József Veress National Development Office Budapest 21 st of April 2004

1. EU Funds: expected impact on Hungary József Veress National Development Office Budapest 21stof April 2004

2. Community initiatives Regional and cohesion policy Means of the development policy of the European Union Cohesion Fund Structural Fund EU financial institutions URBAN LEADER CEB ERDF ESF EIB EBRD EQUAL INTERREG EAGGF FIFG

3. Objectives of the NDP I.II (2013) NDP objectives(2004-2013) Economic and social convergence to the EU level Horizontal objectives Sustainable development Specific objectives (2006) Development of the human capital Gender mainstreaming Better environment More balanced regional development Increasing the competitiveness Increasing the employment Horizontal objectives Roma issue Increasing the employment level and development of the human resources Better infrastructure and cleaner environment Stronger regional and local potential Improvement of the competitiveness of the productive sector Environment protection Priorities (2003-2006) Information society

4. I.How is the government preparing to profit from EU subsidies • Preparation of NDP and OP-s • Building up the whole institutional framework necessary for successful implementation • Careful planning the Hungarian co-finance (especially for local governments) to be able to implement the programmes • Preparation of projects • Communication campaign

5. Financial allocation of the NDP and the Cohesion Fund • Cohesion fund: 1150mE at current prices • Structural funds: 1995,4mE at current prices (1765,33mE at 1999 prices)

6. Allocation in the different intervention areas (OP-s)

7. Expected socio-economic Impacts Forecasted macroeconomic effects of the CSF 2004-2006 • Funding will amount to an annual average of roughly 2.6% of Hungary’s GDP (comparable to Greece and Portugal) • Long term annual GDP growth rate 0,7-0,79% higher • About 100-110.000 more people employed • Better competitiveness • Investment expected to increase by 10% • Lower inflation rate in the mid and long term

8. Expected socio-economic Impacts Source: Schalk, Varga, Ex-ante Analysis of the Macro-economic Impacts of the Hungarian National Development Plan 2004-2006, Pecs-Münster 2003, study commissioned by PMO.

9. Expected socio-economic Impacts

10. II. What must companies do to access EU funds? The aim of funding is to make companies more competitive and successful, not to subsidize them Companies need own initiatives, good ideas, and transform them into projects

11. To become a beneficiary of NDP: • (International) companies can be beneficiaries of interventions (Economic Competitiveness OP) • They can apply for funding from NDP directly submitting (general) application • NDP improves the environment for investments (infrastructure, training, formation, counseling,…)

12. Expected impact of the NDP for Foreign Direct Investments2004-2006(million euro, price-level 1999)

13. Prognosis for investments related to the NDP and the national economy

14. Institutional framework Monitoring Committee Paying authority Managing Authority Organizations taking part in the implementation Intermediate Bodies Beneficiaries (applicants)

15. Monitoring Committee Paying authority ECOP MA: GKM Intermediary bodies: Magyar Fejlesztési Bank OM Kutatás-fejlesztési, Pályázati Igazgatóság Regionális Fejlesztési Holding Magyar Vállalkozásfejlesztési Kht. Információ Társadalom Kht. Magyar Államkincstár Organizations taking part in the implementation Beneficiaries (applicants)

16. Monitoring Committee Paying authority HRDOP MA FMM Intermediary bodies: ESZA Kht. OM Alapkezelő Igazgatóság Foglalkoztatási Hivatal EüSzCsM Közreműködő Szervezet Országos Foglalkoztatási Közalapítvány Magyar Államkincstár Organizations taking part in the implementation Beneficiaries (applicants)

17. Monitoring Committee Paying authority EIOP MA: GKM Organizations taking part in the implementation Intermediary bodies: Energia Központ Kht. KvVM Fejlesztési Igazgatóság Magyar Államkincstár Beneficiaries (applicants)

18. Monitoring Committee Paying authority OPRD MA: MEH Organizations taking part in the implementation Intermediary bodies: VÁTI Kht. Regionális Fejlesztési Ügynökség Magyar Államkincstár Beneficiaries (applicants)

19. Monitoring Committee Paying authority AVOP MA: FVM Organizations taking part in the implementation Intermediary Body: Mezőgazdasági és Vidékfejlesztési Hivatal Beneficiaries (applicants)

21. III. Negotiating the 2007-2013 EU budget:what can Hungary expect

22. Elements of the 2007-2013 EU budget ExpendituresIncomes CAP Traditional own Regional policy resources Other internal policies VAT resource External action GNP resource Administration

23. Regional policy Need of a reform of the cohesion policy: • Priorities • Importance of Cohesion Fund • Eligibility criteria • Indicators • Resources • Simplification of the rules

24. Reform of the cohesion policy Priorities • support of the regions lagging behind • increase the flexibility of Objective 2. (introduction of a menu approach) • transnational co-operations Eligibility criteria • 75%→should be applied, but to EUR25 Indicators • GDP/cap. at PPP • Region+country

25. Reform of the cohesion policy Resources • Equal treatment • Volume of resources – „0,45%” – should be increased Cohesion Fund • Increase of the Fund? • Revision of relevant regulations→more flexible approach→taking into account the needs of individual member states Simplification of management, decentralisation • Decentralisation of public administration • Strengthening of regions • Simplification of rules, procedures

26. CA(R)P Agreement on the reform of the CAP • Improvement of competitiveness of EU agriculture • Strengthening of rural development policy • the promotion of a fair and decent standard of living for the farming community • the improvement of food quality and safety, animal welfare and environment • the simplification of agricultural legislation and the decentralisation of its application, in order to make rules and regulations clearer, more transparent and easier to access. • Results of the CAP for Hungary: difference of support of eastern and western farmers getting to disappear by 2009 (complementary support)

27. Next programming period of the funds2007-13 • Three times higher support per year from structural funds /24 bn. €/ • The Central Hungarian Region will be above the 75% criteria • The CAP direct payments will be gradually increased

28. Financial assistance to Hungary from the EU2000-2006

29. Financial assistance to Hungary from the EU2000-2006-2013

30. e-Hungary “Hungary has to get into the „New Economy” together with the EU, in order to secure the necessary technological development- accompanied by vast investments - and (even more) to secure the overall socio-economic modernization.” (expert opinion) ?

31. Types / stages of modernization • Resource driven • Investment driven • Innovation driven • Welfare driven (Michael Porter)

32. „Innovation diamond” - Porter • Absorptive capacities • R&D supply • Diffusion mechanisms • Demand side

33. Transition to the innovation driven phase of the modernization • Keep the high growth rate of the „recovery period” following the Change of the System • Securing sustainable development- from an environmental, social, territorial, economic, etc. point of view • Catalyzing, promoting innovation driven development

34. Knowledge cluster-model (Infopark) Technopolis XI. district „brownfields” Media and contentindustrial park Infopark + universities - Information and knowledge base* *-Karolinska-model -Incubatory outsourcing

35. Cluster „precursors” • National network of knowledge parks and universities • Elaboration and common implementation of a national innovation strategy

36. Universities and knowledge parks across the border • Miskolc – Kosice - Krakow • Debrecen – Oradea • Szeged - Subotica • Pécs – Zagreb– Fiume – Ljubljana • Győr – Bratislava - Vienna • …

37. Cross-border network of Universities and scientific parks Bratislava Vienna

38. Regional Knowledge cluster-modelCEIA . Knowledge-base 1.Network of Universities and scientific parks 2.Universities and knowledge parks across the border 3. European Research and Innovation Area 4.External networks (outside the EU) Regional contentindustrial cooperation Assembling and supplying regional circle South-East European Region

39. CEIA

40. CEIA – a region of the European Research and Innovation Area: • “Knowledge net(work)” building through CEIA • Increasing weight of R&D orientated FDI from several sources • Expanding market-building in South-East Europe „New Frontier” • Increasing volume of internal (SME) innovative investments • Structural change and „fine-tuning” of the migration and educational policy • Increasing share of “knowledge -economy” products and services in the export

41. Information Internet: www.nfh.hu www.gkm.hu Information line: 06-40-200-494

42. Thank you for your attention!