The Ministry explains: according to the preliminary report of the Hungarian Central Statistical Office (KSH), R&D spending grew by over 21% last year, from HUF 517.3 billion in 2017 to HUF 628.4 billion. R&D expenditure (% of GDP) in Hungary had been around 1.3% for years but finally reached 1.49% in 2018. This is a major step forward not only from the previous year (1.35%) but also compared to the highest value on record (1.39 % in 2013).

The significant growth already shows the effects of the large-scale government funding programmes launched under the ‘Investment in the Future’ strategy enabling not only universities and research institutes but also businesses to invest more in research and development – the Ministry explained.

These programmes include projects implemented under the Economic Development and Innovation Operational Programme (GINOP) and Competitive Central Hungary Operational Programme (VEKOP) co-financed by the EU, as well as the projects funded from the National Research, Development and Innovation Fund with the effective coordination of the NRDI Office, financed from the central budget of Hungary, which contributes to a large extent to the implementation of the RDI Strategy.

According to the Ministry, the excellence programme for higher education institutions is particularly important as it provided the financial resources for the HUF 15 billion increase in the academic sphere. With this increase in R&D spending, the higher education sector almost caught up with the performance of the business sector (20.78%), and performed more than two times better than research institutes (9.51%). Researcher headcounts have been steadily increasing in higher education (by 3.4% this year), while research institutions experienced a 2.9% drop last year – the Ministry said.

The share of R&D funds received by higher education institutions from businesses and foreign sources (e.g. direct access EU funds) are less significant (5-6% and 10-11%, respectively), which can be primarily attributed to the low level of cooperation – according to the communication.

In terms of the embeddedness of higher education and academic institutions, there is plenty of room for improvement in partnering with domestic businesses and performing in the European research arena. Without such improvement it would be futile to expect substantial contribution to the Hungarian innovation ecosystem from the efforts to strengthen their own competitiveness and that of domestic businesses – the Ministry points out.

According to the Ministry, this is clearly shown by the European Commission’s European Innovation Scoreboard which enables comparison of the RDI systems between the 28 member states. In the latest report released in 2018, Hungary slipped back to the 23rd position due to its stagnating innovation performance despite the significant increase in RDI expenditure. In other words, there is no point in increasing public RDI expenditure if the funds are not utilised properly in the economy – the Ministry concludes.

The Ministry’s communication explains: the government aims to transform the entire research and innovation funding system and to provide predictable and stable financing to the affected organisational system. This effectively helps to ensure a gradual and permanent increase in public R&D spending towards the long-term goal of reaching a 3% RDI-spending-to-GDP ratio by 2030.

As another policy aim, the funds should help achieve a critical mass of research and development capacity which would enable Hungary to become a knowledge-based, balanced and sustainable economy and society that create high added value.

The strengthening of collaborations is a key policy objective. It is important to build fruitful collaborative partnerships between the stakeholders of the RDI system: businesses, universities and research institutes. This way, the business sector and a wide range of other actors of society can contribute to the practical exploitation of research results achieved in universities and research institutes – the Ministry stresses in its communication.