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Innovation Policy Challenges in Transition Countries: Foreign Business R&D in the Czech Republic and Hungary


R&D expenditures of national firms decreased considerably and structural changes of R&D financing followed the fall of planned economy in the transition period of Central Eastern European economies. In the middle of the 1990s, business R&D started to grow in the Czech Republic and Hungary due to investments of foreign affiliates and restructuring of domestic companies. Nowadays multinational companies have a decisive share in business R&D in these countries, which entails special challenges for national innovation policy. In this paper, we look through the development of the Czech and Hungarian innovation policy considering MNEs R&D. We use case studies of the Czech automobile industry, the Hungarian pharmaceutical industry, and the new MNE-related university units and private universities to show how these companies influence innovation systems in transition economies.

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Both of the authors took part in the LocoMotive research, a FP 6 (Regions of Knowledge) project (contract No. 030089) led by Tutech Institute in Hamburg, and with the participation of eight EU member countries. The interviews of pharmaceutical companies in Budapest were taken for this project by the Centre for Regional Studies with the leadership of Prof. Györgyi Barta.

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Correspondence to Balázs Lengyel.



See Table 2.

Table 2 FDI and foreign companies’ attraction in the Czech and Hungarian innovation policies

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Lengyel, B., Cadil, V. Innovation Policy Challenges in Transition Countries: Foreign Business R&D in the Czech Republic and Hungary. Transit Stud Rev 16, 174 (2009).

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  • R&D
  • Innovation policy
  • Foreign-owned companies
  • Transition economies
  • University-industry relation

JEL classification

  • O32
  • O38
  • R11
  • R58