Are you sure?

Hungary Keen to Catch up in Innovation

While Hungary is doing respectably well compared to its regional competitors, the country, and most especially its SMEs, still lag behind Western European standards in terms of innovation, prompting the state to introduce measures to try and improve the situation, according to Deputy State Secretary at the Ministry for Innovation and Technology Ádám Szigeti.

Ádám Szigeti

Szigeti was speaking at an event in the Budapest Marriott Hotel sponsored by the Swiss, German, Austrian, Canadian, French, British, Swedish, and Dutch chambers of commerce as well as the Danish-Hungarian Business Club, and the Magyarok a Piacon Klub (MAPI).

“All in all, Hungary is not doing well on the European level,” Szigeti remarked regarding the state of innovation in Hungary. “The positive results are not by SMEs, but the multinational companies.”  

Indeed, while the Global Innovation Index (GII) compiled by the World Intellectual Property Organization (WIPO) shows that Hungary managed to improve six positions compared to its 2017 results, the country sits firmly in 33rd place globally.  

While this still behind the 25th place result Hungary achieved in 2011, it is a positive sign that the Innovation Efficiency Ratio sub-index shows Hungary in an impressive eighth, an improvement of 22 places year-on-year. Regional countries such as Poland, Slovakia, and Croatia are all behind Hungary on the overall ranking, while Portugal and Italy are only marginally ahead.

Szigeti noted that neither the EU, nor Hungary will be to achieve R&D spending targets by 2020. In Hungary the goal is R&D spending as high as 1.8% of the GDP, while the realistic achievement will be no higher than 1.4%, according to the deputy state secretary.  

Stagnation

“Since 2002, R&D expenditure has been growing constantly,” he said, noting that the growth was driven by multinational companies while state support stagnated.

“This is a symptom,” he added, pointing out that it is only worth spending if there are players who are worthy of and able to absorb the support. “Hungary is a small country with tight finances, we cannot spend money everywhere and excel at everything,” he argued.

Szigeti revealed a line of new and renewed measures to stimulate innovation, especially among SMEs. The current cycle of the “Befektetés a jövőbe” (Investment in the Future) program which started in 2013 and will end in 2020, is set to be continued between 2021 and 2030, should the EU give the program the nod. The mission of the new cycle will be bringing Hungary’s R&D potential to the European level.

For the EU, innovation support will also enter a new stage in 2020, as the “Horizon 2020” program will be replaced by “Horizon Europe”, an EUR 100 billion research program. Aims will include encouraging openness towards innovation in the business world, while motivating creative thinking and value creation.  

Importantly for the future, success must not become a geographical lottery. “The countryside must be supported as strongly as Budapest,” Szigeti said. “Digitalization and innovation creates huge social gaps. The digitally illiterate get left behind, finding themselves in a bubble.”

One obvious way of improving innovation in Hungary is through the universities. Yet, one can hardly achieve significant results simply by “yelling at universities to innovate,” as the deputy state secretary put it. He noted that the number of PhD scholarships has increased from 1,300 to 2,000 in the near past. Szigeti also put a number on what would be a satisfactory level of R&D employment, saying: “If the Hungarian economy used 60,000 people in R&D, we would be calm.”  

Accademia and Industry

The FIEK (Higher Education and Industry Cooperation Center) program, which promotes cooperation between major industry players and universities, offers grants of between HUF 1 bln-6 bln. Notably, the first cooperation center is being built in Győr, marking the start of cooperation between Audi and that city’s Széchenyi István University.

There are a number of other state supported programs available, including the “KKV Start Innováció” (SME Start Innovation) program.  

“In the long run, it is important that Hungarian-owned companies become as successful as the international companies operating in our home country,” Szigeti explained. Micro-, small- and medium-sized companies are all eligible for grants of between HUF 10 million-20 million.  

Another new program is the “Piacvezérelt KFI” (Market-driven R&D&I) program, where SMEs, large enterprises, and institutions of higher education (as consortium partners) may apply for grants of between HUF 50 mln-700 mln.

Regarding the protection of industrial property rights, the deputy state secretary noted that there is a program offering grants for patenting innovations and intellectual property.  

“It exists, but nobody uses it,” he said. Last year, only approximately HUF 50 mln was handed out in industrial property grants, while available funding was in the region of HUF 1 bln.