1. How to strengthen the industrial co-operation in the light of Hungary’s experiences
Antal Nikodemus Ph.D.
Ministry of Economy and Transport
Innovation and Environmental-policy Department
Euro-Mediterranean Industrial Co-operation, Rome, 3. October 2003

2. FDI in the 10 EU accession countries, Huge increases in the Czech Republic, Slovakia and Slovenia
$ billions

3. Does it divert FDI from the EU-15
Does it divert FDI from the EU-15? FDI inflows of accession countries as % of EU-15

4. Why accession countries defy the global downturn
More successful privatization and cross-border M&As than in other parts of the world
Relative stability and growth of the accession countries
Potential for attracting “higher value added” FDI (R&D, regional headquarters, logistical centres, call centres and back offices)
A combination of labour skills and competitive production costs

5. Risks for accession countries
Uncertainty brought about the transition to EU requirements, prompting a wait-and-see attitude by investors.
Production costs may increase, prompting a departure of activities based on unskilled labour (to non-accession Europe and East Asia)

6. Matrix of specialization between accession and non-accession countries of CEE
How to adjust policies/ measures to the status of new frontier, question of business environment
“New frontier” for efficiency-seeking FDI
Non-accession countries
How to best adjust FDI promotion to EU instruments (regional and cohesion funds etc.)
Upgrading of FDI activities
Accession countries
FDI policies and measures
FDI patterns
Countries

7. Policy challenges for accession countries
Investment promotion policies: harmonization of FDI regimes with EU regulations. Examples of nonconforming FDI instruments: Slovakia (special incentives for foreign investors), Hungary (10-year tax holidays granted only to large investors), changed in 2002
General policies related to FDI: establishment and and development of an institutional framework required to administer and channel EU funds: a test for human and financial resources.

8. The Small Business Bridge to Growth Private and equity capital
Stock Exchange
Hungarian economy
SMEs
Private and equity capital
PPP
Founders, Family Friends
Banks
Loans
< 250,000 euro
5 million euro <
The Capital Chasm

9. Enterprises Public Research Channels of interaction
Size of R&Đ
Enterprise governance
Market structure
Absorptive capacity
Innovation performance
Cultural attitude
Public Research
Size of R&D
Disciplinary structure
Types of organisations
Transfer capacity
Research performance
Compatibility of knowledge supply and demand
Market demand and technology development
Channels of interaction
Intermediaries
Industry-science relationship
Promotion programmes
Financial incentives
PR financing, steering & management
Institutional arrangements
Regulations
Incentive structure

10. Hungarian industrial production in 2001
1936,9 bHUF; 15,53%
710,85 bHUF
5,70%
1381,8 bHUF; 11,08%
1829,4 bHUF; 14,67%
909,1 bHUF; 7,29%
355, 8
bHUF
2,85%
141,39 bHUF
1,13%
365, 1
bHUF
2,93%
960,7 bHUF; 7,71%
387,5
bHUF
3,11%
495,5 bHUF
3,97%
452,2
bHUF
3,63%
381,5
bHUF
3,06%
474,6 bHUF
3,81%
258,5 bHUF
2,07%
377,38
bHUF
3,03%
334, 4
bHUF
2,68%
Hungarian industrial production in 2001
191, 5 bHUF
1,54%
300, 3
bHUF
2,41%
Central Transdanubia 25,02%
Central Hungary 23,24%
224, 1 bHUF
1,80%
Western Transdanubia 18,86%
Northern Hungary 9,76%
Northern Great Plain 9,59%
Southern Great Plain 7,78%
Southern Transdanubia 5,74%

11. Hungarian industrial parks, 1997-2002.
(According to the year granting the „industrial park” title)
Salgótarján
Miskolc
Eger
Nyíregyháza
Győr
Debrecen
Szombathely
Tatabánya
Szolnok
Veszprém
Zalaegerszeg
Székesfehérvár
Kecskemét
Békéscsaba
Kaposvár
Szekszárd
Year of granting the „industrial park” title
Pécs
1997
(28)
Szeged
1998
(47)
1999
(37)
2000
(21)
2001
(13)
2002
(14)
© Ministry of Economy and Transport, Innovation and Environmental Protection Department, 2003.

12. Hungarian incubator houses
Sátoraljaújhely
Ózd
Encs
Miskolc
Salgótarján
Nyíregyháza
Eger
Győr
Komárom
Budapest
Berettyóújfalu
Budaörs
Vecsés
Szombathely
Szolnok
Székesfehérvár
Sümeg
Veszprém
Ajka
Zalaszentgrót
Kecskemét
Zalaegerszeg
Békéscsaba
Lenti
Hódmezővásárhely
Kaposvár
Szekszárd
Szeged
Mórahalom
Pécs
Ministry of Economy and Transport, Innovation and Environmental Protection Department

13. Centres of Hungarian clusters
Mátészalka Optomechatronic Cluster
Central-Hungary Automotive Cluster
Pannon Thermal Cluster
University Cluster
Quality Devlopment Cluster
Pannon Automotive Cluster
Hungarian Building Industry Cluster
Pannon Fruit Cluster
Central-Transdanubia Wood and Furniture Industry Cluster
Saxon Export Cluster
Great-Plain Thermal Cluster
Papa Meat and Food Industry Cluster
Great-Plain Economy-development Cluster
Pannon Electronic Cluster
Central-Transdanubia Electronic Cluster
Pannon Wood and Furniture Industry Cluster
Southern Great Plain Textile Industry Cluster
Southern Great Plain Road-Construction Cluster
Southern Great Plain Touristic Cluster
Southern Great Plain Handicraft Cluster
South-Transdanubia Regional Geothermic-Energy Development Cluster
Ministry of Economy and Transport, Innovation and Environmental Protection Department

14. The Hungarian industrial policy 2003-2010
Succeeds the industrial policy of 1995
Contents:
Hungarian present position
Comparison of Hungarian and EU industrial-policy
Industrial policy and other policies
Goals
Means
Hungarian competitiveness policy
Hungarian innovation policy

15. Thank you for your attention!
Antal Nikodemus Ph.D.
Ministry of Economy and Transport,
Innovation and Environmental Protection Department
Address: Honved utca, Budapest, H-1055, Hungary
Tel: (+36-1)
Fax: (+36-1)