-core faculties” is now provided in the Hungarian Higher Education Act. In order

to increase cost efficiency in both countries, the countries should cooperate also in those fields of education involving a relatively small number of students. Special training given for only a few persons can be ensured. In this way, cooperation would be needed in the area of the wood industry, forestry, arts and applied arts. Such cooperation cannot be established without governmental intent, since training at these institutions can be accomplished only with governmental support. The development of current and the establishment of new technological and educational co-operations between universities should be an important field of cooperation. However this belongs under the competence of the institutions and they can only apply for EU funds by applying jointly for projects. The Forum can only act as a mediator between universities regarding this topic. 5.12 Environment and Water Management: Environmental issues hindering cooperation between the two countries started to rise just

about 3 years ago with the water contamination issues of the river Raab. Two factories on the Austrian side were made responsible for a significant damage in both the river’s water quality and wildlife. The region had to experience a blanket of constant white foam on top of the water, which in Hungary’s opinion, contained some toxic chemicals. In the beginning the Austrian side tried to neglect the Hungarian accusation, but later they sort of admitted their guiltiness and started to cooperate in order to prevent the river from further damage. The Forum bared a lion’s share in solving this issue and in eliminating the setbacks it caused in both the economic and political relations of the two countries. Nowadays at the Hungarian side, it is always being emphasized that the foaming of the river Raab was an excellent example of solving sensitive issues. In May 2007, an 36 http://www.doksihu agreement was reached between the Hungarian and Austrian water management ministries to

eliminate the foaming of the Raab. The implementation of the action plan regarding the bilateral agreement was supervised by the Raab Action Team. The action team elaborated the Raab Action Plan which serves as a basis for continued cooperation. The Hungarian and the Austrian sides had reached an agreement on July 20, 2007 about the Monitoring Program, which follows the fulfillment of the main requirements set forth in the Raab Action Plan. At the final session of the Raab Action Group on September 27, 2007 an agreement was reached about the implementation of the adopted measures and about further activities. In this way, the political resolution of the dispute between Austria and Hungary was successfully realized. On the other hand there is another recent environmental issue that is in the centre of attention these days. Austria is planning to construct a thermic waste treatment plant just besides the Hungarian border, in Heiligenkreuz, which is very close to one of the most

toursitically attractive cities of the region, the city of Szentgotthárd. This project has generated some great dislike from the Hungarian side and the Forum has been asked several times to try to settle the tension and convince the Austrian party to build the waste treatment plant somewhere else. These attempts have been unsuccessful so far and there is still no sign of any improvement regarding the topic. Austria does not think that the waste plant would have any negative effects on the Hungarian side of the border, while the Hungarian standpoint is to prevent the actual construction of the plant by any legal means. If some changes do not occur in the near future regarding this topic it will have some serious consequences on nearly all fields of cooperation between the two countries, even on cultural cooperation, which is only about to unfold. 5.13 Cultural cooperation: The idea of the joint utilization of the region as a cultural region offers exceptional possibilities to

organizations and specialists active on the two sides of the border. Carrying on common traditions can be made possible through a number of cultural events organized in this region, first and foremost in connection with composers Joseph Haydn and Ferenc Liszt (Haydn festival in Eisenstadt, Haydn 2009 cooperation, Liszt Festival). 37 http://www.doksihu There is an already existing cultural and touristic cooperation between the Liszt societies in Burgenland and Sopron, which can make preparations for possible joint programs much easier. The purpose of the Hungarian side is to cooperate with Austria in order to rely on music traditions and culture in strengthening economic and social cohesion, increasing the number of participants and the income from cultural tourism, and harmonizing the parties’ system of cultural institutions, thereby creating a sort of cultural integration. The result expected from the integration is the formulation of a common cultural vision. All these above

listed fields of cooperation within the framework of the Forum add a little to the extent and diversity of cross-border co-operations between Austria and Hungary. The only question now is whether impacts can challenge or even exceed diversity or not. 38 http://www.doksihu 5.2 SWOT analysis of the Forum: Strengths: • • • • The Weaknesses: Forum provides an organised • framework for the cooperation between responsibilities are not always defined the two regions clearly The Forum’s work is supported by • Results of the cooperation are often government bodies from both sides difficult to measure in several fields General good relationship between the • Only a few results can be measured in two countries figures The local, regional and governmental • The follow-up of the implementation of level certain actions is not strict enough representatives are equal participants in the cooperation • • Regular meetings are organized Threats:

• Flourish the region touristically • Breakthrough protection Different level of economic development of the two countries Opportunities: • In the course of creating action plans, in and • environmental renewable Too many areas of cooperation, the Forum will be unable to coordinate all of energy them. The areas should be narrowed, utilization more focused. Jointly the two regions have a better • Different priorities of the two countries opportunity for winning EU tenders can be a problem later. • Several factors hindering the good relationship between the two countries (project for a waste plant in Heiligenkreuz near the Hungarian border, water contamination of the river Raab, roadblocks placed on border crossings by the inhabitants of several Austrian villages) 39 http://www.doksihu 5.3 Evaluation of the Forum’s work: In order to determine the effectiveness of the Forum I did not only comment on my results showcased in the SWOT

analysis, but also tried to look beyond physically observable results as I am convinced that this cooperation has some hidden values under the surface. The Forum has reached several of its goals since its establishment. Some of these are tangible and can be seen visually (e.g roads), but most of these results are either intangible, in process or had only indirect effects on the economy or on Hungarian-Austrian relations. It is important to note that in those cases where there are not any numbers and figures available which can prove the actual success of the cooperation; they still might have a positive effect on the economy, but indirectly. There may be an outcome or achievement of the Forum’s work which is of even greater importance than actual data on better performance and higher level of effectiveness. This is something, which has no direct economic effect, but it is one of the most important elements of cooperation between two different countries, which is trust. Numbers and

figures are important, but there are some aspects of a cooperation that can not be measured. Trust can not be measured in numerical terms, but it is needless to say how important it is in order to achieve better results time after time. Cooperation is done in many fields through the governing body of the Hungarian-Austrian Regional Coordination Forum, but most importantly it has reached a point, where the people and institutions on both sides of the border are having the confidence to seek contact with each other. Hungarian-Austrian relations have been great for decades, cooperation was usually successful and the people of the two border regions did not have significant problems with working with each other. But now, thanks to the work of the Forum in my opinion, the situation is even better. More and more companies seek cross-border relations; trade between the two countries is flourishing and growing constantly year after year, even in times of recession. Well to be honest, there is

no proof that the Forum is solely responsible for the better relations, but it has some unquestionable credit in the process for sure. There have been 40 http://www.doksihu several problematic issues in the past few years between the two border regions that were solved much faster and easier through the institutionalised body of the Forum. Such an issue was for example the foaming of river Raab. Although there have been some dark clouds on the horizon regarding the Forum’s future with such great tension about the issue of the planned thermic waste treatment plant in Heiligenkreuz, the Forum will surely have the power to somehow overcome this obstacle and Hungarian-Austrian relations will continue to follow a promising development tendency. It is important to note though that good relations are never enough to result in a fruitful cooperation, without each party getting some significant advantages out of the whole process even the best relations are not enough to hold things

together. This is where priorities and their realisation come into the picture. 41 http://www.doksihu 5.4 Realisation of objectives/priorities from the perspective of Western-Transdanubia One of the crucial elements of a successful cooperation is to have clearly defined mutual objectives and priorities regarding all fields in which the cooperation is conducted. However this does not have to mean that the parties included in such co-operations have completely identical ideas about certain topics. As a matter of fact it is inevitable for parties to have slightly or even significantly different priorities themselves. In the process of setting mutual goals all individual targets are taken into account and all minor and major differences in interests are identified. The parties then start a negotiation process, where they determine a set of objectives that can serve the interest of the cooperation as a whole the best. This process generally requires parties to either alter or give up

some of their priorities. The party that has to give up the least or gets to fulfil all its strategically important objective gains more with the cooperation, but usually parties do pay attention and do not let either of the participants receive significantly more benefits than the other. This is important in order to avoid future conflicts. For the Hungarian-Austrian Regional Coordination Forum the place where the priorities of the two sides usually clash is the Forum meeting itself. Each party composes its own list of objectives they think would serve their interest the best. They usually then rank them by importance and they discuss it with the other party at the Forum meeting. There is a place though where the representatives of the two countries some have to give some hint about what their priorities are before they present them at the upcoming Forum meeting. This place is the co-chair’s meeting, where new topics that one of the countries wants to discuss at the next Forum

meeting have to be mentioned and cleared. And if the chairmen agree that it is worth discussing they adopt the topic it in the agenda of the Forum meeting. At the Forum meeting the discussion begins. After the results of the past action period are discussed it is time to set a new action plan for the next roughly 12 months. This is the time when based on the experience from previous years and on new ideas as well, mutual objectives and priorities are selected. 42 http://www.doksihu Let us see what priorities the Western-Transdanubian region has regarding the HungarianAustrian Regional Coordination Forum’s work: I. Economy and technology (labour market, tourism, cooperation between chambers of commerce) • Improvement of the integration and competitiveness of the region’s enterprises (especially SMEs) with the main emphasis on technology and research • Improvement of research and development capacity in the fields of renewable energy sources and organic raw material •

Creation of a regional market in order to reveal potential synergies with other economic sectors • Making cross-border tourism and their means (cycling and hiking) more attractive • Promotion of products, services and leisure time activities in connection with the region’s cultural heritage • Mapping new areas of potential cooperation • Development of the region’s infrastructure to support the cross-border business opportunities of sustainable products and technologies and to strengthen regional competence • Elaboration of joint labour market and the facilitation of a more intensive relationship between labour market institutions on the two sides of the border • Support of integration of labour markets and the improvement of the education and job opportunities of the youth • Support of the cross-border exchange of scientific, educational and know-how experience • Professional assistance from the region to assure equal opportunities on the labour

market If we look at the above mentioned objectives we can see that development in connection with SMEs, renewable energy and the labour market are the most vital economic priorities for the region. These three things also sort of combine past, present and future While SMEs have been the most powerful factors of the area’s economic development for years, renewable energy sources could be such dominant elements of the future. And the improvement of the labour market symbolises the present as it is an issue that got significantly important just recently with Austria being on the threshold of opening up towards the Hungarian labour force in 2011. 43 http://www.doksihu II. Regional Development • Strengthening the cooperation between local authorities to support the mutual development perspective of the region • Support of the CENTROPE strategy • Improving the quality of life in the small towns and villages of the area • Searching for new fields of cooperation and

enhancing existing ones • Improving cross-border networking services and the exchange of experience between regional and local authorities • Support of people to people projects, such as the basis of cultural cooperation From the priorities concerning regional development it is easy to see that WesternTransdanubia is willing to learn from the more experienced and successful Eastern-Austrian region through the exchange of experience and mutual work in many fields. III. Transport • Improvement of cross-border transport, the availability of existing border crossing points and the connection of the northern and southern as well as the eastern and western peripheral territories of the border region • Improvement of cross-border logistics • The formation of new border crossing points and the improvement of cross-border public transport that would result the sustainable development of the region’s mobility • Improvement of the infrastructural connections between the

bigger cities of the region Regarding infrastructure and transport the Western part of Hungary suffers from some serious deficiencies. It has many problems with road quality and has a shortage on higher ranked roads, which makes cross border logistics harder and also has a negative effect on economic relations as well, as transportation takes longer and is relatively unsecure in the region. For this reason infrastructural investments and developments are of great importance for Western-Transdanubia even within its most developed parts, not to mention cross-border wise. 44 http://www.doksihu IV. Environmental protection and water management • The realization of a higher quality environment and the better utilization of natural resources • Improvement in energy efficiency and making the exploitation of the potential in renewable energy resources more intensive • The preservation of the variety of the area’s biodiversity • Improvement of the quality and effectiveness

of public services in the fields of water and waste management in particular • The reduction and elimination of the negative effects of economic activities on the environment • The reduction of the risk for environmental catastrophes (e.g floods) by cooperation regarding water management issues • Protection and improvement of the quality of the environment by qualifying environment as an economic factor and by improving the competitiveness of goods that help regional sustainable development Environmental protection and water management have not been too important fields of the cooperation by the time of the creation of the Forum. But with all sorts of cross-border pollution and water contamination issues it bursted into the spotlight a couple of years ago. The region has suffered from such issues as the constant foaming of the river Raab or the debate over the planned thermic waste treatment plant in Heiligenkreuz. Fortunately the Froum had the power to intervene in some

of these cases and achieved tensions to settle at least in connection with the water contamination issues. The waste plant however is still a controversial matter, where standpoints are rather certain from both sides and currently seem to be unchangeable. We can only hope that this matter will not effect cooperation in other fields negatively. If we take account of all above listed priorities in all fields, we will get to the conclusion that most of them are already more or less included in either ongoing or already planned actions of the Hungarian-Austrian Regional Coordination Forum. 45 http://www.doksihu The representatives of Western-Transdanubia must have made a good job in giving voice to their priorities at the past Forum meetings as in my opinion they benefit more from ongoing projects and co-operations than their Austrian partners. However it is important to look out for potential dangers in the future regarding unsolved issues and problematic matters if they want to

maintain the level of current relations. 46 http://www.doksihu 5.5 Critical issues in the work of the Hungarian-Austrian Regional Coordination Forum During my research I have stumbled upon some issues in the relationship of the two countries that might already have or most certainly will have some either minor or major negative effects on some fields of cooperation. I would like to point out some general notes and potential problems I have investigated in the bilateral cooperation from the point of view of the Hungarian-Austrian Regional Coordination Forum: • Shortly after Hungary joined the Schengen zone there have been several occasions when the Hungarian-Austrian border crossing roads were closed by the Austrian side for no particular reason. Unfortunately there have not been any significant activities from either side of the border to develop such projects that could solve this situation on the long run. • Due to the different regional institutional structure of Austria

and Hungary several structural difficulties may occur. In many cases Hungary has no appropriate partner institution with the same functions as in the Austrian provinces. This difference makes it hard to allocate the same level of competence on both sides within the cooperation. • Institutions of the two countries apply a significantly different method regarding project selection. In Austria it is typical of each field to select and fund a certain project on the basis of a long-term strategy, which enjoys national consensus. Meanwhile in Hungary a pre-determined strategy is not common neither is to ask the Austrian partner institutions’ opinion during the selection process. Hungarian organisations usually only deal with a project after there has been a specific request for it. • In the future Hungary will have to have a tighter cooperation between its institutions involved in the decision making process. They will have to contact each other much before (most likely in the

preparation stage) the details of a certain project are being discussed. With such amendments in the Hungarian practice, it will be easier to develop such projects that are strategically important for both countries and have a greater crossborder impact. 47 http://www.doksihu • The adoption of the Lead Partner Principle is actually in a very early stage. There is still an interactive process of learning by the applicants. At the moment the only support could be the expertise achieved in the previous INTERREG IIIA program. This can however be supported by the adequate preparation of the Hungarian partners. In details it can mean for example the management of the monitoring system of the program or the elaboration of the way of presenting progress reports. • The significant difference in the development levels of the two counties often results that Austria and Hungary have different perceptions of certain issues. Hungary usually has a strong need for infrastructural

investments, but in many cases these are not something Austria looks forward to, as they already have a well-developed infrastructure and they think they would not benefit notably from such projects (e.g while Hungary would really like to extend its current number of cycle paths, an extensive cycle path network already exists in Austria and what they need are some minor soft investments regarding this area). • Achievement indicators of Operative Programs clearly show that Austria only plans 20% of all projects to have an infrastructural effect and 80% to be soft projects. This is the reason why communication is extremely important between institutions involved in these projects to somehow overcome such highly differing priorities by the two countries and find a mutually acceptable solution in the project outcome. • There is a demand on the Hungarian side to establish and operate a special fund for small projects. At the same time this is not a strategic issue on the Austrian

side A consultation between the participating organisations of both sides could bring an acceptable solution for each party. • The utilization of cross-border funds on the Austrian side are strategically more planned and more synchronized with the usage of state funds (funds regarding Operational Programs in particular) than in Hungary. 48 http://www.doksihu • The utilisation of cross-border funds on the Austrian side shows close relationship with other Austrian national funds designated to nation-wide operational programs. On the other hand there is only a loose connection between the regional and the country-wide operational programs in Hungary.29 29 Source: internal documents of the Ministry of Local Government 49 http://www.doksihu 5.6 Recommendations for the future activity of the Forum As it is explained in the chapters above that the Hungarian-Austrian Regional Coordination Forum has achieved essential progress in the Hungarian-Austrian cross-border cooperation

since its establishment, however its work can be accelerated. The Forum’s role also can and in my opinion should be strengthened especially in the field of monitoring the status of implementation of its approved action plans. I think that the monitoring of the implementation of the actions that were agreed upon at the Forum meetings could be stricter. The Forum only meets once a year and the co-chairs of the Forum also meet once a year a few months prior to the Forum meeting. These are generally the only occasions when both sides have to give account of what they have achieved or were unable to achieve during the given implementation period. It is usually about 7-8 months that pass after a Forum meeting until the co-chairs meet again. This is too much time that elapses, during which the chairmen of the Forum are not fully aware of how the implementation of activities goes. Sometimes this is the first time a problem, which has been there for months is finally identified. There have

been a number of examples throughout the years where parties on the two sides of the border had some communications on issues that they were unable to solve on their own and had to wait months till they could give voice to their problems through a representative at the co-chairs’ meeting. It is the job of the Ministry of Local Government to conduct an inquiry about everything that has happened since the last Forum meeting in the Hungarian part of the border region and then to submit these to the Hungarian co-chair, who can present them to the Austrian party at the meeting. Often the Hungarian co-chair not only receives these in writing but organizes a meeting for all local authorities and they develop a common viewpoint. Generally there always are some controversial issues that could not be solved on a regional level. For example in case of missing contact persons local authorities are helpless. The other problem is that in many cases local authorities try to sweep issues under the

carpet and do not bother to solve them until the next meeting when they come to eye-to-eye with the Austrian partner. It is always easier to say that they were unable to take action because it is the other party’s fault and wait on the Forum to solve the debate, then to try to negotiate on their own. 50 http://www.doksihu I think a solution for a better and more effective monitoring would be that co-chairs would not only meet prior to the next Forum meeting, but a couple of months after the last Forum meeting as well. As usually the first 2-3 months are the most crucial in implementing new activities and decisions, it could easily filter problematic issues right in the beginning and the ones involved will not have to wait months for a solution. 51 http://www.doksihu 6. Hungarian-Austrian economic relations In this chapter the Hungarian-Austrian economic relations are supported by figures according to the Hungarian statistics. 6.1 Austria’s perception of Hungary as an

economic partner: Hungary’s permanent presence among Austria’s key economic partners has made economic relations with Austria a daily routine for many Hungarian companies. And despite the downturn in the Hungarian economy since 2008, these relations haven’t been affected significantly in any field. Trade figures show that the Austrian interest towards Hungarian companies and their goods is still quite big. Hungarian export to Austria has become greater in each category of goods in 2008. Although, it is important to note that Austria is also concentrating on yet unexploited markets, such as the Balkans and Russia and is planning to invest primarily in these regions. Table No. 9: Types of goods traded between Austria and Hungary (million EUR)30 export Total Food, drink, tobacco Raw material Energy source Processed goods Machinery import balance 2006 2007 2008 2006 2007 2008 2006 2007 2008 2851.7 3120.5 3577.8 3825.7 4210.7 4461.7 -974.0 -1090.2 -883.9 250.1

269.4 331.7 179.8 210.9 278.8 70.,3 58.5 52.9 177.6 232.5 321.6 54.5 67.6 100.2 123.1 164.6 221.4 339.1 366.7 455.3 289.4 340.6 508.6 49.7 26.1 -53.3 1067.0 1174.6 1251.6 1800.7 1941.5 2088.5 -733.7 -766.9 -836.9 1017.7 1077.5 1217.6 1501.1 1650.1 1485.5 -483.4 -572.6 -267.9 30 Source:KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14.112009) 52 http://www.doksihu Table No 10: Changes in the ratio of the previous year; percentage of the turnover31 ratio export Total Food, drink, tobacco Raw material Energy source Processed goods Machinery percentage import export import 2007 2008 2007 2008 2006 2007 2008 2006 2007 2008 109.4 114.6 110.1 106.0 100 100 100 100 100 100 107.7 123.1 117.3 132.2 8.8 8.6 9.3 4.5 4.7 6.2 130.8 138.3 124.0 148.2 6.2 7.5 9.0 1.4 1.6 2.2 108.1 124.2 117.7 149.3 11.9 11.8 12.7 7.6 8.1 11.4 110.1 106.6 107.8

107.6 37.4 37.6 35.0 47.1 46.1 46.8 105.8 113.0 109.9 90.0 35.7 34.5 34.0 39.2 39.2 33.3 2007 was however a quite tense year regarding Hungarian-Austrian relations, which had its impact on the bilateral activities of the two countries in 2008 also. From the economic point of view the most conflicting issue was OMV (an Austrian oil company) declaring its desire of the acquisition of MOL (Hungarian oil company). The problem arose from the different perception of this action from the two countries. While Austria thought of it as a natural expansion, Hungary looked at it as a hostile acquisition and tried everything in its power to sop it. Finally OMV backed out of the process in August, 2008 due to a thorough anti-cartel EU investigation conducted on the case. Other problematic issues included the contamination of river Raab by an Austrian factory and the Austrian plans for setting up a thermic waste treatment plant near the Hungarian border in Heiligenkreuz. While the

water quality of river Raab significantly improved in 2008, after the implementation of the mutually accepted Raab action plan, the question of the waste 31 Source:KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14.112009) 53 http://www.doksihu treatment plant seemed to become one of the most controversial issues in the history of Hungarian-Austrian relations. Although it is an environmental problem, but thanks to stiff standpoints from both sides it might also lead to a set-back in economic relations as well. 6.2 Bilateral trade and capital investment: In 2008 trade between Hungary and Austria anticipated a significant extension in volume. In spite of Hungary’s total import activities, Austria was Hungary’s third most important partner after Germany and Russia, while on the list of Hungary’s most important export partners Austria finished fourth behind Germany, Romania and Italy. Altogether Austria was Hungary’s third

most important trade partner in 2008 and is still among the strategically most important partners. The total volume of Hungarian–Austrian trade activities in 2008 was 8039.5 million Euros, which is 5.5% of Hungary’s total trade conducted during the year Although both counties are rather small, their trade relations with each other are much greater then their market sizes would imply and they conduct trade to an extent typical for big, highly developed countries. The goods traded include mostly machinery, vehicles, processed goods and electronic devices. Based on Hungarian statistical data, the value of Hungary’s total export to Austria in 2008 was 3577.8 million Euros, while the total import from Austria accumulated for 44617 million Euros, which compared to 2007 means a 14.7% and a 6% increase Based on Austrian statistical data Hungarian export is 2.8% of Austria’s total import Hungary is always perceived positively by Austrian politicians and by the players of the economy.

They think of Hungary as Austria’s closest ally This trend was confirmed by the experience from the first few years of our EU-membership. Austria believes that Hungary successfully fulfilled its obligations and tasks in relation with its membership. There has been mutually favourable cooperation between the two countries in the course of EU’s internal affairs. 54 http://www.doksihu Based on an assessment performed among Austrian firms the prestige of Hungarian firms has become greater. It is important to note however, that the same Austrian companies have become unsure about their Hungarian business perspectives by the end of 2008, due to the unfavourable Hungarian economic and political situation. For this reason Hungary became a less attractive country to invest in, in the Central-Eastern European region. Diagram 8: Trade between Austria and Hungary32 Table No.11 Trade between Austria and Hungary33 Trade between Austria and Hungary in million HUF import export 2001 713 566

693 019 2002 672 362 627 994 2003 671 052 781 824 2004 995 441 814 127 2005 2006 868 331 1 012 048 694 794 754 701 2007 2008 1 058 007 1 145 113 784 187 903 162 32 Diagram made by the author of the dissertation based on data of the KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14112009) 33 Source:KSH database http://portal.kshhu/portal/page? pageid=37,594564& dad=portal& schema=PORTAL (14.112009) 55 http://www.doksihu 7. Conclusion Based on my investigations and analyses it could be assumed that the role of the HungarianAustrian regional cooperation is inevitably very important for the development of the whole Hungarian economy. The territorial closeness of the Western-Hungarian region to the more developed WesternEuropean economies is perceptible as the development of Western-Transdanubia is only slightly behind the development of Central-Hungary (including Budapest). In a country that is so centralised in the

means of economy, employment, technology, R&D, infrastructure and transport, logistics culture, education and almost all possible fields of social life, it is of great significance when a rural area achieves such valuable results. The Hungarian-Austrian cooperation reveals such demands in the economic sector that are initiated by the higher level of development of the partner region and would otherwise remain hidden in the internal economic circumstances of Hungary. A good example for such needs is renewable energy source exploitation, which is only in its preliminary stage of development throughout the whole country. In a world where the greenhouse effect is a key issue in order to save the Globe every little step in order to avoid the emission of CO2 has to be concerned as a great contribution towards our common interest. Therefore the enforcement of constructing new cycle paths in the framework of the cross-border cooperation has a valuable advantageous impact on the environment

of Hungary as it promotes the usage of environmental friendly vehicles. As Hungary is an essential link between Eastern and Western-Europe the development of the infrastructure in Western-Transdanubia facilitates transit traffic as well as the transportation of goods towards both directions. It can also have a positive effect on tourism, which an important developing sector of the Hungarian economy. The Hungarian-Austrian Regional Coordination Forum has a special role in accelerating positive results in the field of not just regional, but the whole economy with gathering potential developments and project ideas in order to promote the fast realisation of actions that can give dynamism to economic development. 56 http://www.doksihu It is on the other hand hard to take an exact account of all economic related effects of the Forum as in many cases we can only talk about indirect effects or ones that can not be supported by any figures or statistical data. However it is clear that the

Forum itself played and intensive role in the last five years in the achievements of Hungarian-Austrian cross-border cooperation. The Forum gives an institutionalised body for almost all the fields of cooperation. Instead of conducting cooperation on many different levels and through many different channels the Forum gives a framework to sum up and discuss all ideas and opportunities at the same platform as well as problems and obstacles of cross-border joint projects in order to utilize the most possible advantages of the cooperation between the two neighbouring countries. The Forum also ensures an organised and regular discussion among the local authorities of the regions on both sides of the Hungarian-Austrian border. 57 http://www.doksihu 8. Bibliography Palkovits, István Phd. “Economic development strategy of the West-Pannonia EuRegion 2004-2006.” (p 5-15) 2003 <http://eceuropaeu/regional policy/index enhtm> Soós Edit and Fejes Zsuzsanna. Határon átnyúló

együttműködések Magyarországon (Crossborder cooperations in Hungary) Budapest: Pólay Elemér Alapítvány, 2009 (p22-23) <http://ec.europaeu/regional policy/country> <http://portal.kshhu/pls/ksh/docs/hun/xstadat> <http://www.westpahu/cgi-bin/westpa/news> <http://www.itdhcom/engineaspx?page=Itdh Foreign> <http://www.statistikat/web en> <http://en.wikipediaorg/wiki/Austria#Economy> <https://www.ciagov/library/publications/the-world-factbook/geos/auhtml> <http://www.statistikat/web en/statistics/population/indexhtml> Internal documents of the Ministry of Local Government 58 http://www.doksihu 9. Appendix List of Tables: Table No. 1: Austrian capital invested in the Hungarian economy 2000-2007 Table No. 2: Foreign capital invested in the Hungarian car industry 2000-2007 Table No. 3: Hungary’ export and import in billion HUF (2001-2008) Table No 4: GDP of the Western-Transdanubian Region at purchasers’ price in million HUF Table

No 5: Proportion of GDP of the Western region comparing to Hungarys total Table No. 6: Growth of the GDP and the inflation rate in Hungary 2005-2008 Table No. 7: GDP of the Eastern region of Austria at current price Table No. 8: GDP per capita of the Eastern region of Austria in E Table No. 9: Types of goods traded between Austria and Hungary (million EUR) Table No 10: Changes in the ratio of the previous year; percentage of the turnover Table No.11 Trade between Austria and Hungary List of Diagrams: Diagram 1: Hungarian export and import in proportion to the GDP (1991-2000) Diagram 2: Hungarian export and import in proportion to the GDP (2001-2008) Diagram 3: Hungary’s export-import curve of years 2001-2008 Diagram 4: Foreign capital investments in proportion to the GDP Diagram 5: Foreign capital investments to Hungary in million EURs Diagram 6: The Volume of GDP in the three Western counties Diagram 7: Trade between Austria and Hungary 59