1. Innovation and R&D Department, Ministry of Economy and Transport
Co-operation of public and private funding in financing the innovation process
Dr. Tamás Balogh
Innovation and R&D Department, Ministry of Economy and Transport
Finnish-Hungarian Seminar "Innovation and Success”, Budapest, 4 December 2006.
Joke: We have long traditions in the co-operation on knowledge based economy issues.
2000 years ago Finnish and Hungarian people marched together from Asia to the West.
At the entrance of EUrope, they found a sign: „People who want to live in a knowledge driven economy, having high competitiveness and living standard, shall take a turn right.”
All people being able to read, turned right, the rest went ahead here, to the Carpathian Basin.

2. But: Albert Szent-Györgyi was the only Hungarian born Nobel Prize Laurate scientist obtaining the Prize in Hungary.
Scientific heritage

3. Growth of Hungary and the EU-15 average1 2 3 4 5 6 7
2000
2001
2002
2003
2004
2005
%, előző év azonos időszakához viszonyítva
Magyarország
EU-15
GROWTH = EU15 + 2%
HUNGARY

4. Macroeconomic figures
2001
2002
2003
2004
2005
Gross domestic product (%)
3.8
3.5
3.0
4.6
4.1
Industrial production (%)
3.6
2.8
6.4
8.3
7.3
Exports (% - volume)
7.7
5.9
9.1
17.0
10.8
Imports (% - volume)
4.0
5.1
10.1
14.0
5.3
Consumer prices (%)
9.2
4.7
6.8
Balance of foreign trade (bn EUR)
-2.5
-3.4
-4.2
-3.9
-2.8
Current account balance (bn EUR)
-3,6
-4.9
-6.5
-7.0
-6.4
FDI (bn EUR)
4.4
3.2
2.0
3.7
5.4
Unemployment rate (%)
5.7
5.8
6.0
7.2
Source: Hungarian Central Statistical Office,
GKI Economic Research Institute of Hungary

5. Summary Innovation Index
CATCHING UP
Source: Innovation Trend Chart 2005.

6. Gross R&D expenditures per GDP are still in the lower third of the EU, …

7. Innovation is a top priority of the government.
…but the trend is improving.
Innovation is a top priority of the government.

8. Business enterprises should be more active in R&D …

9. Plus a variety of R&D programmes.
… and the government promotes that by generous tax benefits.
Plus a variety of R&D programmes.

10. Tax measures for R&D and IPR
intramural and outsourced R&D: 200% (tax base).
IPR costs (SMEs only): 200% (tax base).
R&D expenditures at university campus or Academia, 400% (tax base), maximum 50 M HUF.
Investment tax release from 100 M HUF (R&D only).
Students in R&D: tax free up to minimum wage.
% tax base reduction for R&D donations.
Small and micro enterprises do not pay in Fund.

11. Strong foreign presence in corporate R&D activities.
World class knowledge base in some fields (IT, maths, physics, life sciences, chemistry, etc.).

12. CORPORATE RESEARCH CENTRES Bosch Power Tool Audi Magna Steyr
General Electric
Philips
AFT
Michelin
Flextronics
ZF Hungária
Samsung
W.E.T.
Electrolux
Samsung
Nokia
Draixlmaier
Philips
Samsung
GM-Opel
Ericsson
Continental Temic
IBM
Sysdata
General Electric
Nokia
Cisco
SAP
TATA Consulting
Sanofi-Aventis
Denso
Visteon
Philips
Zeuna Starker
General Electric
Flextronics
Knorr-Bremse
Zenon
Continental Teves
Valeo Auto-Electric
Elcoteq
Source:ITDH

13. Consequently, high-tech manufacturing industries play very important role in the economy…

14. … boosting Hungary’s high-tech manufacturing exports.

15. Public sources for R&D and innovation programmes (2007-)
Research and Technology Innovation Fund
Economy Development Operational Programme („GOP”, ERDF co-financed)
National Scientific Research Fund (OTKA)
EU 7th RTD Framework Programme
EU Competitiveness and Innovation Programme
Close co-ordination, working as one organic system

16. The innovation value chain…
New idea, basic research
Experimental dev’ment, IPR
Applied research
Market entry, mass production
Market success, growth
The innovation value chain…
… and the applied government tools
University and MTA basic financing
OTKA
National R&D and Innovation programme (GVOP/GOP and KTIA)
Market conform enterprise financing tools (credit, capital, guarantee)
Supporting stock market entry
Innovation and R&D conducive legal environment

17. KNOWLEDGE BASED
HUNGARY

18. Thank you for your attention!