The Digital Export Development Strategy of Hungary

The Digital Export Development Strategy of Hungary (DEDS), dated 30 June 2016, represents a comprehensive governmental effort to enhance the digital economy’s contribution to the nation’s economic growth, particularly through increasing the export capacity of digital products and services. The strategy was conceived under the umbrella of the broader Digital Success Programme, which was established in response to a national consultation on digital development (InternetKon) conducted by the Hungarian government in 2015.

Introduction

The rapid evolution of digital technologies and their integration into various sectors of the economy have made digital transformation a pivotal factor in economic development globally. Recognising this, the Hungarian government has embarked on a strategic path to ensure that the nation not only keeps pace with these changes but also leverages them to bolster its economic standing. The Digital Export Development Strategy (DEDS) is a cornerstone of this effort, aiming to position Hungary as a leader in the digital economy within the European Union and beyond.

In Hungary, the digital economy already plays a significant role, contributing to 20% of the gross value added (GVA) of the national economy and employing nearly 15% of the workforce as of 2015. This indicates that the country has a strong foundation upon which to build a more robust digital export sector. However, the government recognises that to maintain and expand this advantage, targeted measures are essential. The DEDS was formulated to address this need, focusing on enhancing the export capabilities of small and medium-sized enterprises (SMEs) engaged in IT services, among other goals.

The strategy is designed as a short-term policy framework with a time frame of four years (2016-2020), subject to annual revisions to adapt to the rapidly changing digital landscape. It is structured to comply with the requirements of Section 35 of Government Decree No. 38/2012 on Governmental Strategic Management.

Strategic Significance and Objectives

The DEDS aims to intensify the growth of digital product exports, fostering strong digitalisation knowledge within Hungary. This, in turn, is expected to have several far-reaching effects:

• Modernising the economy, particularly the SME sector.
• Creating a substantial number of high-value jobs, especially for young people.
• Enhancing Hungary’s image in foreign markets and improving its international recognition.
• Contributing to the broader national economic goals outlined in the Irinyi Plan, which focuses on innovative industrial development.
• Serving as a pilot model for export and SME development in other industries.

The strategy is predicated on the understanding that digital transformation is not just a technological or economic issue but a broader social phenomenon that is reshaping how people live, work, and interact with government and business. By focusing on the export of digital products and services, the Hungarian government aims to ensure that the country is not only a participant in but a beneficiary of the ongoing digital revolution.

Sectoral Focus and Export Development

The DEDS identifies key areas within the digital economy that require targeted interventions to enhance export capabilities. These include:

1. Hungarian ICT Companies: The strategy emphasises the need to support established ICT companies in expanding their export activities. This involves not only financial support but also training, market research, and the development of export strategies tailored to specific markets.
2. ICT Startups: Startups are seen as crucial engines of innovation and export growth. The strategy aligns with the Digital Startup Strategy of Hungary, which is being developed concurrently, to ensure that startups receive the support they need to succeed in international markets.
3. Governmental Infocommunications Solutions: Hungary has developed several advanced digital government solutions, some of which are competitive at an international level. The DEDS seeks to organise and institutionalise the export of these solutions, particularly to countries targeted by Hungary’s “Opening to the East” and “Opening to the South” strategies.
4. Services Centers (SSCs): Shared Services Centers are an integral part of Hungary’s digital export landscape. The strategy aims to strengthen existing SSCs and promote the development of new centers, particularly in rural areas, to decentralise economic growth and create jobs outside of Budapest.

Implementation and Measurement

The strategy outlines specific measures to be implemented across these focus areas, including training programs, financial incentives, market research support, and the development of a comprehensive monitoring system to track progress. It also highlights the importance of collaboration between government, industry, and academia to ensure the successful execution of the strategy.

Given the dynamic nature of the digital economy, the DEDS is designed to be flexible, with annual reviews to assess progress and make necessary adjustments. This approach ensures that Hungary remains agile in responding to global digital trends and can capitalise on emerging opportunities in the international market.