New Program Boosts Business Growth in Southern Hungary

Well-functioning, high-performing businesses not only create jobs and expand the range of goods and services available, but also contribute to the well-being of local communities, suggests a recent analysis by the Oeconomus Economic Research Foundation.

The study finds that business density, i.e. the number of operating businesses per thousand inhabitants, is a good indicator of a region’s economic development. Based on the data, enterprise density depends mainly on economic geography factors such as urbanization, infrastructure, and the presence of large companies nearby, but the level of business tax also plays a role.

In Hungary, business density increased by an average of 39% between 2010 and 2023, while the population slightly declined.

The highest growth rate was recorded in Pest County (48%), while the lowest was in Heves County (29%). Budapest and Pest County continue to have the highest density, while the eastern and southern counties lag significantly behind.

The Demján Sándor Program, launched in 2024, with a budget of more than HUF 1,400 billion (EUR 3,51 billion), aims to reduce regional disparities. It primarily supports investments by micro, small, and medium-sized enterprises in the South Transdanubia region aimed at technological change. The “1+1” investment stimulus sub-program, for example, provides non-repayable grants of up to HUF 200 million (EUR 501,000) to individual enterprises.

Oeconomus’ analysis confirms that regional economic characteristics have a decisive influence on investment willingness. Small and medium-sized enterprises (SMEs) operating in large cities carry out investments financed by multiple loans, while businesses in rural areas typically develop using only their own resources – if they develop at all. This double trap also justifies focusing state aid on lagging regions.

Via Oeconomus Economic Research Foundation; Featured photo: MTI/Balogh Zoltán