AI, Digitalization Could Offer Hungary a Place at the Top Table

By one of those curious quirks of timing, there have been a number of events dealing with AI and digitalization in the past few of weeks. That should come as no great surprise, seeing how “trending” the topics are, as they say on social media, but nor should it diminish their importance, for they hold the promise of significant development for Hungary.

At the most basic level, that of functionality, they offer at least a partial answer to the labor crisis that besets the region. Simple, repetitive jobs are better done by machines than man. Pretty soon, the former will also be cheaper than the latter.

But AI and digitalization offer so much more than that, not least the chance to shine of a world stage. For once, size does not matter, or at least it need not, as Finland, Israel and Singapore can all attest. More than size, what counts here is brain power and adaptability. Hungary, with its reputation for producing talented engineers and programmers, clearly has the former. Surprisingly, for a people skilled at finding the “little gate”, the back door that makes the system work for you, the problem actually lies with the latter.

Hungary performs on par with its regional neighbors when it comes to innovation, but lags behind more established states further west. It is heading in the right direction, in that it is moving back up the table, but the crucial words there are “moving back up”, for Hungary today is behind where it was in 2011.

The problem is the lack of innovation among Hungarian SMEs. R&D spending is increasing, but that is largely the result of large multinationals. Spending in state bodies and by SMEs has stagnated. There are grants available, but they are not being accessed, and for once you cannot blame this on the government, which has found it hard to give the money away (again, a surprise given the general Hungarian willingness and talent for accessing what is available). The root of the problem lies in the short-termism that has plagued Hungarian SMEs for years. Most are happy simply to survive today; far too few are prepared to invest in tomorrow.

The good news is that the government is aware of this, and it is also aware of the potential dangers of having a society of digital haves and digital have nots, which will only accelerate the growing wealth gaps already evident. The creation and promotion of the AI Coalition is a good step, but what is required more than anything is the sort of joined-up thinking that coordinates education with market needs and global trends, that provides an agile workforce and rewards those prepared to innovate and, as Cole Porter would have it, experiment.

It is at this point that the professional cynic in me will take a deep breath. Governments, regardless of nationality or political persuasion, do not have a universally great track record when it comes joined-up thinking. Like Hungarian SMEs, they are prone to short-termism and chasing votes.

The optimist in me does, however, take heart from the groundwork that is being laid. It is a start, and only a start, but it is at least that. Multinationals will continue to innovate and push the R&D boundaries because that is what they do, and increasingly because the Hungarian government also rewards them for doing so. Now all Hungary has to do is persuade its SMEs to follow suit.

Robin Marshall

Editor-in-chief