Working Papers

Comparative analysis of the evolution of the CE4 countries’ national innovation systems and their innovation performance in 2000–2020

ATTILA HAVAS

2023/38

This paper compares the evolution of CE4 countries’ (Czechia, Hungary, Poland, and Slovakia) national innovation systems, as well as their innovation performance. Its analytical framework draws on evolutionary (and institutional) economics of innovation.

Given the structural features and the level of socio-economic development in the CE4 countries, as well as the dominant way of thinking since the cold war, Western politicians, business people, analysts and journalists tend to share a ‘block’ view of these countries. Further, there is a noticeable – and certainly understandable – ‘drive’ also from the academic community to produce findings that can be generalised across the new EU member states, but at least for the CE4 countries, that is, to focus on identifying shared or similar features. Yet a closer look at the structure of the national innovation systems in these countries, as well as at their innovation performance, points to a different direction. While the structural composition of the research sub-systems of the CE4 countries showed a great diversity already in 2000, fairly significant changes have occurred since then almost in all countries, adding more colours to the observed diversity. Neither a similar structural composition of the research sub-system can be observed, nor a move towards a similar structure. Their innovation performance is also diverse.

Given the diversity among innovation systems, one should be very careful when trying to draw policy lessons from the ‘rank’ of a country as ‘measured’ by a composite indicator. The CE4 countries, therefore, need to avoid the trap of paying too much attention to simplifying ranking exercises. Instead, it is of utmost importance to conduct detailed, thorough comparative analyses, identifying the reasons for a reasonable or disappointing performance.

2024

Futures of the interpenetration of criminal and lawful economic activities in the European Union in 2035: Scenarios and policy implications

ATTILA HAVAS – PHILIPP AMANN – MARCO LETIZI – HOLGER NITSCH – UMUT TURKSEN

2023/37

Policy-makers – working on various domains, notably regulations, home affairs, security, science, technology, and innovation (STI) policies – need to pay close attention to possible new ways and methods for the interpenetration of criminal and lawful economic activities. This paper is aimed at assisting these policy-makers by presenting four possible futures (scenarios) on the interpenetration of criminal and lawful economic activities and considering their implications.

These scenarios assume that the interpenetration of criminal and lawful economic activities – just as most other types of crime – cannot be fully eradicated. There are two competing groups of actors whose capacities, activities, and efficiency largely determine the possibilities for, and repercussions of, the interpenetration of criminal and lawful economic activities: criminal actors and law enforcement agencies (LEAs). The scenarios, therefore, are shaped by two main dimensions: i) whether LEAs are well-resourced, strong, and effective or not, and ii) whether large criminal organisations or small-scale ones are the dominant criminal actors. Hence, the four scenarios consider various types of ‘push’ and ‘pull’ factors that influence actors to commit – or not – criminal economic activities; the main types of these activities; features of regulations; research, technological development, and innovation activities by the criminal actors vs LEAs; as well as the activities, capabilities, and resources of LEAs.

By considering the nature of the criminal activities that aim at penetrating lawful economic activities, and the options to prevent, monitor, and fight these crimes, the report explores a range of policy implications, especially for STI policies and regulations. Further, it stresses the multi-level nature of policy-making in the EU, as well as the need for collaboration with the willing countries outside the EU. Criminal actors can penetrate lawful economic activities in the EU when commissioned by hostile (‘rogue’) states that aim to weaken and/or undermine the EU and its Member States as part of their geopolitical power games.

2024

Does cutting the value of unemployment insurance benefits affect take-up? Evidence from Hungary

MÁRTON CSILLAG – BALÁZS MUNKÁCSY – ÁGOTA SCHARLE

2023/36

Does a drastic cut in in potential benefit duration affect the take-up of unemployment insurance benefits among those eligible? We evaluate a policy change reducing the maximum length of UI benefits from 9 to 3 months in Hungary at the end of 2011. We rely on rich longitudinal matched administrative data, which allows us to obtain information on a large sample of job losers, and precisely estimate eligibility for UI benefits. We find that slightly less than 60 percent of UI eligible individuals claim benefits, and that while the length of benefit entitlement is only slightly positively correlated with taking up benefits, UI claiming rate tends to increase with previous earnings. We show that the proportion of UI benefit claims fell only slightly (by 1.5 – 2 percentage points), but this effect was more pronounced for those with the largest potential losses in UI value. This moderate effect might be related to the fact that the reform essentially got rid of the period of flat-rate UI benefits, while keeping the period when UI benefits were proportional to previous earnings roughly unchanged.  At the same time, UI take-up decreased among those with low earnings (around the minimum wage) but stable employment, a group with likely little savings, which is alarming from a social policy perspective.

2024

Corruption Risk and Education at Regional Level

ISTVÁN JÁNOS TÓTH – MIKLÓS HAJDU

2023/35

In this study, we investigate the correlation between corruption risk and the level of education in European sub-national regions (NUTS2 level) between 2006 and 2020 in 16 member countries. We use the data of Tenders Electronic Daily (TED) covering the parameters of 6,766,274 public procurement contracts in total and NUTS2 level Eurostat data. We found that higher educational attainment is associated with lower corruption risk and a higher level of control of corruption, indicating that better-educated locals may force authorities to limit corruption risk as they have less tolerance for corrupt behavior. In addition, the results point out that the increasing level of education is associated with a decreasing level of corruption risk. Our study contributes to corruption research by using objective indicators characterizing the NUTS2 regions of some European countries.

2024

Testing Corruption Indicators: Statistical Analysis of a Hungarian Cartel

ISTVÁN JÁNOS TÓTH – MIKLÓS HAJDU – MÁRTON VIDA

2023/33

The study analyzes the reliability of corruption risk indicators using Hungarian public procurement data, specifically focusing on EU-funded contracts associated with a cartel case revealed by the Hungarian Competition Authority (HCA) in 2016. The investigation aims to determine whether corruption risk indicators for public procurement contracts related to the identified cartel case (214 contracts) are significantly higher than those for similar contracts in different submarkets. The analysis utilizes data from the Corruption Research Center Budapest database, encompassing Hungarian public procurement information from January 1998 to July 2023, totaling around 340,000 contracts or contract lots. Since the cartel case detected by the HCA was part of the EU-funded KEOP program, covering contracts from 2015 to 2016 in the manufacturing sector, our analysis is limited to EU-subsidized contracts in the manufacturing sector awarded in 2015 and 2016.

Our findings highlight that the corruption risk indicator (single bid), endorsed by the EU Single Market Scoreboard, provides valuable insights for identifying anomalies in public procurement. For the identified cartel contracts, the likelihood of a contract being awarded to a single bidder (without competition) was significantly higher compared to contracts not associated with a cartel case. A similarly robust outcome was observed for the indicator measuring contracts concluded with more than three bids. The probability of contracts with more than three bids was significantly lower for cartel contracts than for others.

The indicator assessing the occurrence of rounded winner prices yielded a significant result for one of the three subsamples, and in another, it was significant only at the 10% level. These results affirm the significance of conducting statistical analyses on contracts and the calculation, as well as in-depth examination, of corruption indicators (single bid, more than three bids, and rounded winner price) to identify anomalies in public procurement.

2024