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Promoting Transparency in Transitional Economies
Visiting Hungary in late June, Deputy Secretary of Commerce David A. Sampson talked about the benefits of transparency in a country still making the transition to a market economy. by David Levey The high cost of corruption and the benefits of transparency were the subjects of a multilateral forum titled “Transparency and Competitiveness: Is There a Connection?” The conference was held in Budapest, Hungary, on June 29, 2007, and the keynote speaker at the conference was Deputy Secretary of Commerce David A. Sampson.
“Transparency is critical to creating a competitive, dynamic, and growing business environment … and countries moving away from a legacy of communism are particularly aware of this challenge,” Sampson said. As those economies, including Hungary’s, finalize their transition to market economies, he continued, “there is perhaps no more critical—and no more difficult—issue than sustaining an ethic that encourages and rewards transparency and predictability.” Transparency Initiative The June conference, sponsored by the American Chamber of Commerce in Hungary, was part of a continuing commitment by U.S. Ambassador April Foley and by the ambassadors of eight other countries to improve Hungary’s competitiveness. It is an effort that took its first step on May 8, 2007, when the nine ambassadors and János Koka, Hungarian minister of economy and transport, launched the Transparency Initiative in Budapest. Hungary in Transition In 1989, Hungary was the first communist country in Central Europe to emerge as a democracy. Since then, it has made tremendous strides in its economic development. It has joined the global economic system, becoming a member of the World Trade Organization and the Organization for Economic Cooperation and Development. U.S. investment in Hungary has grown during that time, with more than $9 billion invested by U.S. companies since 1989. And U.S.–Hungarian trade has grown, with nearly $4 billion in bilateral trade in 2006. Continuing Challenges Unfortunately, corruption and the lack of transparent decision making are issues that Hungary continues to struggle with. Freedom House noted in its most recent Nations in Transit report that a lack of transparency pervades Hungary’s procurement system. The World Economic Forum’s 2006–2007 Global Competitiveness report identifies the “business cost of corruption” in Hungary as one of the highest in the European Union. In the areas of licensing and regulatory transparency, the World Bank’s 2007 Doing Business report ranked Hungary as one of the world’s most challenging environments in which to conduct business. Freedom from corruption and adherence to transparent rules of conduct are critical elements in maintaining a competitive, market-driven economic system. By keeping decision making open and by adhering to the rule of law, the United States and other advanced economies have benefited greatly. Those benefits include ensuring the confidence of citizens in their country’s institutions; enhancing respect for the rule of law; promoting good governance; reducing risk to investors, entrepreneurs, and inventors; and increasing overall competitiveness. Transparency is an attribute that citizens should expect. It is a trait no country should be without in a world that is increasingly integrated and interconnected and where resources can easily be deployed anywhere and everywhere. Sampson, in his remarks at the June conference, noted, “In the United States we have found that by taking firm, fair, and open actions, with real penalties, our system is strengthened. By doing so, we fulfilled an obligation not only to our partners in international agreements and our international investors, but to our people and to the laws they expect us to uphold. These same standards, I would think, would apply here in Hungary too.” David Levey is a writer in the Department of Commerce’s Office of Public Affairs.
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