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The emerging vision of the modern, innovative Hungarian economy, which can compete successfully in the global arena, made it absolutely necessary to encourage business firms to be innovation-oriented and to encourage universities to develop, beyond their traditional teaching mission, also their research performance and their capabilities to transfer research results and new knowledge to convert them into commercially relevant innovations. The role of government was to create a suitable legal environment and proper incentives to stimulate and support change and to enable collaborations between Public and Private Sector actors. Despite all efforts in launching relevant programmes, the competency and attractiveness of universities for strategic research partnerships with the private sector remained heterogeneous and partially unsatisfactory because of shortcomings in their knowledge base and their capability to act as well-performing research partners in collaborative projects. In 2004 Hungary established a new complementary programme which addressed particularly these shortcomings, the Pázmány Péter – Regional University Knowledge Centre programme. This paper describes shortly the programme and then investigates the experiences of two initial calls. This Public-Private-Partnership model, where the state is not the single supporter of the programme, the participating Private Sector actors provide complementary funding. In addition, the centres can also attract external funding from various other sources. In addition, Private Sector enterprises make advanced technical equipment available for use by members and non-members. By the first experiences this programme is a good frame to support overcoming on one of the failure of the system, weak knowledge distribution capability. This initiative, the Pázmány Péter programme provides a potentially transferable example for other countries with shortcomings similar to those of Hungary’s National Science and Innovation System. It was the first policy measure which has attracted a large number of actors and united them in joint regional research activities. This form of Public Sector - Private Sector research collaborations is crucial for the flow of knowledge, the seamless transfer of research results to commercially relevant innovation and for feedback loops in development. The centres offer a stimulating environment for innovators and potential innovators, thus contributing to make the Hungarian economy more competitive.
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