Innovation Policy Challenges in Transition Countries: Foreign Business R&D in the Czech Republic and Hungary

R&D expenditures of national firms decreased considerably and structural changes of R&D financing followed the fall of planned economy in the transition period of Central Eastern European economies. In the middle of the 1990s, business R&D started to grow in the Czech Republic and Hungary due to investments of foreign affiliates and restructuring of domestic companies. Nowadays multinational companies have a decisive share in business R&D in these countries, which entails special challenges for national innovation policy. In this paper, we look through the development of the Czech and Hungarian innovation policy considering MNEs R&D. We use case studies of the Czech automobile industry, the Hungarian pharmaceutical industry, and the new MNE-related university units and private universities to show how these companies influence innovation systems in transition economies.