AmCham aims to set the cornerstones of Hungary's future success by helping to maximize the opportunities provided by digital transformation, innovation and R&D, increased productivity and a sustainable economy.
Hungary is one of the most advanced in ultra-fast broadband in households, 4G coverage and 5G readiness within the EU. However, the country’s overall digital infrastructure and digital preparedness of SMEs is lagging behind most of Europe.
In the European Commission’s 2020 Digital Economy and Society Index (DESI), Hungary scored 48, compared to an EU average of 53 points . When looking at the trend of Hungary’s position in the DESI, we see that maintaining our relative position takes continued effort, as digitalization is a highly competitive, fast-moving area, with room for improvement in digital public services and integration of digital technology. We believe, that alongside a well-established digital infrastructure, a digitally competent workforce is also a precondition for attracting high value-added industries. Currently digital competences of the Hungarian labor force are behind the EU average. We closely monitor related government strategies, while encouraging timely action to avoid losing momentum.
INNOVATION AND R&D
According the World Intellectual Property Organization’s Global Innovation Index, Hungary ranked 22nd among 39 European countries in the overall 2020 index, amidst other V4 countries and Austria. Hungary is also below the OECD’s average R&D spending of 2.37%, as according the data in 2019 Hungary’s spending was only 1.5% of GDP. Additionally, the number of new patents registered per year is lower than the V4 and EU averages, indicating an inefficient resource allocation, in the face of rising R&D expenditures.
Innovation is more than technological development. It is also a mindset, encouraged by a supportive environment, and focused on processes and productivity. In this broader sense, the level of innovation is determined by not only an inventor’s willingness to take risks and ability to solve problems, but also by the level of digitalization, a capable workforce, and the general business environment. Therefore, we believe that first and foremost, an enabling environment is needed to foster and to sustain innovation.
Increasing productivity is the most effective way to increase per capita GDP. As the growth in quantity – specifically employment numbers - reaches a cap, we need to focus on the qualitative factors to maintain progress. According to European Central Bank projections, if output per worker, structural unemployment, and labor participation remain at current levels, population ageing will result in a stark fall of output per capita income. We believe that structural reforms are needed to increase productivity and unlock unused labor potential and thereby avoid stagnation in per capita income, providing both monetary and fiscal policy more space to operate in.
We believe that for Hungary to become a smart, resource-efficient, and competitive economy, sustainability needs to be a cornerstone of economic policy, as countries and businesses with no clear sustainability measures will have a long-term competitive disadvantage. We consider it crucial for sustainable economic development that the Hungarian regulatory system follows the UN 2030 Framework for Sustainable Development, incentivizing the business sector to create long-term value with innovative products and services, while minimizing the negative external economic and environmental impacts. The key to sustainability is continuous renewal, which requires an appropriate and transparent regulatory environment, with the involvement of all stakeholders.
For more information about our views in these areas, please read the Policy Agenda 2021-2025.