The prospects of an innovation-based regional development in Hungary

The European Union aims to become the leading knowledge-based region of the world by 2010. Innovation as a major source of competitiveness and economic growth has been brought to the center of regional development policies. After joining the European Union this constitutes a serious challenge for Hungary since the country's competitiveness depends not only on the effectiveness and development level of its innovation system but also on the extent to which the country is capable of a successful integration to the European Research Area. After surveying the international (i.e., the US and the EU) experience and the relevant literature this paper provides an analysis on the prospect of an innovation-based regional development strategy for Hungary particularly on the role universities might play in that. The main focus is on the institutional and regulatory frameworks of innovation with a special attention to the characteristics of university R&D financing.