The industrial transformation that revolutionized the economic and business models of former state-owned enterprises has barely reached an advanced stage before the transforming economies face a new type of industrial revolution. The 'new economy' is hammering on their doors.

There is a policy-making challenge of a structural and regional character, besides the conventional one of closing the object and idea gaps between Hungary and the developed economies in this field, by promoting investment in the diffusion and absorption of information and communication technologies.

Hungary's incorporation into the global structure of world manufacturing brought about a spectacular increase in the share of high- tech products in total output and in exports. Can it be concluded that the country is facing up to the challenges of the new economy?

The paper analyses the lessons to be drawn from the theses of the economics of networks and the characteristics of the new economy's business models. This puts the apparently positive structural-transformation record of Hungarian manufacturing industry in a different perspective.

The paper also examines the opportunities and limits of supply and demandbased regional development-policy methods, to find out whether regional development can be grounded on promoting an FDI-based shift from the old to the new economy, also in backward regions.