In different of the two countries. In the Monarchy

In its content, addition to the common ruler in the Austro-Hungarian Monarchy, the military affairs, foreign affairs and finance as common matters. Internal affairs been different of the two countries. In the Monarchy were dual-customs policy and free movement of capital and labor between Austria and Hungary. For this dual-custom policy and the market protection of the Monarchy, in this time Hungary developed the most.

The economic points of the Compromise (1867) served both the Hungarian and the Austrian parties’ financial interests and caused a huge boost in Hungary. Of course, not only the dualism system but, for example, the flowering of the two industrial revolutions – in the first absence/delay – meets of the two industrial revolutions. An important factor for the development of the economy was that the long reign of the Austro-Hungarian Monarchy and Joseph Franz (1848/67-1916), which emerged in 1867, has created a relatively stable political background, which was indispensable for capital investment. The point of economy the Compromise regard Hungary as a sovereign country oblige to independent in taxation and trade and policies.

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Change from feudal to agricultural country

Hungary was a feudal society in the 18th and beginning of 19th century. According to László Katus (1979) to changing the Hungarian society from feudalism to capitalism was not easy because Hungary was an agrarian country, where more than 70% of the population worked into agriculture and around 10-20% in industry.

Between the Compromise and the turn of the century the economy grew by annually 2.5% to 3% according to Katus estimates.  In the second half of the 19th century, the backward countries are also able to close up with the West and Middle Europe, its causing a new capitalist world economy. Building an extensive railway system in Hungary and Austria similarly as Wester-European railway system. It could not be possible to build the railway system without foreign investments.  In Western and Central European countries the industrialization has already started in the late 18th and early 19th century and Hungary was behind compering the West. In the industrial revolution Hungary build a modern competitive infrastructure, expanded railway system, large labor and capital investment.


The process itself, the industrial revolution


Developing the economy were seeded, in agriculture, infrastructure and in the industry. End of 19th century the textile industry and light industry play no role in the industrial revolution.

The Industrial Revolution started such industrial sectors in Hungary which benefited from abundant raw materials. The wild and growth markets provided the demand for more developed countries. Two main industries played a role in the industrial development of Hungary. The first one played leading role it was the food industry, the second one is the heavy industry.  While in Austria in the first half of the XIX. century the annual growth rate of industrial output per capita was between 1.7 and 3.6% on the basis of estimates. The Industrial production grew at an even higher rate in Hungary. (Rando Cameron 1993) The Hungarian agro-export has been continuously expanded it means the grain growing had a major role. In this time frame the agriculture developed the most. Raised the crop lands so with river regulation, deforestation. The appearance of the American wheat export caused a deconstruction, the farmers had to work in inbred cultures such as fruit, grapes, animal husbandry. The volume of production has been growing continuously, which was no longer the area of production, but it was increased in yields. The previous developed procedures such as fertilizer and production tools such as threshing machines, iron bars, iron rims, first appeared on large estates. Growing crops, potatoes, maize and sugar beet growing mostly based on spirits and sugars. The various food industry sectors were built on the agriculture, for example canned industry. In Budapest, the milling industry become forefront of the world. Beginning of the 19th century Hungary was a feudal country but by the time, become an agrarian country. The agrarian country was transformed into an agrarian-industrial country by the industrial revolution and modernization. Development has been extensive, while agricultural production doubled at the end of the century, industrial production went up by the eight-fold increase.

After 1867, a huge amount of foreign and state capital was invested in the development of the Hungarian industry. The coal mines opened in peripheral arear, where large mining centers grew out of the land and built on the heavy industry processing raw materials. They were able to raise productivity to a high level, received the latest industrial technologies from Europe and the cheap labor was easy to hire.

In addition to the traditional industries in the heavy industry, the mechanical and manufacturing industries of the 1880s and 1890s has started. The most advanced sector was car manufacturing. By the end of the century, the production of the food industry declined, while the significance of tool manufacturing, construction, and chemical industry increased.

The infrastructure developments have become the major driving force behind investments. Dam construction and rivers have played a major role, many rivers became navigable in this case the water transportation played a major role. Another major driving force was the construction of the railway network, the significance of which was recognized by Hungary very soon and with a strong capital concentration, built an exceptionally high speed, a European-level network. MÁV, Hungarian state railways shortcut of the Magyar Állami Vastutak.  Gábor Baross, minister of transportation made MÁV to become a giant company and has become profitable with its tariff system. Traffic raised six-fold with the zoned tariffs. Railway system development, provides new jobs, orders for a number of industries and job opportunities for the Cubists. New areas are connected with the development of the rail such as market expansion, trade and production. Helped accelerated the delivery of goods. Under 50 years, Hungary has done a lot of work from its previous disadvantage and became a medium-developed agri-industrial country, with much help from state aid and the common market.

The expansion of road networks was due to the development of transport. Development of transport and the mechanical engineering connected to the internal combustion engines which merits Donát Bánki and János Csonka.