Biology of Business

Zala County

county in Hungary

By Alex Denne

In 1943, Zala County's oil fields produced 837,000 tons of crude — a peak driven not by market demand but by wartime necessity, with output flowing to Nazi Germany's fuel supply. After Soviet forces occupied the fields in 1945, they treated extraction as war reparations, pumping wells at maximum capacity without regard for reservoir management. The reserves depleted decades ahead of geological projections. By the 1990s, Zala's oil economy was effectively dead. This is what forced extraction looks like: an occupying power overexploiting a resource until the resource ceases to exist, leaving the host economy to reorganise around whatever remains.

What remained was hot water. Lake Hévíz, a 47,500-square-metre thermal lake whose springs replace the entire water volume roughly every 72 hours, is the largest swimmable thermal lake in the world. It draws roughly a million visitors annually, 80% of them repeat visitors seeking treatment for rheumatic and locomotor disorders. Hévíz ranks among Hungary's most visited destinations outside Budapest — a geological anomaly that accidentally anchors an entire regional economy. Unlike oil, the lake's output is self-renewing and its demand is predictable: ageing populations across Central Europe guarantee a clientele that grows rather than shrinks. The lake cannot be replicated, expanded, or moved. Its value is entirely positional, which makes it a keystone species for the county's tourism sector.

Zalaegerszeg, the county seat, pursued a different reconstruction. In 2016, the government committed EUR 127 million to build ZalaZONE, a 265-hectare autonomous vehicle proving ground that opened in 2019. The facility operates ten track modules for conventional, electric, and autonomous vehicle testing, including a high-speed oval capable of 250 kilometres per hour. The investment was niche construction — engineering a habitat that did not previously exist. It worked: Flex, Hungary's second-largest industrial employer, expanded from simple lamp panels in the 1990s to autonomous vehicle computers and EV battery-control units, and committed EUR 91 million to a plant producing high-voltage converters for electric vehicles.

Zala County's birth rate falls below the national average, and its population continues to decline. The economic transition from oil to thermal tourism to automotive technology has sustained the county's institutional relevance, but the trend points toward concentration: each successor economy generates value through fewer, more specialised assets and workers. The oil fields required a broad labour force; Hévíz requires seasonal service staff; ZalaZONE and Flex require hundreds of engineers. The county produces value through increasingly concentrated assets — a thermal lake, a test track, a single anchor manufacturer — while the population that might benefit disperses to Budapest, Vienna, or beyond.

Related Mechanisms for Zala County