Innovation and technological renewal in a transforming economy

Abstract

Over the last few decades, global competition has grown considerably, while in this competition, innovation is becoming the main trump card. The transition to a market economy in Central and Eastern Europe, including Hungary, has paved the way for participation in a global innovation competition, and new players in innovation – entrepreneurs – have also appeared. The limits of the decentralized, free initiative are no longer present, and the strong financial motivation of innovators is not limited by the equalizing behavior typical of planned economies. Therefore, the question is why the furtherance of innovation in Hungary has not been promoted by evolving market conditions? What is the reason for this anomaly? Earlier research sought the answer through the analysis of macroeconomic factors such as low levels of R&D expenditure, size and structure of the IT sector, quality of education, etc. The author tries to show that besides the better examined macroeconomic factors, hidden behavioral attitudes are also present behind the innovation-inhibiting phenomena, such as low willingness for taking risk and learning, noncompliance with contracts and rules, and other "soft factors". The weakness of innovation is also closely linked to the fact that the opportunities and incomes of market players depend heavily on the "strength" of their ties to state or government institutions.