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Does Innovation Policy Matter in a Transition Country? – The case of Hungary

  • Attila Havas

    ()

    (Institute of Economics, Hungarian Acedemy of Sciences)

The political and economic transition posed a complex, tremendous challenge in Hungary in the beginning of the 1990s. Not only macroeconomic stabilisation was required, but fundamental organisational and institutional changes were also needed to transform the country into a stable, middle-income economy, capable of catching up with the more advanced ones in the longer run. Having completed the first round of transition, Hungary has again reached a cross-roads. While the oneparty system has been replaced with a multi-party parliamentary democracy and the planned economy with a market economy based on private ownership, the world has significantly changed during this historically short period of time. Hungary now has to consider what role to play in the globalising learning economy, i.e. what future it envisions for herself. To be more specific, does the country passively accept the fate of a mere surviving economy, drifting without having its own strategy? Or, by implementing a clear strategy, does Hungary intend to be prosperous country, where in 15-20 years most citizens will enjoy high living standards, good health and a clean environment? The paper argues that a sound, coherent innovation policy is one of the cornerstones of an overall development strategy, required if a country is to excel. Yet, in spite of a number of efforts/ trials in the 1990s, no such policy document was approved in Hungary. The article first provides a brief overview of the transition process, emphasising the simultaneous need for systemic (institutional) changes and macroeconomic stabilisation in order to improve (micro)economic performance. Its core section analyses recent changes in the S&T decision- making system, various efforts to draft S&T and innovation policy documents, as well as the inputs and outputs of R&D and innovation. It concludes that the lack of an explicit innovation policy may hinder longterm development as such a policy is required to signal the main policy directions and commitments of the government, to strengthen the national inovation system – thus anchor FDI – and to align all public and private efforts, resources for development.

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Paper provided by Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences in its series IEHAS Discussion Papers with number 0205.

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Length: 44 pages
Date of creation: Sep 2002
Date of revision:
Handle: RePEc:has:discpr:0205
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  1. Giovanni Dosi & Christopher Freeman & Richard Nelson & Gerarld Silverberg & Luc Soete (ed.), 1988. "Technical Change and Economic Theory," LEM Book Series, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy, number dosietal-1988, August.
  2. Dosi, Giovanni, 1988. "Sources, Procedures, and Microeconomic Effects of Innovation," Journal of Economic Literature, American Economic Association, vol. 26(3), pages 1120-71, September.
  3. Chris Freeman & Luc Soete, 1997. "The Economics of Industrial Innovation, 3rd Edition," MIT Press Books, The MIT Press, edition 3, volume 1, number 0262061953, June.
  4. Havas, Attila, 1998. "A Long Way to Go: The Hungarian science and technology policy in transition," MPRA Paper 63533, University Library of Munich, Germany.
  5. Attila Havas, 2003. "Evolving foresight in a small transition economy," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 22(2-3), pages 179-201.
  6. Freeman, Chris, 1994. "The Economics of Technical Change," Cambridge Journal of Economics, Oxford University Press, vol. 18(5), pages 463-514, October.
  7. Freeman, Chris, 1995. "The 'National System of Innovation' in Historical Perspective," Cambridge Journal of Economics, Oxford University Press, vol. 19(1), pages 5-24, February.
  8. Richard R. Nelson, 1995. "Recent Evolutionary Theorizing about Economic Change," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 48-90, March.
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