With the climate crisis, environmental degradation, digitalisation, robotisation and many new types of challenges, we must ask: what is the role of the state in the 21st century? How can it fulfil its purpose most effectively? To do this, we should not be concerned with the dilemma of „small state or big state”, but with what the state is capable of.
The capabilities and instruments that can be mobilised to achieve the state’s objectives are called state capacities.
These are made up of three main components:
- material resources (revenues, fiscal resources, public assets),
- human resources (the knowledge and commitment of the people running the public administration),
- information resources (the ‚readability’ of society, i.e. the ability to understand it through the most detailed data).
The Hungarian state, despite its relatively large size, is inefficient: it tries to compensate for a poor domestic business environment by „cheapness”, i.e. by cutting its own revenues. The low level of taxation is intended to compensate for moderately weak competitiveness: for example, according to the World Bank’s business environment ranking Hungary ranks 52nd in the world, the eighth worst in the EU and last in its own region. This also means that public revenues could be increased while maintaining and even strengthening our competitiveness.
You can view the additional policy proposals at the following link: