GKI analysis: Don’t let anyone else do the work for you
An often-mentioned element of economic competitiveness is exportability. If a company’s products can be sold abroad at a good price (e.g., products of domestic pharmaceutical manufacturers), this improves the operation of the enterprise (they can avoid the fluctuations of the small domestic market), but also contributes to the economic stability of our country. Let’s not forget that exports account for nearly 80% of GDP, and net exports account for 7% of GDP! For this reason, the number of exporters, the value of exports compared to total output, and of course the total volume of exports are good indicators of corporate efficiency and how innovative domestic enterprises are.
Previous governments have also recognized all this! Already in the Kádár era, companies that “produce” hard currency were given special support, and the encouragement of exports remained a constant focus of economic policy. One important step in this was the establishment of Eximbank in 1994. Despite the continuous support (which was also supported by EU funds after 2007), the export capacity of domestic SMEs has hardly improved, which is clearly shown by the fact that although domestic enterprises took out subsidized loans of HUF 1,200 billion under the Gábor Baross reindustrialization program, the issue has resurfaced under the Demján program (with a budget of HUF 1,410 billion). Although in terms of the national economy, the Gábor Baross program did not achieve its goal, the Demján program is starting with almost the same goals, and with these it aims to give the Hungarian economy a “flying start”.
Of the 250,000 companies operating in Hungary and carrying out substantive activities, 11,600 are foreign-owned. 9% of the companies had exports, the rest of the companies did not cross the export capacity threshold. Within this, companies with a Hungarian majority ownership account for 80%. However, the ratio is exactly the opposite within export revenue. In addition, only 8% of domestic companies exported, while the corresponding proportion for foreign companies was 37%.
Nearly 19% of Hungarian manufacturing companies, compared to 5-6% of domestic companies in other sectors, export (except for the construction industry, where the proportion is 3%). The weak performance of the construction industry is also due to the fact that state investments have sucked up capacity in recent years.
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