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One fifth of GVA provided by digital economy

Hungary’s digital economy constitutes 20% of the whole national economy’s Gross Added Value (GVA), even applying the most conservative calculations, and provides jobs for 15% of those employed in Hungary, research by the ICT Association of Hungary (IVSZ) and research institute Századvég reveals.

The narrowly defined Information and Communications Technology (ICT) sector constituted 8.3% of national economy in 2014, and constituted more than 10% of research and development in 2013, the research found.

The Hungarian ICT sector’s performance is outstanding in the region, being among the bests in the European Union, even when considering traditional enumeration methods, a report on the research jointly issued by the two bodies reveals. “IVSZ was not only planning to show again how important the ICT sector is for the Hungarian economy, but also that the ever strengthening digital economy has become one of the most important factor’s in today’s Hungarian economy,” said Tamás Laufer, IVSZ president.

The macroeconomic analysts of Századvég started researching the topic with the hypothesis that digital transformation significantly affects processes in the economy and society, therefore analyzing the narrowly defined ICT sector is increasingly less suitable for determining the scope and reach of the digital economy. The report adds that the new methodology invented by Századvég has its limitations, and the results certainly underestimate the full effects of the digital economy, yet still give the most exact approximation of recent years.

The research found that digital economy contributed HUF 4.2-4.8 trillion to GVA, or 18.6-20.1% of the total Hungarian national economy. Using the new methodology, the research calculates that between 376,000-417,000 workplaces can be connected to digital economy, either directly or indirectly, providing jobs for 13.6-15.5% of the total number of employees in Hungary.

The ICT manufacturing sector should be regarded as the second greatest exporter in the national economy following the automotive industry, with a HUF 2.3 tln worth of exports, constituting 9.6% of total exports in 2013. The ICT sector spent more than HUF 1 tln on investments and R&D from 2008-2013, or 3.8% of total investments in the national economy.

According to the research, the 3.25 rate of employment multiplicator means that employing one person in the ICT sector indirectly creates 2.25 new jobs. Therefore, the approximately 20,000 vacancies in the Hungarian ICT sector, according to IVSZ calculations, could create some 60,000 jobs if filled, the report noted.

The report says that the greatest advantage of the new methodology is that it covers the indirect effects of the digital economy in greater detail than ever before.