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Hungary gives forward-looking responses to domestic RDI challenges, OECD says
Hungary gives forward-looking responses to domestic RDI challenges, OECD says
14 December 2016
Last modified: 25 June 2019
Reading time: 7 minute(s)
OECD has recently published its Science, Technology and Innovation Outlook 2016 (STI Outlook 2016) which reports on the current trends and key issues of science, technology and innovation (STI), as well as their potential implications on the operation of the global economy, money markets, society and modern governments.

According to the document, the ten most promising technology trends are: the Big Data, the Internet of Things (IoT), artificial intelligence (AI), 3D printing, micro and nano satellites, neurotechnologies, synthetic biology, nanomaterials, advanced energy storage technologies and “blockchain”. The document also contains country profiles on the RDI policy of Member States, including Hungary. It is considered as a positive development in the profile that Hungary reformed its RDI funding system by adopting the National Smart Specialisation Strategy (S3) in 2014-2015, and by enacting the RDI Act, establishing the National Research, Development and Innovation Office and coordinating the portfolio of competitive calls in 2014.
The document enlists several forward-looking actions, but also points at the fields where Hungary is still lagging behind the OECD average. This year, the document highlights that the annual growth rate of gross R&D expenditure is more than double the OECD average. It also mentions that new funding programmes have been introduced to promote the development of the research infrastructure, and that there are promising Government measures aimed at the development of startups. In addition, the document also mentions that Hungary is well integrated into international knowledge networks.

  • The document appreciates the establishment of the National Research, Development and Innovation Office on 1 January 2015, which eliminated the previous fragmentation of institutions responsible for RDI policy. This structural reform enables proper horizontal and vertical cooperation and coordination between the Office and other competent ministries, agencies, institutions and various market operators in the field of research, development and innovation.
  • The document highlights that the Hungarian economy is increasingly active in research and development and has a strong industrial sector. At the same time, it notes as a problem that public investment in R&D displays only 33% of gross domestic expenditure on R&D (GERD). In this regard, however, it should be added that this rate is close to other EU member states, according to Eurostat 2014 data: Belgium – 28%, Denmark – 30%, Austria – 38%, the Netherlands – 33%.
  • Hungary allocates an increasing amount of funding to support innovative SMEs, promote various forms of cooperation and develop the innovation ecosystem. The document speaks highly of the initiatives aimed at strengthening innovative startup businesses. In relation to this, the document highlights the innovation funding schemes for startups, launched with an aim to strengthen incubators which promote startups and to provide initial grants for the development of innovative businesses.
  • The document states that Hungary is well integrated into international knowledge networks, as confirmed by the high number of scientific publications and patents achieved in international cooperation. Foreign companies also play an important role in the RDI activity in Hungary, but the country’s exposure has substantially dropped in this respect. The document also notes that the NRDI Office stimulates the competitiveness of domestic RDI actors with various instruments. The programmes primarily provide funding for international networking, building consortium partnerships and strengthening international relations, with an aim to involve the business sector, research institutions and universities. The document praised the Hungarian Smart Specialisation Strategy which opened a separate chapter for research infrastructure. A declared goal of the Strategy is to advance Hungary’s participation in major European research infrastructures on the basis of mutual benefits. In 2016 Hungary joined nine further research infrastructures, with a broad spectrum ranging from physics to social science.
  • The document highlights Hungary’s involvement in the Policy Support Facility (PSF) peer review, an instrument of the EU Horizon 2020 Programme aimed at supporting Member States in developing, implementing and assessing RDI policies. The process to be launched on a voluntary basis, supports the decision-makers of the Member States concerned in reforming and further developing their RDI policies, and provides advice for the assessment of national RDI strategies, programmes and institutional systems, and for the identification of key development areas. The legal predecessor of the NRDI Office joined the initiative at the end of 2014. The useful experience gained from the Peer Review is integrated by the NRDI Office into the domestic RDI policy. The Office continuously consults with all stakeholders on its dedicated online forum for consultation.
  • Although the annual growth rate of gross domestic expenditure on R&D is more than double the OECD average (i.e. an average annual growth-to-GDP ratio of 5.1% between 2009 and 2014, compared to the average 2.3% of OECD Member States), the document states that there is further scope for improvement in Hungarian STI, partly due to the shortage of both private and public R&D investment. This deficiency is confirmed by the facts that Hungary’s gross domestic expenditure on R&D as a percentage of GDP (1.37%) still remains significantly below the OECD average (2.38%), and that the share of public allocations within the total R&D expenditure is low (see Section 1). This, however, also means that more than around 67% of the total R&D expenditure is provided by the business sector, which is considered as a positive phenomenon at other points of the document. Business spending on R&D is only slightly below the OECD average as a percentage of GDP.
  • Although the document does not describe them in detail, it is still worth pointing out certain areas where Hungary nears or even outperforms the OECD average. Among others, Hungary’s performance being close to the OECD average in the field of innovative businesses bears a message more favourable than the overall negative judgement: indicators of venture capital investments as a percentage of GDP and the ease of entrepreneurship index reach the OECD average. Participation in international innovation activity reflects a similarly positive picture.
  • All in all, Hungary’s R&D performance in the business sector is close to the OECD average in terms of several indicators. The complex picture of research and technological development in Hungary is influenced by the lower value of public R&D investments, fundamental ICT infrastructures supporting research and technological development, the top 500 corporate R&D investors, the number of registered patents compared to  GDP and the professional RDI skills and competencies to be improved. At the same time, the document highlights positive trends in these areas as well, such as the large share of calls for proposals aimed at developing the RDI infrastructure and the measures promoting better career lookout for researchers, including the revamped system of postdoctoral fellowships. 


National Research, Development and Innovation Office:

The National Research, Development and Innovation Office, which is responsible for the appropriate, efficient and transparent utilisation of domestic RDI funds, developed a uniform system of competitive calls in 2015 for the coordinated, appropriate and value-creating utilisation of EU development funds provided for RDI purposes and the domestic sources provided from the National Research, Development and Innovation Fund (NRDI Fund). The coordinated calls in the portfolio incentivise scientific research projects, business developments and the implementation of innovative ideas alike. The Office is responsible for providing professional background to RDI projects funded from EU sources – Economic Development and Innovation Operational Programme (EDIOP) and Competitive Central-Hungary Operational Programme (CCHOP) – and for preparing the concept of calls for applications from an RDI policy perspective. The total funding available for research, development and innovation until 2020 is HUF 1,200 billion, provided from EU and domestic sources in the framework of calls announced in cooperation with the NRDI Office.

Updated: 25 June 2019
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