Istvan Varga is Hungary's minister for national development and economy.
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In your opinion, has the EU Lisbon Strategy's aim of increasing R&D spending by European SMEs succeeded? Perhaps take Hungary as an example.
In line with the Lisbon Strategy, Hungary, just like other member states, has taken measures to increase R&D spending. The mid-term strategic objective is for overall R&D expenditures to reach 1.2% of GDP - preferably by 2010 - and 1.4% by 2013, instead of the present 1%.
I would also like to refer to a positive tendency: 44% of the expenditure comes from the private sector. Since 2002, the R&D spending of enterprises has increased dynamically from 30% to the present level, and should reach 50% by 2013.
As indicated in the government's mid-term (2007-2013) science, technology and innovation policy (STI) strategy, one of the objectives is to strengthen companies' research, development and innovation (R&D&I) activities.
An important aim is to support activities focusing on the social and economic utilisation of research results and those based on cooperation in the business sector.
We will further develop our application-oriented R&D programmes, which demand concentrated resources and are significant for the national economy, and will also start programmes supporting solutions and inventions worth implementing and spreading across the whole innovation chain. By concentrating on the available financial resources, we will start incentive programmes in support of business research, development and innovation.
The Economic Development Operational Programme (EDOP) of the New Hungary Development Plan (NHDP) co-financed by the EU Structural Funds has been designed in line with the above priorities. The improvement of the low level of the market-oriented domestic corporate R&D and innovation activities (primarily SMEs but not excluding the big-size companies), better utilisation of existing capacities and results, as well as encouraging the co-operation between the actors of the R&D&I procedure, are the key areas on which the R&D and Innovation for competitiveness priority programme of EDOP is focusing.
Total funding allocated to the Economic Development Operational Programme amounts to 2,868 million EUR (674 billion HUF). One third of this amount is dedicated to RTDI. In 2008 around 32 million EUR (8.7 billion HUF) was paid to R&D performing organisations from the sources of EDOP and its predecessor programme (Economic Competitiveness Operational Programme).
In addition to that, we have other R&D programme constructions for companies financed from the Research and Technological Innovation Fund (RTIF), which serves as a domestic financial source for supporting applied research and technological development in Hungary.
The National Technology Programme - considered a "flagship" programme of the RTIF - aims to promote increasing economic competitiveness and sustainable development with the help of mid-term use-oriented strategic research and development carried out in the field of modern technologies.
In 2008 ca. 150 million EUR (40 billion HUF) has been paid to different types of organisations performing R&D from the sources of RTIF. 46% of this amount has been allocated to enterprises.
What are the major challenges you think need to be addressed in the way R&D is carried out in Europe? What policy solutions do you propose?
In the current economic turmoil it is of utmost importance to keep R&D&I high on the agenda at the EU level. I am convinced that in the long run, public and private investments in R&D and innovation are essential for helping economies to stabilise and get out of the crisis. Therefore it is in our common interest to stimulate innovation and contribute to the development of high-tech markets in Europe.
In this context, further efforts are needed to create a real innovation-friendly business environment in Europe. The role of the venture capitalists and seed capital is essential in this process. Further reinforcement of co-operation between the state and the private sector, facilitating the growth of private/public partnerships (PPP), should also be crucial.
Financing is often a major problem for projects, not least because of national rivalries and the principle of juste retour. How do you think this is holding back projects, and do you support the harmonisation of funding mechanisms across member states?
Several instruments exist at EU level aimed at the harmonisation and synchronisation of national R&D programmes in certain areas. We have gained experience of some of them: Hungarian organisations participate in the Article 169 initiatives EUROSTARS and AAL ['Ambient assisted living', a programme drawing on information and communication technologies (ICTs) to improve the quality of life of the elderly], as well as Joint Technology Initiatives and ERA-NETs [schemes to develop and strengthen the coordination of national and regional research programmes].
These instruments differ in their size and level of synchronisation, allowing member states to join the ones that correspond to their needs and interests, as well as their legal and financial regulations. Keeping these programmes operational is not an easy task: procedures and mechanisms acceptable to all of the participating member states should be created.
The assessment of these programmes in the coming years will show how successful and how viable they are. However, I suppose that this way of carrying out R&D in Europe will be even more significant in the future. We should not forget that only a small portion of the R&D expenditures are spent at EU level compared to the R&D spending in the members states.
As a follow-on question, how can delays in projects such as Galileo be avoided in future? How would Hungary propose to speed up the process?
Participation in Galileo is important for us. Hungary has taken part in research related to satellite navigation systems since the middle of the 1980s. We have always stressed the importance of speeding up the preparation of the project.
In the case of other programmes jointly implemented by the member states, the European Commission and relevant international organisations, setting up the rules and procedures is always a challenge and long discussions between the different actors of the programmes may lead to delays. In my view, better coordination between the member states firmly moderated by the European Commission could accelerate the process.
How has the financial crisis affected (a) the amount of R&D funding available to SMEs and (b) their ability to access that funding?
In the current financial climate, it is vital to offer support programmes for SMEs, which are the most vulnerable actors on the market.
To mitigate the effects of the economic crisis, the Hungarian government approved a rescue package for them with a 5.2 billion euro budget over the next two years. The package includes different financial constructions according to the demands of the SMEs: grants, loans, interest subsidies and guarantees.
Concerning R&D funding in Hungary, it is a priority to maintain the levels of financial resources available for research and development activities. One of our newly started support programmes aims at saving R&D personnel employed by companies who have been dismissed due to the crisis.
Regarding the funding system in general, our strategic goal is to increase the share of companies receiving grants. Last year, business entities received more than 40% of funds from the Research and Technology Innovation Fund. As a guiding rule, projects financed by the RTI Fund should involve Hungarian companies, mostly SMEs.
In order to help enterprises get information on R&D funding opportunities, a map has been prepared about the public financial sources available for the actors of RTDI. This map contains 80 different R&D programmes and constructions financed from domestic or EU sources. The total sum for different calls is 1.3 billion EUR (350 billion HUF) in the 2009-2010 period, 0.63 billion EUR (170 billion HUF) in 2009 and 0.66 billion EUR in 2010.
In what specific industry sector is Hungary currently strong in terms of innovation, and where do you aim to be stronger in future?
One of our priorities is to establish a quality, performance and utilisation-driven efficient national innovation system to become the leader in Central and Eastern Europe. Taking the current crisis into account, the key knowledge-based industry sectors that can represent the breakthrough points for us are in IT, the car and vehicle industry, the pharmaceutical industry, and logistics.
The Hungarian Ministry for National Development and Economy elaborates overall sectoral industry strategies for these four key areas. The 'Car and Vehicle', the 'Logistics' and the 'Pharmaceuticals Industry and Biotechnology' action plans have already been accepted by the government. In both areas research and development play an outstanding role. Tenders promoting training of experts and financing innovation are calling constantly.
