Hungary is the 24th most competitive country in the EU according to the new WEF index
- October 19, 2018
The Index examines 110 indicators across 12 pillars (Institutions, infrastructure, ICT adoption, macroeconomic stability, health, skills, product market, labour market, financial system, market size, business dynamism, innovation capability) to measure competitiveness. The current ranking cannot be compared to previous years' results since the methodology was entirely changed to put more emphasis on Industry 4.0 readiness, ICT adoptation, digital competency and innovation.
Hungary ranked 24th among members of the European Union and the gap between us and the elite is growing. Even though our country is ahead of Bulgaria and Romania, we are lagging behind the likes of Czech Republic, Poland and Slovakia in the region. We are last among the Visegrád Fours.
Business dynamism, innovation, institutional background are our main weaknesses, the latter of which is the most influential criteria in the index. Bureaucracy, corruption, poor social capital, the weak protection of property rights and the legal framework's lack of efficiency in challenging regulations are the main causes of the poor rating in this category.
According to the index, there are not nearly enough innovative companies in Hungary which is a result of three factors: finance, knowledge and regulation.
There is room for improvement in regards to cooperation between universities and businesses. Despite the fact that there is considerable research underway in Hungary, the Index indicates that their quality is far behind the world's elite and they have no significant added value. These trends are the direct consequences of a weak quality of education and vocational training systems.
Moreover, companies struggle to find skilled employees and the competence and efficiency levels of the current workforce is low.
Considering the long term future, the most concerning issues seem to be the high national debt, the quality of healthcare and education.
Despite some poor ratings, we have performed well in plenty of categories. In terms of infrastructure and ICT adoption, Hungary is comparable to the EU average. Low interest rates and the government’s pursuit to attract large foreign investors provided a major boost in our ranking. Even though there is a lack of trust toward banks, our banking system is also above EU average. Although the index shows the digital skills of the population is low, Hungary adopts ICT effectively and broadband and cellular internet coverage and speed is elite.
Kopint-Tárki's analysis suggests digitalization is a primary area we can build on and there are considerable opportunities to improve in research, market relations and macroeconomy.
- The United States of America is now the most competitive country in the world followed by Singapore, Germany and Japan.
- The disparity between countries continues to grow.
- Most governments fail to capitalize on the technological revolution due to the institutional backgrounds, infratstucture and the quality of human resources.
- The EU's (72 pts) disadvante to Japan (82.5 pts) and the US (85.6 pts) is growing. However, we must take heterogeneity into account upon comparison as the average is heavily affected by the low performance of its new members.