SWOT Analysis - Central Europe

SWOT Analysis
Status of Creative Industries at Pécs
„This project is implemented
through the CENTRAL EUROPE
Programme co-financed by the
ERDF.”

Head of publication: János Keresnyei, president, CICC Association
Edited by: EURES Consulting Ltd., South Transdanubian Cultural Industry Cluster,
CICC Association, Stakeholder team of Pécs Creative Industry
First Published in 2010 by Cultural Innovation Competency Center
All right reserved.

Content
2.1 Short introduction (based on statistical data) ................................................................ 7
2.2 Brief description of the economy ....................................................................................... 8
2.3 General presentation of the administrative system .................................................... 10
2.4 A comprehensive attempt to promote culture and creative industries (cultural
and creative industry related activities) ................................................................................ 11
3.1 Introduction to the major social, geographical and economical changes........ 15
3.2 Brief description of the economy, presentation ........................................................... 16
3.4 Brief presentation of the city’s cultural profile (cultural assets) ................................ 19
4.1 Demographical structure .................................................................................................... 21
4.2 Industrial structure .................................................................................................................. 22
4.3 Cultural structure.................................................................................................................... 27
5.1 Definition of the creative industry ..................................................................................... 29
5.2 The position of the creative industry ............................................................................... 30
5.3 The creative industry in Pecs according to statistical data ..................................... 33
5.4 The situation of the creative industry in the selected subsector .............................. 38
5.5 Summary .................................................................................................................................. 42
6.1 The definition of the public sector .................................................................................... 45
6.2 The position of the public sector ....................................................................................... 45
6.3 The size of the public sector ............................................................................................... 45
6.4The supported activities of the public sector ................................................................. 46
6.5. Summary ................................................................................................................................. 47
7.1 Strengths ................................................................................................................................... 49
7.2 Weaknesses ............................................................................................................................. 50
7.3 Opportunities .......................................................................................................................... 52

7.4 Threats ....................................................................................................................................... 53
7.5 Essence of the SWOT analysis (according to 20 questionnaire) .............................. 53
The professional questionnaire used by the analysis: ........................................................ 57
The list of organizations participating in the questionnaire analysis: ............................. 60
The main results of the structured database used in the evaluation of the statistical
analysis (Source: Central Statistical Office): ......................................................................... 61
List of employed documents and electronic documents: .............................................. 65

1. Summary (Objectives, expectations methods)
The goal of the present study is the detection of the operational efficiency in
the creative industry in the city of Pecs and the preparation of a situation
analysis and SWOT analysis on behalf the sectoral work’s and the services’
coordination. The study is intended to seek more than a simple valuation. The
purpose of our survey is to serve as a basis for further analysis of sectoral
developments and lead to concrete results.
Almost two months of preparatory work preceded it the analysis, as during
the process of the situation analysis of both qualitative and quantitative
methods were used. The qualitative study was based upon the documents
regarding the sector analysis of the city, and on personal interviews carried
out by 20 people (all of them were professionals of the different sub-sectors)
After the data collection the survey questionnaires were recorded and then,
these was prepared to statistical database. In parallel with this process we
collected the available economic and statistical data of the companies
working in the local creative industry, of which 790 items, and nearly 10,000
data were prepared, which served as a basis for a quantitative study. During
the analysis process we debated the two different methods and finally we
came to the creation’s essence of the SWOT analysis. (See Figure 1!)

1. Figure Methodology of the analysis used in the study

2. The general profile of the country (administrative system, demographic
trends, employment, economic development, and attempts to promote
culture and creative industries in the national indicators)
2.1 Short introduction (based on statistical data)
Hungary's key statistics are as follows:
Form of government: Republic (EU member since 2004)
Capital: Budapest
Area: 93.036 km² (CSO, 2010)
Population according to census: 10 198 315 persons (CSO, 2001)
Density: 107,5 persons/km² (CSO, 2010)
GDP (CSO, 2009a): 26 753 906 (Mio HUF)
Per capita GDP (CSO, 2009a): 2 665 (thousand HUF)
Hungary is located in the northern hemisphere temperate climate belt, in
Central Europe, at the middle section of the Danube River, enclosed by the
Carpathian Mountains. To the west, Austria to the north, Slovakia, to the
northeast Ukraine, to the east Romania, and to the south of the former
Yugoslavia, Serbia, Croatia and Slovenia bordering the country. The area of
Hungary is 93,036 square kilometres.
The total population of the country at the 2010th of September was 9 998
thousands (CSO Flash Report 2010 January-September), which since 1981 due
to the low birth rate and high number of deaths is decreasing and has an
aging structure. At the same time, 4,320,681 homes were held accountable in
the country (CSO, 2010a). It is considered relatively homogenous in terms of
nationality as 92.3% of the population declared themselves as Hungarians,
and the Hungarian language is spoken by 99% of the population (CSO, 2001).
Hungary's territorial administration has two main levels. At territorial level 19
counties and the capital (Budapest) while at the local level 3152 towns and
villages is found (CSO, 2009a).

Among the settlements there are 328 municipalities the rests are villages. The
cities include 23 provincial towns and the capital, and the latter is divided into
23 districts. Out of the villages there are 118 large ones. [16] These territorial
units possess their own municipality. In Budapest two-tier local government
system operates, which consist of the Metropolitan municipalities and district
authorities. There is no hierarchical relationship among the counties and
municipal governments. (CSO, 2009b)
Out of the two basic levels, there are two more territorial levels, the designing-
statistical region and the micro-region. Originally both were created for
statistical purposes and under the regional institutional framework, but they
form as well as the territorial basis of organizing some administrative and
municipal functions.
The 7 regions were established with the grouping of the counties and the
capital, and the 174 micro-regions within the boundaries of the counties with
the grouping of municipalities. Budapest forms a separate micro-region (CSO,
2009).
Regarding the Local Self-Government Act, the County Town Municipal
Council in its own territory - corresponding changes - assume their own
competence of the county government functions and powers. Cities with
County Rights however, are not allowed to form a distinct territorial
administrative unit; they are entitled only to specific municipal law.
2.2 Brief description of the economy
Hungary's economic system according to the constitution is based on a social
market economy, which has to ensure fair competition, and everyone
involved in state-guaranteed minimum economic security. Hungary is a
member of the advanced industrial countries comprising the OECD, on the
basis of the economic performance it belongs to the developed countries,
but in the European Union it has tended to count to the poor.

Gross domestic product (GDP) at current prices in 2009 was HUF 26 753 906
million (CSO, 2009a). The per capita gross domestic product is scattered
moderate. Among the regions of country in 2008, the wealthiest was Central-
Hungary (4 424 000 HUF / person), the poorest the South- Plains (2 398 000 HUF
/ person). (CSO, 2009a)
The average wages in Hungary, compared to the world standard is high and
but they are low in comparison to the European Union's average wage, gross
wages in 2008 averaged 213 thousand forint (HUF 129 thousand net). (CSO,
2008) The unemployment rate of 10,0% (CSO 2009d) is relatively low, but the
tendency is that the capital-intensive industries are developing, which
providing livelihood mainly for highly skilled workers. Among people with non-
marketable skills or low skills exist a high level of structural unemployment, and
poverty is also significant.
Hungary just as the other developed countries has an increasingly aging
population, and the rate of activity of 55% (CSO, 2010b) is extremely low, i.e.
a smaller working population producing high value, supporting many inactive
(student, retired, unemployed) people. Hungary consumes more goods that it
creates, ergo the state budget is showing a deficit, the public debt levels
equals about 78,3% (CSO, 2010c) of the annual gross domestic product
(GDP).
The role of the service sector is continuously increasing in the Hungarian
economy, and over the past fifteen years investments were flowing to the
transportation and other service sectors. Still, the economic structure can be
described as advanced industrial country. Regarding the development of the
Hungarian economy the predominantly multinational companies industrial
activity, manufacturing, mechanical engineering, automotive, electronics
goods are in terms of absolute importance. Some of those companies are
producing more than half of the exported products, and are paying more
than half of the tax revenue of the budget. Hungary's, a poor country,
regarding natural resources, the economy rely mostly on imports; balance of
payments and external balance is in deficit.

The aim of the Hungarian economy after 1989 was a transition from a
planned to a market economy. Hungary as a member of the European Union
the world's largest single market, in accordance with the objectives of the
European Union’s economic policy aspiring to replace the Forint to Euro to
achieve low interest rates, manageable fiscal deficits and government debt
levels to meet the requirement of the Maastricht criteria’s low inflation rate.
2.3 General presentation of the administrative system
Hungary's territorial administration has two main levels. At territorial level 19
counties and the capital (Budapest) while at the local level 3152 towns and
villages is found.
Among the settlements there are 328 municipalities the rests are villages. The
cities include 23 provincial towns and the capital, and the latter is divided into
23 districts. Out of the villages there are 118 large ones. [16] These territorial
units possess their own municipality. In Budapest two-tier local government
system operates, which consist of the Metropolitan municipalities and district
authorities. There is no hierarchical relationship among the counties and
municipal governments. (CSO, 2009b)
Out of the two basic levels, there are two more territorial levels, the designing-
statistical region and the micro-region. Originally both were created for
statistical purposes and under the regional institutional framework, but they
form as well as the territorial basis of organizing some administrative and
municipal functions.
The 7 regions were established with the grouping of the counties and the
capital, and the 174 micro-regions within the boundaries of the counties with
the grouping of municipalities. Budapest forms a separate micro-region.
(CSO, 2009c)
Regarding the Local Self-Government Act, the County Town Municipal
Council in its own territory - corresponding changes - assume their own
competence of the county government functions and powers. Cities with

County Rights however, are not allowed to form a distinct territorial
administrative unit, they are entitled only to specific municipal law.
2. Figure Mid-level administrative structure of Hungary
2.4 A comprehensive attempt to promote culture and creative industries
(cultural and creative industry related activities)
The Cultural Industry makes up the 3.1% of the active population, generates
2.6% of GDP in the European Union although the EU wouldn’t even spend 1%
of the average GDP on the broader culture.
At the end of the 1990’s the share of culture was approximately 3% of the
GDP, decreasing slightly during the decade. The structure of the funding has
been thoroughly changed lately. By the mid-decade, a multisectoral cultural
institutions were established, in which, properly in a market economy, the
culture market oriented part was dominated More recently 70% of the cultural
spending was cost and fee income (including public budgetary institutions
such as the museum's revenue), 17% of the state (budget) support, 13% in

various non-profit organizations, foundations, associations, public utility
companies, performance value, (a significant part comes from large public
foundations, which also benefited from the budget). The big national cultural
developments are tending to be real estate development projects to cover
the time being.

3. Presentation of the city – The general demographic geographic and
economic situation
Pécs situated in Central-Europe in the Carpathian Basin. From the north it is
bordered by the Mecsek mountains, from the south flat terrains. The city is
close to the Croatian border in the southwest part of the country. The south
part of Pécs is relatively flat, while the northern part is creeping up the
southern slopes and valleys of the Mecsek. The position of Pécs is extremely
favourable from climatologic point of view at the border of a still quite
forested area.
In sultry summer evenings cool air flows and cleans the city launched from the
Mecsek Mountain. The city is open from the south, protected from the north
by the ridges of the Mecsek, which is emerging suddenly from average of
120-130 meter high flatland of Pécs , and reaches the height of 400-600
meters.
In the western part of the Mecsek the 592-meter high Jakab hill; just right
above the city in the Central-Mecsek the 612 meter high Tubes, the 535 meter
high Misina is to be found. [18] The settlement’s sections stretch up to the
slopes of an average height of 200-250 meters.
The Mecsek is dissected by various valleys, which improves significantly the
climate of our city which doesn’t possess any warm water reservoir or lake in
the vicinity. Water coming from the slopes of the Mecsek is gathered by the
Pécsi-víz flowing of the NE-SW direction drives it to the Fekete-víz (Black-
water), which flows into Drávába.
At the analyses of Pécs it is necessary to examine the values of the past. The
sudden and shocking loss of the traditional industries determine the present
economical situation for example the leather industry, coal, - and uranium
mining, and the traditional machinery production. From the creative
industries’ point of view it can be established that one of the most famous
creative product of Pécs is the Zsolnay porcelain, which gets its special
metallic colour and glitter from the usage of eosin enamel.

31 bank and insurance company’s branch and regional management
functions in Pécs. Recently the Municipality of Pécs established new industrial
areas. First, in the immediate interior of the city - a long tradition of
representatives of local industries: machinery, leather and the precision
engineering – then in the eastern and southern industrial areas with fully
recultivation. Thus was established the Pécs Industrial Park area of 50 hectares
near the main highways.
Demography
For quite a long time, the city's population has grown more dynamically than
the national average (in the 1970s, peaked), from the early '90s, however, it
has been started significantly decreasing. Between 1985 and 2005 the
population of Pécs decreased by 12.3% (20,988 persons). In Pécs , similar to
nationally representative rates, the number of women is higher than men. The
proportion of older people is more than 3% of young people (14 years).
Two city of Pécs , is one of the most important centre of officially recognized
national minorities in Hungary: the Germans and the Croats. It is interesting to
note that while the entire population of the city is decreasing, the number of
minorities increased slightly over the last few decades, although it is applies
mostly to the Gypsies. The number of Germans in 1980 were 996, in 1990 were,
1704, so it had increased. The number of Croats also slightly increased: in
1980, there were 629 of them, in 1990, 637 people, and in 2001, 820 people
declared themselves Croat nationality in Pécs. We should note though that
slight growth in number in the statistical data, is due to the changing of social
atmosphere and the new census questionnaire.

3. Figure The age pyramid of the city of Pécs
3.1 Introduction to the major social, geographical and economical changes
The post-Communist times severely affected the city, the industrial plants
almost without exception were closed by the reason of uneconomic, the new
industrial location remained an insignificant level compared to the former
times, and unemployment has grown enormously. In the 1990s the proximity of
the Yugoslav war set back the tourism industry considerably as well.
Although during the past decade and a half the city's economic structure has
changed - more and more of the knowledge, health, cultural industries came
into focus - but what has not changed was that Pécs remained a multi-
faceted town, where the ethnic traditions, values merged. It also helped in
the effort to materialize, that Pécs has won the 2005th 19 October 2010
European Capital of Culture (ECOC) title (ahead of Miskolc and Eger), which
has sparked real big development projects in the city. As the large-scale

projects, such as a Concert-hall, the knowledge-centre and the Zsolnay
Cultural Quarter hasn’t finished yet for the first half year of 2010,
Pécs arranged alternative sites for the programmes (Pécs National Theatre,
the University of Hall of the Medical University, and the Synagogue). The M6
and M60 motorway, which connects Budapest with Pécs was completed and
with the V/C corridor it has developed one of the most important regional
traffic line. In this year, the life of whole city has been heavily astir due to the
ECC investments. In addition, a spectacular increase has been realised at the
number of tourists in our city. According to researches and data of the TDM
the tourist occupancy rate increased by 25 percent compared to the
previous year’s March and April.
3.2 Brief description of the economy, presentation
In Numbers (CSO, 2010):
� GDP 1.557 billion HUF
� GDP/person: 1.596.000 HUF
� Investment 90 566 million HUF
� Registered number of businesses: 24 268 pcs. (2006)
� Number of nonprofit organizations: 162 pcs. (2006)
� Unemployment: 14%
� Number of registered unemployed (2009): 41,9 thousand person
The economic performance of the South-Transdanubian region over the past
few years was positioned at the breaking point of the Hungarian regional
differences, moving away from the dynamic territories and towards the
lagging regions of. The eastern part of the country.
In the region each element which determining the dynamics on a territorial
growth, the gap rather widened and the negative marks ruled:
– The rate of employment and the rate of the GDP/employed persons are
relatively deteriorated;
– The foreign presence in the region's economy is very weak;

– The economic structure is out of date and there was no appreciable sign
of modernization - in addition the weak manufacturing were producing
mainly into the domestic market, and was weak in export, there wasn’t
any major industry or company to which the regional development –
such as industry clusters form could be supported
Pécs according to its size of population and the role it fulfils in the regional
settlement structure the largest city in the Transdanubian and the main town
and country planning centre. The city’s regional centre's role is based upon
it’s traditionally fulfilled duty, far radiating intellectual base, its university which
was the first founded university in the country, cultural attractions, and
significant economic potential.
Pécs is a service centre, the three quarters of the earners are working in the
tertiary sector, and the rate of intellectuals is dominating. In the last decade
several international commercial companies established in the city, and quite
a lot of firms built up here its storage and distribution centre at national level.
Thus, the previously mainly industrial nature of the local economy is now
converted to services-based trade and logistics economy.
Pécs with its economic, cultural, scientific performance is one of the most
dynamic, progressive and the best quality of life providing city, whose spiritual
radiance reaches far beyond the region and the country's borders. The city
tries to achieve according to its concept of urban development planning to
- become the pole of the national and international knowledge-based
economy development;
- be a major player in the field of the culture, education, science at national
level;
- have an effective and competence promoting infrastructural environment;
- fulfil further on its regional role with the very important principle of
partnership;
- be a city of its well organized administration providing its inhabitants a good
quality of life.

4. Figure Sectoral composition of economy based on the number of employees in Pécs
3.3 Brief presentation of the city in the European hierarchy and networks (main
junctions)
Pécs so far hasn’t played an important role in the Euroregional network, which
partly due to its structural position within Europe, and partly the external
periphery of the country's transport occlusion is linked.
The Danube-Drava-Sava Euroregion was established in 1998, which was the
first important step toward the broadening relations of the city. The city's
incorporation of the European territorial network has a strategic importance in
the economic and cultural terms as well. The speciality of the present situation
is that linkage into the economic bloodstream, the economic reversal of
subsidence depends on the success of today's cultural record: the cultural
and intellectual heritage and continuity could be the dimension, which is a
real opportunity for the city to the spatial structure of European integration,
and to become a real investment and travel destination.

The EKF provides considerable and non-recurring potential to Pécs , to get
integrated into Europe's economic and intellectual-cultural fabric. Luckily,
and certainly not by chance that Istanbul-Pécs-Essen are the three European
Capitals of Culture 2010. This east-west axis gives visibility and structural
possibility for the three cities and the around organized spatial dimensions
(partner cities, countries) to improve their position.
From north to south the Scandinavia-Budapest-Ploce (V/ C corridor) axis is
getting increasingly updated and real in the EU, which involving Hungary into
the European transport network, to which Pécs also will have the transport
links. In the cross section of these new (transport, economic, cultural) axes,
and opportunities the city has to find its development directions, which
hopefully would moderate, and may be stop the South-Transdanubian
Region breaking off from the more dynamic regions, and promote the
economy, increase social cohesion, stop the migration from a thousand years
old cultural centre, and make it again an attractive and successful city.
It has to be examined, whether these axes are considered also to be of
strategic importance in the partner countries, so the economic terms of Pécs,
in particular, may become a driving force particularly in the tourism.
Examined the potential for the development of cooperation with those
countries (including those specific cities, regions, institutions and investors) that
lie along this axis, focusing on tourism and increasing investment, and that
along these axis Pécs become an increasingly growing important link and
intermediate pier.
3.4 Brief presentation of the city’s cultural profile (cultural assets)
Pécs is one of the most ancient and rich city in national monuments, the
administrative and spiritual centre of the Southern-Transdanubian region. The
city’s cultural life is prominent in the field of the music and fine arts wide-
ranging accepted in the country. There are 59 galleries, museums and
exhibition halls in the city of Pécs according to our survey. Larger collections -
Modern Hungarian Art Gallery, Csontváry Museum, Ferenc Martyn Museum,
Museum of Victor Vasarely, Amerigo Tot Museum, Schaár Elizabeth: "Street" -

urban and private galleries are offering the full, and unique presentation of
the 20th century’s Hungarian art. The National Theatre of Pécs has theatrical,
ballet, musical comedy and opera section as well. Beside the National
Theatre are operating the Croat Theatre the University and the Third Theatre
too, but the student acting has got decennial tradition too. A symphonic
orchestra operating, the concert life is rather significant even in national level.
Pécs is also quite unique as it owns a independent puppet theatre.
The city traditionally characterized by vibrant intellectual life that is home to,
inter alia, the University of Pécs Days, Days of University, the Pécs’ days or the
Pécs National Theatre Festival (PNTF) and the Cinepécs International Film
Festival as well. Here operates country largest university regarding the number
of students, with 31 thousand of them attending the various courses.
In 2010, together with the city of Essen and Istanbul – Pécs is one of Europe's
cultural capitals. The title is awarded to the 2010 year, a number of
investments made possible by the European Union. The Pécs2010 Cultural
Capital of Europe project has four investment priorities: Conference and
Concert Centre, South-Transdanubian Regional Library, Knowledge Centre,
and the Zsolnay Cultural Quarter. They also complement the revitalization of
public spaces and parks.
There are three cinemas now in Pécs. The Apolló movie theatre in the
downtown is the permanent cinema in the city. Here one usually project art
films in two separate halls. The second oldest cinema is the Urania, which was
the first cinema in the country built in Bauhaus style. The cinema is the
member of the ArtMovie-network and the Europa Cinemas supports it as well.
There is a multiplex movie in the city, which can be found in the Pécs Plaza
the so-called Cinema City. There they project commercial type films in ten
different halls.
The first concert hall of the city, which bears the name of Zoltán Kodály, will
be opened at the 16 th of December 2010. The conference and concert hall is

designed to accommodate as many as 1000 visitors was built in the Balokány
quarter near the Zsolnay China Factory.
Since 2009 has been held the Festival of Literature in May. At the time of the
four-day festival the elite of the Hungarian literature life appear in the city.
Then book readings, book presentations, interviews with authors are taking
place in a public festival atmosphere, in public squares, streets and in cultural
institutions. Actors recite poems and besides tale telling afternoons for the kids
it can be seen drawn illustrations from fairy tale as well. The concert and
festival to host cross-border stitched journals, from a series of literary, which
holds the title of literature caravan. The literature heritage of the city has been
promoted by the professional organizations since the renaissance poet and
bishop Janus Pannonius. It shows the significance of the literature’s creative
aspects that in our city there are 87 companies involved printing and editing
or press activities. The Jelenkor publisher is quite significant in the whole
country.
Pécs is one of the pop musical centres of Hungary since the 1960’s. The most
famous band from Pécs is the “Kispál és a Borz”, which created a tradition as
well as a style. With the accented presence of the popular music is coherent
the high number of pop festivals, international music entertainments. The pop
festivals are connected with the other type of festivals so one can emphasize
the following programs: Fishing on Orfű, Student days in the Pécs University,
the Heritage festival, the Rockmarathon, Mediterranean Autumn, and the
Batta Deam.
4. Development
4.1 Demographical structure
Pécs city's population on the 1 st of January 2010th was 157 680 people, but
the permanent population is about a thousand fewer because of the
differences was made up by people who are living in the city on a temporary
basis and the ones who are only commuting elsewhere, but normally they are
Pécs citizens. There hasn’t made any survey yet what was composition of the

two groups but it is quite possible that the majority living in the city temporarily
are university students. It is also assumed that the others living elsewhere are
also mostly students, but the rate of the people living temporarily out of the
city due to work is also significant. Between the two groups there is a
significant difference. After completing the university the majority of students
leaving Pécs, but in turn those who were due to work elsewhere rarely move
back to Pécs. Since young people are involved in both cases, a very bad age
structure triggers the formation. The effect is similar to the one mentioned in
the agglomeration section previously. The moving out most of the city is
typical among the 30's, 40-year-olds who’s existential situation is stable, and
already possessing the necessary resources to build single-family houses and
the needed one or two vehicles as well.
In Hungary, the aging index of approximately 100%, i.e. there are the same
numbers of inhabitants over 65, as the 15 years of age. Pécs situation is not
much better. There are some settlements belong to the agglomeration of
Pécs where, this figure is significantly better than the national average. The
ones moving out belong to the most active age groups, and of course they
take the kids with them too, while the parents usually stay in Pécs, thereby
providing the family a kind of "double-residency".
Here, however, should take into account that the ethnic composition of the
settlements’ population also affects the index value. The vitality index shows
that out of the number of 18-59 year-olds how many per cent belong to the
age group of 18-39 years. This indicator is 53.70% of national context. The
value of the country's big cities - except for Pécs - is placed above the
national average. The vitality of the region’s county’s seat hardly differ from
each other, but all three are below the national average. The variance of the
settlements belong to the Pécs agglomeration is quite significant.
4.2 Industrial structure
Decades before the change of regime Baranya County belonged to the
major industrialized counties. Obviously the mining as well as the processing
industry selling products to the CMEA market included the food and textile

industry played an important role of that success. After the old system had
collapsed these sectors were cutting down, and out of the resources the old
capacities only a few of small and medium-sized enterprises were created.
The result was that by the end of the 90’s Baranya (Pécs is also included) fell
behind to the end of the line in the field of industrial production in the country.
(PBKIK Data line, 2009)
The per capita industrial output value of the Baranya County according to
the CSO yearly editions in 2005 was 697,400 HUF only Szabolcs-Szatmár-Bereg
county reached weaker results than that. The national average that time was
1,623,000 HUF per person, while counting the most industrialized county
Komárom-Esztergom 7,584,400 HUF was produced. The production value per
employee all the region has achieved better results then Baranya, which
indicates that the productivity was extremely low. The county’s - and thus the
city of Pécs’ - competitiveness of the industry is one of the weakest ones. Out
of the industrial sale only 24.4% is the export, only Tolna County has got lower

atio. Csongrád, Hajdú-Bihar counties have similarly poor export ratio whereas
the productivity indices slightly better.
There are three sector which plays a major role of the industrial development’
performance in Baranya county: the electricity, gas, steam, water supply,
food, beverages, and tobacco productions, and mechanical engineering.
Sale gives more than 20%, electricity, gas, steam and water supply gives 38%
of the industrial production. Major representatives are the companies
belonging to the PannonPower Holding (electricity and heat production), the
E. ON group of companies: the South-Transdanubian Electricity Supply
Company Ltd. and the South-Transdanubian Gas Supply Co. (electricity and
natural gas sales), Pécs Waterworks Co. (water production and sales), and
the PÉTÁV Ltd. (district heating). The energy sector companies employ a total
of more than 4 thousand people, and, more than 1,800 employees directly in
the city. The annual production value is nearly 55 billion, the sales is 139 billion
HUF, respectively. This sector sale only for the domestic markets, and plays an
important role of energy supplies in the region's economy. The operation
provides employment for many SMEs, however, this sector won’t play a
leading role or boost the local economy. Food, beverages and tobacco
production ensure close to 40% of the annual production and 26.8% of total
sales. Only 13.16% of the turnover came from abroad. According to the
production data it is the strongest, but also the most vulnerable sector in Pécs.
The sector indicators have deteriorated because of the negative trends of
recent years (closing down the MIZO dairy company and the integration into
the South-Pick Szeged Meat Co.). Marketing problems facing the American
Tobacco BAT (the high rate of smuggled goods sold in our country), Pécs
Brewery Co. (low market share and high production costs). We cannot
expect positive change in the near future. This sector won’t play a leading
role in the economy’s stimulation of the city and the region either.
The machine industry provided the 20.9% of the total production value of the
whole industrial production accounted for. This sector took part in the
industrial sales by 16%. The export share within the sales was 85.33%,

espectively. The leading companies within the sector have a very important
role in both the county and city life of Pécs. Primarily the fact that they
provide jobs and regular income for nearly 6 thousand employees, and work
for more than a hundred SMEs mainly in the service area. For those SMEs
belonging to this sector only the Hauni Hungary Machinery Ltd. Provides gives
supply orders. This kind of activity is an energizing effect for the economy, but
today makes only a very small share of the industry's performance. The larger
Elcoteq Hungary Ltd. doesn’t strive for creating such kind of supplying network
with the local firms, instead of that it tries to solve all stages of the production
in the plant itself, or within its own group.
The city alongside with the competitive Pole Project’s planning identified
three important sectors the environment industry, the health industry and
creative industry. One of the most important sub-branches of the health
industry is the biotechnology, which has an accredited cluster. In that cluster
one can find spin-off companies from the university as well as private
companies with significant export activities.
Pole matrix (Source: PBKIK, 2010)

Pécs and South Trensdanubia, the pole of life quality
34 Billion Ft
investment so far in
31 projects
(140 MRD)
R&D&I infrastructure
Clusters
Training ,
learning
Should be evaluated positively, however, that the Elcoteq Hungary Ltd.
devotes more and more emphasis on product development, and has
developed its own division, where more and more young engineers are able
to find jobs.
PTE clinic
University of Kaposvár
agricultural research institue
University of
Kaposv ár
agricultural
research institue
PEIK
BIBNet
Therme
Cluster
PTE AOK
PTE ET
Healthindustry Environment industry Cultural industry
Science
Building
Wine research I.
RÉK
TDM
University of
Kaposv ár
Vocational
training
Beremend
Mecsek -Dráva
biomass
Pannonlaser
researchinstitute
Building engineering
cluster
Knowledge Centre
Creative Incubator
House
Environment
industry
cluster
Creative
Cluster
Zsolnay Cultural
Quarter
Kodály Centre
Ceramic
Cluster
PTE TTK PTE MK
Vocational
training
Bikal ren aissance city
Memorial Park in Mohács
Mecsekextr ém
Castle of Sikl ós
Castle of Pécsvárad
Castle of Szigetv ár
In the field of non-metallic mineral products the Zsolnay Porcelain
Manufactory is relevant. In this essay we are not going to deal with the
company's financial and economic situation. The company's products, it’s
reputation, tradition, and the industrial heritage and through the projects of
the European Capital of Culture in the near future it provides hopefully an
important factor in the local economy.
In summary, the industrial enterprises have an important role in the economy
of Pécs and Baranya County, their energizing role, however minor. They are
not considered classically innovative. The possibility of future development is
to be searched rather at the present still not highly appreciated so called
"novel" non-traditional sectors, which could improve significantly the
population's quality of life, such as the environmental industry, health industry
and cultural industry. Their relevance is clearly demonstrated by the

international trends, and the strategy for competitiveness 2020 of the EU
(ec.europa.eu/eu2020)
4.3 Cultural structure
Considering the cultural sector we have to separate the civil, private, and the
institutional sectors. The rate of the three special structural units characterizes
the dynamism of the creative industry, which still could be characterized with
the dominance of the institutional and civil sector. According to our survey
790 company operate in the field of creative industry, which is still quite a low
proportion (4,15% of the other branches). The big cultural infrastructures are
operated by government or state institutions, which situation hasn’t been
changed by the new institutions created through the ECC project. The
creative enterprises are only small-scale suppliers to the institutions, which
prevents the real development of the creative industry. At the analyses of a
city’s creative economy in the past these subject were only marginal issues
mentioned just as breakout points. In the 21st century we have to approach
this subject with a different attitude. One cannot count on the governmental
support that it is possible to get those cultural services for free or at a minimal
cost. The marketing of the culture has started, and we have to recognize that
the culture is not much different from any other goods in the market, that
means the rules of the macroeconomic apply too. In the future – according
to the excellent aptitudes – can become one of the most significant
branches of the economic development of Pécs.
5. The state of the private and the civil sector
The skills knowledge and experience of the local cultural civil society actors is
not sufficiently utilized. The civilian sector in particular is facing difficulties of
sources and capacity, although that is a national-scale problem, still there is
no suitable effort to highlight and support local, talented and worthy
organizations.

- The NGOs further on have communication and infrastructural difficulties;
therefore, they find it difficult to utilize their values, and multiplying them.
- They don’t have a strong system of relationship, their collaborations are
under motivated, promotion opportunities are limited, the absence of
adequate knowledge of cultural values can be difficult to manage, and
expose as a product.
- Communication among the civil society organizations and cultural
institutions is weak; there are duplications in certain sub-areas, whose
demand would be qualitatively and quantitatively better satisfied by the
civilians.
- The region's civil society is rather diverse, including those found in the service
of self-motivated and advocacy organizations. In May 2010 according to
official figures of the CSO, 1,547 non-governmental organizations were
established in Pécs one third of the registered ones were dealing with cultural-
recreational activities. On the average approximately the number of non-
profit organizations in Pécs is 9.8 per 1000 inhabitants.
- The local non-governmental cultural sector in the underground is swelling
with energy in almost all areas of arts and culture, the dedicated players are
waiting only for a call to get invited and share experiences tasks and
opportunities. Many of them have already turned to be professional, and
able to work under pressure with high cost efficiency so the cooperation with
them could bear strategic importance. Notable amateur orchestras: e.g.
Mecsek Dance Ensemble, the Tanac Misina Dance Group, which are
characterized by the efforts to preserve the Hungarian folk dance treasure
and promote it’s achievements and further elaboration of the Hungarian folk
culture, partly through modernization. Priorities: preserving values, and
heritages and enforcement of the new values, as well as the city's cultural
enrichment with the current supply of micro-programs. According to the
database it can be stated that the number of social enterprises in the field of
cultural services in Pécs are only 4 pcs.
The turnover of one out of the four was between 51-300 million HUF; the rests
had less than 20 million HUF. The largest organization employs between 5-9

people, the other three are one each respectively. 65 enterprises carry out
publishing activity. All of them employed less than 50 people, in fact all but
three were micro enterprises employing less than 10 people. Three companies
have reached a turnover between 51-300 million HUF, seven fell under the
category between 21 - 50 million HUF, and the others had fewer than 20
million.
The number of enterprises engaged in research and development is relatively
high compared with other creative industries, currently operates 115 such
companies. One of these sales exceed 300 million HUF, between 51 to 300
million were six companies, another six realized between 21 to 50 million, while
102 firms had less than 20 million HUF. On the headcount basis 3 companies
belong to the small business category (the number of employees were
between 10 to 19), the majority however micro-enterprises with only one
employees, respectively.
5.1 Definition of the creative industry
The creativity and the exploitation of their culture-related industries, the
expansion is not only the result of socio-cultural movements. It is also a
strategy is strengthening European competitiveness. New markets with new
services are badly needed to provide development. It is no longer good
enough to do something well, or do better than the competitors, now they
must work together to gang up on groups that can withstand the growing
competition.
The creative industry is including 13 different sectors, which today is one of the
world’s most dynamic industries. It contains lots of different branches like
heritage, arts, leisure as well as web development. The defined "creative
class" member is projected to soon exceed the number of workers in
traditional industrial sectors. The importance of cultural industries, however,
gives not only the number of jobs in a city, or even in the region, but also the
percentage rate with it contributes to the economy's performance. Where
the cultural industry is well developed, there is a higher level of quality of life, a
greater ability to retain the workforce of the settlement, even the highly skilled

ones, and an ability to retain younger generations. The concept of cultural
industry is a somewhat narrower definition then the creative industries’. The
creative industry also implies that in the presence of an appropriate density of
a particular locality or region it could create such a creative milieu, which in
today's knowledge-based economy the prerequisite of the innovation, and
therefore the means and guarantee of the region's ability to attract capital.
Enterprises operating on the previously defined fields are usually categorized
of the methodology based upon their business activities are as follows:
Categories
1 Arts, Crafts, Performing arts
2 Film production, Cinema
Journalism, News agencies,
3 Publishing
4 Museums, Expositions
5 Cultural Trade
6 Architecture
7 Planning, design
8 Advertising
Software-, Interactive Leisure
9 Development
5.2 The position of the creative industry
1. Table Subsectoral areas of the Creative Industry
The most important goal of the creative industry is the strengthening of the
income producing capability of the creative and cultural activities, to
generate such creative industry processes which have innovative and

economic potential, which can result the quality development of the service
systems through the economy generating effects.
TOLERANCE: The visibility and recognition of the creative industry with the
wide range of the society and other developing and/or driving force industrial
branches.
TECHNOLOGY: Introducing the utilization and recycling option namely the
connection of the creative industry to the industrial production,
biotechnology, environmental projects, communication and financial
services.
KNOWLEDGE: Operation of a regularly communicating and cooperating
network, which is able to draw up the common interests, and to decrease the
insensible inside market competition. Building up systems and its transfers.
It has to be introduced into the cultural industry the elsewhere well-
established consumer oriented market methods.
CLUSTERING: Our cluster is the first such creative industry coordinating
organization, which was established by government support through the
Baross project, financed by the DDRFÜ and the NKTH in 2006.
• The mission of the cluster is that it could become the management of
the change of paradigm where it could achieve the more effective
application of the creative industrial capacities and the export of their
products and services. According the surveys on the average 10-12
EURO (Pécs University, 2007) equals to the local purchasing power and
this as a demand isn’t balanced with the supply on the other side. The
local market is significantly distorted by those concerts and
performances which are highly supported by the state or government.
The Southern Transdanubian Cultural Industrial Cluster manages and
generates several forward looking and creative industrial cooperation.
Organizational -
methodical
Market Creative
Industrial
Cluster members
Joint Project Organizing
Scientific – Innovation
related

Southern
Transdanubian Cultural
Industrial Cluster
Southern Folklore
Association
Tourist Cluster of
Szigetvár
Equestrian Cluster of
Siklós
Regional media subbranch
and the
adjoining Film Fund
ECC expert’s materials
and advising activities
Dombóvár Cultural
Strategy
Conferences and
Events
Communications
platform
Pécs Lexicon Film Fund
CULTourist Pécs Registered projects
Zsolnay Cafe Cluster organization
methods
Organizing
Conferences, software
development
University courses
Accredited special
curriculums
Sub-sectors surveys,
Databases
From the creative point of you the national situation isn’t too promising. At the
present even the Central Statistic Office doesn’t collect data, which is
appropriate for a creative industrial survey, the latest data is from 2002. The
latest data are supplied by the GFKI (according to the CSO data) and by the
Cultural Innovation Competence Centre (based on TEÁOR) – locally.
According to the CSO data the summarized added value of the creative
industries equals 987 billions of HUF in 2002, which was the 6,7% of the GDP.
The 7% of total number of employment in the country comes from the
creative industries. The national situation is equals to the Capital’s
concentration though, the provincial creative industrial bases producing a
very low figure, and contribute to the GDP and to the employment rate
marginally. In the ECHO magazine at the issue of October 2005 Mr. Zsolt
Szokolay an expert of the field examined the number of the people
employed in the creative sector and its position. According to his survey
approximately 4000 persons are engaged in the Creative sector at the time of
writing. The concentration of the creative class – which is so important for the
development of the creative industry – is rather low in the Southern
Transdanubia, and the added value is lower than the national average.

Therefore the most important motivating factor for the colleagues of the
Southern Transdanubia Cultural Industrial Cluster is the enhancement of the
competitiveness of the Region and the development of knowledge based
creative industry.
5.3 The creative industry in Pécs according to statistical data
The cultural industry’s current state in the city of Pécs is presented on the basis
of statistical data, which is an important complement to methods based on
qualitative analysis. The full analysis was performed of the latest available
2007-2008's period. The number of enterprises operating in Pécs and their
classification are found in the 2. Table below:
Number of registered enterprises
Number of operating
enterprises
Industry,
Out of
Out of
Agriculture Building Service
the Per
the Per
Industry
Total total, thousand Total total, thousand
Branch
joint inhabitants
venture
joint inhabitants
venture
2008 2007
1 348 2 710 21 618 25 676 11 272 164 13 622 7 653 87
2. Table Number of enterprises in Pécs (CSO)
25,676 enterprises were registered in the city in 2008, of which 11,272 worked
in the form of joint venture. The operating firms in 2007 according to the
figures are slightly more than half of all enterprises (53%).
To determine the magnitude of the operating creative industry in Pécs we
acted in accordance with the methodology set out in subsection of 5.1. We
have been acquired from the Central Statistical Office (CSO) the public

ecords of those companies, which are classified as creative industries
according to classification of sub branches 1.
The database contains the data of 790 company / institution. For the
companies temporarily out of business or don’t operating ones was used to
detect the expired public debts, so surely the number of operating businesses
in the sector 565 pcs.
The number of industrial enterprises in the creative sector compared to all
active companies in the city we have got the following figure:
5. Figure The rate of the businesses operating in the creative industry in Pécs (CICC
Association Data)
The rate of creative businesses operating in the City is approximately 4% to,
but it is absolutely necessary to emphasize that among the creative
businesses is much higher (71.5%) the proportion of still operating enterprises
then as it is generally experienced in other sectors (53%).
The number of examined businesses divided to sub-sectors is as follows:
1 The analyses cannot be considered as complete and reliable according to the following methodological problem
– the classification could be determined due to the reported and possibly not the real activity – but it still could
be extremely useful to present trends and order of magnitudes. The database used to the analyses can be found in
the appendix section.

6. Figure The division of the particular activities among creative industry businesses (CICC
Association Data)
Most of the registered companies operating in the field of the arts, performing
arts, but the feature of this sub-sector is that most actors working on his/her
own as individuals, so under this category the lowest the proportion of the
corporations, only 40.2%. It is also a high the number of architecture firms, and
the lowest registered businesses one can find in the film production, cultural
trade and software development’s territory.
In the next table we present the form or type of enterprises in the sub-sectors
respectively:
Arts,
Performing
Arts
Film
production,
Cinema
Sub-sector
Unlimited
Partnership
Types of Businesses
Ltd. Chamber, Private
cooperativeEnterprise
Joint stock
company
State, Local
government
Institution
Total
Frequency 76 15 134 1 226
Distribution 33,6% 6,6% 59,3% ,4% 100,0%
Frequency 18 18 1 1 38
Distribution 47,4% 47,4% 2,6% 2,6% 100,0%

Journalism,
News
agencies,
Publishing
Museums,
Expositions
Cultural Trade
Architecture
Planning,
Design
Frequency 43 48 2 1 94
Distribution 45,7% 51,1% 2,1% 1,1% 100,0%
Frequency 20 7 1 30 58
Distribution 34,5% 12,1% 1,7% 51,7% 100,0%
Frequency 14 6 2 22
Distribution 63,6% 27,3% 9,1% 100,0%
Frequency 70 117 2 189
Distribution 37,0% 61,9% 1,1% 100,0%
Frequency 30 53 1 1 85
Distribution 35,3% 62,4% 1,2% 1,2% 100,0%
Advertisement Frequency 31 36 67
Distribution 46,3% 53,7% 100,0%
Software-,
Interactive
leisure
development
Frequency 2 8 1 11
Distribution 18,2% 72,7% 9,1% 100,0%
Frequency 304 308 1 140 7 30 790
Distribution 38,5% 39,0% ,1% 17,7% ,9% 3,8% 100,0%
3. Table Type of businesses in the creative industry in Pécs (CICC Association Data)
The most popular form of business in the arts, performing arts category is the
private enterprises, or the unlimited Partnership form, which are the
characteristics of industries where the number of persons employed are small
(or self-employment is expressly made), respectively, there is no specific cost
of production. Local museums, exhibitions, are typically operating as state, or
local governmental institutions.Further examine the type of businesses we can
state that mainly in the sectors of Software, and Leisure development, the
Design, and Architecture exist more business activities, and higher
employment.
Reviewing the economic data the following trend can be established (See 7.
figure!)

7. Figure Trends of industrial statistic data 2007-2009 (Data in Thousand HUF (CICC Association
Data))
The shock caused by the economic crisis of course can be detected in the
creative industries primarily (we will see later) in the field of architecture. The
industrial enterprises' capital reserves lose weight significantly, but after the
more than 50% decrease in sales in 2008. Year, in 2009, almost 20% increase
observed.
8. Figure Trends of average employment in the creative industry of Pecs 2007-2008 (ps) (CICC
Association Data)

In accordance with the foregoing a tendency to decrease in employment in
2008 could be traced as well, the industry's average employment number,
which is in the year of 2009th already shows an increase, still won’t reach the
level of 2007.
9. Figure Distribution of creative industry businesses by sales categories (CICC Association
Data)
The 9 th figure chart shows that the vast majority of industrial enterprises are
belong to the category under 20 million annual revenue levels. It can be
evaluated as a positive result that almost every tenth firm HUF generates sales
of between 20 million and 50 million HUF annually, 3.6% of them even more.
Over 300 million revenue there is only one company the Zsolnay Porcelain
Manufactory.
5.4 The situation of the creative industry in the selected sub-sector
Out of sub-sectors presented in the previous section I would emphasize three,
one each of the largest, the medium and the smallest proportional operating
areas, covering about two thirds of the whole business sector.

10. Figure Rate of the priority sub-sectors (CICC Association Data)
28% of the creative industrial firms in Pécs have public debt. (See Figure 8!)
Broken down it into the examined three sub-area, we can see that the film
production and film companies are under this ratio, while the journalism, news

agencies, publishing sub brunch is rather in deep trouble.
11. Figure The rate of businesses with expired public dept ratio
Finally, let us examine the main economic indicators of the sub-sectors in the
following table:
Cultural Industry
Sector
Film production,
Cinema
Journalism, News
agencies,
Publishing
Equity Equity Revenues Revenues
(2007) (2008) (2007) (2008)
16.959 17.707 21.608 20.555
Number of
employees
20.048 19.188 40.231 41.413 5,83
Architecture 308.061 63.861 137.503 29.743 3,75
Average total 198.708 47.147 99.993 34.091 4,64
4. Table The main economy indicators in the priority sub-sectors (2007-2008)
We have seen that the architecture composed the quarter of all creative
industrial enterprises in 2007; both equity and magnitude of net sales
exceeded the average size of the enterprises in the other two sub-sector.
Since the economic crisis affected most right that sub-sector - due to the loss

of real estate development and declined investment demand - so clearly,
the average turnover dropped more than 100 million HUF and the companies
used up their reserves (this indicates 80% decline of the equity). The other two
sub-sectors, however, kept itself in spite of the crisis, businesses linked to the
film industry realised an average of 20 million, the media-related companies
could make even double of that revenue. It is also worth to highlight that the
highest employment readiness we find in journalism, news, and publishing
field!
One local literary magazine - at national level is also important -, formulated
the following difficulties, and certainty for future opportunities during the
interview:
Uncertain. There are fears of what will be after the ECC, because these
innovative ideas and proposals could be implemented without exemption
from tendering sources. It is a major challenge to the MIH (House of Arts and
Literature) that how it can operate at the same level after the ECC.
� The most stable source is the public support; the magazine has the most
respect and works best there too.
� The cooperation with the other actors of the cultural industry. E.g.
cooperation with the “Trafik”, “Kultúrkert”(Culture Garden), Sophiane
Heritage Non-profit Ltd. for, synergies are created, everybody brings
their own audience
� The Zsolnay Culture Quarter can hold a positive contribution, but still
there is a certain distancing, even mistrust
� Advertising and marketing activity is weak
� In the PR, the public feedback does not work properly
� The professionalism, and outstanding dedication of the staff
� Institutional diversity, for example House of Arts and Culture doesn’t
exist elsewhere in Hungary
� Serious literary tradition

5.5 Summary
During the interviews with our stakeholders we put four such closed questions
to the interviewees, in which we asked them to set out the allegations on a
scale of assessment of one to five, where the five meant the most favourable

outcome. The result are shown in the chart based on average values of some
of the responses 2:
12. Figure The average values given by the interviewees on the questions
It is clear that the respondents considered the cultural situation of Pécs the
best (3,4) and the city's economic situation is considered the worst (2,1). At
the two responses the two standard deviation values are also low; it is the
unanimous opinion of the respondents confirmed. The frequency and
efficiency of the cooperation within the cultural and creative industries were
considered medium (3) by our interviewees. It has resulted a very mixed
outcome that the respondents’ professional activities or project how fit to the
cultural season program series or how much support it has got through it. In
any case, the given a 2.8-value rather damning nature of this area.
Overall, we can make up very mixed picture in the separately tested areas,
because regarding the sales revenue, employment and economic stability
2 The statistical analyses was based on the 20 questionnaires that means it cannot be viewed as a representational
assay. The questionnaire used during the interviews and the list of the organizations which were took part in the
survey can be found in the appendix section.

the media-related companies have performed well, this very same group has
the highest tax debt. The architectural firms’ turnover and reserves have fallen
significantly due to the crisis, while the film production companies may be
subject to a small number of significant changes in their operation which is
hardly ca be detected.
It can be emphasized in the field of employment and competitiveness the
software, and interactive leisure (game) development, design and
advertising activities, but these are the overalls a small size of scale.

6. The state of the public sector
6.1 The definition of the public sector
Many people think that to distinguish between "State" and "non-state" cultural
organizations are artificial and the discrimination is held purely on formal
grounds. According to the legal background governmental financial support
involves the following activities: museum, archives, and theatrical activities.
These institutions are part of the national cultural infrastructure. The rate of the
governmental support varies with genre and institutions, but always
proportional with the local (county and/or municipal) support.
In our analysis, those organizations are considered to belonging to the public
sector’s , which are entirely or predominantly public and / or activity funded
by local government sources.
6.2 The position of the public sector
In Pécs the local municipality operates the cultural Institutions though
continuously increasing income-generating obligations. Their operation is at
the present a serious burden on the already ailing local authorities and other
major threat is the operation of the new institutions established during the
ECC project. The city received government support promises at the start of
ECC developments for the necessary operation of the institutions (national
institutional status), but unfortunately is still needed to lobby to redeem the
promises. So here we can expect further significant shifts in the expected rate.
6.3 The size of the public sector
It is quite a difficult methodical task to determine the size of the public sector,
the financing structure is difficult to comprehend, but typically the museums
and in press area active institutions and organizations are run (indirectly) by
the government or local self-government. The vast majority, over 80% of the
staff number and revenue of museums are belonging to the public sector
alone.

The state intervention and assistance are mostly palpable by the program
funding of the ECC. After completing the cultural season however, the
central government resources are going to fall back and the maintenance
costs will fall to the local government. Thus, in the future we can count on a
significant shift of rate. Pécs, despite the difficulties, can realize a significant
profit by the end of the 2010 year, as it succeeded to bring together and
coordinate many attractive and colourful performances, and programs to
the city. It is also noteworthy because the economic crisis is felt in a very
eloquent way in the European Capital of Culture success rate. The capital of
Lithuania, Vilnius was deeply affected by the crisis despite the series of events;
the revenue from cultural tourism dropped by 15 percent drop while another
European Capital of Culture 2009, Linz, Austria could realize only slightly, 11.4
percent increase in hotel room bookings during the ECC year. The Hungarian
experts say the signs are favourable for Pécs, and it is conceivable that results
of the Hungarian city even surpass Linz’s.
6.4The supported activities of the public sector
The biggest problem regarding the cultural events according to one of our
interviewee a contemporary artist of Pécs, that there is a sort of dilettantism
from the part of leadership, they don’t dare not undertake true artistic events,
and partly the decisions are made from above by people who have no
serious artistic background, so they don’t even has any credibility from the
professionals. The standard of the programs are only reached the level of the
junk mass media. With that mentality we won’t be taken seriously in any
national and especially in international forums. Moreover, without adequate
infrastructure framework, we cannot appear in the European audience, as
there are no large spaces where with high-quality events, exhibitions can be
held. It appears that the city waived the fine arts, because it carries little
value for the politics, does not provide sufficient opportunity for the politicians
to appear in public. Although Pécs is a cultural stronghold partly because,
there were and there are internationally recognized artists as well.

They must find the opportunities how to capitalize on the economic benefit of
art, how to make profit on it. Unfortunately we have limited the capacity of
the current structure; there is nobody who has still the energy and free
capacity to achieve these goals. We have a gallery, which is vegetating, and
it is unable to fill the new functions with a 30-year backwardness. The
university has no proper exhibition area, and the judgment of culture is quite
mixed. The young generation rather holds the potential, which are more open
to contemporary art.
Another interviewee, who deals with crafts, sees the possibility of
development to the growth of tourism and to connecting to tourism
development efforts due to the ECC. He sees the need for increasing the
purchase of local products, a growing support for the local arts and
craftsmen. Further highlights the importance of joint lobbying. It highlighted
the importance of strengthening tourism in the region, the appreciation of the
growing number of world heritage sites.
6.5. Summary
Nowadays it is quite apparent that the role of the cultural sphere has
increased, has become essential in the social redistribution Together with the
change of the culture’s role it’s importance has also increased as on the one
hand according to the consequence of globalization our shared responsibility
for future generations to preserve and pass them those values that dominate
our identity - the role of how it generates processes has a great importance -
and thereby enrich our cultural heritage, on the other hand investments into
knowledge is actually either theoretically or practically produce profit. The
acquired knowledge, which becomes the property of the individual, has a
positive impact on society as a whole. The economic and cultural spheres
mutually affect each other: a creative, open-minded, "civilized" labour-force
who can live independently with the freedom of choice; in the economic
sector also have an invigorating effect. In addition, our responsibility is to take
advantage of the region's intellectual capital, which is rooted in the distant

past’s traditions and possibilities offered by the present - the culture should be
the driving force of the service sector.
According to the opinion of our interviewee who is employed in the public
media we don’t have the possibility to be more innovative as our whole
structure very centralized every decisions are made in Budapest, and they
deprived of even the slightest independence from us. They won’t provide any
resource for marketing activity. The support of the culture is still very Budapest
oriented, which makes for the provincial institutions even the daily operation
at higher quality impossible or extremely hard.

7. SWOT analysis
This analysis carried out in two distinction methods. In the first part the
evaluation and the analysis of the SWOT can be found thanks to the joint
work of the invited experts and the colleagues of the cluster. In the second
part we summarize the outcome of the SWOT analyses of the stakeholder
interviews. At the end of the chapter we aggregate the weighted results of
the two methods in a table.
7.1 Strengths
Pécs’ feature as a student-city is quite determining, the university here has the
largest number of students in the country; there are numerous arts institutions
and many nationwide famed cultural events.
Pécs is main regional centre within Hungarian spatial structure:
• Intellectual, cultural and educational centre
• Health Centre,
• Service and commercial Centre
• Technology, R & D Centre
• Administrative Centre,
• Spiritual and Episcopal Centre
• Multiplayer sector system inside the creative industry
• Operating a regional network (Cultural Industry Cluster)
• Existing knowledge-base
• Motivated players in the sector
• Existing program and event systems
• One of the legs of the Pole Project is the development of the cultural
industry
• Pécs ECC Project
• Extensive Institutions

7.2 Weaknesses
As the creative industry and the cultural sphere couldn’t be treated
separately from the social and economic processes, therefore among the
weaknesses we emphatically display the above. The indicators can be
interpreted through the creative industry-planning phase as important base
data.
• According to the CSO data for the first of January 2009 the number of
inhabitants compared to the previous year decreased by 7.1 thousand
to 953 thousand in the region.
• In this region can be found the smallest villages (353) where fewer than
500 persons are living. More than 2/3 of the settlements of Baranya and
half of the ones in Somogy fall into this category
• The aging structure of the population is still a characteristic. On the
base of age structure counted "dependent population ratio" is lower
than the national average in terms of child-population, and higher in
the case of the elderly population.
• The Southern Transdanubia belongs to the less economically developed
regions of the country where the per capita gross domestic product
only makes the 68.3% of the national average and ranks to the 4 th
place out of 7 (in 2007).
• "Public" services (public administration, education, health and other
community services)
produces the 26.5%, of the region's gross domestic product which is4.3%
points higher than the national average. This originates from the lower
economic state of development.
• According to the most recent CSO data the 2009th I-III. quarterly
industrial production was 14.6% less than the same period last year
• The industrial production of those South-Transdanubian organizations
employing more than 4 people made up only 4.9% of the national’s.
The largest decline in production volume was the in Baranya County by
25.3%, while in Somogy by 11.3%, in Tolna by 4.5% fell the production
level compared to the previous year.

• The employment rate was 46.1%, the participation rate was 51.8%, the
former by 3.1%, the latter by 2.9% point below the national average.
The unemployment rate was in the 2009 in the region at an average of
11.0%, which was 10.0% of the country as a whole during the same time
of period. The number of employees was 191.7 thousand during the first
three quarter of 2009, which was 4.4% less than last year. In Baranya
2.9% in Somogy 6.8%, in Tolna3.4% was the reduction in the number of
employees compared to the year before.
• In the first three quarter of 2009 in the region the number of employees
significantly declined in the private sector (8.7%) compared to the
same period of the previous year, in the government sector, however
had been a 4% rise. The "Way to Work" scheme that attempted to
expand employment with public work programs tried to compensate
the negative trends characterized by the whole economy.
• . The gross monthly earnings in the region grew by just 0.2%, so the 162.9
thousand HUF regional averages are only 82.9% of the national one.
• The number of registered unemployed was 69,738 people in Southern
Transdanubian, which was 20.5%, or 11,852 people more than in the
previous year. In 2009 the growth was 27% nationwide which is higher
than in the region.
• Among the registered unemployed regarding the monthly average of
6,266 qualified job seekers were career starter in 2009, which is 16.2%
more than a year ago. The ratio of the job seekers was 9% of the total
and that is by 0.3% less than in 2008. Value loss, but 0.2 percentage
points higher than the national average.
• The new methods and ways to stimulate cultural activities and
innovation are weak. The cultural institutions partly reproduce passivity
and the new initiatives, often remain isolated.
• The year by year repeated research called “Youth” has shown that in
the past four years there were an important shift characteristic to the
atomized societies so much in the way of leisure activities at home
including, in particular that of passive TV watching: In Hungary, the

young people spend their free time mostly at home, in front of the
television.
• Further on is very important to take account of:
• Our region situated far from the “development corridor” of Vienna-
Budapest,
• The driving forces of the economy before 1990 economic are vanished,
and new ones have never replaced them.
• The central city of the region acquired during the past 20 years only a
few percent of foreign capital invested in Hungary, which is by far the
lowest among all regions.
• The weakness of the coordinated cooperation system
• The knowledge-base doesn’t support the demand related training and
innovative developments
• Weak and scattered infrastructure
• There isn’t any income producing creative industry
• The cooperation of the actors of the tourist and cultural industry is
embryonic
• The appropriate innovation chains don’t exist in the sector
• The sustainability and the contents of the innovation projects are not
proven
• Pécs and Baranya centricity
• The demand isn’t standardized and not developing
7.3 Opportunities
• Strengthen the knowledge-based economy (within this the University
development program, the local economy partner’s program, and the
establishment of the cultural industry employment supporting
• Creating the innovations chain with the help of the cultural cluster and
methods
• Through the training and advisory system building establish income
generating abilities
• Generating innovation activities – developing products and services

• Effective business operation through the coordination and cooperation
• Utilization of the ECC 2010’s development results and infrastructure
• Demand oriented operation
• Development of the youth tourism
7.4 Threats
• The bureaucratic systems prevent the development process
• The Pécs 2010 wouldn’t meet the expectations
• Due to the coordination the negative attitude of some actors
• The radical and quick changes of the demand
• Without the appropriate resources the Pole project cannot carried out
• Clusters and innovation chains are not able to cooperate
• Half of the youngster in the age group between 15-29 haven’t been in
a classical concert, in museum, theatre and in parallel appears the
stratum of the mass-media passive and not a participant, not
reproducing consumers.
• The largest population (31%) is the group of deprived whose way of life
does not appear in any form the cultural activity significantly
• The operation of the institutional network is dysfunctional, there are
unnecessary duplications, parallels, and there are units with unbearable
costs employing large number of people and burden the system over
of its capabilities.
7.5 Essence of the SWOT analysis (according to 20 questionnaire)
During the interviews, respondents were also asked to give their own areas of
expertise those the parameters, which are later, used to carry out the SWOT
analysis, of which we would highlight just a few thoughts:
Strengths:
• The business based intension for cooperation is high
• Increasing clustering process
• Art qualities of Pécs

• Coordinated operation and cooperation of the new ECC institutions
• All of the creative sub-branches are exist
• Identifiable development directions in the Creative Industry (Heritage,
AV Industry, Event organization)
Weaknesses:
• Lack of implementing the long-term cultural strategies
• Disproportionate appearing of enterprises, civil organizations, institutions
in the market
• Trainings, development programs, governmental daily decision-making
are completely diverging in the cultural field
• The lack of international marketing of the cultural sphere- there is only
the domestic market. (Tourism, country brands);
• Budapest oriented even the cultural sector in Hungary
• Lack of an homogenous city picture, monuments and advertising are
unregulated
• Consumer approach of the culture (entertainment), instead of the
producing approach (subsistence)
• Imperceptible professional involvement of the local government
Opportunities:
• Dynamic relationship with the consumer base- including the
involvement of young people
• Increasing clustering process, joint lobbying
• State operation effectively coordinate the training and development
programs, the conditions of the daily operations;
• Exploit the ECC effects and the economic interpretation of the ECC
project
• Increasingly strong support for the purchase of local products in certain
circles

• Strengthening, and upgrading the region's tourism, growing number of
Threats:
World Heritage sites
• Deteriorating external, ownership conditions of the state and local
government-run organizations, the internal reserves have been already
exhausted
• The expected erosion of vocational training at the middle-level in Pécs
• The dominant personalities give up the fight
• Lack of the regional and local decision making and resource allocation
• After the year of ECC 2010 the sustainability of attention is decreasing
• Contemporary architectural solutions come to prominence against the
heritage protection
• Strengthening the competitive positions the too many organized
thematic routes EU projects) would put out each other, would cause
too much competitions in vane
• Cultural industry exist only in words among the decision-makers, its
handling is rather negative

8. Summary of the SWOT analysis
The factors identified are summarized in the table below:
Strengths (internal)
- Existing rich cultural heritage,
- Natural resources,
- Road access,
- A rich cultural program selection,
- Key projects of infrastructure in the ECC,
- Endowments of the city of University,
- Unique products, ability to meet
individual demands
- Quality
- Flexibility
- Artistic qualities
- Creativity
- Improvement ability
Opportunities (external)
- External and internal growth in tourism
- Active involvement of university students
- Connecting possibility to the tourist
developments due to the ECC project
- Strengthening the knowledge-intensive
economy
- Settling in cluster joint lobbying,
- Strengthening the region's tourism, the
appreciation of the growing number of
World Heritage Sites
- Industry Organization
8
4
10
6
10
5
4
6
4
6
7
6
6
8
10
6
7
7
10
Weaknesses (internal)
- Population Issues (migration)
- Adverse economic conditions
- Lack of appropriate marketing activity
- Dissension among the industry
participants
- Lack of financial resources
- Lack of lobby control
- Lack of accessibility by rail, plane
internationally
- Budapest orientation
- Low employment potential of creative
industry businesses
- Lack of resources
- Lack of proper Industry competences
Threats (external)
5. Table Summary of the SWOT analysis
- After years of attention to the ECC,
sustainability, cultural, local government
sources will decrease further
- Lack of interest, industry demand for
services (especially cultural
consumption) decrease
- The expected erosion of vocational
training at the middle-level in Pécs
- The dominant personalities in the industry
give up the fight
- The extinction of the traditional craft
industries
- The mismanagement of the cultural
industry both at local and at state level
-10
-8
-5
-5
-10
-8
-7
-10
-10
-4
-4
-6
-6
-8
-5
-3
-10

Attachments
The professional questionnaire used by the analysis:
Within the project of Creative Cities we prepare SWOT analysis of
the creative industry. For this to work ask for your kind assistance.
Filling up voluntarily
1.1 Name of
Business/Organizatio
ns
1.2 Address
1.3 Statistical number (Prime
number, sector, county)
1.4 Statistical headcount - 2009
(Number of employees)
1.5 Company net – 2009 year
(please write in letters)
1.6 Name of the filler,
Position,
Phone number,
e-mail address
Questionnaire for research purposes
1. General Information

2. Estimate the situation of Pécs according to the following criteria (1 – 5 score)
2.1 Judgement of Pecs’s economic condition based on the
operation of their own business (1-very bad, 5-very favourable)
2.2 Judgement of Pecs’s cultural condition based on the experience
on their own field (1-very bad, 5-very favourable)
2.3 Frequency and efficiency of cooperation in the creative, cultural
sector (1-poor, 5-excellent)
2.4 The opportunities to join with the ECC2010’s projects, the level of
professional support to their own project implementation (1-poor, 5excellent)
3.1 Do you know the leading up program of
the European Capital of Culture? What kind
of project idea of yours related to the ECC
program? (brief description)
3.2 Do you know the cultural “pier” of the
Pole project? Please express your opinion
briefly!
3.3 Your institution’s existing innovative
service, and/or product, and method linking
to the operation ( brief description)
3.4 What kind of development ideas do you
have in the next 3-5 years? (Please express
briefly)
3. Development, cooperation

Opportunities
(external)
4. Evaluate the situation of your sub-sector - brief textual commentary
Threats (external) �
Strengths (internal)
Weaknesses
(internal)
Thank you helping us in the research!
�
Pécs, 2010………………………………………………………………….
Southern Transdanubian Cultural Cluster

The list of organizations participating in the questionnaire analysis:
Number Organization Industry
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
Erla Lp. Film production, Cinema
Organ building
Manufactory
Dupla Ltd. Architecture
Musical Instruments Manufactory
Marckon Ltd. Software-, web development
Mediátor Performing Art
Sophiane Hearitage Nonprofit
Ltd.
Heritage
Pecs Encyclopedia Advertisement
Arts School Performing Art
Pecs Gallery Museums Galleria
Zsolnay Heritage Nonprofit
Ltd..
Heritage
Jelenkor Journalism, Press, Publishing
Hungarian Radio Journalism, Press, Publishing
Képzőművész Fine Arts
PTE Arts Faculty Fine Arts
Tele Paks Non-profit Ltd. Film production, Cinema
Partners Pécs Ltd. Advertisement
Film Fund Non-profit Ltd Film production, Cinema
Pecs Philharmonic
Orchestra
Performing Art
19 Pecs National Theater Performing Art
20 Fair Expo Ltd. Advertisement

Cultural
Industry
Sector
The main results of the structured database used in the evaluation of the
statistical analysis (Source: Central Statistical Office):
Codes used in the database:
Classification Type of business Black list
1 Arts, Performing Arts 1 Unlimited Partnership 1 Yes
2 Film production, Cinema 2 Limited liability Company 2 No
3 Journalism, Press, Publishing 3 Foundation
4 Museums, Expositions 4 Chamber, Cooperative
5 Cultural Trade 5 Private Enterprise
6 Architecture 6 Joint Stock Company
7 Planning, Design 7 Public, Municipal Institute
8 Advertisement
Software-, Interactive
9
leisure development
In the database are not listed the names of the individual companies and
other sensitive information (tax number, residence...).
Equity
(2007)
Equity
(2008)
Equity
(2009)
Revenue
(2007)
Revenue
(2008)
Revenue
(2009)
Number of Number of Number of
employees employees employees
(2007) (2008) (2009)
Marts
Performing
Arts
Average 2057,67 2036,55 192,00 3333,56 3909,25 70199,44 1,00 1,48 6,26
Frequency 27 29 2 25 28 18 4 27 82
Deviation 2626,509 2508,420543,058 2921,153 3435,115270275,622 1,414 1,784 44,085
Film
Production,
Cinema
Average 16959,68 17707,72 21608,88 20555,05 1684,00 ,00 1,88 1,26
Frequency 19 18 17 19 3 5 17 27
Deviation 43010,899 40431,689 43456,50237597,571 1725,392 ,000 2,998 1,403
Journalism,
Press,
Publishing
Average 20048,69 19188,33 40231,65 41413,30 2934,25 5,83 4,74 4,47
Frequency 48 48 48 47 4 6 39 77
Deviation 41155,122 38868,882 70488,33568208,849 2296,417 6,178 6,029 7,801
Cultural Trade Average
1,25 3,00 1,50
Frequency 16 7 16
Deviation ,577 4,761 1,095
Architecture Average 308061,92 63861,81 -225,00 137503,71 29743,35 29743,35 3,64
Frequency 110 112 4 112 20 20 86
Deviation 2916819,875387200,205852,696 686961,08044187,295 44187,295 7,494
Planning,
Design
Average
41723,11 109,75 5,44 3,07
Frequency 9 4 36 14
Deviation 81874,188 200,250 6,050 4,047
Advertisement Average
9327,33 ,67 1,47 1,51

Frequency 3 3 19 59
Deviation 5084,596 ,577 1,577 1,685
Software-,
Interactive
Leisure
development
Average
503,00 187836,33 6,00 ,75
Frequency 1 3 1 4
Deviation , 156023,731 , ,500
Total Average 172681,07 40827,84 ,30 88030,81 26678,04 47370,75 21,82 3,48 3,73
Frequency 204 207 23 202 114 60 22 146 365
Deviation 2142518,808286218,205369,610 514876,72551739,163158108,139 86,854 4,918 21,510
Cultural Industry Sector Business form FrequencyDistribution
Art, Performing Arts Unlimited Partnership 76 33,6
Ltd. 15 6,6
Private Enterprise 134 59,3
Joint Stock Company 1 ,4
Total 226 100,0
Film Production, Cinema Unlimited Partnership 18 47,4
Ltd. 18 47,4
Chamber, Cooperative 1 2,6
Private Enterprise 1 2,6
Total 38 100,0
Journalism, Press, Publishing Unlimited Partnership 43 45,7
Ltd. 48 51,1
Private Enterprise 2 2,1
Joint Stock Company 1 1,1
Total 94 100,0
Museums, Expositions Unlimited Partnership 20 34,5
Ltd. 7 12,1
Joint Stock Company 1 1,7
Public, Municipal Institution 30 51,7
Total 58 100,0
Cultural Trade Unlimited Partnership 14 63,6
Ltd. 6 27,3
Joint Stock Company 2 9,1
Total 22 100,0
Architecture Unlimited Partnership 70 37,0
Ltd. 117 61,9
Private Enterprise 2 1,1
Total 189 100,0
Planning, Design Unlimited Partnership 30 35,3
Ltd. 53 62,4
Private Enterprise 1 1,2
Joint Stock Company 1 1,2
Total 85 100,0
Advertisement Unlimited Partnership 31 46,3
Ltd. 36 53,7
Total 67 100,0
Software-, Interactive Leisure Unlimited Partnership
Development
2 18,2
Ltd. 8 72,7
Joint Stock Company 1 9,1
Total 11 100,0

Cultural Industry Sector FrequencyDistribution
Arts, Performing Arts Yes 31 13,7
No 195 86,3
Total 226 100,0
Film Production, Cinema Yes 7 18,4
No 31 81,6
Total 38 13,7
Journalism, Press, Publishing Yes 44 86,3
No 50 100,0
Total 94 18,4
Museums, Expositions No 58 81,6
Cultural Trade Yes 9 100,0
No 13 46,8
Total 22 53,2
Architecture Yes 60 100,0
No 129 100,0
Total 189 40,9
Planning Design Yes 34 59,1
No 51 100,0
Total 85 31,7
Advertisement Yes 37 68,3
No 30 100,0
Total 67 40,0
Software-, Interactive Leisure development Yes 3 60,0
No 8 100,0
Total 11 55,2

Cultural Industry Sector Frequency Distribution Valid
distribution
Arts, Performing Arts 0-20 Mio HUF 84 37,2 96,6
20-50 Mio HUF 1 ,4 1,1
50-300 Mio
HUF
1 ,4 1,1
Over 300 Mio
HUF
1 ,4 1,1
Total 87 38,5 100,0
Total 226 100,0
Film Production, Cinema 0-20 Mio HUF 24 63,2 92,3
20-50 Mio HUF 1 2,6 3,8
50-300 Mio
HUF
1 2,6 3,8
Total 26 68,4 100,0
12 31,6
Total 38 100,0
Journalism, Press Publishing 0-20 Mio HUF 55 58,5 76,4
20-50 Mio HUF 16 17,0 22,2
50-300 Mio
HUF
1 1,1 1,4
Total 72 76,6 100,0
22 23,4
Total 94 100,0
Museums, Expositions 58 100,0
Cultural Trade 22 100,0
Architecture 0-20 Mio HUF 35 18,5 89,7
20-50 Mio HUF 3 1,6 7,7
50-300 Mio
HUF
1 ,5 2,6
Total 39 20,6 100,0
150 79,4
Total 189 100,0
Planning, Design 0-20 Mio HUF 11 12,9 78,6
50-300 Mio
HUF
3 3,5 21,4
Total 14 16,5 100,0
71 83,5
Total 85 100,0
Advertisement 0-20 Mio HUF 49 73,1 81,7
20-50 Mio HUF 8 11,9 13,3
50-300 Mio
HUF
3 4,5 5,0
Total 60 89,6 100,0
7 10,4
Total 67 100,0
Software-, Interactive Leisure
Development
0-20 Mio HUF 1 9,1 100,0
10 90,9
Total 11 100,0

List of employed documents and electronic documents:
Analysis for the Strategy of the Cultural Industry of the Southern Transdanubian
(Authors: Bozóky Anita, Keresnyei János, Dr. Tarrósy István, Vendler Balázs)
Pecs the Pole of the Quality of Life - Pecs Pole 2006
Enyedi György: The cultural economy of the cities. É.N.
http://www.sulinet.hu/oroksegtar/data/ipar_es_gazdasagtortenet/A_magyar
_varosok_kulturalis_gazgasaga/pages/002_az_elmelet.html
Cultural developments from the perspective of the cohesion policy (Authors:
Dr. Nagy Mihály - Hannibál Zsolt) É.N.
Desszi Gavrilova: Public and non-governmental cultural sector in Bulgaria
http://www.ketezer.hu/menu4/2004_kulonszam/gavrilova.html
http://www.scribd.com/doc/25066246/Az-EKF-jelent%C5%91sege-Pecs-varoseleteben
www.pecs.hu
www.pecs2010.hu
www.ksh.hu