SCIENCES, RESEARCH, DEVELOPMENT AND TECHNICAL INNOVATION IN HUNGARY 2004.

1
Impact of the New European Countries
Miklós Boda President National Office for
Research and Technology, Hungary
European Materials Science and Technology Forum,
University of Cork, Ireland, June 28, 2004
2
New EU Members are Catching Up in terms of
Innovation Indicators
New EU members shown with red color. Source EU
Innovation Scoreboard 2003
3
Our main competitive advantage is a highly
qualified workforce

• Creative, flexible, capable of independent
  thinking (cultural tradition)
• Historic tradition need to produce results
  using scarce resources, giving rise to
  innovative solutions
• Still relatively cheap for its quality and
  flexibility

But low in numbers! Percentage of science and
engineering professionals in population of 20-29
age
Source European Innovation Scoreboard 2003,
Technical Paper No 1
4
Major weakness low corporate RD intensity, weak
linkages between science base and industry
Share of BERD/GERD Low performance, mixed trends

• Source European Innovation Scoreboard 2003,
  Technical Paper No 1, Indicators and Definitions

5
Resources of new member states due to the EU
accession

• Access to large markets and division-of-tasks
  economies
• Access to continental infrastructures and
  databases (e.g. GRID)
• The creeping in effect (opportunity of 3rd
  country companies to enter European markets)
• Buffer zone between East and West
• Access to EU Structural Funds, leading to the
  creation of integrated development strategies
  with strong RTDI focus (National Development
  Plans)    

6
Resources of new member states due to the EU
accession - II

• Knowledge and experience gained by EU dialogue,
  leading e.g. to improved monitoring and
  evaluation practices
• Open Method of Coordination as a means for new
  member states to make theis voice heard
• National RTDI legislative processes improving
  coordination within the government and creating
  an environment conducive to innovation
• Use of offsets in large industrial purchases for
  RTDI policies (e.g. large military acqusitions)

7
Adam You left me free to taste the Fruit of
Knowledge But took away your guiding hand from
me. The Lord Your arm is strong, your heart is
elevated The field is vast and calls for endless
labour, And if you listen you will always hear A
voice to warn you or encouradge you
Imre Madách The Tragedy of Man
8
Example the case of Hungary Low enterpreneurial
activity shown by the breakdown of GERD
Hungarian RD expenditures, in 1989 dollars.
Source Central Statistical Office
9
A recovery of business RD has already started
Domestic patent applications
RD labs established by multinational companies
in Hungary

• Lighting technique (GE-TUNGSRAM)
• Medical equipment (GE-Medicor)
• Pharmaceuticals (Sanofi-Chinoin, Astra,
  Teva-Biogal, Akzo Nobel/Organon)
• Information and telecommunication (Ericsson,
  IBM, Compaq, Nokia, Siemens, Motorola, Tata
  Consultancy, T-Systems/Matáv)
• Machinery (Audi, Volkswagen, TEMIC, Michelin,
  Knorr-Bremse, Mannesmann-Rexroth, Flextronics,
  Continental Teves, Visteon, W.E.T.)
• Agrifood (Novartis/Sandoz Seeds)
• Household chemicals (Unilever)
• New materials (Furukawa, Zenon Systems)

Number of company researchers
10
and changing radically the Hungarian export
structure (Top-10 in 1990 and in 2000),

• 1990 2000
• Meat products 1. Office machines
• Chemical semiproducts 2. Electrical machinery
• Steel semiproducts 3. Telecom equipment
• Clothing 4. Power generating machinery
• Road vehicles 5. Road vehicles
• Metalloferrous ores and scrap 6. Clothing
• Canned fruits and vegetables 7. General
  industrial machinery
• Chemical raw materials 8. Manufactures of metal
• Manufactures of metal 9. Meat products
• Pharmaceuticals 10. Furniture

Compilation from Central Statistical Office data
11
Foreign participation in corporate research
Figure 1 Share of foreign affiliates in
manufacturing RD, , 1998 or latest available
year (1)
77.2
Hungary
64.8
Ireland
39.7
Spain
37.1
Canada
31.5
UK
29.5
Poland
26.9
Portugal
23.2
Italy
22.6
Netherlands
18.5
France
16.4
Germany
16
Sweden
16
US
14.1
Finland
10.1
Turkey
8.6
Czeck Republic
Source Third European Report on ST Indicators,
2003 Note (1) S, UK, PL, P, FIN 1999 HU, IRL,
EL 1997 D 1995, I 1992.
5.4
Greece
1.8
Japan
0
10
20
30
40
50
60
70
80
12
The challenge of the Hungarian innovation system

• Weakness of RD and innovation capacity of
  private sector
• Well developed science system and strong science
  base, but with inadequate linkages to private
  sector
• Strong regional disparities, regional paradox
• So the task how to
• Stimulate demand-driven innovation and improve
  the transfer of knowledge?
• Redistribute resources towards innovative
  enterprises, involve the private capital more
  effectively for financing of innovation?
• Gear public research system towards economic
  growth and competitiveness?
• Build widespread organic RD linkages between
  science and industry?
• Assist the catching up of of poorer regions,
  improve regional innovation?

13
Legislative, Financing, Institutional Reforms of
the RTDI System, 2003-2004

• New Governmental Institutional System 2003-2004
  
• Research and Technological Innovation Fund
  (November 2003)
• National Development Plan, co-financed from EU
  Structural Funds (2003 gt)
• Act on Research, Development and Technological
  Innovation concept 2003, final adoption planned
  for 2004
• Higher Education Reform (modification of Higher
  Education Act) planned for 2004
• New strategy on technological innovation
  comprehensive development plan (2004 gt )
• New regional innovation system (2004 gt )

14
An innovative Hungarian scheme Research and
Technological Innovation Fund

• The Fund is dedicated to the knowledge and
  technology based competitiveness of companies
  registered in Hungary, promoting mainly demand
  driven innovation.
• Independent fund not part of the yearly
  budgetary cycle, leftover resources stay with the
  Fund (predictability)
• Sources of income
• Mandatory contributions by companies (innovation
  contribution) 0-0.3 of adjusted net turnover
  (depending on company size) direct as well as
  purchased RD expenditures can be deducted from
  the innovation contribution (indirect incentive
  to perform RD)
• Yearly payment from government budget at least
  matching the private sectors payments of year
  before the previous yr
• Voluntary donations (of public benefit) of
  enterprises and private individuals, other
  incomes (international sources, leftovers,
  refunds etc.)

15
Research and Technological Innovation Fund II
Main Features

• Self-regulatory system weak/weakly linked
  industrial RD gt large Fund to stimulate it
  strong industrial RD gt small Fund.
• Redistribution of private sector resources
  collected normatively, spent competitively for
  innovative activities
• RTDI activities undertaken directly or indirectly
  by companies.
• At least 25 of resources go to regional
  innovation
• Competitive calls
• Programmes financed from the Fund focusing
  resources
• National Research and Development Programmes
• Prominent research programmes carried out at
  regional knowledge centers
• Smaller programs supporting participation in EU
  programmes, RTDI human resources, awareness
  raising etc.

16
Act on RD and Technological InnovationImproving
the Conditions for Innovation

• Public research institutions project financing,
  loans for public research institutions in public
  RD contracts
• Compulsory IPR regimes for public research
  institutions, utilisation in contract
• Spin-off from public research institutions,
  including minority share of mother institutions.
• Researcher mobility to industry, sabbaticals
• National and regional institutions promoting
  innovation
• Solving V.A.T. problems for international RD
  projects
• Measures to promote researcher immigration

17
Welcome the Launch of the European Materials
Science and Technology Forum

• An initiative of major importance to the
  "Materials Scientists and Technologists" group in
  Europe
• More exposure for the field
• An improved dialogue with relevant decisionmakers
• Better coordination and communication with all
  stakeholders of European RD
• An important initiative also for the new EU
  members
• A Forum to make our voices heard and represent
  the interests of our materials science and
  technology community
• We offer significant excellence in the field,
  with a potentially important contribution to
  European competitiveness a Forum to nourish,
  integrate and better steer this excellence
• In specific, the Hungarian materials science
  community is keen to play an active role in the
  future Forum

18
Near-to-physics research in the field of new
materials in Hungary X research XX
researchapplication
19
6th Framework Programme Networks of Excellence
in Materials ST with Hungarian Participation
20
6th Framework Programme Integrated Projects in
Materials ST with Hungarian Participation
21
Not only the learning, the quantity of knowledge
makes you clever, but their understanding and the
proper usage. István Széchenyi
22
Thank you for your attention!
Further info www.nkth.gov.hu