Financing innovation

Abstract

In the context of growing competition in globalising markets the financial dimensions of innovation must be understood by anyone concerned with job-creating growth. Several questions are posed, the answers to which require a new conceptual framework. Financial systems manage risk, but as far as innovation is concerned they attempt the unattainable aim of limiting uncertainty. The outmoded traditional approach to financing takes insufficient account of the profound changes occurring in the financial sector. Instead of being a linear process, innovation is increasingly becoming interactive and more dependent on private finance and the innovation's capacity to gain access to traditional assets such as patents, specialised equipment or consultancy services. Radical changes in the financial sphere have implications for innovation financing. National differences in the nature of financing persist. Because government intervention must be refocused, some common lines of approach are identified. -D.G.Price