How can catching up become a competitiveness turnaround?
Introduction
The 2026 European Innovation Scoreboard offers both an encouraging and a sobering assessment of Europe. The European Union’s innovation performance has been improving steadily since 2019 and increased again between 2025 and 2026. This is a positive development in itself. A closer reading, however, gives a more nuanced and less reassuring picture: innovation gaps between Member States remain significant, convergence in Central and Eastern Europe is uneven, and several global competitors — including South Korea, China, Australia, Canada and the United States — outperform the EU in a number of areas.
Hungary has made notable progress in the 2026 results and is classified as a Moderate Innovator. It stands at 72.1% of the EU average and ranks 21st among Member States. Overall, Hungary outperforms six EU countries: Croatia, Poland, Slovakia, Latvia, Bulgaria and Romania. At the same time, the structure of Hungarian performance is more complex than the aggregate ranking suggests. In some indicators Hungary is close to the EU’s leading group, while in others it remains in the lower third of the ranking.
The key message of the Hungarian innovation profile is the clear trend of improvement, coupled with a strong asymmetry in performance. Digitalisation, exports of medium and high-tech products, the share of foreign doctorate students and some research linkages paint a favourable picture. By contrast, public R&D expenditure, intellectual assets, employment in innovative enterprises, venture capital, and the broader innovation base of domestic small and medium-sized enterprises remain persistent weaknesses.
What is the European Innovation Scoreboard and why does it exist?
The European Innovation Scoreboard, or EIS, has measured and compared the research and innovation performance of EU Member States, other European countries and selected global competitors since 2001. According to the European Commission, the EIS provides an annual comparative assessment of how countries perform in research and innovation and helps governments identify their strengths, weaknesses and areas for policy intervention.
Strictly speaking, the Scoreboard is not a legal institution. It is better understood as an institutionalised EU policy measurement and benchmarking instrument. Its function is nevertheless similar to other tools of EU policy coordination: it makes Member States’ performance comparable on the basis of a common methodology, reveals structural differences between national systems, and helps EU institutions, governments and development policy actors use a shared language when discussing innovation, competitiveness, research and development, and technological catching up.
One recurring lesson of earlier Scoreboards is that innovation cannot be captured by a single indicator. It is not enough to look only at R&D expenditure, patents or business investment. The EIS therefore measures several dimensions: human resources, attractive research systems, digitalisation, finance and support, firm investments, innovators, linkages, intellectual assets, sales and employment impacts, trade impacts, and resource and labour productivity.
The 2026 edition continues to classify countries into four groups: Innovation Leaders, Strong Innovators, Moderate Innovators and Emerging Innovators. Innovation Leaders perform above 125% of the EU average; Strong Innovators between 100% and 125%; Moderate Innovators between 70% and 100%; and Emerging Innovators below 70%.
Three durable tendencies emerge from previous Scoreboards. First, the EU’s average innovation performance has improved over the longer term. According to the 2026 edition, the EU’s summary innovation performance has increased by 11.6 percentage points since 2019 and by a further 1.7 percentage points between 2025 and 2026, following a slower year of growth. Every Member State performs better than in 2019, but the scale of improvement varies considerably: from 0.5 percentage points in Luxembourg to 19.8 percentage points in Estonia.
Second, Europe’s innovation map remains relatively stable. Sweden, Denmark and the Netherlands continue to belong to the group of Innovation Leaders. Finland, Belgium, Ireland, Luxembourg, Austria, Germany, France, Estonia and Malta are Strong Innovators. Hungary is in the Moderate Innovator group together with Italy, Spain, Portugal, Cyprus, Slovenia, Lithuania, Czechia and Greece, while Croatia, Poland, Slovakia, Latvia, Bulgaria and Romania are classified as Emerging Innovators.
Third, innovation performance increasingly needs to be interpreted through the lenses of competitiveness, strategic technologies, digitalisation, productivity and economic resilience. The 2026 Hungarian results should therefore not be read as a simple annual ranking. They show instead that Hungary has visible strengths, but these have not yet come together into a broad, stable and self-sustaining innovation ecosystem.
Hungary in 2026: an improving path with a fragile structure
In 2026 Hungary stands at 72.1% of the EU average and ranks 21st among Member States. The Hungarian summary innovation index has improved by 13.4 percentage points since 2019, exceeding the EU’s overall improvement of 11.6 percentage points. This is an important positive result: over the longer term, Hungary is not on a path of decline but on a path of improvement. At the same time, performance decreased by 0.3 percentage points between 2025 and 2026, indicating that convergence is neither automatic nor necessarily stable.
The Hungary country profile identifies three relative strengths: foreign doctorate students as a share of all doctorate students, public-private co-publications, and individuals with above-basic overall digital skills. The three main relative weaknesses are design applications, employment in innovative enterprises and public sector R&D expenditure.
One of the most important lessons of the Hungarian performance is that several indicators place Hungary in a significantly better position than the aggregate ranking would suggest. Hungary’s strongest indicator is exports of medium and high-tech products, where it ranks 5th among EU Member States. This means that only Ireland, Slovakia, Slovenia and Czechia are ahead of Hungary in this indicator, while Hungary outperforms Germany, Austria, Belgium, the Netherlands, Sweden, Denmark, Finland, France, Italy, Spain and most other Member States. According to the country profile, this reflects the weight of export-oriented sectors such as automotive, battery production and IT-electronics.
A second important area is direct and indirect government support for business R&D. Hungary ranks 8th in the EU in this indicator, which is a strong result, especially compared with its 21st position in the overall innovation index. The picture is not entirely straightforward, however: this indicator also recorded one of the largest recent declines in Hungary, falling by 46.3 percentage points compared with 2025. Hungary therefore still holds a relatively good position in support for business R&D, but the stability of the support environment has become a question.
Digitalisation is another important strength. Hungary performs above the EU average in the digitalisation dimension, at 107.4%, and ranks 11th among Member States. It also ranks 11th in the share of individuals with above-basic digital skills. In this field, Hungary outperforms several Strong Innovators or better-positioned countries, including Germany, Belgium, Croatia, Slovakia and Slovenia.
The fourth area of relative strength is the share of foreign doctorate students. Hungary performs above the EU average in this indicator, at 131.8%, and ranks 12th. It thereby outperforms several regional and Western European countries, including Czechia, Germany, Belgium, Slovenia, Slovakia, Croatia and Bulgaria.
The most important weakness is the human resources dimension. Hungary stands at only 54.7% of the EU average and ranks 25th. The share of the population with tertiary education is particularly weak, with Hungary also ranking 25th in this indicator. This is a strategic constraint: a long-term innovation system cannot be built without a broad and highly skilled human capital base.
Public R&D expenditure is another weak point. According to the Hungarian country profile, public sector R&D expenditure stood at 0.31% of GDP in 2024, compared with an EU average of 0.72%. Hungary ranks 22nd in this indicator. This matters because a weak publicly funded research base constrains scientific excellence, patenting activity, university-business cooperation and the creation of high value-added technological capacities over the longer term.
The breadth of business innovation is also a challenge. Although the Innovators dimension improved compared with 2025, Hungary still stands at only 57.9% of the EU average and ranks 21st. It ranks 20th for SMEs introducing product innovations and 23rd for SMEs introducing business process innovations. This indicates that innovation is still not sufficiently widespread across the business sector.
A change of course is also needed in intellectual assets. Hungary stands at 58.1% of the EU average in this dimension and ranks 23rd. It ranks 16th in PCT patent applications, 24th in trademark applications and 25th in design applications. This suggests that Hungary’s industrial and export performance does not generate enough domestically rooted and formally protected intellectual property.
A similar weakness can be seen in knowledge-intensive services and business digitalisation. Hungary ranks 5th in exports of medium and high-tech products, but only 16th in knowledge-intensive services exports. Structural indicators show that Hungary’s Digital Intensity Index stands at 23.9, compared with an EU average of 34.2. In other words, strong digital infrastructure and improving individual digital skills do not yet translate sufficiently into business-level technological transformation.
One of the key questions of Hungarian innovation performance is the relationship between industrial embeddedness and domestic knowledge creation. Hungary is above the EU average in manufacturing employment and in the share of medium and high-technology sectors. According to the country profile, manufacturing accounts for 20.4% of employment in Hungary, compared with the EU average of 15.4%, while the employment share of medium and high-technology sectors is 44.3%, compared with an EU average of 38.6%.
This is a strength, but also a risk. Hungary is strongly embedded in international value chains, and foreign-controlled enterprises generate 30.8% of value added, more than twice the EU average of 13.3%. This means that a significant part of Hungarian technology-intensive exports is linked to external corporate decisions, foreign-owned production systems and international value chains.
The question, therefore, is not whether Hungary has technology-intensive industrial presence. It does. The real question is how much of this can become domestic knowledge, Hungarian-owned business growth, intellectual property, technology transfer, supplier upgrading and internationally visible innovation capacity. Based on the 2026 Scoreboard, this is one of the central tasks of Hungarian innovation policy.
Policy conclusions for Hungary
The first conclusion is that Hungary needs to turn its sectoral strengths into systemic innovation capacity. Exports of medium and high-tech products, digital skills and the share of foreign doctorate students are important achievements, but they are not sufficient in themselves. They become genuine competitiveness advantages only if they are connected to a stronger domestic R&D base, broader business innovation, more intellectual property and stronger knowledge-intensive service capacities.
It is also clear that there can be no durable innovation convergence without strengthening publicly funded research. Public sector R&D expenditure is not merely a budgetary item; it is the foundation of future technological and scientific capacity. If Hungary continues to underperform in this area, business innovation, patenting activity, university-business cooperation and international research embeddedness will remain constrained.
The digital advantage must be turned into a business productivity advantage. Hungarian digitalisation indicators are more favourable than the country’s overall innovation position, but business digital intensity is low. The next step is therefore not simply infrastructure development, but the business use of artificial intelligence, cloud solutions, the data economy, industrial digitalisation and digital public services.
Another important conclusion is that EU funding policy is a key enabler of innovation policy. Competitive EU programmes — including Horizon Europe, the Digital Europe Programme, the European Defence Fund and LIFE — are indispensable tools for ecosystem-building. Hungary’s participation and absorption in these programmes has improved, but the country’s overall share remains around 1%. Funding absorption becomes a genuine innovation factor when it creates partnerships, knowledge transfer, international embeddedness and business growth. In this context, the regional dimension of the Hungarian innovation system also needs to be strengthened. Innovation is not a process that can rely only on the capital city or a few university-industry centres. Direct EU funding, smart specialisation strategies, territorial development instruments and international partnerships can together help reduce regional innovation gaps.
The most important message of the Scoreboard is therefore that Hungary’s next task is not simply to move up in the ranking. The real objective is to turn technology-intensive industrial presence into domestic knowledge, Hungarian-owned business growth, higher added value, stronger intellectual property and broader regional innovation capacity.
Towards a more balanced European innovation space
One of the most important messages of the European Innovation Scoreboard is that Europe’s performance cannot be assessed only through internal EU comparison. In the global innovation race, the EU is improving, but it is not catching up with all of its competitors. According to the 2026 EIS, South Korea remains the strongest global innovator and performs 21.9% above the EU average in 2026. China, Canada, Australia and the United States are also ahead of the EU. It is particularly important that China, South Korea and Australia widened their lead over the EU between 2019 and 2026.
One of the keys to the global comparison is public and business R&D financing. The 2026 summary states that government support for business R&D has grown more strongly in China, the United States and Canada than in the EU since 2019, while business R&D expenditure has expanded faster in the United States, China, Japan and South Korea than in the European Union. This means that innovation policy is no longer merely a matter of research policy or education policy. It is also a question of industrial policy, technological sovereignty and geopolitics. In artificial intelligence, semiconductors, batteries, defence innovation, clean technologies, health industries and the data economy, global competition is moving faster than many of the EU’s traditional funding and regulatory systems can follow.
For European competitiveness, reducing innovation gaps and building a more integrated European innovation space are therefore essential. The role of the European Union on the funding side is particularly important. The differences revealed by the European Innovation Scoreboard resemble, in many respects, the pattern visible in the absorption of direct EU programmes. Horizon Europe, the Digital Europe Programme, LIFE, the European Defence Fund and future competitiveness-oriented programmes do not operate through automatic national envelopes. They are mainly competitive programmes based on international partnerships. Where the research base is stronger, the innovation ecosystem more developed, university-business cooperation more stable and international networks more extensive, direct EU funding is usually captured more successfully.
This is partly reflected in the Horizon Europe funding intensity per researcher indicator in the 2026 country profiles. In Hungary, the 2023–2025 average was EUR 1,050.6 per researcher, compared with an EU average of EUR 4,851.9. Poland was in a similar range, at EUR 1,257.9 per researcher, while Estonia reached an exceptionally high EUR 10,636.5 per researcher. This shows that a smaller but strongly internationalised innovation system can perform particularly well in competitive EU programmes.
The indicator does not, however, mechanically reproduce the innovation ranking. Sweden is the EU’s leading Innovation Leader, yet its Horizon Europe funding intensity is below the EU average, at EUR 3,748 per researcher. Germany, a Strong Innovator, stands at EUR 3,695.9 per researcher. This suggests that funding intensity per researcher is important but not sufficient on its own. It depends on the size of the research base, the weight of national R&D funding, the role of business research, the funding strategy of applicants and the extent to which a country relies on direct EU funding.
It is also necessary to consider what share of Horizon Europe and other direct programme funding reaches universities, research institutes, enterprises, or applied research and demonstration projects. Where business participation, industrial uptake, technology demonstration, pilot projects and close-to-market innovation play a larger role, funding absorption is not necessarily best understood in relation to researcher numbers alone. For this reason, the analysis of EU funding distribution should not be narrowed down to researchers only. The participation of companies — especially SMEs — as well as technology transfer actors, municipalities and regional innovation centres also needs to be measured.
This is particularly important for the next research and innovation framework programme, FP10, and the planned European Competitiveness Fund. The political direction of the Commission points towards giving greater weight after 2028 to strategic technologies, artificial intelligence, clean industry, biotechnology, defence innovation and European industrial capacities. Accordingly, competitiveness-oriented funding should not follow only classical research excellence. It should also assess whether a country or region can turn knowledge into business innovation, industrial application, intellectual property, higher added value and regional development.
Increasing the absorption of direct EU funds can therefore be a suitable instrument for reducing European innovation gaps. Successful participation brings not only additional funding, but also international partnerships, technology transfer, institutional learning, business linkages and European visibility. This can be an important convergence channel especially for Moderate and Emerging Innovators. Yet the current system is not sufficient for this purpose. If weaker innovation systems do not receive targeted support for capacity-building, project development and partnership-building, competitive funding will continue to concentrate primarily in the strongest innovation centres.
The right approach for the European Competitiveness Fund would therefore be to complement the excellence logic with targeted capacity-building, without weakening excellence itself. Funding distribution should take into account not only research performance, but also business R&D capacity, the weight of applied research, SME innovation participation, technology demonstration capacity, public-private cooperation, coordinator experience and innovation gaps between regions. From Hungary’s perspective, this means that the absorption of direct EU funds should not be treated merely as a grant-writing or research-institutional issue, but as a development policy tool for strengthening the entire domestic innovation ecosystem.
Photo: Lukbar / depositphotos.com
