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Hungary spends little on R&D in international comparison

Hungary, and especially Hungarian businesses, spend little on research and development in international comparison, according to a study by economic research company GKI with the support of Microsoft Hungary.

Hungary's industrial, trade and financial sectors, all dominated by foreign capital, are adjusting well to the challenges of the global market, and most of the country's economic growth is attributable to improved efficiency, but not enough attention is paid to domestic knowledge, the study said. The amount of R&D spending in Hungary is just 0.89% of GDP, compared to 1.92% in the EU-15. Much of R&D spending in Hungary, some 0.52% of GDP, comes from the state, while most R&D spending in the EU-15, equivalent to 1.24% of GDP, is by companies, GKI president András Vértes noted. He added, however, that Hungary is a global leader in terms of the proportion of high-technology products within its exports. These products account for 29% of exports. Only the US and Ireland boast a higher proportion, he said.
Vértes also pointed out that productivity has played a far bigger role in the growth of GDP per employee than the increase in the number of employees or the number of working hours. Still, several big Hungarian industries, such as the food and chemicals sectors, as well as the farming sector and the public services sector are far from efficient. GKI will soon prepare a competitiveness index which is more objective than that made by the World Economic Forum, Vértes said. Hungary will be between 30th and 35th place on the list, however, its position is threatened by the inefficiency of the state sector. Vértes said Hungarians' purchasing power measured at parity increased from 45% to 57% of the average in the EU-15 between 1996 and 2005.