Hungarian Development Plan: Strategies for EU Cohesion

1. Business environment in the EU Prepared by Dr. Endre Domonkos (PhD) 1st Semester, Academic Year 2016/2017

2. I. What is the Hungarian Development Plan? • Strategic document in compliance with the Council regulation No. 1260/1999. • The National Development Plan is a precondition for receiving the subsidies of the Structural Funds and Cohesion Fund after Hungary’s EU-accession in 2004. • The National Development Plan is a planning document. • It’s a mutual financial covenant between Hungary and the European Union. • It contains different co-financed development programmes, projects.

3. II. The structure of theNational Development Plan (2004-2006) • Ex-ante evaluation • SWOT-analysis • Target objectives, development strategies • The coherency of the strategy (priorities) • Consistency with national policies • Financial tables that show the contribution to the projects by priorities • Short summary of the different operational programmes • Implementation (system of supervising and evaluation) • The principle of partnership

4. III. The situation of the Hungarian regional development policy • In Hungary the institution of the regional development policy is based on the following levels: national, regional, county and local levels. • 7 NUTS-II statistical regions were created. • Significant economic, social and infrastructural disparities exist across and within the Hungarian regions and this has increased during the 1990s. • The country is charactarised by a significant duality. • Problems: low employment rate (57%), disparities among Eastern and Western part of the country.

5. IV . The institutional background of the Hungarian regional development policy • National Development Agency (NDA): coordination of the operational programmes, monitoring of their implementation, finalisation of the calls for application, etc. • The tasks of the Managing Authorities: finalisation of the National Operational Programmes + specification of the necessary documents and consultation with the European Commission. • The intermediate bodies: handling of the financial transfers of the Structural Funds and Cohesion Fund.

6. V. SWOT-analysis • Strongholds: • Continuous convergence • The country has got a favorable geographic, infrastructural and economic situation • Broadening the number of people that take part in education • Good quality agricultural sites • Thermal and medicinal water • Favorable touristic target point • Budapest central position • Weaknesses: • Lack of traffic infrastructure • Regional disparities • Weak competitiveness • Lack of enough capital of the small and medium-sized companies • Low employment rate • Bad quality of the population health state • The competitiveness of the agriculture is not appropriate

7. VI. The targets of theNational Development Plan (2004-2006) I. • According to the period 2004 and 2006 the general aim of the National Development Plan was to reduce the disparities among regions in GDP per capita. • To achieve these targets the National Development Program (2004-2006) contained three specific objectives: • 1. To improve the competitiveness; • 2. To develop the quality of human resources; • 3. To create better environmental conditions and a more balanced regional development.

8. VI. The targets of the National Development Plan (2004-2006) II. • The National Development Plan (2004-2006) wanted to achieve the specific targets through four different development priorities that were the followings: • The horizontal principles were the followings: • 1. The principle of the sustainable development; • 2. gender equality.

9. VII. Operational programmes (2004-2006) • The main targets of the National Development Planwere fulfilled through different Operational Programmes. • The National Development Programmewas structured on five different Operational Programmes: • 1. Agricultural and Rural Development Operational Programme; • 2. Economic Competitiveness Operational Programme; • 3. Human Resources Development Operational Programme; • 4. Environmental Protection and Infrastructure Operational Programme; • 5. Regional Development Operational Programme.

10. VIII. Agricultural and Rural Development Operational Programme (2004-2006) • Main objectives of the Agricultural and Rural Development Programme: 1. modernization of agriculture, 2. development productive technologies, 3. promotion of rural development + income-productive capabilities. • The main priorities of the Agricultural and Rural Development Operational Programme were the followings: • - to establish a competitive basic-material production; • - modernization of food processing; • -development of agricultural infrastructure and rural regions.

11. IX. „Economic Competitiveness” Operational Programme (2004-2006) • The total budget of the Operational Programme was approximately EUR 606 million. • The ECOP contained three specific objectives: • The ECOP had got four priorities: • Investment promotion; • SME development; • Research and development and innovation; • Development of the Information Society and the e-Economy.

12. X. Human Resources Development Operational Programme (2004-2006) • The Priorities of the Human Resources Development Operational Programme: • - to support the active labour market policies; • - to increase the employment of women in the labour market; • - promotion the integration of disadvantaged social groups; • - establishment the conditions for life-long learning; • - improvement of education and training and • - development the social and public health care infrastructure.

13. XI. „Regional Development„ Operational Programme (2004-2006) • The „Regional Development” Operational Programme between 2004 and 2006 supported for all the Hungarian regions within the Objective 1. framework. • The OPRD had got 4 priorities: • Development of tourism potential of the regions; • Development of regional infrastructure and the communal environment; • To Strengthen the regional dimension of human resource development; • Technical assistance.

14. XII. „Environmental Protection and Infrastructure” Operational Programme (2004-2006) • The Environmental Protection and Infrastructure Operational Programme (EIOP) main endeavor was to improve the transport infrastructure and promote the environmental protection. • The EIOP was structured on 3 priorities: • Environmental protection; • Transport infrastructure development; • Technical assistance.

15. XIII. INTERREG III A – Austria / Hungary (2000-2006) • The overall objective of the programme was to promote the economic, social and rural development of the Austrian and Hungarian border region. • The Programme revolved six development priorities: • 1. Cross-border economic co-operation; • 2. Infrastructure; • 3. Cross-border organisational structures and networks; • 4. Human resources; • 5. Sustainable cross-border environmental and spatial development; • 6. Special support for border regions.

16. XIV. INTERREG III C – East Zone (2000-2006) • The management of the programme was organised in four zones. • The East Zone included Germany, Austria, Italy, Greece, Czech Republic, Hungary, Slovakia, Slovenia and Poland. • The Action priorities were the followings: • 1. Operations; • 2. Technical Assistance linked to Priority 1. • 3. Strand C co-operation actions; • 4. Operations in border regions; • 5. Technical assistance linked to Priority 4.

17. XV. INTERREG III A Programme Hungary – Romania and Hungary – Serbia & Montenegro (2004-2006) • The main target of the programme Hungary Romania and Hungary-Serbia & Montenegro: • The programme was structured on two priorities: • 1. Strengthen the spatial, physical and infrastructural integrity of the cross-border area. • 2. Promotion of cooperation initiatives in order to facilitate the integration of markets and enhance coherence between local societies.

18. XVI. INTERREG III Neighbourhood Programme Hungary – Slovak Republic – Ukraine (2004-2006) • The programme strived on consolidating and strengthening the work in the context of the Phare CBC programme between Hungary and Slovakia and Ukraine. • The strategic objectives of the programme were to strengthen the level of economic and social integration of the cross border region. • The objective was divided into two priorities: • 1. Cross-border Social and Economic Cooperation; • 2. Cross-border Environment and Transport.

19. XVII. INTERREG III A Neighbourhood Programme Slovenia – Hungary – Croatia (2004-2006) • The total budget of the programme was 27,40 million Euros. • The joint strategy of the programme aims were the followings: • The programme contained two priorities: • 1. Economic-Social Cohesion and Human Resources Development; • 2. Sustainable development.

20. XVIII. Results of the National Development Plan (2004-2006) in numbers • 510 billion Forint was provided by the Hungarian National Development Plan and 178 billion Forint by national financial resources + 280 billion Forint by private contribution. • The contribution of the Hungarian National Development Plan to the GDP was 0,7% annually between 2004 and 2008 (all together 3,5-4 % GDP growth) • The number of employed people rose by 110 000 • Between 2004 and 2006, as a result of the transport projects, 570 km of railways and 40 km of motorwayswere constructed and 450 km of public roads were reconstructed.

21. XIX. The experiences of the National Development Plan (2004-2006) I. • The designing of projects were controlled by individual development incentives and not by national development level targets and strategies. • The most important step was to set up a general social, economic and environmental targets on national level and afterwards to start the sectoral designing. • During the previous years the lack of long-term designing used to be a serious problem. • Other problems: social organisation was not well organised + slowness of designing process.

22. XIX. The experiences of the National Development Plan (2004-2006) II. • In 2004 the institutional background was set up (starting the implementation of the National Development Plan in January, 2004). • Large number of candidates, but it’s important to emphasize the errors made in the forms of the tenders. • Our legal system was completely harmonised to the European Union (modification of public procurement law) • After some difficulties the operation of the Single Monitoring and Information System was adequate.

23. XX. The deficiencies of the National Development Plan (2004-2006) • Large amount of the resources were at disposal in 2004. • In 2006 there weren’t new tendering projects. • The system of the tendering procedure was quite slow and complicated. • The tender securities were irrelevant high. • Financial subsidies were given for successful and productive companies (successfulness versus equal opportunities).

24. XXI. European Cohesion policy in Hungary 2007-2013 I. Convergence objective 'Phasing-out' regions 'Phasing-in' region ‘Competitiveness and emploxment’ objective

25. XXI. European Cohesion policy in Hungary 2007-2013 II. • For the 2007-2013 period, Hungary has been allocated € 25.3 billion in total. • Between 2007 and 2013: six regions under Convergence objective and one, the Central Hungary region under Phasing-in Regional Competitiveness and Employment objective. • The Hungarian contribution was € 4.4 billion. • The main objectives of the Hungarian National Strategic Reference Framework (NSRF): to sustain long-term growth + increase employment.

26. XXI. European Cohesion policy in Hungary 2007-2013 III. • The objectives of the NSRF were translated into six thematic and territorial priorities: • The priorities were the followings: • 1. Economic development; • 2.Transport development; • 3. Social renewal; • 4. Environment and energy; • 5. Regional development and • 6. State reform.

27. XXI. European Cohesion policy in Hungary 2007-2013 IV. • In the field of economic development, investments were made in RTD, SME development, business infrastructure and ICT. • In transport, support was provided for TEN-T priority projects, road and rail investments and the development of sustainable means transport (€ 7.2 billion). • The social renewal priority focused on achieving active labour market policies and investments in human capital and in human infrastructure (€ 3 billion for education and vocational training programmes).

28. XXI. European Cohesion policy in Hungary 2007-2013 V. • In the environmental field, priority was given to ensure compliance with the Community’s legislation, with a focus on actions targeting wastewater and drinking water. • As regards regional development, support was given to regional growth poles, rural development and the realignment of disadvantaged micro-regions. • In terms of state reform, the aims were to modernise Hungary’s public administration and provide social support to civil society.

29. XXI. European Cohesion policy in Hungary 2007-2013 VI. • The Hungarian NSRF included a commitment whereby spending on the earmarked Lisbon categories was expected to increase by another 10% in the 2007-2013 period (46% during 2004-2006). • The objectives and priorities of the NSRF resulted in 15 operational programmes, two of which were cofinanced by the European Social Fund (ESF) and 13 by the European Regional Development Fund (ERDF) and Cohesion Fund (CF). • The 15 operational programmes included seven regional and eight sectoral programmes.

30. XXI. European Cohesion policy in Hungary 2007-2013 VII. • Hungary participated in 10 territorial cooperation programmes (ERDF contribution of € 386 million): four bilateral cross-border cooperation programmes and two transnational cooperation programmes. • Hungary took part in operational programmes: • - Cross-border cooperation with Slovakia, Austria, Romania and Slovenia; • - Transnational cooperation between Central Eastern Europe and South Eastern Europe; • - Interregional cooperation in the European Union among all Member States.

31. XXII. Cohesion policy in Hungary between 2014 and 2020 I. • The European Structural and Investment Funds (ESI): The EU's main investment policy tool for the period 2014 and 2020. • Five different funds of ESI Funds: 1. ERDF; 2. ESF; 3. CF; 4. EAFRD; 5. EMFF. • Hungary has been allocated EUR 25 billion from ESI Funds over the period 2014-2020. • With a national contribution of EUR 4.63 billion, Hungary has a total budget of EUR 29.63 billion to be invested in various areas.

32. XXII. Cohesion policy in Hungary between 2014 and 2020 II. Source: European Commisson, European Structural and Investment Funds: Country factsheet – Hungary http://ec.europa.eu/regional_policy/sources/policy/what/investment-policy/esif-country-factsheet/esi_funds_country_factsheet_hu_en.pdf

33. XXII. Cohesion policy in Hungary between 2014 and 2020 III. Source: European Commisson, European Structural and Investment Funds: Country factsheet – Hungary http://ec.europa.eu/regional_policy/sources/policy/what/investment-policy/esif-country-factsheet/esi_funds_country_factsheet_hu_en.pdf

34. XXII. Cohesion policy in Hungary between 2014 and 2020 IV. • Targets of the ESI Funds Source: European Commisson, European Structural and Investment Funds: Country factsheet – Hungary http://ec.europa.eu/regional_policy/sources/policy/what/investment-policy/esif-country-factsheet/esi_funds_country_factsheet_hu_en.pdf

35. XXIII. Conclusion • The National Development Plan (2004-2006) and the New Hungarian Development Plan (2007-2013) were the biggest development programmes after the changement of regime. • The National Development Plan and the New Hungarian Development Plan: positive effects to the economic growth and structural changes in lof of sectors. • Between 2014 and 2020 Hungary was allocated EUR 25 billlion from ESI Funds through nine national and regional programmes. • Supported areas: infrastructure networks in transport and energy, SME competitiveness, employment and environmental protection measures, low-carbon economy, research and innovation + investments in social inclusion and education.

36. Literature - European Commission. Regional Policy, Inforegio. http://ec.europa.eu/regional_policy/country/prordn/index_en.cfm?gv_pay=HU&gv_reg=ALL&gv_obj=ALL&gv_the=ALL&gv_per=1 Downloaded on 26 July 2014. - European Commission Regional policy, Inforegio. In: http://ec.europa.eu/regional_policy/atlas2007/hungary/index_en.htmm Downloaded on 26 July 2014. - European Commission, European Structural and Investment Funds: Country factsheet – Hungary. http://ec.europa.eu/regional_policy/sources/policy/what/investment-policy/esif-country-factsheet/esi_funds_country_factsheet_hu_en.pdf Downloaded on 26 August 2016. - The homepage of National Development Agency. http://palyazat.gov.hu/introductionDownloaded on 26 July 2014.