Innovation, Venture Capital and Globalization: the Role of Public Policies
Creating more innovative and dynamic economies is one of the fundamental challenges facing both advanced and emerging market economies. An important ingredient of this involves the creation of entrepreneurial firms which can quickly translate creative ideas and scientific discoveries into viable products. These firms, however, need financing because it takes time and money to turn ideas into marketable products. However, investing in these types of activities is risky as a lot of new ideas simply don’t work out in practice. Because of these risks, banks tend to avoid lending to these types of firms. There is, however, a small segment of the financial sector referred to as the venture capital market that specializes in finding and developing these entrepreneurial businesses. This paper provides an overview of this important financial sector and concludes that public policies have historically been quite important in nurturing a venture capital industry as it is an area characterized by numerous market imperfections. From these experiences some lessons are drawn as to what actions governments can take to overcome the obstacles in establishing a venture capital market which can adequately finance dynamic new companies. It is also emphasized that although obtaining finance is often a significant constraint it is nevertheless just as important to ensure that the other ingredients for entrepreneurship are also present; these include a proper regulatory and legal framework including protections for intellectual property, low start-up costs with minimum paper work, a favourable tax regime, and a well-educated workforce. More generally, it is pointed out that the policies needed to promote innovation in advanced economies may not be appropriate for catching-up economies.
|Date of creation:||Jun 2008|
|Publication status:||Published in United Nations ECE 2008 Annual Report|
|Contact details of provider:|| Postal: Palais des Nations, CH - 1211 Geneva 10|
Phone: +4122 917 44 44
Fax: +4122 917 05 05
Web page: http://www.unece.org/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ece:annrep:2008_5. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Robert Shelburne)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.