The objective of the study is to examine the correspondence between city status and city identity and the factors explaining the spectacularly large number of small cities in Hungary. A further aim is to explore the positive or negative impacts of the acquisition of city status on the development of the urban network. The study, using a historical approach, aimed to identify the key enabling factors of the transformation of small towns into cities. This was achieved through the qualitative assessment of specific properties of the urban micro space, the presentation of various life stories and a review of the main milestones of the development path. The elements of local government capacities of peripheral small towns in the region are assessed on the basis of operational and efficiency aspects. The lack or reduced mobility of these elements has negative implications on local government functions, the delivery of public services, the availibility of local resources and the vitality of the local economy.
The recently launched Hungarian Village Program categorizing small towns with less than 5,000 inhabitants as villages may fuel further reflections on the development policy and governance relevance of the research. The analysis of developments planned and undertaken in the framework of the project and the monitoring of the implementation of the Modern Villages and Small Towns Programme will constitute the tasks of the next phase of the research.

Keywords: urban development, small town, Modern Villages Programme, settlement network