Research and development sector is shrinking due to lack of funding

July 31, 2017

Funding of Hungary’s research and development sector dropped 8.8 percent in 2016 according to the Central Statistical Office, reports print daily Magyar Nemzet.

The European Union aims to achieve average expenditures of 3 percent of GDP on research and development by 2020. Currently, Hungary lags behind this average by a considerable margin: last year’s research and development spending of HUF 427 billion (USD 1.64 billion) adds up to only 1.22 percent of the country’s GDP.

According to EU requirements, at least 1 percent of research and development funding must come from the government. However, last year the Hungarian government spent only 0.33 percent of GDP for that purpose.

Although the research and development sector is an important contributor to a nation’s economical competitiveness, the number of research facilities and those who are employed by such facilities in Hungary have been steadily decreasing since 2013. There were 2,727 research facilities in Hungary in 2016 – 2.6 percent fewer than the previous year. There was also a 16.1 percent decrease in higher education research facilities.

Although research and development spending increased by 3.5 percent in 2016 among private companies, this could not offset the sector’s lack of state funding. It is also worth noting that the sector’s largest contributors were foreign automotive companies with a Hungarian location, and a couple of IT companies.