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The new financial factory for innovation economic development

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Abstract

Both Moles (2008) and Sneyers (2008) have proposed ideas about "manufacturing‟ private capital market securities that could be used by new ventures and existing firms that were raising growth capital to support innovation. Their ideas for new varieties of securities would work well if they were part of a larger strategy of regional innovation economic development. The securities issued by individual firms would be seen within the context of a vibrant, full-service regional capital market whose goal was the continuing commercial viability of the regional firms. In an ideal regional private capital market, the new securities would allow for subsequent investments, as capital gains were reinvested back into the regional economy. In other words, rather than viewing the new securities from the perspective of a single company attempting to attract business angels or venture capitalists, the success of the new securities would be viewed from the contribution they make to the self-renewing and self-sustaining economic growth of regions. Most investments in innovation depend on a high degree of trust in a 50-mile radius of the participants in the capital markets. The new securities would be most successful when they were embedded in vibrant regional capital markets that are characterized by business social networks built upon a high level of trust within the regional economy. Financial institutions in each region would become important partners in the regional capital markets.

Suggested Citation

  • Vass, Thomas, 2009. "The new financial factory for innovation economic development," Journal of Financial Transformation, Capco Institute, vol. 26, pages 37-41.
  • Handle: RePEc:ris:jofitr:1394
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    Keywords

    Private capital market securities; financial institutions;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage

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