How Public Financial Instruments Impact on the Economy of a Territory
Proceedings of the 15th Uddevalla Symposium on "Entrepreneurship and Innovation Networks", Faro, Portugal, 14-16 June 2012
21 Pages Posted: 21 Oct 2012 Last revised: 22 Oct 2012
Date Written: 2012
The competitiveness of enterprises depends both on environmental characteristic favouring innovation and on the availability of funding for R&D activities; while the former can and should be developed by local and central authorities and agencies, the latter depends on the ability of the single enterprise to attract private investments. Unfortunately, enterprises with high technology/innovation content show a risk-return profile which is too high for private investors, which results in an Equity Gap, as shown for the first time in the Macmillan Report (1931). Given the correlation between the ability to innovate and the economic development of a country or a territory, the Public Sector often takes action in supporting high technology/innovation firms by direct intervention or by incentivizing private investments (indirect intervention) through different schemes.
This study investigates the impact that Public-private financial programs have on the innovation activities of a territory. The results should help orienting the allocation of Public resources to the most effective and efficient instruments. First, a set of innovation indicators is built, made of traditional indicators (e.g. R&D effort, Patents & Patent applications) and non-traditional indicators taken from the available literature (e.g. Kleinknecht et al, 2001). The indicators chosen take into consideration the local conditions and are normalized in order to make comparison possible among schemes activated in environments with heterogeneous characteristics. The chosen set of indicators is used to evaluate the impact of several schemes adopted in different countries and in different geographic areas (Europe, North America, Asia) on the innovation grade of the territory. The study is not intended to identify the best scheme among all, but to understand which scheme is the most appropriate to be adopted by the Public Sector in order to pursue its objectives of bridging the Equity Gap for high technology/innovation firms according to the peculiarities of the local territory.
Keywords: Entrepreneurship, Growth, Indicators, Innovation, Public-Private Partnership, Venture Capital
JEL Classification: G24, G28, L26, L53
Suggested Citation: Suggested Citation