Innovation and Innovation Policy in Hungary 

Overview of Innovation Policy

The principal challenge for Hungary is to achieve cohesion with the advanced, core member states of the EU, and thus being able to improve quality of life. To do so, international competitiveness should be significantly enhanced, and then maintained for the long-term, i.e. it cannot be based merely on low production costs.

For a large number of innovation performance indicators Hungary is lagging considerably behind the EU25 average. On the input side, the most worrisome feature is the very low spending of businesses on R&D: 0.36% of GDP in 2003. Innovation expenditures are also way below this benchmark. There is a significant gap in terms of human resources for R&D and innovation, too. The Hungarian CIS3 survey, covering the period of 1999-2001, found 28.8% of manufacturing firms as innovative, compared to 47% in the EU industry in 1998-2000. (Important innovation output data, such as the share of new products in sales or export revenues, or data on the effects of innovations have not been published in Hungary.)

Exports data can also be used as a ‘proxy’ variable of innovation performance, and this ‘lens’ shows a somewhat different picture: a quick restructuring both in terms of export markets and exported goods. Hungarian exports to the EU came to over 75 percent of total exports as early as 1999 (from less than 25 percent in 1989). As for products, by 2000, electric and office machinery and components, together with vehicles and automotive components have replaced meat, chemical and steel semi-finished products and clothing, which were the principal export goods in 1990. In other words, new products and processes have been introduced rapidly, improving efficiency considerably and thus making it possible to enter new markets. These developments are mainly due to the strong presence of foreign-owned firms and the thorough restructuring of their domestic suppliers.

These favourable results can cause a significant policy problem, however, if decision-makers do not realise the close links between domestic R&D efforts, innovation and economic performance. Economic development can indeed be maintained, or even accelerated, without indigenous R&D and innovation efforts in the short run thanks to foreign direct investment. Yet, a country opting for this ‘development’ path becomes not only overly dependent on foreign technologies but most probably would lose its attractiveness, too.

An apparently appropriate decision-making mechanism has been put in place in the form of two high-level bodies and a government agency responsible for R&D and innovation programmes. The Science and Technology Policy Council, headed by the Prime Minister, co-ordinates STI policy measures, and discusses current STI policy issues. The Research and Technological Innovation Council – appointed by the Prime Minister, and consisted of seven high-ranking officials of interested ministries, and eight representatives of the business and STI communities – guides the activities of the National Office of Research and Technology. Yet, policy co-ordination is fragmented in practice and at best takes places bilaterally. No policy reviews (white papers or parliamentary debates) have been produced so far, nor has a systematic international policy benchmarking exercise been used to assess Hungarian innovation policy.

Some of the former weaknesses of the national innovation governance system have been addressed by new legislations since September 2004. Most notably, the importance of devising and implementing a coherent RTDI strategy has been recognised in the Law on Research and Technological Innovation. Evaluation of RTDI policy measures has become compulsory since 2005 (due to the same Act). Other useful methods preparing policy decisions, such as systematic data collection and analyses of techno-economic issues, technology assessment or technology foresight, however, have not been included in this legislation.

There is a broad range of RTDI policy measures in place to enhance competitiveness and speed up the cohesion process. Since September 2004, ten new policy measures have been introduced.

Who Is Who

Senior Official(s) for Hungary
Zsuzsanna Mokry
Correspondents for Hungary
Attila Havas
Tamas Polgar




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Innovation Performance

 Performance in Innovation Scoreboard 2008

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 List of relevant websites