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Innovation and Access to Finance

Author

Listed:
  • Michele Cincera

    (The International Centre for Innovation, Technology and Education Studies (iCite), Solvay Brussels School of Economics and Management, University of Brussels, Belgium)

  • Anabela Santos

    (The International Centre for Innovation, Technology and Education Studies (iCite), Solvay Brussels School of Economics and Management, University of Brussels, Belgium)

Abstract
Promoting Research and Development (R&D) activities is the main goal of the EU 2020 Strategy in order to achieve an R&D spending at least 3% of GDP. The Innovation Union is one of the seven flagship initiatives of the EU 2020 Strategy, which has the aims: to improve access to finance for R&D; to get innovative ideas to market; to ensure growth and jobs (European Commission, 2014b). The aim of the present paper is to identify and explain the main mechanisms related to four commitments of Innovation Union: i) Commitment 10 (Put in place EU level financial instruments to attract private finance); ii) Commitment 11 (Ensure cross-border operation of venture capital funds); iii) Commitment 12 (Strengthen cross-border matching of innovative firms with Investors); iv) Commitment 13 (Review State Aid Framework for Research, Development and Innovation). To this purpose, a review of both theoretical and empirical literatures about ’Innovation, Access to Finance and SMEs’ based on more than 80 scientific and other articles and analyses is presented. The paper provides an analysis of the main alternative financial instruments to bank loans, namely Risk-Sharing Facility Financing, Venture Capital, Business Angels and public subsidies. We found some evidence in the literature that Venture Capital could have a limited impact in enhancing innovation in the long-term and that some public support schemes could be more effective than other, depending on the firm’s maturity state.

Suggested Citation

  • Michele Cincera & Anabela Santos, "undated". "Innovation and Access to Finance," IRMO Occasional Papers 6, Institute for Development and International Relations, Zagreb.
    • Handle: RePEc:crv:opaper:6
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    References listed on IDEAS

    as
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    2. Phedon Nicolaides, 2013. "The Economics of Subsidies for R&D: The Intrinsic Difficulty of Determining Optimum Subsidies and Implications for Reform of EU State Aid Rules on R&D," Bruges European Economic Research Papers 26, European Economic Studies Department, College of Europe.
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    Keywords

    EU 2020 strategy; innovation; finance; Innovation Union;
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