Innovation and R&D are key instruments for recovery from the economic crisis, Minister of State Zoltán Cséfalvay said at the conference entitled "Innovation – for small and large enterprises" organized by business daily Világgazdaság. He stressed that innovation requires small and large enterprises alike, as both can have a relevant role to play.

The Minister of State said that in 2010, R&D expenditures increased to 1.2 percent of GDP in Hungary, the highest figure since 1993. Final data for 2012 is expected to be similar, or even better. In 2011, the two-thirds of the HUF 336bn total R&D spending originated from enterprises, he added.
The Minister of State emphasized that innovation and R&D are key factors for Europe to regain its competitiveness and win back lost ground. As far as Hungary is concerned, innovation can also enhance competitiveness; instead of low wages and a weak forint, Hungary must be competitive with goods of high added value. To attain this end, however, adequate infrastructure, a taxation system that facilitates performance, a flexible labour market, a skilled labour force and low bureaucratic expenses are necessary.

Zoltán Cséfalvay stressed that national innovation policies are also competing with each other. According to the Globalization Index, Hungary is among the most open economies in the world; it is highly export-oriented and exports constitute 90 percent of GDP. One-fifth of Hungarian export products have high added value and this is the best figure in Central and Eastern Europe.

Compared with the member countries of the EU, Hungary is in the middle of the field with regard to innovation; there is a long way to go, but venture capital already has a marked presence in Hungarian innovative enterprises. In 2011. 42 percent of venture capital invested in the region, the highest share, went to Hungarian companies and thus Hungary is ranked fifth among EU member countries on the basis of the amount of venture capital invested as a percentage of GDP.

Among the Government’s measures to boost innovation, the Minister of State mentioned the definition of the term business innovation and the fact that developed certification increases legal certainty. As of 1 January 2013, highly educated researchers and developers are exempted from paying social contribution tax which is estimated to result in a HUF 4bn decrease in fiscal revenues, while the same amount remains with enterprises, Zoltán

Cséfalvay said.
Between 2014 and 2020, Hungary is expected to receive approximately EUR 24bn from structural and cohesion funds, and 60 percent of that is earmarked for direct economic development, Zoltán Cséfalvay said.
In the coming EU development period, the bulk of funds intended for direct economic development will be used for assisting SMEs, boosting R&D&I, strengthening employment and facilitating the introduction of modern technologies. Out of that amount, at least HUF 400bn will be spent directly on R&D&I projects, but this amount may increase as other operative programmes will also have funds available for this purpose, the Minister of State stressed.

(Ministry for National Economy)