According to The Geography of Europe’s Brain Business Jobs, the latest report from the European Centre for Policy Reform and Entrepreneurship (ECEPR), supported by NC Advisory AB, advisor to the Nordic Capital funds, Budapest has an unusually high share of employment in ‘brain businesses’ – companies that compete through their brainpower and expertise.   

The new study, which is aimed at businesses and investors making a strategic choice about where to locate or invest, shows that close to 6% of the working age population of Hungary is employed in highly knowledge-intensive companies. This is a higher share than the European average of 5%.

Dr Nima Sanandaji, President of the ECEPR, said that the overall trend is that Central- and Eastern European countries are catching up to Northern and Western Europe.

Weaknesses and strengths

In terms of industry sectors, Hungary is a top-performer when it comes to high-tech manufacturing. The concentration of Brain Business Jobs in this sector is more than twice the European average.

 Another strength is R&D, where Hungary now has more than 50 percent higher concentration of Brain Business Jobs than the European average. Also in design and IT services Hungary has a stronger than average performance. On the other hand, Hungary lags behind the rest of Europe when it comes to areas such as telecom, advertising and market research and publishing.

Changing geography of successful enterprise

Europe is increasingly a skilled-based economy, with growth happening where the brains are. A new generation of IT-specialists, engineers and other knowledge workers are emerging from the universities of Central and Eastern European countries. While some of these talents do move to places such as London and Zurich, many settle in the capital regions of their home countries. The result is that the geography of successful enterprise is changing.

Regional differences

The strongest region in Hungary is the capital region of Budapest.

Here, 10.5% of the working age population is employed in Brain Business Jobs, which is nearly twice the national average. Budapest has a slightly higher Brain Business Jobs concentration than Helsinki. It also ranks higher than Brussels, Vienna, Madrid, Berlin, Sofia, Lisbon, Rome and Warsaw.

The other regions of Hungary have lower Brain Business Jobs concentration. In Közép-Dunántúl the concentration is 3.7%, followed by Nyugat-Dunántúl where it is 3.5%. Észak-Alföld and Dél-Alföld are not performing as well, with 2.6% of the working age population employed in highly knowledge-intensive enterprises.

Dr Sanandaji explains:

“In a time when Europe is rapidly moving towards a knowledge-intensive economy, it is important for regions to develop brain business jobs. These jobs are the driver for future economic well-being, and need to evolve not only in the capital region but throughout the country.”

Cost of living a major benefit

The key for the success of knowledge-intensive industries is to attract talent. Regions with a very high cost of living, face a disadvantage. In places such as London, Paris and Stockholm firms must pay high wages for programmers, engineers and other knowledge workers.

 An advantage of Hungary is the lower cost of living, which can be used as a carrot to retain knowledge workers and perhaps encourage those who are working abroad to re-locate back home. This is a real possibility in a time when digital technology makes it possible to easily co-operate across the borders.

 Dr Sanandaji explains: “The study finds that knowledge regions with lower costs of living and correspondingly lower wages have a competitive advantage. There are three keys to success. Regions need to invest in social capital through higher education and adult learning. They need to encourage business and connectivity to the rest of Europe. And they need to keep the cost of highly skilled labour down, through tax policy and housing policy that reduces the cost of living.”  

Get the full report HERE.


Source: European Centre for Policy Reform and Entrepreneurship

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