The development opportunities of the urban system of Hungary are substantially influenced by significant changes in the 20th century. The urban network of organic development over centuries experienced a significant shock when several main towns were cut from the country after the First World War. Towns like Bratislava (Pozsony), Košice (Kassa), Cluj Napoca (Kolozsvár), Oradea (Nagyvárad), Timisoara (Temesvár), which had served as counterweights to the dynamically growing Budapest were cut artificially from the urban network by borders. The capital of Hungary thus became overweighted in the shrunk urban system.

The centrally planned economy linked urban development to central economic planning, therefore towns along the heavy industrial axis of the country running from Northeast to Southwest, including Budapest were developing the most. The realization of the harmful territorial polarization led the planners to limit the development of Budapest and start development of towns outside the heavy industrial axis. The explicit settlement development policy of the centrally planned economy aimed at creating a balanced system of towns, but the implementation resulted in the development of towns mostly at a higher hierarchical level.

The change of the economic system caused a shock on the development of towns. The former industrial towns experienced a decline in the newly formed market economy and revival of the towns came in a regionally differentiated pattern. With the decline of central planning, the development patterns of towns have been mostly defined by their individual characteristics, mostly defined by geographical location and local policy. As disparities appeared on a regional basis, the law on spatial development (Act XXI of 1996), and the first national planning document, the National Spatial Development Concept (Decree 35/1998 of the Parliament) approached the spatial problems from a territorial perspective, regardless of the settlements and their structures. This solution was adequate at the end of the 1990’s when solutions to great regional disparities and economic restructuring had to be carried out. Urban policy was dedicated to the local level stakeholders predominantly.

After the major restructuring of the economy, the 21st century brought new challenges to urban policy. With the transformation of Hungary into a small and open economy, the local values have been appreciated. The new National Spatial Development Concept together with the National Development Concept (Decrees 97 and 96/2005 of the Parliament) defined the conceptual framework of the perspectives of development for the first decades of the 21st century. Development opportunities of local communities are addressed in a way that sustainable endogenous growth is to be achieved based on the local resources and characteristics. The concepts therefore open from a regional approach to a more local resource-based approach, allowing more space to urban policy. Some key issues of urban policy are in focus of the medium term development goals. These include mostly the development of a polycentric network of towns, with special focus on the Budapest metropolitan area to be strengthened in the competition of European cities and the regional development poles to dynamize their regions based on innovation. As Budapest is the largest city in the country and most of the specific urban problems arise, national spatial policy dedicates special attention to these detailed problems. Some intra-urban issues are addressed in national spatial policy level in the case of the largest towns of the country to be developed on the basis of innovation in order to dilute monocentricity of the country. The basic document of spatial planning does not handle the perspectives of the settlement network in details, therefore an amendment of the concept is being prepared to strengthen the settlement approach of national spatial policy. The planning process is still ongoing and gives special attention to the European integration processes and positions the towns of Hungary in a wider, cross-border and transnational context.

The key programmes of implementing urban policy are based on the instruments provided by EU regional and cohesion policy. The major share on the responsibility of urban development is born by the municipalities, however programmes funded by the EU provide substantial support. On one hand, most of the developments are concentrated in towns and cities, which fact leads to a significant increase in investments, on the other hand some of these programmes allow integrated urban development and renewal projects.

The first opportunities of integrated local development actions were offered to the local communities by the Phare Orpheus programme, right before the accession of the country to the European Union. The first National Development Plan for the programming period 2004-06 offered more resources for developments, out of which urban renewal actions were targeted by the central Regional Operational Programme.

The new programming period from 2007 opened new ways of coordinating urban developments. The National Strategic Reference Framework of the country provides guidelines for the coordination of developments and defines some urban issues to be addressed in the 2007-13 period. However, integrated urban development strategies are supported primarily by the regional operational programmes with special focus on economic development based renewal programmes and social rehabilitation programmes. The latter are supported in both deprived transitional zones and in housing estates with differentiated and defined thresholds for delimitating action areas. Though there are initiatives for integrated urban developments, the coordination of sectoral investments is primarily the responsibility of the municipalities.

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