Strengthening the financial and legal background of research and development and innovation
In November 2003, the Act on the Research and Technology Innovation Fund (KTIA) was passed. The resources in the separate government fund consist of company contributions (initially 0.2% of their total annual turnover, later 0.25%, then, from 2006, 0.3% thereof) and matching government funding. Thus, the resources in the Fund do not depend on the annual budget negotiations. Enterprises may reduce their innovation contributions with the amount they spend on own research and development or R&D services ordered from government or non-profit research centres. As a result, the number of R&D enterprises grew from 430 to 630 last year. This improves the 2:1 ratio of government and company spending on R&D, which is just the opposite of that of developed countries, a target to be achieved by Hungary.
In December 2004, the Hungarian Parliament passed the Innovation Act, primarily aimed at improving the competitiveness of Hungary, contributing to the identification of a development path that is sustainable both economically and environmentally and indirectly improving the quality of life of the Hungarian population.
Appointing government stakeholders of innovation policy
Science and Technology Policy Council (TTPK) is top level government forum for science, technology and innovation, established by the government and chaired by the prime minister. The work of the forum is assisted by a counselling, decision preparing, coordinating and assessing body, the Science and Technology Policy Advisory Committee (4T).
The Agency for Research Fund Management and Research Exploitation (KPI) was established in August 2003 as a cooperating organisation of the Economic Competitiveness Operative Programme of the National Development Plan. Its tasks included the operation of the Hungarian innovation resources of the European Regional Development Fund and managing the Research and Development Innovation Fund.
KPI is supervised by the National Research and Technology Office (NKTH), a national government office established on 1 January 2004. The Office is primarily responsible for:
- coordinating the innovation activities of the government;
- improving the regional innovation system – preparing for the utilisation of European Structural Funds;
- monitoring and analysing the impact of R&D activities (strategic planning, impact analysis, building and maintaining innovation databases);
- disseminating the innovative approach;
- strengthening the cooperation between the knowledge base and the business sector;
- managing and improving the international relations of Hungarian R&D.
The government has also set up the Research and Technology Innovation Council, a body working along with the Office and dealing with strategic issues. The Council, in cooperation with the president of the Office, forms positions on the strategic issues of planning, operating and utilising the Fund.
Strengthening regional innovation
Parts of the national innovation system are unevenly developed which has an unfavourable impact on the competitiveness of the Hungarian economy as a whole. Therefore, improving the innovation capacity of regions became a priority in the last two years. In order to motivate regional development, 25% of the KTI Fund must be spent on regional innovation.
At its foundation, the first step of NKTH was to work out a strategic concept in order to develop the regions. In 2004, we started two programmes to establish the system of organisations and instruments that generate and transfer knowledge and to provide for the necessary conditions. The objective of the Péter Pázmány Programme was to create Regional Knowledge Centres (RET) through the exploitation of R&D results of universities and to promote intensive cooperation with the industry. With the establishment of Regional Innovation Agencies, the background for the development of regional services was provided for.
Exploitation of results
Since its foundation in 2004, NKTH has been primarily working for the exploitation of the results of Hungarian research and development and improving the innovation capacity of companies. The goal of our support policy was to improve the competitiveness of Hungarian economy through innovation. We worked out our programme portfolio in this spirit. One of its important aspects was to ensure a balance between short-term developments based of favourable conditions and long term goals. We ensured that both types of initiatives may succeed, i.e. local, company and institutional (bottom up) initiatives on the one hand, and central, strategic initiatives on the other. Most of the programmes were available only for consortia with enterprises as members. Mental and financial resources were concentrated on priority areas while the support for giant projects implementing strategic programmes increased. For further information on our programmes, see: www.nkth.gov.hu
Further improvement of programme management
NKTH and KPI paid particular attention to further improve the programme management system. We set up an evaluation and monitoring system for our programmes and the projects they include. We streamlined the administration of calls. We involved more and more industry, economy specialists and international experts in programme-assessment and in the evaluation committees.
Steps to further improve competitiveness of the economy
As shown in the table below, the innovation performance of most new EU member states, including Hungary, is below the EU average. However, the innovation performance of Hungary grows significantly quicker than the average. This is an obvious driving factor for the competitiveness of the economy.
In order to further improve competitiveness of the economy, though, we need to maintain this growth. The National Office for Research and Technology, in cooperation with the Hungarian Academy of Sciences, worked out a mid-term R&D and innovation strategy for the government. The general objective of the strategy is to make Hungary a country, the economy of which is driven by innovation by 2013 and to ensure that Hungarian companies display competitive products on the international market.
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Major goals defined in the strategy:
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I.
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The rate of company spending on R&D should reach 1.4% of the GDP, whereas government spending should not exceed 0.7%.
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II.
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Internationally acclaimed R&D facilities and centres should be created. Quality and efficiency of non-profit research centres should improve and result exploitation and links to the business sector should be strengthened. Top ranking research universities should be established in Hungary which work in close cooperation with companies and react flexibly to the needs of the economy. |
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III.
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Hungarian small and medium sized enterprises (SMEs) must receive special treatment. Working out the government strategy for the innovative development of SMEs is one of the most urgent priorities. Government subsidy should not only be a form of capital but a factor in motivating innovation activities. |
