Attila Havas

The Hungarian precision engineering industry, although fairly successful in the pre-war period and able to survive all the adverse corollaries of planning and CMEA orientation, might be wiped out by the long-awaited marketisation: far more competitive and powerful foreign competitors can now enter both its former single most important market, i.e. the former Soviet Union, and the domestic market. Thus accumulated knowledge of R&D and production engineers as well as the experience of the highly skilled blue-collar workers, albeit of primary importance in this industry, might become completely worthless and disappear. Combined with fresh capital, access to new markets, recent technologies and up-to-date management methods, however, it can (and should) be regarded as a major asset and the indispensable basis for successful restructuring. This paper suggests that sweeping changes in size, ownership, internal organisation, and product range are also inevitable so as to be able to adjust to the new environment.

Both business and social innovations have been studied for several decades by now. Yet, these two communities still seem to live in their own fiefdoms. This review aims at stressing the need and possibilities for more
interactions and exchanges between these two ‘tribes’. As a first step, lessons from business innovation studies are highlighted below, indicating opportunities to refine the analytical tools and methods we use, and thus improve our understanding of social innovation processes. These insights
– on the degree of novelty, level of change, the ‘dark side’ of innovation, policy rationales to justify interventions, and policy implications – can be useful for practitioners, social innovation scholars, policy analysts and policy-makers.

Foresight can be a highly useful tool to address the opportunities and challenges triggered by the next production revolution. As shown by the various country cases considered in this chapter, it facilitates debating and systemic thinking about multiple futures and helps shaping the future through the process of participation and engagement. Given its participatory nature, key actors are mobilised to form shared views about the future, negotiate their future stakes and interests, and agree on actions aligned to their shared vision. The next production revolution requires quick and proactive policy-making, as well as better orchestration across different policy domains. Foresight can assist policy-makers by providing foundations for robust policies, fostering new framing of policy issues, as well as translating long-term concerns into aligned policy priorities. Furthermore, policy implementation is likely to be faster and more effective when key stakeholders are involved early on in shaping these policies. Foresight benefits, however, are far from being automatic: the chapter considers eight factors critical to achieving those. An astute embedding of a foresight process into policy-making enhances the likelihood of impact, but foresight recommendations are no substitute for policy decisions and actions.

Universities are among the oldest known formal organisations, and  they had undergone fundamental changes several times in the last few centuries. Yet, due to economic and societal pressures, their mission, teaching and research methods, as well as management structures and financial models need to be renewed yet again. Systematic prospective analyses can contribute to these efforts by considering the wide-ranging and complex factors, shaping the future of the higher education systems and individual HE organisations. ‘Futures’ (images of the future) are often devised at the level of a single university or at a national level for the overall higher education system. However, the bulk of trends and driving forces are international in their nature and universities operate in broader socio-economic and S&T systems. Hence, futures devised in a multi-level structure would better assist decision-makers and stakeholders. This approach is a demanding one in several respects, but offers several advantages: (i) the potential changes in the social, economic and S&T systems, in which universities are embedded, as well as their impacts on higher education can be considered systematically; (ii) the substantial diversity of higher education systems and individual universities can be taken into account; and (iii) the likely impacts of different policy options can also be analysed. The chapter also considers the major features and benefits of the various forward looking techniques, and concludes that foresight offers specific advantages.

Foresight has evolved as a distinct prospective analytical tool: it considers alternative futures of various S&T fields or socio-economic systems, based on the views of various stakeholder groups, derives recommendations, and thus assists the decision-making processes at different levels. Since its inception in Europe in the 1990s it has acquired prominence in supporting both public policies and business strategy development. This is reflected, for instance, in the range of domains to which the initial national technology foresight approach has been transferred over the past few years: (i) multi-country; and (ii) regional levels, as well as (iii) sectoral perspectives; and (iv) various policy areas, beyond STI policies.
In spite of this apparent success, the perspectives for foresight are far from clear. The notion of “hype – disappointment cycles”, originally developed to describe the changing attitudes towards emerging technologies, might be applicable to foresight, too: initial enthusiasm has been replaced by scepticism in several countries, and a more realistic assessment of the strengths and weaknesses of various types of prospective analyses is also highly demanded.
To prevent ‘disillusionment’, potential contribution of foresight to decision-making processes should be clearly understood, and inherent tensions should be taken into account when foresight processes are designed and conducted. The chapter first ‘locates’ foresight among different types of prospective analyses, and then develops a framework to classify the impacts of foresight on policy preparation processes. Foresight is often associated with consensus building – real life cases, however, reveal several types of tensions, e.g. among participants, as well as between participants, sponsors, and policy-makers. A tentative typology of these potential tensions is also presented.

Hungary, just as all the other Central European countries (CECs), is facing a number of interrelated challenges: the changing dynamics of globalisation and the concomitant re-arrangement of the international division of labour, as well as joining the European Union, where cohesion with the more developed members is a crucial issue for both the EU and national policy-makers. The starting point of this chapter is that innovation – new technological, organisational and managerial solutions – is a must to strengthen international competitiveness and thus improve quality of life. Although innovation is mainly a matter for companies, public policies should assist both the creation and exploitation (diffusion) of knowledge. Science, technology and innovation policies, therefore, can, and indeed should, play a significant role in meeting the above challenges – together with a host of other policies, of course, such as education, competition, industrial, investment promotion, regional develo...

The principal challenge for Hungary is to achieve cohesion with the advanced member states of the EU, and thus being able to improve quality of life. International competitiveness should therefore be significantly enhanced, i.e. it should - and can - not merely be based on low production costs. Hungary is already squeezed in a ‘nut cracker’ formed by advanced countries, on the one hand, and dynamic industrialising countries on the other. The former are capable of controlling international production networks and markets via new technologies, financial muscles and superior business models, while the latter are characterised by extremely low wages and highly disciplined work forces.
It is crucial for Hungary to escape this trap. That requires a wide range of technological and non-technological innovations to raise productivity and enter new markets. Macro-economic pressures also call for a successful, competitive economy. Hungarian decision-makers do not realise the close links between domestic R&D efforts, innovation and economic performance. Given the lack of an explicit, coherent innovation strategy and the low level of R&D expenditures, overall economic policies – especially macroeconomic and investment promotion ones – and strategies of foreign-owned companies operating in Hungary are likely to play a much more decisive role in influencing economic performance than science, technology and innovation policies. This is not to suggest, however, that it would be worthless to devise and implement a sound, explicit innovation strategy. On the contrary, an astute innovation strategy should be one of the cornerstones of a comprehensive socio-economic development strategy, aimed at speeding up the cohesion process.

Central European (CE) policy-makers have to work in a very demanding context: given the constant macroeconomic tensions since the early 1990s, they cannot devote sufficient intellectual and financial resources to address long-term issues. This is a genuine danger, indeed, since long-term drawbacks – stemming from neglecting the long-term issues – cannot be felt immediately, by definition. Innovation can play a significant role in accelerating the catching-up process. In the meantime, the science-push model of innovation is still influential. By criticising policy misconceptions derived from this model of innovation and the closely related ‘high-tech’ hypes, the chapter argues that CE policy-makers should understand the non-linear, complex relationships between (domestic) R&D efforts, innovation, and competitiveness. Then they can define appropriate goals in a broad innovation system framework, understanding the importance not only of knowledge creation, but also that of the exploita...

ABSTRACT Automotive investment projects across borders have significantly intensified in recent years, as companies have attempted to cut costs via relocation of production, and to get closer to final customers in emerging markets. This chapter analyses the impacts of this global re-structuring process in three Central European countries: Hungary, the Czech Republic, and Poland. The Czech and Polish automotive industry has been privatised via ‘brown-field’ investment projects: foreign investors have simply taken over existing companies. In other words, these indigenous, long-established production complexes are being replaced and displaced by Western companies. The process inevitably entails conflicts between traditional and new management methods and work practice. In Hungary, by contrast, car assembly has been re-established via green-field investment projects: there was no ‘old’ industry to be replaced. Hence there was no room for conflicts between traditions and new practices either. It resembles the Japanese practice: all their transplants in the US and UK had been located in the ‘desert’, i.e. in regions with no automotive tradition – precisely in order to avoid the sorts of conflicts that are inevitable on a brown-field scenario. It is argued that Central European governments need to (i) provide adequate funds for education and training, (ii) promote R&D capabilities and (iii) offer investment incentives geared towards lean production so as to avoid being locked into a low-wage, low-tech, low-value-added ‘development’ path.

Central European countries highlight the importance of institutions as they are of somewhat different nature in this diverse group of countries, given their different history. Briefly, before World War II there was a market economy in place in Central Europe – as opposed to most Eastern European countries and former Soviet republics – based on private property. These economies were linked to the wider European economic space via foreign trade, subsidiaries of, and joint ventures with, foreign firms operating there and subsidiaries of Central European firms active abroad. Then they went through the planned economy period and right now the transition process. As three rather distinct socio-economic systems and their impacts on the national system(s) of innovation can be observed in these cases, it is a ‘living’ laboratory where evolving institutions, including re-emerging old ones, can be explored. Thus it seems worthwhile studying these cases in-depth as they might provide a number of important, perhaps eye-opening, lessons for more general theorising.

This chapter analyses institutional changes in Hungary from the point of view of science and technology (S&T) policy by pulling together some recent theoretical developments in the economics of innovation and a fairly descriptive approach. The underlying question is whether it is possible to devise a coherent, feasible S&T policy and implement it in an efficient – or at least a satisfactory – way in a transition economy, or whether S&T policy, together with other major institutions, is also evolving. In other words, is S&T policy an outcome of conscious, well-designed and co-ordinated efforts in this period (can it be?), or should it be seen as a resultant of deliberate and unintended consequences of actions and interactions of a host of actors?

Theories and models of innovation as theoretical foundations for S&T policy are briefly outlined in section 2. Then section 3 describes the legacy of central planning in Hungary. Recent changes in the science and technology system are analysed in section 4, and policy conclusions are presented in the final section.