Bold policies needed to ensure real inclusiveness
During recent times our world has faced significant economic challenges and security risks. When Hungary introduced bold economic policy reforms a few years ago it was subjected to strong criticism from domestic political opposition and various international institutions, as well as from public figures and representatives of foreign governments. The objective of these policy reforms was to make the Hungarian economy resistant to future crises.
In an effort to create the financial stability necessary for economic growth and to promote competitiveness, the government adopted three new foreign policy aims: to expand and diversify exports; to strengthen the position of Hungarian small and medium-sized enterprises (SMEs) in foreign markets; and to attract more foreign direct investment into Hungary. New foreign policy measures prioritizing economic diplomacy and country promotion were also introduced to bolster Hungary’s economic interests.
Economic growth will be achieved only if foreign policy is flexible enough to confront and overcome crises as they arise. With this in mind, Hungary made its economy open to countries in developing regions. To stimulate stronger economic relationships with these countries and to enable Hungarian companies to expand into foreign markets, the government launched the ‘Opening to the East’ strategy targeting Asian markets and the post-Soviet countries in 2010; and, in 2015, the ‘Opening to the South’ strategy, which focuses on African and Latin-American markets. These strategies are expected to deliver positive economic outcomes by facilitating exports and inbound investment Hungary has an export-driven and open economy, which is largely dependent on changes of global demand and on its external economic relations. Consequently, the three previously listed foreign policy aims were accompanied by structural and institutional modifications to ensure improved performance by the Hungarian economy. As a result, the Ministry of Foreign Affairs and Trade has become a lead agency responsible for overseeing the work of all institutions dealing with economic diplomacy. These institutions include the Hungarian National Trading House (the agency responsible for trade development); the Hungarian Investment and Promotion Agency (the agency responsible for investment promotion); Eximbank (the financial institution responsible for export financing and insurance); and the institution of Joint Economic Committees, which helps drive Hungary’s foreign economic objectives. The strategic partnership agreements are also an important contributor to the aims.
To strengthen Hungary`s position in overseas markets, the Hungarian Government increased the number of trade commissioners, whose main task is to actively assist export-ready Hungarian companies to expand their businesses into external markets. To achieve this, the commissioners help companies to identify new markets for their products and services and to search for potential business partners and customers. They also undertake market research and market visits and arrange business meetings with local industry and government.
The Government of Hungary places great importance on the role of SMEs in contributing to trade-led growth and job creation. Hungary’s Economic Development and Innovation Operational Programme enables more SMEs to connect with international markets. The programme is supported by the European Regional Development Fund, which grants financial support to eligible Hungarian SMEs proposing to develop products and services for export.
To further encourage foreign direct investment in Hungary, the government proposes policy measures that will develop the capabilities necessary to position Hungary as a production hub with a highly skilled workforce – and as a centre of innovation – within the European Union (EU). The purpose of the proposed Research and Development (R&D) support programme, for example, is to assist large enterprises located in Hungary to undertake R&D activities and therefore to encourage the development of R&D competence centres in the country.
Digitalization has become an increasingly important component of economic competitiveness and plays an integral part in the realization of the Industry 4.0 vision, Hungary’s roadmap for industrial development. Recognizing the importance of digital capabilities, Hungary implemented the Digital Success Programme, which is built on four pillars: digital infrastructure; digital community and economy; digital state; and digital skills. In developing a complete national digital environment by 2020, Hungary will be well placed to attract investment.
Beginning in 2015, and in response to crises occurring in the Middle East, Central Asia and Africa, the EU faced a large influx of migrants and refugees. These people included asylum-seekers, but also economic migrants and some hostile agents, including Islamic State militants disguised as migrants or refugees. Hungary responded with a range of measures, including improved border security, to ensure the sustainability of the asylum system. To communicate these measures in a coherent manner, the government created the Hungary Helps Programme.
It is important to note that besides the trade programmes and initiatives, international development cooperation continues to play a significant part in the foreign policy of Hungary. Political stability is a prerequisite for sustained economic development and trade relations. Given their geographical proximity, the stability of the Western Balkans and Eastern Europe is important for Hungary as well as for the whole of Europe. Consequently, countries within these regions continue to remain the priority area of the Hungarian aid programme.
Other areas where Hungary will consider development assistance include sub-Saharan Africa, the Horn of Africa and the less developed countries in Asia. The Lao People’s Democratic Republic, Jordan, Serbia and Sri Lanka were the biggest recipients of Hungarian official development assistance in 2016. The Government of Hungary remains committed to the 2030 Agenda for Sustainable Development to ensure that societies can prosper in a healthy and sustainable manner.
It is an honour to be the first country within the Central and Eastern Europe region to host the World Export Development Forum. With its central theme of `Trade – a Force for Good: Include, Innovate, Integrate,’ the 2017 Forum serves to connect SMEs with the global economy while also promoting Hungary as a hub of creativity and innovative trade practices.
The event is an excellent opportunity for Hungary to showcase its strengths, capabilities and potential. With its high-level intergovernmental and business-to-business meetings, the forum will contribute to achieving Hungary’s international trade objectives and will further strengthen trade and business connections with Asia, Africa and Latin America.