Overview

In the past 10 years, the information technology sector has contributed 431 billion to 608 billion forints of GDP to the Hungarian economy annually, including direct, indirect, and guided production, accounting for 18.1% to 20.3% of the national GDP. In the past five years, the nominal GDP generated by this sector has increased by 23% to 24%.

In recent years, economic changes have shown that the computing scope of the digital economy is broader, and the ICT sector does not include digital development of non ICT companies (such as car manufacturers, manufacturing plants and financial services, e-commerce, IT consulting firms), whose number is growing. Taking into account these factors (and applying input-output indicators to them), IVSZ estimates that the contribution of the digital economy to domestic GDP may exceed 25% in the near future and predicts reaching this level by 2023. Hungary ranks 22nd among the 27 EU member states in the 2022 Digital Economy and Society Index (DESI) released by the European Commission.

In terms of human capital, the country ranks 23rd with a score of 38, while the EU average score is 46. 49% of people have at least basic digital skills, which is lower than the EU average of 54%. 3.1% of graduates study ICT (the EU average is 3.9%), and the proportion of ICT experts in the workforce is still relatively low (3.9%, compared to 4.5% in the EU). Significant improvements in ICT experts and digital skills are crucial for the EU to achieve its skills goals for the Digital Decade.

Hungary has performed well in broadband connectivity. Leading in the use of broadband at least 1Gbps, as 22% of households subscribed to this service in 2021, compared to only 7.6% in the European Union. The country also scored higher than the EU average in overall fixed broadband usage, 5G spectrum, and fixed high-capacity network coverage (VHCN). Considering that the goal of the "Digital Decade" is to achieve 100% coverage of gigabit networks in all households by 2030, this is also important.

Despite the progress made in digitalization of enterprises in 2021, most Hungarian companies have not taken advantage of the opportunities provided by digital technology. 21% of companies use enterprise resource planning software to share information electronically (the EU average is 38%), and 13% of companies rely on social media (the EU average is 29%) or send electronic invoices (the EU average is 32%). The situation with advanced technology is also similar: Hungary's scores in artificial intelligence, cloud computing, and big data are far below the EU average. The absorption rate of these services is between 3% and 21%, and the goal of the "Digital Decade" is to reach 75% by 2030. Small and medium-sized enterprises need a special policy focus, as only 34% of SMEs have at least a basic level of digital intensity (the EU average is 55%), while the goal of the "Digital Decade" is at least 90%.

In terms of digital public services, the main indicators show mixed results. Substantive progress has been made in the demand for e-government. In 2021, 81% of Internet users will participate in public administration online, higher than 64% in 2019, and higher than the average level of 65% in the EU in 2021. However, the quality and integrity of service supply to the public and businesses are still relatively low, especially in cross-border service supply, which is key to achieving the "Digital Decade" goal of fully online access to all key public services by 2030.

In terms of digital policies, the National Digital Strategy 2021-2030 provides a strategic policy framework for 2021-2030. It is a comprehensive strategy that categorizes, clarifies, and in some cases supplements measures from various other strategic documents. This strategy is built around the four main pillars of the "Digital Decade" compass measured by DESI, namely digital infrastructure, digital skills, digital economy, and digital nation. Hungary has a very ambitious and challenging goal of surpassing the EU average in digital development by 2020 and becoming one of the top ten leading economies in the EU in digitalization by 2030.

表1 2021～2022年匈牙利数字经济态势分析（SWOT）

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Table 1 SWOT Analysis of Hungary's Digital Economy Situation from 2021 to 2022

Analysis of the Competitiveness of the Second Digital Economy

In the 2022 Digital Economy and Society Index (DESI) released by the European Commission, Hungary ranks 22nd among the 27 EU member states (see Figure 1).

Figure 1 Ranking of Digital Economy and Social Index in 2022

（1） Digital literacy

Hungary's human capital index ranks 23rd among EU countries. The country's scores on three skill indicators are lower than the EU average. Especially, only 49% of people have at least basic digital skills, while the EU average is 54%. The goal of the "Digital Decade" plan is to achieve a digital technology penetration rate of 80% by 2030. The proportion of information and communication technology experts in the workforce has slightly increased, reaching 3.9%, but still lower than the EU average level (4.5%). There is a shortage of ICT experts, with 57% of companies reporting difficulty filling the ICT gap in 2020. In order to achieve the EU's "Digital Decade" goal of 20 million ICT experts, member states should have an average of about 10% of their workforce as ICT experts. The proportion of female ICT experts in Hungary is still very low (14%). In addition, in 2020, the proportion of ICT graduates among all graduates was 3.1%, lower than the EU average of 3.9%. In 2020, 16% of companies provided ICT training for their employees, while the overall proportion in the European Union was 20%.

The Hungarian Social Inclusion Strategy 2030 sets several numerical goals. Especially aimed at improving the digital literacy of students, parents, and teachers; Further develop digital infrastructure in impoverished areas; Reduce online risks such as cyberbullying, addiction, hate speech, and data security, and improve the information technology infrastructure of schools to effectively address the issue of early school leaving (ESL).

The National Digital Strategy 2021-2030 lists three priority areas for developing digital skilled talents: ① Developing digital capabilities (based on the DigComp framework); ② Increase the number and qualifications of information technology professionals and engineers; ③ Support the structural changes needed to develop digital skills in education and vocational training. This strategy provides an ambitious framework for enhancing the digital skills of citizens, the workforce, and IT professionals. EU funding will play a crucial role in implementing the measures outlined in the plan. Given the goals of the "Digital Decade" regarding skills, all three areas are crucial.

表2 匈牙利社会数字素养态势分析（SWOT）

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Table 2 SWOT Analysis of Digital Literacy Situation in Hungarian Society

（2） Digital infrastructure

In 2021, Hungary made significant progress in achieving its 2030 digital connectivity goal, with the coverage of fixed ultra high capacity networks (VHCN) increasing to 79% (30 percentage points higher than the previous year). In addition, the coverage rate of fast broadband (NGA) has increased to 97% (8 percentage points higher than the previous year). The sharp increase in network coverage corresponds to a significant increase in consumer usage, which is significantly higher than the EU average (20 percentage points higher for 100Mbps usage and 14 percentage points higher for 1Gbps usage).

Hungary is planning to utilize the European Regional Development Fund (ERDF) to support the deployment of broadband infrastructure in its rural areas. This funding will mainly be used to provide gigabit connectivity in white areas. From 2014 to 2020, the European Structural and Investment Fund (ESIF) deployed over 30Mbps high-speed Internet with more than 253 million euros.

In terms of 5G, Hungary has also made progress towards achieving its 2030 digital connectivity goal, although it is still in its early stages

In 2021, Hungary's 5G coverage increased to 18% (an increase of 11 percentage points from the previous year), but still significantly lower than the EU average of 66%. Hungary has allocated 60% of the total coordinated 5G spectrum, mainly through two spectrum auctions organized in 2020 and 2016. Three mobile network operators have launched commercial 5G services in Hungary.

The mobile operator has started to shut down the 3G network. In order to accelerate the transition away from 3G, the National Supervisory Authority (NMHH) has launched a new program called "Netref!". The budget for this project is approximately 140 million euros, and users can replace their 3G devices with phones that support 4G or 5G. It is expected that this plan will accelerate Hungary's introduction of 5G.

2021 is a year of continuous progress in Hungary, with both gigabit and 5G coverage increasing steadily. In the fixed network market, the coverage of FTTP and VHCN has greatly improved, which is in line with the corresponding increase in consumer usage. This indicates that Hungary seems fully capable of achieving the goals set for fixed connectivity in the Digital Decade. However, in terms of mobile and 5G, Hungary still lags behind in terms of coverage, despite some improvements. If Hungary wants to achieve the relevant goal of 100% 5G coverage in the 2030 Digital Decade, more work needs to be done. The release and implementation of the National Digital Strategy can better promote the achievement of these goals. In addition, the emergence of new participants in the Hungarian market may affect the current ecosystem and potentially lead to further market integration.

（3） Digital technology

Hungary ranks 25th among EU countries in terms of digital technology integration in corporate activities. Despite the growth in several indicators in this field, most Hungarian companies still have not been able to utilize digital technology. The country's performance in technology adoption indicators is still poor. Regarding basic technology, 21% of enterprises have enterprise resource planning systems for electronic information sharing (up from 14% in 2019), and 13% of enterprises send electronic invoices (suitable for automated processing) or use social media (at least two channels). These numbers are far below the average level of the European Union. The adoption rate of advanced technologies is also low: 3% of enterprises report using artificial intelligence, 7% use big data, and 21% use cloud computing. More and more small and medium-sized enterprises are engaged in e-commerce (reaching 18% of the EU average in 2021, compared to 12% in 2019). However, only one-third of small and medium-sized enterprises have at least a basic level of digital strength (the EU average is 55%). 65% of businesses reported that their use of information and communication technology has largely led to environmentally friendly measures - a proportion close to the EU average (66%).

表3 匈牙利数字基础设施态势分析（SWOT）

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Table 3 SWOT Analysis of Hungary's Digital Infrastructure Situation

In 2021, the government launched a new project for developing the data economy (EDIOP3.2.8). Within the framework of this project, a data management and artificial intelligence acceleration center will be established. The accelerator centers in Zaragoshege and Debrecen have been put into use, and another one will soon open in Balatonf ü red. The target audience for this project is at least 100 small and medium-sized enterprises in the service, manufacturing, and trade industries.

The government has formulated two specific measures to develop the digital entrepreneurship ecosystem. The mission of the INPUT project is to establish and cultivate a digital innovation and entrepreneurship ecosystem across the country, with a particular focus on rural areas and helping innovative ICT startups enter the global market. As of January 2022, the program involves 1853 potential ICT startups and 528 training and activities through a network of 12 national coordinators and 76 mentors. The EDIOP 8.2.3 specialized seed and pre seed investment program related to this program has supported 62 ICT startups by January 2022.

Since 2019, Hungary has been a member of the European Blockchain Partnership. The Government Information Technology Development Agency (KIF Ü) collaborated with the Digital Success Program to launch the first Hungarian European Blockchain Service Infrastructure (EBSI) node in 2021. The Hungarian National Bank is a major supporter of blockchain technology and is currently developing a blockchain based coin registration system as a pilot project.

The National Digital Strategy 2021-2030 has identified four key action areas for enterprise digitization: ① expanding the use of digital technology by small and medium-sized enterprises; ② Developing digital startups; ③ Targeted development of the ICT industry through support programs; ④ Utilize national data assets for economic purposes. Large scale, targeted, and effective measures must be taken in all of the above-mentioned fields to accelerate the digital transformation of enterprises, especially small and medium-sized enterprises. This is also a key area of focus for the 'Digital Decade'. To achieve the technology adoption goals of the "Digital Decade" (artificial intelligence, cloud computing, and big data), more efforts may be needed.

（4） Digital governance

The digitization of public services in Hungary presents a complex picture. The country ranks 21st in this dimension of DESI. The user coverage of e-government has significantly increased (from 64% in 2019 to 81% in 2021), surpassing the EU average of 65%. Regarding the supply of online services, Hungary scores below average on all three indicators (pre filled forms, digital public services for citizens, and digital public services for businesses), although the gap with the EU average is narrowing. The low quality of cross-border services is the main reason for these results. Hungary is also one of the countries with poor performance in terms of open data maturity (policies and characteristics related to open data portals).

As of the end of 2021, there were over 3000 public services available online, almost twice as many as a year ago, with 439 of them provided through built-in online smart forms (iFORM) that have the ability to automatically pre fill personal data (a 70% increase within a year). Since 2018, companies have been required to use online management systems.

The National Electronic Health Infrastructure (EESZT), launched in 2017, provides a unified IT environment to manage communication within the healthcare sector and for citizens. As of the end of 2021, a total of 6375 general practitioners (95.7%), 190 inpatient healthcare providers (91.3%), 2984 pharmacies (96.3%), and 8798 private healthcare providers (70.2%) have entered the system. In the two years following the outbreak, the usage rate of electronic prescriptions increased from 70% to 95%.

Hungary has resumed government coordination on cybersecurity issues. The coordination framework includes a high-level National Cybersecurity Coordination Committee composed of state secretaries from various departments, three working groups (National Cyberspace Working Group, International and EU Cyberspace Working Group, and Working Group for Developing a New National Cyberstrategy), as well as a platform for industry academia research and other non-governmental stakeholders to support the work of the committee - the Cybersecurity Forum. Regarding the future security challenges of quantum communication and quantum computing, Hungary has proposed a legal requirement to use a new encryption communication standard, namely post quantum cryptography. The bill stipulates that certain organizations providing critical services, such as financial institutions and government organizations, must use certified post quantum cryptography applications to make their network communications more secure. This legal obligation was promulgated into law at the end of 2021 and came into effect in July 2022.

The National Digital Strategy 2021-2030 sets out five priorities under its "Digital Nation" pillar: ① Coordinate the digital development of user centered central and regional administrative departments and professional systems on all platforms; ② Establish a data-driven administrative department by further strengthening the interoperability data links between the public registry and related backend systems, as well as providing e-government services Developing smart residential areas and smart zones; ④ Strengthen the information security of government electronic services; ⑤ The digital development of public services. The correct implementation of this strategy is key to further improving the quality and integrity of domestic and cross-border digital public service supply, in line with the goals of the "Digital Decade" regarding online service provision.

表4 匈牙利数字治理态势分析（SWOT）

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Table 4 SWOT Analysis of Digital Governance Situation in Hungary

Three visions for the development of digital economy

The overall goal of Hungary's National Digital Strategy 2021-2030 is to ensure that Hungary makes coordinated efforts to promote digitalization in the fields of economy, education, research, development and innovation, as well as public management, while complying with international standards, greatly contributing to the improvement of the country's competitiveness and the well-being of its citizens. At the same time, it is necessary to strengthen the country's public services and support, and ensure that this approach is always reflected in the measures taken. In order to achieve the overall goals of the national development strategy, each pillar department needs to implement the following support measures to achieve specific objectives.

（1） Building high-quality and high coverage digital infrastructure

According to the strategy, the development vision for digital infrastructure is: ① By 2030, 95% of households will be covered by gigabit networks; ② By 2023, 5G networks will cover 75% of households, major transportation routes, and county-level cities By 2025, the coverage of national telecommunications backbone network (NTG) terminals in regional headquarters will reach 100% By the end of 2025, achieve 100% coverage of 1Gbps bandwidth in public education institutions; ⑤ By 2030, the national supercomputing (HPC) capability will reach 15 Pflops (see Table 5).

表5 匈牙利数字基础设施发展目标

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Table 5 Development Goals of Digital Infrastructure in Hungary

（2） Continuously improving citizens' digital literacy

According to the strategy, the development vision of digital literacy is: ① By 2030, the proportion of people without digital skills (the proportion of people aged 16-74 who do not use the Internet) will be reduced to less than 2%; ② By 2030, the proportion of people aged 16-74 who regularly use the Internet should reach 100%; ③ By 2030, the proportion of undergraduate graduates in computer science in higher education will double (14%) (see Table 6).

表6 匈牙利数字素养发展目标

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Table 6 Development Goals for Digital Literacy in Hungary

（3） Encourage enterprises to undergo digital upgrades

According to the strategy, the development vision for the digital economy is: ① By 2030, the proportion of enterprises with comprehensive (digital) business processes (ERP) will exceed 40%; ② By 2030, the proportion of enterprises using big data analysis technology will reach 20%; ③ By 2030, the research and development expenditure in the field of information and communication will account for over 12% of the total domestic research and development expenditure (see Table 7).

表7 匈牙利企业数字经济发展目标

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Table 7 Development Goals of Digital Economy for Hungarian Enterprises

（4） Expand the scope of customer friendly digital public services

According to the strategy, the development vision for digital public services is to expand the scope of available customer friendly digital public services, increase the openness and enthusiasm of citizens and businesses to use these services, provide cross-border services in areas required by the European Union, and support this approach by automating and developing interoperable data link networks to improve the efficiency of administrative backend processes and achieve data-driven business.

By 2030, the proportion of e-government users (Internet users submitting forms) will reach 90%; Achieved a score of 95 in the entire online management process; The proportion of individuals using electronic health services will exceed 50% (see Table 8).

表8 匈牙利数字公共服务发展目标

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Table 8 Development Goals of Digital Public Services in Hungary

Four official digital strategic documents

Table 9 summarizes the documents with digital strategic nature that Hungary has formulated (approved by the government), and the table has been classified by department.

表9 国家为发展战略而编制的战略文件

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Table 9: Strategic Documents Prepared by Countries for Development Strategies