Private Sector R&D in the New Member States: Hungary

74 Pages Posted: 11 May 2014

See all articles by Attila Havas

Attila Havas

Hungarian Academy of Sciences (HAS) - Research Centre for Economic and Regional Studies (HAS)

Date Written: October 1, 2006


This report addresses two main topics, R&D and innovation data availability and reliability in Hungary, as well as private sector R&D activities.

Practically all relevant R&D data are collected in Hungary, but there are two major problems. Only a limited set of data are published, and thus made available free of charge. Obviously, this practice prevents detailed analyses, required both for deepening our theoretical understanding of RTDI processes, as well as for policy purposes. Further, the way in which data protection is understood and implemented also poses a challenge from the point of view of theoretical investigations, policy analysis, and ultimately policy-making. For instance, the list of R&D performing companies is not available, and thus it is not possible to conduct even the most elementary calculations, e.g. to establish how many of the top exporters conduct R&D activities. It would be a fairly simple and cheap exercise, and given the weight of exporting firms in the small, open Hungarian economy, a rather pertinent one. It is not possible to analyse the impacts of R&D and innovation on micro-economic performance, either, although these three sets of data (R&D, innovation, and company performance data) are collected – but using different surveys and thus stored in different data sets, which cannot be linked for legal restrictions. In other words, public money is spent on collecting data, which cannot be used for analyses aimed at supporting public policies.

The sectoral case studies confirm the dominant role of foreign-owned firms in RTDI activities. Foreign-owned firms tend to be large, and thus the decisive share of BERD is performed by large enterprises.

Pharmaceuticals industry is the most R&D intensive sector in Hungary. The sectoral research system has been radically restructured during the past fifteen years as foreign pharmaceuticals firms became majority owners in most companies, pursuing global R&D strategies. In Hungary, they focus on the development of generic drugs. Thus, the number of research projects has decreased, but the allocation of R&D expenditures became more efficient.

The most important trends in the world’s medical instruments industry play a determining role in the innovation activities of the Hungarian companies. These trends include the increasing use of IT systems for the support of medical equipment, the revolution of digital imaging equipment and the expansion of the home-use appliances market. Besides research and development of the traditional equipment, Hungarian medical equipment manufacturers proved successful in the development and application of these product families.

Automotive industry has been traditionally less R&D intensive, yet, innovation, R&D and engineering skills are becoming decisive factors of success for automotive firms, too, given the fierce competition, requiring improved products in terms of safety, comfort, and fuel efficiency. Interviews suggest emerging co-operation between automotive firms, on the one hand, and university departments as well as other R&D units, on the other. More recently, some foreign investors are setting up either their in-house R&D units or joint research groups with universities. Besides professional excellence, there is a considerable cost advantage in this field, too. Further, various policy schemes have also been introduced to foster innovation activities in the automotive industry.

Keywords: Private sector R&D, automotive components, pharmaceuticals, medical equipment, Hungary

JEL Classification: C81, L62, L65, L69, O3, P31

Suggested Citation

Havas, Attila, Private Sector R&D in the New Member States: Hungary (October 1, 2006). Available at SSRN: or

Attila Havas (Contact Author)

Hungarian Academy of Sciences (HAS) - Research Centre for Economic and Regional Studies (HAS) ( email )

Toth Kalman u. 4.
Budapest, H-1097
+36-30-8164266 (Phone)


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