Over the past two decades, Hungary has built a market-oriented, globally competitive economy, the report notes. It has become a major exporter of manufactured goods. Investments by multinational enterprises have helped the economy diversify into more technologically advanced sectors, such as information technology, cars and pharmaceuticals.
But challenges remain. Overall business spending on R&D as a percentage of GDP was less than half the EU-average in 2006, at 0.48% compared to 1.1%. Nearly three-quarters of this spending is by majority or fully-owned foreign firms, and half a dozen firms alone account for more than one third of the total.
In the long-term, the report warns, this high share of R&D funding by foreign firms will only be sustained if R&D intensive firms link more closely with local research institutes and other firms. The increasingly global sourcing of R&D facilities may also threaten Hungarian sites.
Looking ahead, the OECD advises Hungary to:
• Improve governance of science and technology system, providing more stability and putting in place medium to long-term objectives. Political commitment is needed to boost investment in science and technology and to set clear policies to foster business innovation. More emphasis should be placed on reinforcing innovation capabilities of SMEs and continuing efforts to cut red-tape are needed to stimulate technology-based entrepreneurship. More attention should be given to innovation in the service sector.
• Speed up the pace of reform of the public institutions involved in research and innovation policy, notably the Academy of Sciences. More emphasis on evaluating science and technology institutions and programmes as well as improved co-ordination and co-operation between government bodies, research institutions and industry, including public-private partnerships, would help.
• Leverage EU funding. Hungary should take advantage of EU funding while still maintaining its own national investment in R&D and innovation.
