GKI analysis: Small but strong: the situation of Hungarian SMEs

By: Trademagazin Date: 2024. 12. 02. 12:23

🎧 Hallgasd a cikket: Nyelv: Sebesség: 1.05×

In the past two months, the government has made strengthening small and medium-sized enterprises its flagship in the framework of the new economic action plan. The government has not had a substantive policy debate on this, and although the new initiative sounds promising, there is a lack of causality and a substantive evaluation of (similar) measures so far (counterfactual analysis).

Why should SMEs be supported specifically? External support for SMEs either means that the sector is weak and needs to be saved, or that it is at a comparative disadvantage compared to large companies and, despite good development opportunities, they do not have access to adequate resources. Therefore, it is worth examining the situation of SMEs before the impact assessment.

In 2023, 240 thousand enterprises with more than 1 person operated in Hungary, which is the second highest value in the past decade. The majority of companies (85%) were micro-enterprises with 2-9 employees, while the proportion of large companies was 0.4%. On the other hand, 65% of employees are employed by the SME sector, of which micro-enterprises (2-9 employees) account for 26%, small enterprises (10-49 employees) for 22%, medium-sized enterprises (50-249) for 17%, and the remaining 35% are employed by large companies (over 250 employees).

One indicator of the market potential of a company is whether it can export. Foreign markets, which generally cover Western European countries, have higher price levels, generally expect higher quality, and are predominantly Eurozone members, so they use the euro, so it can be considered a more profitable and stable target market for Hungarian companies.

The share of exports in sales revenue increases from micro-enterprises to large enterprises (11%; 17%; 27; 51%, respectively), which also means that 73% of exports are generated by large enterprises and 14% by medium-sized enterprises. The share of the others is 9% and 4%, respectively.