Hungary faces uphill battle to reach EU’s 3% R&D target

Hungary's expenditure on investing in research and development (R&D) barely amounts to 1% of GDP today. While Brussels sees boosting research and innovation as a way out of the current crisis, it is the economic downturn itself that is making the target seem over-ambitious. EURACTIV Hungary reports.

''Hungary also sees innovation, research and development as one of the main options in building our future,'' declared István Varga, Hungary's minister for national development and the economy at the time, in September 2009.

Despite sharing Brussels' goal of making innovation a cross-sector priority throughout the economy, the then-socialist government decided to slash innovation funding by 20% as of 2010.

According to government data, Hungary spends approximately 0.9% of its GDP on R&D and innovation each year. Tables from the Hungarian Central Statistical Office reveal that this figure represents the accumulation of all public and private entrepreneurial investment. Looking only at public resources, Hungary spent €0.4 billion on R&D in 2008 – 0.5% of GDP.

In the European Commission's Innovation Scoreboard for 2009, Hungary ranked 22^nd in the EU-27: a performance that made it a ''moderate innovator''. That gloomy picture offered little hope of Hungary meeting the EU's 3% R&D target in the coming years. Besides, there is almost no public debate about increasing the GDP share of R&D expenditure.

Speaking to EURACTIV Hungary, Róbert Kassai, vice-president of UEAPME (the European Association of Craft, Small and Medium-sized Enterprises) outlined the four biggest problems facing R&D in Hungary.

''First and foremost, everything needs to be financially supported from public money. In Hungary, however, the share of R&D resources is decreasing. Now it is under 1%, while in Western Europe it is between 3 and 7%," Kassai said.

"Secondly, we would need some own resource in R&D investments, and very few of the Hungarian enterprises can secure this. Thirdly, we have narrow markets. And finally, financial resources of SMEs are conditioned with quantitative results: surplus in production or in human resources. But SMEs can not produce more as they do not have the market for it,'' he said.

Kassai called for the establishment of a new system to distribute EU funds among SMEs, adding that reforming the education system would be among the main challenges facing the incoming centre-right government, Fidesz-KDNP.

Slogans or actions?

The newly-elected conservative government recently presented its programme to the Hungarian parliament. The document – which is largely the same as the party's elction manifesto, which has been available for months – cites innovation and creativity as a sector with ''accentuated importance''.

However, very few details have emerged as to how the cabinet intends to acheive its goals.

Fidesz-KDNP has pledged to create one million jobs in the next ten years – most of them with the help of SMEs.

''To achieve this, the future belongs to creative industries, and to European and global provider centres […] Big and small [companies] need […] permanent innovation, therefore there is a need for an R&D strategy and structure,'' the programme states.

It underlines the importance of European Parliament and Council decisions and aims to develop "funding mechanisms for small businesses with weak research capacities''.

Fidesz also says it would subsidise SMEs to enhance their capacity to defend intellectual property rights.

While there has been no public debate about these parts of the programme so far, many parties have criticised the document for being too general and giving no details of how to achieve the list of goals.

Ildikó Lendvai, leader of the Hungarian Socialist Party (MSZP), which won a catastrophic 15.3% in the parliamentary elections, said: ''Already with the first reading, you can see that we do not get a programme, but a huge balloon, which is colourful from the outside but vague inside. A lot of slogans, very little content, more questions than answers and barely any concrete proposals,'' he said scathingly.

The hearings of ministers-designate are taking place this week, so some details may emerge then. Fidesz has planned a small cabinet with only eight ministers (EURACTIV 12/05/10) and Hungarians are expecting a lot from György Matolcsy, who will be responsible for the ''national economy''. Matolcsy will present his ideas to six parliamentary committees between now and Friday (28 May).

Innovation helps itself

While politics does not care too much for innovation, it appears that universities do. The Budapest University of Technology and Economics (BME) announced on Tuesday (25 May) that it will integrate five of its strategic research areas. The institution is widely seen as the engine of Hungarian innovation, as most foreign IT companies and the European Innovation and Technology Institute have their headquarters at the so-called 'Infopark' next to the university campus.

Together with BME, four other universities have been given the title of 'elite research universities': the Eötvös Lóránd University, famous for law and arts, the health-oriented Semmelweis University, the multi-faceted University of Szeged and the University of Debrecen.

The institutions plan to widen the scope of their current research activities across regional and national borders. 

''The Budapest University of Technology and Economics would like to become the leading institution in innovation in Hungary, and beyond the borders we would like to become a European elite university,'' said László Vajta, dean of BME's IT department. Under their new title, the universities each received three billion forints (€1.1 billion).

In their application for this funding, BME highlighted the importance of horizontal integration and put five strategic research areas at the forefront.

The institution would like to develop its research activities in sustainable energies, transport and logistics, biotechnology, environmental and health research, nanophysics and nanotechnology, and last but not least, intelligent environment and e-technology.

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