Industry developed in Hungary only after the Compromise ( Ausgleich) in 1867. The Hungarian state remained a part of the AustroHungarian customs area, but its government became able to foster industry by various administrative and financial measures. The Hungary of 1867-1918 was an economic unit sufficiently populous and endowed with enough natural wealth to support a relatively large food-processing and metal industry. Budapest developed into an industrial center of the Dual Monarchy, second only to Vienna.
In 1919, Hungary lost most of her mineral resources and important markets. The foundations for her industrial development thus shrank considerably. The adaptation of Hungarian industry to new political and economic conditions was difficult and took several years. Because of the paucity of raw materials, at first the industrial outlook seemed rather hopeless, but the shortage of ores led to intensified exploration and the subsequent opening of a rich manganese ore mine in 1925; bauxite deposits were located and have been commercially exploited since 1927, and oil deposits have been developed on a large scale since 1938. The discovery of new minerals led in turn to new industries in ferro-alloys, aluminum, and oil refining. An extensive textile industry was created. The food-processing industry, in particular flour milling and distilling, lost its pre-1918 markets and never recovered its prewar position. Because of its skilled manpower and transportation facilities, the Budapest metropolitan area preserved its dominant position in industry producing 62 per cent of gross industrial output in 1938; about 250,000 workers were concentrated there.
The interwar trends of Hungarian industry did not always parallel those in neighboring countries. The depression hit Hungarian industry less deeply and lasted for a shorter time than elsewhere in Central Europe; it was practically limited to producer goods industries (75,000 registered unemployed in industry and construction in 1932, and 46,000 in 1947). Metallurgy and machine building were concentrated