Napi.hu writes that Hungary achieved its all-time worst result on World Economic Forum’s competitiveness list. The weaknesses of Hungarian competitiveness lie in the system of institutions and innovative capability, but there are also problems with the infrastructural supply and the financial market.
Hungary finished in the 69th place on World Economic Forum’s newest competitiveness list. This is the worst Hungarian result in the history of the survey, which also means that we fell back with 6 places compared to the 2015 list. Hungary’s competitiveness declined the most out of all East European countries.
Hungary got 4,2 points which was enough for the 25th place on the European competitiveness list led by the Netherlands. Structurally the Hungarian competitiveness is similar to the Bulgarian-Romanian pair, but we’re also close to the Croatian structure. These states are characterised by bad system of institutions, infrastructure and health-care.
The weaknesses of Hungarian competitiveness lie in the system of institutions and innovative capability, but there are also problems with the infrastructural supply and the financial market. The final result shows that the biggest problem of our system of institutions and competitiveness is that favoured enterprises take delight in notable advantages in governmental decisions. They write: “The governmental decision-making is not transparent, the respect of ownership is problematic and there’s also trouble with the ethics of corporate behaviour”.
One of the biggest issues in the field of innovations is that the government doesn’t encourage scientific research and the purchase of modern techniques properly, although the quality of Hungarian research institutes and technological enterprises is above the world average. Also, scientists believe that the cooperation between universities, research institutes and enterprises is very weak.
They find that the problem with the financial market is that a very small part of the enterprises is able and willing to incorporate resources from the capital market. The majority of enterprises still prefer bank credits, yet the interest of these credits is still very high in an international comparison.
The analysis also mentions beneficial factors like the savings of the population which are quite high compared to the GDP. The state budget’s GDP proportionate indices are favourable. “Inflation is low, which is good in global comparison, but deflation is quite harmful on a regional and local level. However it is great that inflation won’t be high even after the offset of the increase in prices.”
It is also mentioned that the GDP proportionate state debt is around 75% which is not too great in global comparison, nevertheless the economy of several developed countries function on a much higher level, so all in all the decreasing of state debt affects our competitiveness positively.
Switzerland is still in the lead
The world’s most competitive state is still Switzerland, followed by Singapore and the USA, so there’s no change in the top three. The first third of the list is mostly dominated by European countries and other OECD members, but dynamically growing countries like China (28th), India (39th) or Russia (43rd) also achieved good results.
The last third of the list includes developing economies, where there are serious issues with the system of institutions. There are only two European countries in this section: Moldova (100th) and Bosnia and Herzegovina (107th).
Copy editor: bm