which can deliver the overall objectives of solving the European economic crisis? 2. How can this be done in practice in the context of the framework of planning defined by the 6 steps outlined in the S3 Guide?
and may not in any circumstances be regarded as stating an official position of the European commission. 2 TRANSNATIONAL LEARNING AS A POWERFUL TOOL IN SMART SPECIALISATION The point of departure for this policy-brief is opportunities
which can deliver the overall objectives of solving the European economic crisis? 2. How can this be done in practice in the context of the framework of planning defined by the 6 steps outlined in the S3 Guide?
and communication, consisting of definitions of core concepts for analysis and planning. In this way, S3 provides a framework for dialog on regional development opportunities and challenges between regional development policymakers inside regions and between regional planners in different countries...
AND OPPORTUNITIES FOR TRANSNATIONAL DIALOGUES Through peer review workshops knowledge about the region, its regional innovation system (RIS), its triple helix (3h),
as well as it ongoing work on the Smart Specialisation strategies are put on the table, and explained and discussed with peers, experts and critical friends from regions in other countries.
and opportunities for transnational dialogues are all about. It is the first step in the direction of a new perspective on your systems of innovation.
or opportunities and new strategies you might need in the future. In other words, the new perspective could lead to real change.
and/or it can be the discovery of an opportunity of development. Frustrations and the discovery of opportunities are related closely.
If you have lost the ability to experience a frustration with your own performance, you are unlikely to look for new opportunities.
In the analysis, the driver of change is likely to be summarized as a SWOT, which outlines strengths, weaknesses, opportunities and threats.
This frustration, importantly, may be created through comparisons with others. It may also be present already, as a tension between current realities and opportunities you have not been able to reach.
Comparisons with other can help you to see your own region in a new perspective
It is an efficient way to understand their position in global competition, and identify areas which needs improvements.
and share experiences of how their regional economy may become more globally competitive. The motivation to do this varies.
Regions may in varying degrees feel the forces of global economic competition. Then again why should regional policymakers care?
obstacles are also opportunities. In order to realise these opportunities, you need an analysis of your problems
which identifies your needs. Using transnational learning to change your own region takes a coordinated effort,
The experimental S3 planning and policy-making cycle The experimental S3 planning and policy-making cycle Smart specialisation planning and policymaking Objectives Transnational learning opportunity What can go wrong?
and opportunities identified in your SWOT. What is relevant in terms of transnational learning depends on your SWOT analysis where you have discovered your drivers of change.
You may have done considerable investments in R&d but outputs may be lagging. Or you may simply lack a proper regional system of innovation supporting important sectors.
In this case, you have discovered an opportunity for development through co-evolution with other regions. We may be positioned in different parts of the same value chain.
Identification of unexploited opportunities through comparison with other regions Discover own weak projects with large potentials Authorization to follow this lead.
Roadmaps for weak projects A strategy for the valley of death Technology foresight taking global competition into consideration Joint development Making priorities(=hard choices) Decide to do something new
Identify both short term cost-efficient mechanisms of coordination between existing institutions as well as long term strategies Selection of realistic opportunities,
which are likely to lead to loss of competitiveness and investments. You could do a comparative GAP analysis with other regions
and attract new investments (step 6). You should also consider other alternatives, such as 1. Consider
such as public and private investments in R&d Process indicators, such as triple helix connectivity Output indicators, such as innovations or patents Competitiveness indicators,
in terms of investments in R&d into outputs, in terms of new products, processes and competitiveness. A problem which is likely to be made in some regions is that their systems of innovation are not as efficient as the systems of innovation in other regions. 10 These findings are very important,
because they can guide the direction of the search for new opportunities. The opportunity is the solution to the problem you just discovered.
What created your inferior performance, compared to the other region? The crucial governance problem in the initial phase of this process is the analysis of the root cause.
What is different with respect to venture capital funding? Or perhaps there is a lack of connectivity between the universities
weak projects or unexploited opportunities which are there, but which has been marginalized by other, more successful industrial opportunities.
You may discover them when you look at others, who have developed them already. You may see them
Entrepreneurial discoveries may be big projects which required huge investments over long periods of time before they become profitable.
of either investing in this opportunity or putting it on hold. WE WILL CREATE A NEW PARADIGM A special case of entrepreneurial discoveries consists of new paradigm creation.
and competition and knowledge privatization of the other. 12 On one hand, new paradigm creation requires new infrastructures, value chains, technological standards and support industries
On the other hand, new paradigm creation is driven by massive venture capital investments in long term R&d which necessitates a high level of knowledge privatization.
certain European regions have discovered the new opportunities created by co-specialisation. Typically, the development of co-specialised networks of European or global regions takes as a point of departure sector specific or cluster specific networks
and the focus is on exploiting existing opportunities through open systems of innovation. The forms of transnational learning required in these strategies are sophisticated
which can deliver the overall objectives of solving the European economic crisis? 2. How can this be done in practice in the context of the framework of planning defined by the 6 steps outlined in the S3 Guide?
and stakeholders, allowing them to explore the potential for collaboration and to better understand innovation dynamics.
'The most common RIS3 priority areas in the EU are energy, health, information and communication technologies, food, advanced materials, services, tourism, sustainable innovation, advanced manufacturing systems,
Finally, we compare the main areas of planned investment with sectoral data on firms employment and patents, with the conclusion that the connection between priorities and the economic and innovation structures is weak.
in order to ensure effective and efficient investments in research and innovation (R&i)( European commission, 2010b). One essential feature of RIS3 is the concentration of funding on a limited number of R&i priorities (2). The Eye@RIS3 tool provides information on these prioritised areas with the aim of facilitating searching for potential cooperation partners,
smart specialisation is‘the capacity of an economic system (a region for example) to generate new specialities through the discovery of new domains of opportunity and the local concentration and agglomeration of resources and competences in these domains'(Foray, 2015).
in order to address emerging opportunities and market developments in a coherent manner, while avoiding duplication and fragmentation of efforts';
authorities, together with stakeholders such as research institutions, industry and social partners, identify and produce information about new activities
this should allow emerging opportunities and market developments to be addressed in a coherent manner, while avoiding duplication and fragmentation of efforts.
The concept of smart specialisation builds on knowledge accumulated from different Commission services as regards innovation policy development and implementation:
DG Enterprise and Industry's experiences with cluster policies, sector-specific innovation policies and the Lead Market Initiative (European commission, 2009;
and innovation policies, including regional innovation systems, economic geography, institutional economics and evolutionary geography (e g. Asheim et al.
supporting research and development through subsidies, acting as lead customers for innovative solutions, etc. However, most innovation results from existing regional capabilities that transform into new industries in different forms.
but demand in certain product markets (which can be influenced by market access, legal frameworks impacting on private and public demand for innovative solutions, etc.).
The Lead Market Initiative brought demand-driven innovation policy instruments into EU innovation policy thinking (Aho et al.
2006). ) In its report on reindustrialising Europe to promote competitiveness and sustainability, the European parliament stressed again the need to develop lead markets
and services living up to societal needs"(European parliament, 2013: 14-15). This concept of market creation is also important in the context of RIS3
academics and users/civil society to develop a better understanding of both future and private investment potential.
It argued that research investments in Europe have been fragmented overly, have lacked critical mass and have been plagued by a‘me too'syndrome,
which manifested as regions making investments in very similar and fashionable areas such as information and communication technologies (ICT),
These areas of investment were disconnected often from actual local capabilities, and, in many cases, based on hopes of developing future industries.
as well as DG Enterprise and Industry in the context of politically driven cluster initiatives. The lack of connections between these investments and existing capabilities was probably one of the greatest problems;
recent related research underlines this issue by showing that regional innovation, in many cases, begins with a set of existing capabilities (Neffke et al.,
which will prevent regions from developing economies of agglomeration and positive spill overs. In order to overcome these problems of fragmentation, mimesis and lack of critical mass,
and because investments in R&i were expected to increase considerably in ESIF, DG REGIO and the Joint Research Centre set up the Smart Specialisation Platform at the Institute for Prospective 5 Technologies (IPTS) in 2012 to provide regions and Member States with guidance and hands-on support
as of 2012, identifying priorities for their RIS3 investments. 3. Developing an open data tool for mapping innovation priorities Eye@RIS3 is an interactive open data tool that gives an overview
and an opportunity to be recognised by potential counterparts looking for collaboration in a particular area.
probably because this sector encompasses large parts of the economy. Moreover, an important goal of smart specialisation is to stimulate R&i activities linking industry and research,
which also influence planned investments. Table 1: Number of priorities within the main category‘research and innovation capability'Name of priority category No of observations%of total priorities Manufacturing and industry 452 34.6%Information and communication technologies
(ICT) 157 12.0%Energy production and distribution 138 10.6%Agriculture, forestry and fishing 112 8. 6%Human health and social work activities 100 7
. 7%Services 93 7. 1%Creative and cultural arts and entertainment 60 4. 6%Tourism, restaurants and recreation 51 3. 9%Transporting
and social work activities 154 11.8%Energy production and distribution 128 9. 8%Information and communication technologies (ICT) 98 7. 5%Tourism, restaurants and recreation
74 5. 7%Transporting and storage 73 5. 6%Services 69 5. 3%Agriculture, forestry and fishing 65 5. 0%Creative and cultural arts and entertainment 52 4. 0%Construction 42 3. 2%Grand total 1 287 98.5
For example, ICT, services, creative industries, and agriculture, forestry and fishing are described most frequently as R&i capabilities,
56 4. 3%Motor vehicles and other transport equipment 55 4. 2%Human health activities (medical services) 47 3. 6%Machinery and equipment
%Human health activities (medical services) 71 5. 4%Energy distribution 46 3. 5%Power generation/renewable sources 43 3. 3
and distribution Energy production and distribution 6. 2%Digital Agenda Information and communication technologies Information and communication technologies 6%Public health and security Human health 5
and‘supporting the shift to a low carbon economy'(TO4) could explain the popularity of sustainability, renewable energies and ICT.
Most common R&i priorities in Europe Energy Information and communication technologies (ICT) Health food Advanced materials Services Tourism Sustainable innovation Advanced manufacturing systems Cultural
There is a risk that these investments stem from political priorities, rather than from a real discovery process
alone, they do not capture the many priorities in the areas of ICT, creative industries, tourism and services.
and possibly in activities relating to services. However, few regions specifically mention any of the other major sectors legal services, engineering or head offices in the text descriptions of their priorities.
Likewise, few regions mention priorities in retail trade, but some do mention transportation and construction.
Construction, real estate and related services are large sectors, but they do not correlate strongly with RIS3 priorities.
'17 services (to some extent) and‘civil engineering'.'After looking at the number of local units in absolute terms, growth in absolute terms and relative growth,
We found that there were some connections between the RIS3 priorities of food, services and advanced manufacturing and:‘
'‘services to buildings and landscape activities'(possibly; the‘manufacture of fabricated metal products, except machinery and equipment'.
there being overlaps in most sectors except for‘mining support services actions',‘mining of metal ores'and‘veterinary activities'.
'The main overlaps were found to be with services, sustainable innovation and ICT priorities. 0%10%20%30%40%50%60%70%80%90%100%Growth in number
'ICT and‘electric communication technique'and‘computing, calculating, counting';'energy and‘generation, conversion or distribution of power'.
since patents are not highly relevant to some of the main priority areas, such as tourism, services,
hygieneelectric communication techniquemeasuring; testingbasic electric elementscomputing; calculating; countingvehicles in generalengineering elements or units; general measures forproducing and maintaining effective functioning ofmachines or installations;
For this, they had to select a limited number of investment priorities, via an entrepreneurial discovery process,
and to facilitate communication between countries and regions. Currently the dataset covers 1 307 priorities from 20 EU countries, 174 EU regions, 6 non-EU countries and 18 non-EU regions;
The most common priority areas are energy, health, ICT, food, advanced materials, services, tourism, sustainable innovation, advanced manufacturing systems,
and put into practice with the help of regional stakeholders engaged in an entrepreneurial process of discovery.
the concept, Knowledge Economists Policy Brief 9. Available online: http://ec. europa. eu/invest-in-research/pdf/download en/kfg policy brief no9. pdf. Foray, D. 2015.
opportunities and challenges for regional innovation policy, Routledge: Abingdon. Frenken, K. and Boschma, R. 2007.
Economic development as self-discovery, Journal of Development Economics 72 (2): 603 633. IPTS (2011. The RIS3 Guide.
Categories and sub-categories for‘research and innovation capabilities'and‘business areas and target markets'Agriculture, forestry and fishing Agricultural services Crop and animal production, hunting and related
Power generation/renewable sources Human health and social work activities Human health activities (medical services) Residential care activities Social work activities without accommodation Information
and communication technologies (ICT) Computer programming consultancy and related activities Information service activities Motion picture, video and television programme production, sound recording and music publishing activities Programming and broadcasting activities Publishing activities
public order, fire service and safety activities Services Activities auxiliary to financial services and insurance activities Activities of head offices and management consultancy activities Advertising and market research Architectural
office support and other business support activities Rental and leasing activities Scientific research and development Security and investigation activities Services to buildings and landscape activities Travel agency, tour operator and other
tour operator and other reservation service and related activities Transporting and storage Air transport and related services Postal and courier activities Rail transport and related services Road transport
and related services 25 Warehousing and support activities for transportation (logistics storage) Water transport and related services Water supply, sewerage, waste management and remediation
Categories and sub-categories for EU priorities Aeronautics and space Aeronautics Aeronautics and environment Bio-fuels and energy efficiency Remotely piloted aircrafts Safety and security Space Transport and logistics Blue
coverage in rural areas Cleaner environment and efficient energy networks (e g. smart grids) E-commerce and SMES online e-Government (e g. e-Procurement, e-Participation) e-Health
or improved service processes New or improved service products (commodities or public services) Social innovation New organisational models and social relations that meet social needs New products or services
and stakeholders, allowing them to explore the potential for collaboration and to better understand innovation dynamics.
'The most common RIS3 priority areas in the EU are energy, health, information and communication technologies, food, advanced materials, services, tourism, sustainable innovation, advanced manufacturing systems,
Finally, we compare the main areas of planned investment with sectoral data on firms employment and patents, with the conclusion that the connection between priorities and the economic and innovation structures is weak
Table of contents Introduction 7 1. The ICT sector's stakeholders, inputs and significance for the national economy 8 1. 1 Definition of the ICT sector 8 1. 2
The role and competitiveness of ICT in the EU 9 1. 3 The significance of the ICT sector in the Hungarian national economy 11 1. 4 Value added 12 1. 5
investment and cost 20 2. 3. Number of people employed in R&d 23 2. 4. Regional distribution of ICT research and development personnel 24
released by the National Innovation Office RDI Observatory examines the relationship between the Information Communication (ICT) sector and Research, Development and Innovation (RDI.
The analyses included in our publication entitled‘Status Report on Enterprise RDI'released in the Spring of 2012 clearly demonstrated that ICT has RDI potential which definitely merits further investigation.
economy and the number of people employed in research and development. At the same time, if we take a look at its R&d expenditure or investment and resource requirement,
we find that all those indicators are far more modest than in other sectors, consequently the ICT sector is capable of generating high added value even at relatively low levels of investment.
It is also common knowledge that the ICT sector is characterised by very significant multiplicator impacts,
given that practically all forms of economic activity rely on ICT products and services, thereby the ICT sector plays an important role in significantly improving the efficiency and productivity of other sectors,
This publication aims to bring ICT stakeholders up-to-date with the current status of RDI in their own sector
four-digit breakdown) whose main activity is production and marketing of ICT products or services.
and subsectors representing two distinctive branches of the national economy: the processing industry on the one hand and the services industry on the other.
Hereinafter, we shall respectively refer to these as the‘ICT industry'and‘ICT services'.'According to a harmonised Statistical Classification of Economic activities in the European community (in Hungary:
TEÁOR'08), we categorised available data as follows: ICT Industry: Section C (Manufacturing: C. 26: Manufacture of computer, electronic and optical products C. 26.1:
Manufacture of electronic components and boards C. 26.2: Manufacture of computers and peripheral equipment C. 26.3:
Manufacture of magnetic and optical media ICT Services: Section J (Information and communication) J. 58:
Publishing activities J. 59: Motion picture, video and television programme production, sound recording and music publishing activities J. 60:
which divides the ICT sector into manufacturing and services, and as the sectors listed above are largely identical with the classification proposed therein,
Occasionally, less data is available on the ICT manufacturing as some statistical databases fail to subdivide this section of the national economy into further sectors and subsectors,
We nevertheless endeavored to present the fullest possible picture of both the ICT industry and ICT services
as far as it was possible. 1. The ICT sector's stakeholders, inputs and significance for the national economy 8 ICT tools and services play an important role in building a digital single market,
which presents a significant growth potential for the EU. The European commission's'Annual Growth Survey'released in 2011 December sees the building of a digital single market as a source of significant growth;
ICT tools and services have a pivotal role in unlocking this potential. The survey highlights-among other things-the importance of establishing secure mobile
the role of online purchases in reducing costs and improving the quality of delivery of goods and services,
and communication technologies and world-class logistics servicing the internal market are essential components of a modern, competitive economy and crucial for EU development in the coming years'(European commission 2012. pp 8
and services make a significant contribution to the economic growth of advanced economies. Its significance was highlighted both in the EU Lisbon Objectives and in the Europe 2020 Strategy,
ICT services contributed 3/4 of total ICT value added and employed 2/3 of the workforce.
while the EU's BERD/value added ratio of telecommunication services is no worse than that of the US,
the EU has a big backlog in IT services and software manufacturing (both compared to the US and South korea),
computer services and software manufacturing. As a further disadvantage, US companies were quicker to recognize the significance of Asia
however, deeper analysis shows that these countries are still hosting rather low-value added activities. 1. The ICT sector's stakeholders, inputs and significance for the national economy 10 Figure 1:
as a result, in a number of ICT areas. 1. 3 The significance of the ICT sector in the Hungarian national economy As individual branches of the economy are interrelated through many ripple effects,
Individual sectors can have an influence on other segments of the national economy in a number of different ways going beyond simple buyer-supplier relationships, e g. through the flow of technology.
This makes it almost impossible to determine the precise weight or significance of any sector in a national economy,
therefore, we will give only two examples evidencing that the sector is having a particularly strong impact on the rest of the national economy.
In most OECD member countries under review, ICT investments generate more economic growth than investments made by all other sectors combined.
Based on 2000-2009 data, the OECD also evaluated the contribution of ICT investments to economic growth.
In the United kingdom, the US, Germany, Japan, Denmark, New zealand, Belgium, The netherlands, Sweden, Switzerland, Austria and Finland ICT investments made a bigger contribution to economic growth than investments in all other
In other countries under review (Australia, Canada, Spain, France, South korea, Portugal, Ireland, Italy and Germany) the growth impact of ICT investments is weaker
the topic itself definitely merits further investigation. 1. 4 Value added The ICT sector is seen as an engine of global economic growth,
. Even though the sector was too hit by the economic downturn, for example, large IT corporations globally were forced to cost-cutting and downsizing their workforce,
nevertheless the sector itself very quickly returned to the path to recovery, partly due to the highly innovative nature of its companies and to the growth of some sub-sectors, e g. computer and mobile communication services.
There is no data available for Poland 1995) 1. The ICT sector's stakeholders, inputs and significance for the national economy 0%2%4%6%8%10%12%14%16%Poland Austria Germany Portugal Slovakia France OECD
average Czech republic USA Hungary Sweden Finland 1995 2008 Finland Sweden USA France Slovakia Portugal Germany Austria Poland Czech Republik OECD
average Hungary While in 1995 the share of the entire ICT sector of total gross value added at level of the national economy stayed below 4,
nearly 3/4 of this performance being generated by ICT services. This growth was interrupted not even by the recession that began to unfold in 2008;
however, that this was made possible by ICT services, as in 2009 the gross value added of the ICT industry declined, however slightly.
In 2011 the share of ICT services marginally declined despite a nominal increase in their value added;
however, based on preliminary GDP figures for 2012, the performance of ICT services is on the rebound.
Gross value added of the Hungarian ICT sector as a percentage of value added of the total economy, 1995-2011.
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 ICT services ICT industry National Innovation Office RDI MIRROR
The ICT service sector's contribution to international trade is represented relatively well by statistical data published by the Hungarian Central Statistical Office on communication services as well as IT and information services4.
however, that trade in services is accounted for somewhat differently compared to the logic we adopted so far.
The Hungarian Central Statistical Office's trade-in-services datapool classifies postal and courier services as communication services;
whereas computer services, news agency services, database services and online publishing are classed as IT and information services.
Foreign market entry opportunities The bulk of primary data shown in the text boxes of this report were taken from an RDI survey carried out by the National Innovation Office RDI Observatory in the spring of 2012 with the participation of 1
1. The ICT sector's stakeholders, inputs and significance for the national economy 1150 1200 1250 1300 1350 1400 1450 1500 1550 1600 0%5
and information services is nearly twice as much as that of communication services; in addition to which the computer and information services sector also recorded a major trade surplus in contrast with communication services,
which is characterised by a relatively small but increasing trade deficit. 1. 6 Number and size of ICT businesses In the space of seven years,
the number of business enterprises in the ICT services sector has grown by 14.7, %however, the total number of business enterprises decreased.
The size of the ICT services sector can be illustrated by the total number of business enterprises5 making up the sector,
however slightly, the total number of business enterprises making up the national economy declined. There were altogether 708,307 active enterprises in Hungary in 2004 compared to 696,680 in 2010.
Figure 6: Balance of trade in ICT services (HUF bln) and their relative proportion within the import and export of services(%)in 2008-2011.
Source: Hungarian Central Statistical Office 5 In any given year, a business enterprise is classified as‘active
on technology and computer services (right axis) Balance of trade in communica? on services (right axis) Export of informa?
on technology and computer services (lek axis) Import of informa? on technology and computer services (lek axis) Export of communica?
on services (lek axis) Import of communica? on services (lek axis) 0 5, 000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 2003 2004 2005 2006 2007 2008 2009
2010 ICT in total ICT services ICT industry National Innovation Office RDI MIRROR-1. Review on the ICT Sector However, the two subsectors that make up the ICT industry
are characterised by outright inverse dynamics: as the number of service provision business enterprises dynamically increased, the number of active businesses with a manufacturing profile has declined steadily since 2005.
Further investigation is needed to reveal the causes of this process. The relative proportion of companies providing ICT services is rising,
and it is now many times higher than the number of companies in the ICT industry.
Based on 2010 data and the standard national economic sector classification, the highest number of active businesses are engaged in the wholesale and retail trade, repair of motor vehicles (139,546 out of a total
In 2010, information and communication (i e. ICT services) came seventh in the ranking of various branches of the national economy according to the number of active businesses involved (34,371 companies in total.
The ranking of various branches of the national economy based on the number of active businesses involved was identical already back in 2003 in the top six spots.
While in 2003 the ICT services sector (i e. the Information and Communication Technology branch of the national economy) still ranked only 9th,
it has stopped never climbing, moving to 8th in 2006, to 7th in 2007, which position it has retained ever since.
'Source National Innovation Office RDI Observatory's survey, 2012 6 A business enterprise is categorised as a startup enterprise in any given year
Hungarian Central Statistical Office) 7 A business enterprise will be classed as a terminated enterprise in any given year if, for two consecutive years,
Entities terminated with a legal successor are classed not as de facto terminated enterprises. Hungarian Central Statistical Office) The ICT sector's stakeholders, inputs and significance for the national economy 0%10%20%30%40%With overseas research ins4tutes With overseas
educa4on ins4tu4ons With Hungarian research ins4tutes With NGOS suppor4ng R&d ac4vi4es (e g. founda4ons) With large companies engaged in R&d With small
Breakdown of active business enterprises by sector and branches of the national economy, 2010. Source: Hungarian Central Statistical Office Figure 10:
ICT industry) Administrative and support service activities Other services ICT services ICT industry Hotel accomodation
and hospitality Other sectors in total If we look at ICT services sector companies in terms of size,
while the rate is only 2. 4%in ICT services. Small and medium-sized businesses represent a higher proportion of all businesses in the ICT industry,
Although the number of companies in ICT services is over twenty times higher than in ICT manufacturing,
while the ICT services 91,800 people. The ICT industry was hit particularly hard by the downturn,
but in 2011 the size of its workforce exceeded 2008 levels, in contrast with the ICT services sector,
furthermore, it can boast one of the most dynamic rates of growth in employment compared to all sectors of the national economy.
The ICT sector's stakeholders, inputs and significance for the national economy 1-9 empl. 64.2%Unknown and 0 empl. 24.3%10-49 empl. 7. 2
. 34%10-49 empl. 2%50-249 empl. 0. 3%more than 250 empl. 0. 1%Other 2. 3%ICT services 1
%Other 2. 3%ICT services Such growth was driven largely by foreign businesses with an IT profile deciding to settle down in Hungary. 1. 8 International outlook In terms of the percentage rate of its population
investment and cost In 2010 8. 7%of the total national R&d expenditure was spent in ICT industry and services,
Despite their significant research and development potential and performance, both the ICT industry and ICT services have a relatively modest (even though growing) share of R&d investments9 and R&d costs10.
National Innovation Office RDI Observatory's survey, 2012 9 According to the Hungarian Central Statistical Office's definition, R&d investment means‘the cost of purchasing new and used fixed assets
R&d performance of the ICT sector 0 20 40 60 80 100 120 140 160 180 ICT industry ICT services number of research
For example, R&d expenditure in ICT services increased by 2. 5 times at nominal value (from HUF 5. 5 billion to HUF 13.6 billion.
Within R&d expenditure in the ICT sector, the relative proportion of R&d investment is below the national average.
Within gross domestic R&d expenditure, R&d investment averaged 11.4%for the national economy as a whole, compared to 7. 9%in ICT;
sum of R&d investments and R&d costs Figure 16: Gross domestic expenditure on R&d by sector (with a separate detailed breakdown for the manufacturing industry) in 2010.
split roughly evenly between the ICT industry (4. 4%)and ICT services (4. 3%).The ICT sector's R&d expenditure is higher than the same indicator-for example-of either automotive or machine manufacturing,
. 3%2. 3%1. 7%4. 6%33.7%Professional, scientific and technical activities Education Wholesale and retail trade, repair of motor vehicles ICT services
All other sectors of the national economy Manufacture of pharmaceutical products Manufacture of motor vehicles ICT industry Manufacture of machinery and equipment n e c.
%Professional, scientific and technical activities Education Wholesale and retail trade, repair of motor vehicles ICT services All other sectors of the national economy Manufacture of pharmaceutical products
National Innovation Office RDI MIRROR-1. Review on the ICT Sector other words ICT had a relatively higher share of R&d costs and a relatively lower share of investments.
with the ICT industry representing no more than 2%of all R&d investments in 2010. Capital expenditure in ICT services is dominated by professional and technical activities and education,
and the 4%share of ICT services is by no means outstanding. Nevertheless, both professional and technical activities-which in terms of sectoral Figure 17:
Distribution of R&d investments by sectors of the national economy (with a separate detailed breakdown for the manufacturing industry) in 2010;
Source: Hungarian Central Statistical Office Figure 18: Distribution of R&d costs by sectors of the national economy (with a separate detailed breakdown for the manufacturing) in 2010;
Source: Hungarian Central Statistical Office 2. 22 R&d performance of the ICT sector 27%17.1%5%4%3. 9%23.4%3. 3%4
. 7%2. 8%2%8. 7%Professional, scientific and technical activities Education Wholesale and retail trade, repair of motor vehicles ICT services All other
sectors of the national economy Manufacture of pharmaceutical products Manufacture of motor vehicles ICT industry Manufacture of machinery and equipment n e c.
activities Education Wholesale and retail trade, repair of motor vehicles ICT services All other sectors of the national economy Manufacture of pharmaceutical products Manufacture of motor vehicles ICT
%Professional, scientific and technical activities Education Wholesale and retail trade, repair of motor vehicles ICT services All other sectors of the national economy Manufacture of pharmaceutical products
%Professional, scientific and technical activities Education Wholesale and retail trade, repair of motor vehicles ICT services All other sectors of the national economy Manufacture of pharmaceutical products
and so also to a small extent with the ICT industry and services. The distribution of R&d costs within the manufacturing industry is different from the distribution of R&d investment:
the dominance of pharmaceutical manufacturing is also evident in this area, but the ICT industry too has a bigger share, alongside with the automotive industry.
From R&d costs incurred on services, professional and technical activities and education have the biggest share.
the possible existence of particular interlinks between various sectors of the national economy, even though ICT services as such do not weight significantly in this area
either (4. 5%).2. 3 Number of people employed in R&d The number of researchers
with the most spectacular growth taking place in the ICT services sector. The number of researchers and developers12 increased nearly threefold in the business sector during the period between 2000-2010,
with the most spectacular growth occurring within ICT, particularly its services subsector: starting from 2005 we could see a slow, then from 2007 an explosive rate of growth.
In the ICT services sector there were four times as many researchers and developers employed 23 Objectives of R&d activity The RDI survey carried out by the National Innovation Office RDI Observatory also examined
The most dynamic increase in R&d employment took place in the ICT services sector compared to other branches of the national economy,
so by 2008 the ICT services sector was ahead even of the pharmaceutical industry in terms of the number of people employed in research,
ICT services employ more researchers and developers than either the pharmaceutical or the automotive industry. 2. 4 Regional distribution of ICT research and development personnel By far the highest number of researchers is employed in Central Hungary,
Full-time Equivalent 14 More than half of research and development personnel is employed in education as a branch of the national economy.
Number of people employed in research and development (FTE) in the national economy as a whole, in a breakdown according to sectors, excluding education.
2005 2006 2007 2008 2009 capita R&d personnel in the ICT services sector R&d personnel in the ICT industry R&d personnel in all other sectors
repair of motor vehicles and motorcycles ICT services Human health services Manufacturing industry (excl. pharma and ICT industry) Professional, scientific activities 2008 Rate of growth for 2010
82.8 The dominance of Central Hungary within the ICT services sector has become less pronounced from 2008 to 2010 in terms of the number of people employed in research and development,
The number of research and development professionals employed (FTE) per 1, 000 capita of the population (columns) and within that the ratio of R&d personnel in the ICT services sector (marked in red in the pie chart) in the context of Visegrad
or new organizing-organizational method in the context of an enterprise's business practice, work organisation or external relations15.
The ICT services sector is the most innovative of all service sectors From all the sectors covered by the survey
whereas ICT services are the most innovative of all services sectors It is a key issue for companies,
to adapt and develop their products and services accordingly, and to what extent they are prepared to renew themselves
Share of innovative businesses with at least 10 employees in various sectors of the national economy and in the manufacturing industry, 2008-2010.
repair of motor vehicles and motorcycles Wholesale trade (excl. vehicles, motorcycles) Water supply Financial and insurance activities Electricity, gas, steam and air conditioning supply ICT services Services
Share of innovative enterprises in total (product, process, organisational, marketing) Share of non-innovative enterprises 29 covered by the survey.
%whereas increase in the relative proportion of innovative companies within the services sector is explained by a growing number of companies engaged only in organisational
vehicles, motorcycles) Water supply Financial and insurance activities Electricity, gas, steam and air conditioning supply ICT services Services Share of innovative enterprises engaged in product
or process innovation and organisational or marketing innovation Share of enterprises engaged only in organisational
or marketing innovation Share of enterprises engaged only in product or process innovation 2. 7 Tender system:
this has a positive knock-on effect on the national economy as a whole; therefore, unsurprisingly, supporting such grants is seen as a priority also in the New Széchenyi Plan.
nearly 60%responded to a call for tender bids at some point over the last five years in Hungary (the highest level of activity demonstrated by small and medium size enterprises,
and the machine industry) in IT relatively low investment can generate very high returns. EU grants have paramount importance among available forms of funding,
as they allow companies to obtain large amounts of financing for various developments by contributing only a limited amount of their own capital.
%followed by (nearly 2/3 of companies) announcing more RDI tenders and greater predictability of the regulatory environment (61.1),
National Innovation Office RDI Observatory's survey, 20120%20%40%60%80%100%By promoting technology transfer By strengthening the protection of intellectual property rights By relying on venture capital
and JEREMIE funds By providing education and training By providing access to regional tender funds and guarantee funds By creating a more predictable regulatory environment By offering a wider range of R&d tenders By putting more emphasis
on direct forms of support By offering a wider range of R&d tenders By creating a more predictable regulatory environment By providing access to regional tender funds and guarantee funds
By providing education and training By relying on venture capital and JEREMIE funds By strengthening the protection of intellectual property rights By promoting technology transfer By comparing EU-27 countries individually,
ICT investments make a greater contribution to economic growth than the investments of all other sectors combined.
The EU attributes a vital role to ICT tools and services, as it is with their help that we can create a digital internal market that could bring numerous potential growth opportunities for the region.
The European union has several competitive disadvantages compared to its main rivals (e g. Japan or the US),
A good example of the above is that a significant part of the rapid productivity improvement in the Hungarian domestic economy (nearly sixth of it) is attributable to ICT products and services.
The macroeconomic significance of the ICT sector is demonstrated also by the fact that more than 25%of Hungarian manufacturing industry exports are generated by products of the ICT industry, with ICT services playing also a significant role in the trade of services.
The ICT industry and ICT services-both distinguished by a balance of trade surplus-have both been making a significant contribution to maintaining the country's external balance.
nevertheless the Hungarian national economy has an economy of scale which determines the scale of the Hungarian ICT sector too:
we find that the ICT industry and ICT services both present significant R&d potential also with regard to research units with a strong increase in the number of ICT research units between 2008-2010,
a trend that was interrupted not even by the economic downturn. The size of the research and development personnel nearly trebled in the business sector in the period between 2000-2011, with the most spectacular growth taking place in the ICT services sector.
During the same period, if we look at not just strictly the number of research and development professionals,
From the gross domestic R&d expenditure of the economy R&d spending is compared proportionately modest to other sectors,
while ICT services are at the top of the innovation league table within all service sectors in the Hungarian economy.
In view of this analysis of the ICT sector's status on R&d, it is clear that the sector can rightfully be regarded as a potential breakout point for the Hungarian economy.
which is in the interests not only of sectoral players but also of the national economy as a whole,
given that ICT activities are interlinked practically with all sectors of the economy. Bibliography Csonka László:
Research and development and innovation in the light of globalisation-a case study of small and medium size enterprises in the Hungarian IT sector (Kutatás-fejlesztés és innováció a nemzetköziesedés tükrében a magyar információtechnológiai ágazat
Gross value added of the Hungarian ICT sector as a percentage of value added of the total economy, 1995-2011.
Balance of trade in ICT services (HUF bln) and their relative proportion within the import and export of services(%)in 2008-2011.
Breakdown of active business enterprises by sector and branches of the national economy, 2010. Source: Hungarian Central Statistical Office...
Distribution of R&d investments by sectors of the national economy (with a separate detailed breakdown for the manufacturing industry) in 2010;
Distribution of R&d costs by sectors of the national economy (with a separate detailed breakdown for the manufacturing) in 2010;
Number of people employed in research and development (FTE) across the national economy as a whole, in a breakdown according to sectors, excluding education.
The number of research and development professionals employed (FTE) per 1, 000 capita of the population (columns) and within that the ratio of R&d personnel in the ICT services sector (marked in red in the pie chart) in the context of Visegrad
Share of innovative businesses with at least 10 employees in various sectors of the national economy vs manufacturing industry sectors, 2008-2010.
The Office operates under the direction of the Minister for National Economy. Main activities of the National Innovation Office:
u attract foreign investment to Hungary u harmonise international and EU RDI policies u coordinate bilateral scientific and technological cooperation SME-support activities:
and promote networking between RDI players u provide innovation management services u boost the innovation activity of SMES To promote these objectives, NIH works in close cooperation with other government agencies, ministries, bureaus, the Hungarian
With the help of this database, RDI stakeholders can be involved in diagnosing problems as may exist within the sector
's services: u generic and specific sectoral RDI analyses and statistics u quality data sources informing analysis u information on public funded RDI projects u
and mapping project opportunities Bemutatkozó Phone:++36 1 484 2500 Fax:++36 1 318 7998 E-mail:
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