One of the central topics of the meetings was how the regulatory environment can support the businesses in the capital. Besides, the participants examined the question: what forms of cooperation between the municipalities of the capital and the districts and between the businesses can help the development of Budapest’s economy. Apart from the workshops, HETFA uses surveys to get to know the ideas and experience of businessmen related to the development of the economy.

The first meeting was held on the 17th of March with the participation of the Hungarian Industrial Association. According to the businessmen present there, the most important tool of economic stimulus would be the creation of business points in the districts. These would help the foundation of businesses and the creation of networks among SMEs. Besides, they could have a role in the creation of successful cooperation between companies and municipalities.

On 18th of March the workshop was organised by the National Association of Entrepreneurs and Employers. It has been said as an advantage there that the local enterprises in Budapest can access loans with suitable conditions. According to the businessmen, however, it poses a problem that different districts set different conditions to the local businesses.

On the 19th of March, members of the Young Entrepreneurs Association Hungary shared their thoughts with the professional coordinators of the forums. In their view, the strengthening of the tourism could be the most successful way of economic stimulus in the capital, because it could have a favourable influence to other sectors, too. They noted that the Municipality of Budapest could help the networking among businesses with organising similar forums. According to them, the often unpredictable and changing regulatory environment hardens the functioning of businesses.

On the 23rd of March, businessmen and civil society organisations in contact with the Design Terminal could express their opinions about the economic stimulus to Budapest. According to their view, Budapest can provide the incentive environment, which is needed to the high value-added activity of innovative entrepreneurs and thinkers. These companies, however, move the production to the countryside due to the low accessibility of project funding in Budapest. It was also said that a small amount of incubator house functions in the capital and there is not enough office space that can accommodate start-ups. This is a hardly remediable problem, because for this bubbly environment, the capital can really mean a useful space.

On the 31st of March, the coordinators of the project could get the opinions of the members of the American Chamber of Commerce in Hungary. According to the representative of AmCham, the infrastructural supply of Budapest is outstanding compared to other cities in the country. The participants, besides other remarks, raised attention to two important problems. Certain sectors are suffering from the lack of well-trained engineer experts, and the rate of employees speaking foreign languages is low. They saw an opportunity in the idea that Budapest creates a marketing strategy together with other Hungarian bigger cities. This could help the attraction of foreign businesses into Hungary, because as an investment target, other parts of Hungary can be sold through Budapest in the easiest way. Moreover, in this way, offering more places for investment, the capital can also become a place for bigger and more complex investments.

On the 1st of April, the members of the Association of Hungarian Hotels and Restaurants took part in the meeting. They mentioned that the number of visitors in Budapest is growing year by year and a more and more favourable Budapest image has been created. However, they said that a marketing activity targeting tourist with high solvency and plan of longer stay is really important. In order to brainstorm on this, they urged the creation of the tourism strategy of Budapest. They raised the attention to contradiction between the two-level municipality system and the integrated touristic area. According to their opinion, this pulls back important developments in the capital and hardens the daily administration related to the hosting of tourists.

]]> https://hetfa.eu/2014/10/the-judicial-enforcement-of-contracts-and-the-development-of-entrepreneurial-economy/ Wed, 08 Oct 2014 08:00:38 +0000 https://hetfa.eu/?p=1147 A new three-year research project commences at HETFA Institute in October 2014. The project is led by Karoly Mike, who has received a postdoctoral scholarship from the Hungarian Scientific Research Fund.

The legal system plays a crucial role in any modern economy. An important aspect of this role is that it supports business relationship between enterprises by safeguarding their mutual contractual promises. In the absence of enforcement by courts, firms can rely on non-legal safeguards, such as personal ties, social norms or their partner’s concerns with good reputation. However, these safeguards tend to limit cooperation to rather narrow social spheres and their exclusive use hinders the development of a fully-fledged entrepreneurial economy. At the moment, we know little about how and to what extent Hungarian firms rely on the enforcement of their business contracts by courts. The research explores the types of business relationships, products and markets for which courts are especially important in safeguarding contracts. It set up a diagnosis about how far Hungary has travelled on the road towards an economic and legal system in which the enforcement of contracts by courts safely protects business-making between two strangers. It also tries to identify the factors that support or block such development. For these purposes, the research project analyses data from a survey conducted among 300 Hungarian small and medium enterprises as well as a detailed case study about the contracting practices of an industry.

Economic Review [Közgazdasági Szemle, Közgazdasági Szemle LX. évf., 2013. november (1169—1207. o.).]

Financing the social-security pension system will weigh heavily on the government budget in developed countries, merely through the projected demographic processes. The burden could be eased by various parametric and paradigmatic pension reforms, but in the long run such reforms may trigger behavioural, labour-supply responses, which may alter the budgetary effects fundamentally.

Having described the average work and pension profiles in Hungary between 1999 and 2009, the authors use a microeconomic approach in an attempt to assess the effect of certain parametric pension reforms on the life-cycle labour supply of males. The parameters for the model were calibrated for the characteristics of the Hungarian economy.

The results show that decreasing the replacement rate, increasing the retirement age and replacing Swiss indexation of pensions by price indexation cause a considerable increase in the labour supply of all education-level groups, whereas changing the number of years considered in computing pensions does not have a significant aggregate effect. While introducing price indexation increases the labour supply of all cohorts by the same amount, the other reforms reallocate the life-cycle labour supply, mainly towards younger age-groups.

The publication is available in Hungarian »

In our research project we built upon an econometric model which was used to estimate the potential impact of academic research on productivity and GDP. We applied this model and made a forecast on how public resources spent on universities and research institutes may influence the growth potential of the Hungarian economy.

Our model captures complex connections by illustrating the main links. More detailed exploration of the relationship between higher education, research institutes and companies requires more investigation.

HETFA was commissioned by the Agency for Education to execute this research project hand in hand with the elaboration of a possible indicator system for academic research.

The executive summary of the research report is available in English

Through the research our aim was to contribute to the establishment of local administration districts, which are

• in harmony with the actual habits regarding the use of space and with local identity;
• based on careful consideration of the Hungarian historical traditions and the European practices;
• operating more efficiently, more proficiently, and on a higher quality compared to the present system;
• in compliance with the country’s economic development and the population’s income level, and providing easily and cheaply accessible, integrated office routine.

During our work the following aspects were examined:

• Hungarian historical traditions of the local government;
• results of current researches regarding the reorganization and European tendencies;
• habit of the population regarding the use of space and its local identity;
• expectations of stakeholders for the introduction of the new public administration districts;
• potential locations of district centres, and optimal density of districts, depending on their functions.

The analysis was conducted by a group of experts having scientific and public administration experiences, and including the acknowledged participators of domestic spatial researches, under the supervision of Miklós Oláh.

We implemented our project “Analysis of support-addiction of enterprises” in February-March of 2010, commissioned by the “Hungarian Economic Development Centre (MAG Zrt.)”. The purpose of this analysis was to describe the differences in the acquisition of development funds, its causes and consequences.

Summary available in English

Helyi Kezdeményezésű Gazdaságfejlesztési Programok vizsgálata, értékelése esettanulmányokon keresztül. [Evaluating and analyzing “Locally Initiated Economy Development Program”, using case studies].

KTI Könyvek, MTA Közgazdaságtudományi Intézet, Budapest, 2011.

The basic purpose of our monograph – ordered by the Institute of Economics, Hungarian Academy of Sciences – was to explore how employment in small towns can be extended and long-term unemployment reduced. As the data imply, employment in these areas is very low: lower than the EU- and even the Hungarian average (which is way under the EU-average). Nevertheless, the long-term unemployment rates are very high in the affected regions. As the experiences show, neither the market sector nor the public sector could solve this problem efficiently and permanently. Taking this fact into consideration, we explored local employment solutions, which combine the goals and functions of market- and public spheres. These can strengthen local communities, through which the accumulated stress can be relieved. Our case studies were prepared in the following topics: 1. Agricultural program of Belecska 2. The fruitage-success of Kisvejke 3. Working and experiences of the “Life-changing – Life-forming” labor market program 4. A “life-changing” village: Gyulaj 5. Channels of local products in Hungary The first four of these studies were published in a monograph, as part of the KTI-books of Institute of Economics, Hungarian Academy of Sciences.

Available only in Hungarian

We performed the intermediate evaluation of “Development strategies of small- and medium enterprises (2007-2013)” in association with Ernst & Young Consulting Ltd. The evaluation was ordered by the Ministry for National Development and Economy. We analyzed the adequacy and substantiation of the strategy, and evaluated the experiences of its implementation. While we examined the adequacy and substantiation, we concentrated on the coherency and the substantiation of the strategy’s text, and during the evaluation we focused on the realization and efficiency of the strategy. In both tasks we emphasized the examination of the international financial and economic crisis, which started from the American mortgage market in 2007, and affected Hungary’s economy and the SME-s badly.

Reseearch Report is available in English

HETFA (2011): Response of Entrepreneurs to the New Széchenyi Plan

ISBN 978-963-89112-3-0; ISSN 2062-3798

Our questionnaire, circulated in May 2011, targeted companies employing 5 to 49 employees being one of the target groups of development policy. The outcomes suggest that pre-2010 development policy was deemed in a negative way by them; whereas their expectations regarding the New Széchenyi Plan are positive both in relative and absolute terms. This is supposed to be the result of the fact that entrepreneurs agree on giving priority to job creation and economic development, as they are defined by development policy. Our research results highlight that the government paid attention to the needs indicated by entrepreneurs and entrepreneurial organizations during the articulation of the targets and measures of development policy. However, a number of enterprises are still convinced that they are not able to meet the requirements of the tendering system or their chances to win are quite low. Nevertheless, the main obstacle of the success of the New Széchenyi Plan is supposed to be market instability which might become the main restraining factor from tendering.

The study is available in Hungarian

HETFA (2011): Doing Business in the Balkans

ISBN 978-963-89112-1-6, ISSN 2062-3798

The aim of this study is to explore the opportunities of doing business in the Balkans. Assessing some of the well known international competitiveness indexes and surveys, we introduce how easy it is to do business in Albania, in Bosnia and Herzegovina, in Bulgaria, in Croatia, in Macedonia, in Romania and in Serbia. The study displays the changes of the economical environment in these countries during the last few years, and summarizes the main tendencies in the examined region. In our analysis we used the Global Competitiveness Index (GCI) edited by the World Economic Forum (WEF), the Doing Business Index (DBI), the dataset of the Worldwide Governance Indicators (WGI) and the BEEPS, all of which were established by The World Bank. We also used the Economic Freedom Index published by the Heritage Foundation, the World Competitiveness Yearbook issued by the International Institute for Management Development (IMD), and the surveys of the Global Entrepreneurship Monitor (GEM).

Available in English