The Hungarian investment environment has received yet another prestigious international recognition: based on the remarkable IBM Global Location Trends 2017 report, from among the three most important categories, in two Hungary ranked among the world’s top 10. According to the report, thanks to foreign direct investments (FDI), 18,900 new jobs are being created in Hungary based on 2016 investor decisions, which is the 9th best result in the world per inhabitants. However, what is even more important that Hungary ranked 5th based on value of new jobs created, ahead of countries, in addition to the competitors in the region, such as Switzerland, Japan or Sweden.
IBM-Plant Location International (PLI) has started to develop the Global Location Trends database in 2002. This database tracks announced decisions of companies to local new operations in regions outside of their HQ region/country on an ongoing basis. Additional investment project data is received and integrated from other specialised FDI databases, investment promotion agencies and economic development organizations around the world. IBM-PLI screens almost half a million announcements and projects on annual basis. The analysis of volumes focuses on job creation, which is the best indicator of the local economic impact of the investment.
IBM-PLI project value assessment is an approach that allows an understanding of the potential monetary value of an investment project for a location. The assessment method integrates such project specific factors as: project sector value-added and productivity, project sector knowledge intensity, and project’s occupational profile composition, represented by wage and skills.
Based on the recently published database data for 2016, Hungary has achieved outstanding results in all three categories: as a result of FDI investments, Hungary ranked 15th in the world in creating new jobs, ahead of such countries and economies as France, Turkey, Indonesia or Ireland. In the subcategory of monitoring European metropolitan areas also based on creating new jobs, Budapest ranked 4th leaving behind Dublin and the Krakow-Katowice area. According to IBM-PLI’s findings so far, the total of 18,900 new jobs that are being created has been Hungary’s best result since the financial crisis.
In the second category in which the created new positions are proportioned to the number of people in the country (new job/ inhabitants), Hungary has achieved the prominent 9th place. The extremely intense regional competition is well illustrated by the fact that Hungary which, in this comparison, has been the second is preceded by Slovakia, a country with a lower population.
Based on the result of the report’s only category which, instead of quantity, examines the added value of the created jobs from the perspective of the national economy, it can be said that Hungary created the 5th highest added value jobs in the world in 2016. In this respect, Hungary is preceded only by Ireland, Denmark, Singapore and the Netherlands. This result justifies the effectiveness of the new investment focus defined by the Hungarian Investment Promotion Agency (HIPA): in addition to promoting the “Made in Hungary” type of projects, turning to the “Invented in Hungary” investments, that are research and development and innovation projects.
In this framework, within the automotive industry that forms the backbone of the Hungarian national economy, bringing the development activities related to electromobility and self-driving cars which present near future technology to Hungary has come into focus. In addition – along with the medical technology and pharmaceutical industry, which have century-old tradition –, special attention is given to investments closely related to the automotive high technologies (infocommunications network development (5G), electronics sector).
In order to further support the positive trend, on the basis of the R&D form of subsidies based on an individual government decision, from 2017 funding for setting up research and development capacities may be provided already in Budapest as well. Furthermore, a completely new support category has been introduced as well, whereby technology-intensive investments which do not create jobs but install new technologies can also benefit from cash support.
Source: hipa.hu
