Budapest is the capital city of Hungary and the country's principal political, cultural, commercial, industrial and transportation center. The city is situated on the two banks of the river Danube at the point where mountainous Transdanubia and the Great Hungarian Plain meet. The administrative area of the city is 525 sq. kilometers, and it can be divided into two distinct parts: Buda on the west bank of the river and Pest situated on the eastern side of the Danube. Much of Buda is situated on the forest-covered Buda Mountains, whereas Pest lies on a gently sloping plain. Due to its location in the hearth of the Carpathian Basin sourrounded by high mountains the climate of the city can be characterised as arid continental with a cold winter and warm summer. Budapest is often called as the „town of baths”: warm- and hot-water springs are unique features of the city; there are a dozen of thermal baths complexes served by over a hundred of natural springs.
Currently Budapest has a population of 1.7 million inhabitants, and it has been decreasing since the middle of the 1980s. With 2.5 million it is the the largest metropolitan region in East Central Europe and the seventh largest in the European Union. Administratively the city is subdiveded into 23 fairly independent districts. Each district can be associated with one or more city parts named after former towns within Budapest. The composition of labour force according to the different economic sectors shows the leading role of the services very much: 76,2 percent of the employees are working in this sector. The economic power of the Budapest and its agglomeration within the country is outstanding one third of the Hungarian GDP is produced here and nearly half of the foreign direct investment arriving into the country was realised here.
The history of Budapest begins with the Roman town of Aquincum, founded around AD 89 on the site of an earlier Celtic settlement, and from 106 until the end of the 4th century the capital of the province of Lower Pannonia. The development of Buda and Pest did not really start until the 12th century. In the 13th century Buda took over the role of royal seat, thus became the country's leading town. During the Turkish both Buda and Pest were heavily destroyed, and they became part of the Ottoman Empire for almost 150 years, between 1541 and 1686. Recovery was followed by a rejuvenating period of intensive economic and architectural growth, however, the two cities could not regain their old political and administrative supremacy under the Hapsburg rule. In the first decades of the 19th century, Pest became the center of the Reform movement led by Count Széchenyi, whose vision of progress was embodied in the construction of the Lánchíd (Chain Bridge), the first permanent bridge between Buda and Pest. In 1848-49 the revolution and civil war against the Hapsburg rule ended in defeat for the Hungarians.
The political Compromise between Hungary and Austria in 1867 led to the rapid economic and population growth and physical expansion of the city. The main outcome of this development was the legal unification of Buda, Pest and Óbuda into one city – Budapest in 1873. Due to massive concentration of capital and workforce the last three decades of the 19th century were the peak of urban development in Budapest. The millennial anniversary celebrations in 1896 brought again a fresh rush of construction and development. Architecturally, the outcome of this period was fascinating, a neatly built town consisting of four- and five-storey buildings in eclectic style displaying fully harmony with a densely built-up central city (the castle in Buda, the Andrássy street together with the millenium rail in Pest belong to the UNESCO World Heritage).
At the beginning of the 20th century the cultural flourishing and sparkling energy of abundance and well being
of Budapest rivaled that of Vienna and its café society that of Paris. The belle époque was extinguished by World War I. The consequent dissolution of the Austro-Hungarian Monarchy altered the spatial relationships of Budapest. In 1920 Hungary lost a considerable part of its territory and population. During the inter-war period the development of Budapest slowed down. This period can be charcterised by extensive suburban growth: the flow of labour from the provinces to the suburban belt led to the rapid expansion of the outskirs that were attached to Budapest in the administrative and territorial reform of 1950.
After World War II the country came under soviet political and economic influence and the Communists gained power by force. The forced industrial development during the 1950’s together with the mono-centric traffic and over-centralised settlement system of the country brought again a boom in the life of Budapest. From the mid-1960s the growth of Budapest slowed down gradually partly as a consequence of the new regional development policy that aimed at decentralisation, and the city entered a new phase of urban development. The 1960s and 1970s witnessed technical and structural changes in the economy, the role of services grew, new construction technologies gave a fresh impetus to the infrastructural modernization of Budapest and the development of the housing market. The economic and spatial growth was followed by deconcentration processes, however, clear signs of classic suburbanisation appeared only in the eraly 1980s. By the end of the 1980s the economic functions of Budapest changed fundamentally and the city was well advanced along the road of post-industrial development.
In 1990, at the beginnig of the political and economic transition Budapest was nearly the only city in Hungary which was able to receive international innovations and foreign capital. Budapest as the mediator of the capitalist development in Hungary attracted all capital, the intellectual power and the related infrastucture developments and it managed to keep its leading position in the urban hierarchy, partly relying on its agglomeration. Being the capital of a country in the very heart of Europe, lying on the crossroads of cultural and trading highways, the city could never have stayed free from international influences. Since the political changes of 1989-90 the global economic and spatial processes, also with regards urbanisation (e.g. reurbanisation along with suburbanisation, new trends of social segregation and gentrification) have become manifested in the urban space of Budapest. Global cultural influence burst into the city and took extreme forms in lifestyles, urban and architectural design and forms.
Budapest is nowadays an international city which fits well in the network of East Central European capital cities and the largest cities of Europe. In the context of socio-economic transformation and reintegration into the Europen urban network Budapest stood the chance in the European city competition as a regional centre by special functions. The city possesses a rich and fascinating history as well as a vibrant cultural heritage. Recognizing the unique value of its traditions it has managed to maintain its magic and charm, and is rightly known as the ‘Queen of the Danube’.