Hungary’s recent investment performance makes institutional adaptability more than an abstract public-sector question. In 2025, the Hungarian Investment Promotion Agency (HIPA) supported 108 investment projects representing about €7.07 billion in capital and 18,227 new jobs. Electronics accounted for more than 55 per cent of the investment volume, while automotive projects represented another €1.1 billion. HIPA also recorded 14 research-and-development investments worth nearly €570 million, its highest number and value to date. These figures show an economy competing not only for factories, but increasingly for technologically complex, high-value activity. In such an environment, the speed and quality with which public institutions adapt can become part of the investment proposition itself.
By Abdulla Saeed Alhebsi (A.S. Alhebsi)
This is especially relevant because advanced manufacturing does not operate inside one administrative box. A major industrial investment can depend simultaneously on energy capacity, transport, workforce availability, environmental permissions, digital infrastructure, cyber resilience, incentives and local development. Hungary’s automotive sector illustrates the scale of that coordination challenge: HIPA reported 27 automotive investment decisions in 2025, a record for the agency. When investment becomes more technologically intensive and supply chains become more exposed to external shocks, competitiveness depends partly on whether institutions can move information and decisions across these boundaries without creating avoidable delay.
A global survey presented at the World Governments Summit’s Ambassadors’ Retreat 2026 in Dubai provides useful international context, but it should not be read as a measurement of Hungary. The Global Ministers Survey 2026, conducted by the World Governments Summit with PwC, covered 61 ministers from around the world. Seventy-nine per cent expected the role of government to increase in the future, while 34 per cent said their governments had fully embraced change. Respondents identified funding, skills and cybersecurity among the main barriers to change. These are global findings; they do not describe Hungary specifically.
My interpretation of the distance between expanding government responsibility and the capacity of institutions to adapt is what I call the Government Readiness Gap. This is not an index or metric used by the Global Ministers Survey. It is an analytical concept: the gap that emerges when the number, speed and complexity of responsibilities placed on government grow faster than the institution’s ability to absorb new technology, coordinate across domains and move a consequential decision to the authority capable of acting on it.
Hungary offers a concrete reason to take this gap seriously. In July 2026, HIPA announced that investment-incentive decision-making had restarted after a months-long standstill, allowing negotiations on eight investment projects to move forward. The episode does not prove that Hungary has a broad readiness problem, and it should not be treated that way. It does, however, demonstrate something important for any investment-intensive economy: the administrative path behind a decision can have economic consequences. Capital may be global and factories increasingly automated, but permissions, incentives, infrastructure coordination and public decisions still move through institutions.
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This suggests that competitiveness should be assessed not only through tax rates, labour costs, infrastructure or the volume of announced investment. A further variable is institutional response time: how quickly a government can recognise a material change, verify what it means, coordinate the relevant bodies and place the decision before the authority empowered to act. I refer to one part of this as time to authorised decision. It is not simply the speed of bureaucracy. A fast but poorly verified decision can be costly. The objective is to shorten the distance between reliable information and accountable authority without weakening scrutiny.
The comparison with the United Arab Emirates is useful here not because the two economies are identical, but because they face different versions of the same institutional challenge. The UAE has deliberately embedded digital transformation across government strategy. Its Digital Government Strategy set out a cross-government approach built around digital-by-design services, data, resilience, proactivity, digital skills and legislative readiness. The federal Digital Customer and Digital Government Service Policy also emphasises proactive services, system integration and continuity of digital services. In other words, modernisation is treated not simply as the purchase of technology but as a question of how government structures, capabilities and services operate together.
Hungary’s strength is different. Its position in European manufacturing networks, its automotive and electronics base, and the scale of recent foreign investment create strong incentives for institutional coordination around real industrial activity. The UAE’s experience is relevant because it shows one approach to making digital capability, legislative readiness and cross-government integration explicit parts of government modernisation. Hungary’s experience is relevant to the UAE in the opposite direction: it demonstrates how institutional readiness is tested when industrial investment, supply chains, technology and regional development must converge in physical projects. The comparison is therefore reciprocal rather than a claim that one model should be copied by the other.
The next stage of competitiveness will make this coordination harder. Artificial intelligence will enter administrative and industrial processes. Cyber incidents will increasingly have operational consequences. Energy systems will have to support new forms of manufacturing. Supply-chain disruptions may require rapid coordination between companies and public authorities. In such conditions, the institution that first detects a problem may not be the institution authorised to resolve its consequence.
This is why skills shortages should also be understood more broadly. Governments need technical specialists, but they also need institutional translators: people who can understand enough technology to question a recommendation, enough industry to recognise its economic consequences, and enough governance to know when a matter must move to another authority. A country can possess excellent engineers and still lose time if technical information cannot travel effectively through the decision structure.
The same applies to digitalisation. Technology can reduce processing time, improve access to information and automate routine decisions. But automation can also make institutional weakness less visible. A digital process may appear efficient until an exceptional case falls outside its assumptions. A decision-support system may produce an answer quickly while leaving unclear who can challenge it. A dashboard may show a problem instantly while the authority to respond remains several organisational steps away. Readiness begins where the normal process stops being sufficient.
For Hungary, this matters because the investment figures themselves suggest a transition toward more complex economic activity. HIPA’s 2025 results show significant electronics investment and record R&D activity alongside the country’s established automotive role. The more knowledge-intensive the investment becomes, the more investors depend on ecosystems rather than isolated incentives: skills, regulation, infrastructure, research links, data, cyber resilience and predictable administrative coordination. Institutional adaptability therefore becomes part of the environment in which investment decisions are made and expanded.
A practical government-readiness test would ask four questions. Can an institution detect a meaningful change early enough? Can verified information cross organisational boundaries without losing context? Can it reach the correct authority quickly enough to matter? And can the decision be revised when conditions change without the institution treating the original plan as something that must be defended? These questions are deliberately operational. They test whether transformation has reached the decision-making core of an institution rather than remaining at the level of strategy documents or technology procurement.
Hungary’s competitiveness debate should therefore not be reduced to whether the country can continue attracting capital. Its 2025 investment results show that it can attract major projects. A more forward-looking question is whether the institutional environment can adapt at the same speed as the technologies, industries and risks arriving with that capital. The distinction matters because investment attraction and investment retention are not identical achievements.
The global ministerial survey is useful precisely because it highlights the wider pressure: governments expect their responsibilities to expand while many are still adapting to change. The Government Readiness Gap is my proposed way of interpreting that tension, not a score assigned to Hungary or any other country. For an economy deeply connected to manufacturing and cross-border investment, closing that gap can become a competitive capability in its own right.
The countries that succeed in the next phase of economic competition may not simply be those with the most technology or the largest incentive packages. They may be those whose institutions can absorb change without losing accountability — and can move from verified information to an authorised decision before an opportunity, disruption or risk has already moved on.
Author bio: Abdulla Saeed Alhebsi (A.S. Alhebsi) is an Emirati Author and Researcher specializing in Security, Heritage, Risk Management, and Control Room Operations. ORCID: 0009-0007-1301-7927.
As we wrote earlier, scale of deficit inherited by Magyar government is now official, EUR 7.6 billion in the red.
