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Hungary continues to rank 28th in IT competitiveness

Hungary ranks 28th in the world in the 2009 IT industry competitiveness index, with a score of 46.1 out of 100 in the index. For any development in Hungary, improvements would be needed in the field of enforcement of IP protection, creation of new job opportunities in the IT sector as well as support to the IT industry in general. These are among the findings of a new study issued by the Economist Intelligence Unit and sponsored by the Business Software Alliance (BSA).

The study, now in its third year, assesses and compares the information technology (IT) industry environments of 66 countries, including Hungary, to determine the extent to which they enable IT sector competitiveness.

“In today’s economic climate, supporting a strong technology sector is more important than ever,” said Gábor Sarlós, spokesperson of BSA in Hungary. “Technology can drive the economic recovery and generate long term economic growth. Bearing in mind that each new workplace in the IT industry generates a number of other job opportunities, it would be worthwhile to provide more support to the development of the IT industry in Hungary.”

The study finds that Hungary performed strongest in the field of overall business environment (ranking no 24) and human capital development (ranking no 23). The picture is somewhat shadowed however, that last year Hungary was in the top 20 with the latter category, but deteriorating employment figures in the IT sector could have effected the overall picture negatively.

Within the individual indicators, the ranking of Hungary’s foreign investment policy (part of the overall business environment index) performed best and saw a sharp improvement of 7 positions. On the other side, the ranking of the legal environment suffered a loss of 6 positions, primarily due to problems and inconsistencies related to the enforcement of IP rights. The area of R&D also performed poorer than earlier. The top five countries of the region and their rankings are as follows: Estonia (23), Czech Republic (26), Hungary (28), Slovenia (29) and Lithuania (31).

"Globally, the IT sector has ridden out the crisis reasonably well, despite reduced technology spending," says Denis McCauley, director of global technology research with the Economist Intelligence Unit. "Rather than pushing short-term measures designed to boost sector output or support ailing IT producers, policymakers need to remain focused on strengthening the fundamental enablers of long-term sector competitiveness."

Six Key Competitiveness Enablers

According to the Economist Intelligence Unit, six factors work together to create a sound environment for the IT sector: an ample supply of skilled workers; an innovation-friendly culture; world-class technology infrastructure; a robust legal regime that protects intellectual property; a stable, open, and competitive economy; and government leadership that strikes the right balance between promoting technology and allowing market forces to work.

Those countries that perform well in these six “competitiveness enablers” generally are home to high-performance IT industries. The study is intended to provide a roadmap for governments in addressing their strengths and weaknesses when it comes to supporting a strong domestic IT sector.

Other findings from the Economist Intelligence Unit research and BSA recommendations include:

Broadband networks are a vital factor for IT competitiveness, and the competitiveness gap could widen for countries with slower adoption. Technology firms demand fast, reliable, and secure Internet access, and the importance of broadband will grow as more IT services and applications are delivered over the Internet.Investment in skills development remains a long-term imperative. Those countries that deliver a combination of IT, business and language skills training will generate a stronger IT workforce. This is especially true during challenging business times when mastering new skills can help each individual’s chances on the job market.Protectionism and support for ‘“national champions” will hinder recovery efforts — and longer term sector competitiveness. Governments must strike a balance between support that encourages industry growth and investment, and that which introduces unfair market practices and protectionism that can harm competitiveness.Intellectual property (IP) regimes are improving in many emerging markets, but further progress is needed. Intellectual property protection remains critically important to IT competitiveness and is a relatively low-cost way of stimulating long-term economic development. It is crucial not only to create the appropriate legal environment and make the necessary laws but also to encourage and even force everyone to follow a law abiding business practice.j (BBJ Online)