This report assesses the current status of Hungary’s innovation system and policies, and identifies where and how the government should focus its efforts to improve the country's innovation capabilities. The report finds that the level of innovation activity and performance in Hungary has remained relatively low by international standards. This is attributable to both lagging innovation capabilities in the business sector and an insufficient contribution of public research organisations to the innovation system. There is a need for more stable governance of the innovation system and a more evidence-based approach to policy making in the area of science, technology and innovation policy.