The New Hungary Development Plan 2007-2013
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THE NEW HUNGARY DEVELOPMENT PLAN National Strategic Reference Framework of Hungary 2007–2013 Employment and Growth National Strategic Reference Framework of Hungary 2007–2013 Date of the decision of the European Commission: 7 May 2007 The NSRF is co-financed by the European Regional Development Fund, the European Social Fund and the Cohesion Fund. TABLE OF CONTENTS Executive Summary 1 1. Introduction 20 1.1. Premises 20 1.2. The purpose and motivation of this document 20 1.2.1. The determinant role of the geo-political position of Hungary 20 1.2.2. Theoretical foundations of the strategy 21 1.2.3. Participants in the preparation of The New Hungary Development Plan, the work progress 23 1.2.4. Public discussion on the New Hungary Development Plan 25 2. Foundations of the strategy 28 2.1. The medium term macro-economic course 28 2.1.1. Situation and prospects of our macro-economy 28 2.1.2. Macro-economic objectives 30 2.2. Hungary is eligible for Community support 31 2.3. The development of the country is strongly determined by international trends 32 2.4. Social-economic situation analysis 34 2.4.1. Economic growth with structural risks 34 2.4.2. Low level of activity, stagnating employment 35 2.4.3. The dual nature of economic structure 38 2.4.4. Our transport system requires development 43 2.4.5. The change to a market economy has required substantial social sacrifices 46 2.4.6. Environmental values, with serious deficits 55 2.4.7. Increasing regional differences 59 2.4.8. Re-thinking the role of the state 62 2.4.9. Disparities, weaknesses and potentials determinant from the aspect of growth and employment 65 2.5. Experiences of the First National Development Plan 68 4 3. Defining the Strategy 75 3.1. Strategic objectives of the New Hungary Development Plan 75 3.1.1. Overall objective: increased employment and promotion of long term growth 75 3.1.2. Increased employment 77 3.1.3. Permanent growth 80 3.1.4. Horizontal policies 81 3.1.5. The strategy also serves Hungary’s international integration 91 3.2. Thematic and regional priorities related to the objectives 92 3.2.1. Priority 1 : Economic development 94 3.2.2. Priority 2: Transport development 103 3.2.3. Priority 3. : Social Renewal 109 3.2.4. Priority 4 : Environment and energy development 126 3.2.5. Priority 5.: Regional development 132 3.2.6. Priority 6: State reform 148 3.3. Coordination and communication of the New Hungary Development Plan 155 4. List and Structure of the Operational Programmes 156 5. Indicative Financial Plan and Additionality 156 5.1. Indicative financial allocation plan of the Operational Programmes 156 5.2. Verifying compliance with the additionality principle 158 6. Implementation and administrative efficiency 163 6.1. Institutional system 163 6.1.1. The National Development Council 163 6.1.2. Development Policy Steering Committee 164 6.1.3. The National Development Agency 165 6.1.4. Managing Authorities (MA) 166 6.1.5. Intermediate bodies (IB) 170 5 6.1.6. Enhancement of the administrative capacity of implementation 171 6.1.7. Responsibilities of the line ministers involved in the operational programmes 173 6.1.8. Monitoring Committees 173 6.1.9. Institutional conditions of the regional Operational Programmes 175 6.1.10. Financial management and control 176 6.2. Implementation processes 177 6.2.1. Coordination mechanisms 177 6.2.2. Basic principles 180 6.2.3. Compliance with horizontal principles 181 6.2.4. Processes 183 6.3. Efficiency of the administrative capacity in the service of the NHDP 184 7. Coherence and consistence 185 7.1. Coherence with the National Action Programme 185 7.2. Compliance with the Community Strategic Guidelines 187 7.3. Compliance and coordination with the New Hungary Rural Development Strategic Plan and the National Strategic Plan for Fisheries sector 187 7.3.1. Principles of planning coherence 188 7.3.2. Co-ordination during implementation 188 8. Evaluation (ex-ante and environmental evaluation) 189 8.1. Ex-ante evaluation 189 8.2. Environmental evaluation 191 9. Annexes 193 6 Preface Hungary has reached the gateway of a historical opportunity. Between 2007 and 2013, the country will be eligible for a development fund of EUR 22.4 billion to re-align itself with advanced countries. This is the money of European taxpayers. Together with the funds available for rural development, Hungary can use almost HUF 8,000 billion. Through the successful use of this enormous amount, we can strengthen our existing capacities and eliminate obstacles that hamper our development. If we are able to find our own key leverage points and study our competitors, the economy can show a spectacular growth within the next couple of years. The outstanding performance of the most tal- ented is a precondition for our welfare. If we support the renewal of the society, we can increase the number of employees and efficiently contain poverty. More and more people will be able to advance and fend for their families. Meanwhile, a fair share of public burdens will create resources enabling the solidarity-based society to provide reasonable living conditions for those unable to be self-reliant. If we stick together, we will succeed. This historical opportunity, however, may be lost if we cannot measure up to the task or if we set- tle for less, i.e. we are satisfied with commonplaces instead of an offensive strategy based on our own strengths, if we fragment resources under the pressure of excluded groups instead of selecting large-scale objectives working in synergy, if we prefer some prestige investments instead of every- day work, if we measure success by the achievements of tomorrow instead of long term effects. If we choose isolation instead of fighting and winning in global competition, we will establish ourselves only for survival. The example of countries in the front-rank of realignment shows that we need a brave and creative economic development concept embracing issues of employment as well that respects both the satisfaction of social demands and macro-economic stability. Therefore, we have to consider several aspects when elaborating the underlying vision of our develop- ment strategy. We have to examine our ideas in the light of the actual situation and capacity of the country. On the other hand, we should not forget that a European Union endeavouring progress has expectations requiring modernisation in terms of the absorption of development funds. We have to consider also that other emerging regions – like South-East Asia or South-East Europe – are our competitors. It is obvious that our economy – as a Member State of the European Union striving for realignment – can no longer be competitive with low wages: instead, we must offer products and serv- ices that represent high added value. Especially in a situation where our competitors are not regarded as ‘enemies’ to be defeated – quite the contrary, we establish prospering co-operation with them. The history of the European Union is a good example of the fact that everyday cooperation can create mutual trust opening new horizons of development, eliminating long-standing conflicts. This lesson can be an excellent guideline not only in global competition but also in solving old internal conflicts! 7 Our development strategy can be implemented only if driven by the synergic effects of several governmental measures. Without long term balance, the indebtedness of the country will further increase, and we will fall behind compared to developed countries. We want a state characterised by fewer privileges, higher performance, less bureaucracy and cost efficient operation. To ensure safe financing, we have to increase revenues and cut expenditures – the lost balance can be restored. The existing welfare system cannot be maintained without re-thinking the role of the state and indi- vidual responsibility even in the near future – although it has been consuming too many resources at the expense of economic growth. Therefore, we have to re-organise public administration serving the citizens and companies. We have to modernise healthcare, education and the social system available for everyone so that these systems can perform at a higher quality level. Development implemented from EU funds can be based on these – within seven years, these efforts can result in a physically and socially new Hungary. But, we have to do a lot until then! First of all, we had to define the two most important objectives to remedy our most acute problems, resulting in the improvement of the life of most people: these objectives are the expansion of employ- ment and the establishment of the conditions of sustained economic growth. The effects of the imple- mentation of these two objectives cannot be appreciated enough in a country where half of the people of active age cannot find a job, and the GDP does not even reach two-thirds of the EU average. However, we have a crucial task as well, representing a counterbalance for our development course focused on employment and growth. The imperatives of sustainability and cohesion are curbs call- ing our attention to the fact that only long term viable processes can be launched. Environmental sustainability means the conservation of our natural values, so that also our children can enjoy them. Economic sustainability in turn means that we do not have to pay more taxes to ensure the successful operation of the results of development. Similarly, social sustainability means that we have to assist more and more people to care for themselves and take responsibility for the country as a whole. Social and regional cohesion is the manifestation of the principle of solidarity.