The decline in EU labour productivity growth rates in the mid-990s was attributed equally to a lower investment per employee and to a slowdown in the rate of technological progress (Kok, 2004.
Such direct investments in a necessarily limited number of individual SMES can achieve only limited results.
reducing cost and investment, and working at the centre of a peer knowledge production process allows small enterprises to overcome the activation threshold needed to use ICT in a novel and productive way.
Reciprocity is believed to work eventually to provide a‘return on investment'that may in any case be difficult to monetise
These limit the financial liability of company owners to their investments so personal assets of the owners are not put at risk.
what doesn't to calibrate interventions and investments. Addressing barriers to growth and scale. Growth & scale is an ambition that should be fostered;
and social investment Nominet Trust Nesta Advocacy and advisory or expert bodies IOT Council La Quadrature du net European Digital Rights (EDRI) Table
or solve specific problems. 35 By providing funding and investment: Public sector bodies, large foundations and other philanthropic organisations, provide early stage funding for DSI services,
Open access provides an economic and social return on investment through higher dissemination to citizens, taxpayers,
or lack of investment. It is crucial for successful crowdsourcing to design the activity properly to prevent excessive demands and frustrations.
The institutional infrastructure necessary for cutting-edge research no longer requires state investment, and in fact, private institutions have near-monopolies over social networks and search engine data,
what doesn't to calibrate interventions and investments. Addressing barriers to growth and scale. Growth & scale is an ambition that should be fostered;
It takes perseverance as well as investment in time, money and relationships before good outcomes happen. Business cases for implementing the resulting API's are currently missing;
there is still a degree of operational resistance from some developers reuse requires an upfront investment from developers who must take the time
Building on this, the platform aims to facilitate‘the collective investment in open projects with social, cultural, scientific, educational,
Commercenet's investment and support model combines the elements of a research lab, startup incubator and public interest initiative.
Peerby has received investment from a number of philanthropic as well as private investors including Stichting Doen, Agentschap NL, Sanoma Media and Green Challenge.
and quite an investment that doesn't pay off immediately (in salary). Almost all employees of Peerby own a piece of the company through stock options
and a ready addition to many other innovations without requiring large upfront investment. Its robustness and low maintenance requirements make it particularly suitable for harsher environments in many developing countries.
what doesn't to calibrate interventions and investments. Addressing barriers to growth and scale. Growth & scale is an ambition that should be fostered;
and social investment Nominet Trust Nesta Advocacy and advisory or expert bodies IOT Council La Quadrature du net European Digital Rights (EDRI) Table
or solve specific problems. 35 By providing funding and investment: Public sector bodies, large foundations and other philanthropic organisations, provide early stage funding for DSI services,
Open access provides an economic and social return on investment through higher dissemination to citizens, taxpayers,
or lack of investment. It is crucial for successful crowdsourcing to design the activity properly to prevent excessive demands and frustrations.
The institutional infrastructure necessary for cutting-edge research no longer requires state investment, and in fact, private institutions have near-monopolies over social networks and search engine data,
what doesn't to calibrate interventions and investments. Addressing barriers to growth and scale. Growth & scale is an ambition that should be fostered;
It takes perseverance as well as investment in time, money and relationships before good outcomes happen. Business cases for implementing the resulting API's are currently missing;
there is still a degree of operational resistance from some developers reuse requires an upfront investment from developers who must take the time
Building on this, the platform aims to facilitate‘the collective investment in open projects with social, cultural, scientific, educational,
Commercenet's investment and support model combines the elements of a research lab, startup incubator and public interest initiative.
Peerby has received investment from a number of philanthropic as well as private investors including Stichting Doen, Agentschap NL, Sanoma Media and Green Challenge.
and quite an investment that doesn't pay off immediately (in salary). Almost all employees of Peerby own a piece of the company through stock options
and a ready addition to many other innovations without requiring large upfront investment. Its robustness and low maintenance requirements make it particularly suitable for harsher environments in many developing countries.
meet the infrastructure investment challenge and realize paperless administration. The Commission has called on the 1 Commission Communication Single Market Act-Twelve levers to boost growth
These new rules will allow for well-designed state aid targeted at market failures without crowding out private investment in competitive areas.
and jobs through public and private investment in fields where regions have competitive advantages. One of the conditions to use the future ERDF is the development of research and innovation strategies for smart specialisation.
The Thematic Objective 2 Enhancing access to and use and quality of ICT Investment Priority;
and costing methodologies in order to stimulate investment in fibre deployment, Consistent infrastructure access pricing is key to effective competition and investments in the EU telecoms markets.
Regulatory consistency across Europe ensures that telecoms operators benefit from regulatory predictability and clarity which are necessary for, in particular,
the large scale investments required to roll out next generation networks capable of supporting the Digital Agenda for Europe's broadband targets.
Saves costs of raw materials, transport, storage, management etc. over relatively short time periods and with generally low-risk investments.
On average, these investments paid off after 13 months. Micro companies achieved high relative savings (comparable to 11%of annual turnover)
Research by the Carbon Trust showed that large UK businesses undervalue the financial returns from investments in energy efficiency by more than half.
Orangebox has set up a recycling centre at their site in Wales achieving a significant return on investment
Impact investment for eco-innovation? Impact investment is investment assessing not only the financial return on investment,
but also the environmental and social impacts in the course of the operations of the business and the consumption of the product or service,
Currently, several crowfunding platforms, such as www. Impactcrowd. com (NL) and www. crowdmission. com (UK), specialise in impact investment for ventures that aim to create environmental, social and economic impact.
whether Europe can turn its substantial investment in information and communication technology (ICT) into greater economic gain.
First, why hasn't heavy investment in ICT delivered the economic growth and acceleration in productivity experienced in the US?
however, and most European countries have yet to see ICT investment translated into faster growth and productivity.
The optimists believe that this heavy investment in ICT will soon pay off in higher productivity and economic growth.
The millennial bubble bursts and subsequent slowdown in ICT investment may have tempered wilder claims about the economic benefits of ICT,
Finally, the model takes into account ICT use as well as infrastructure development, in contrast to traditional models that focus primarily on ICT investment indicators.
This is consistent with the view that there is a considerable time-lag between ICT investment and returns, representing the time it takes for organisations to assimilate
European effectiveness in harnessing ICT The Economist Intelligence Unit's research confirms that most European countries lag significantly behind the US in key measures of ICT investment
Continued on page 14 12 The Economist Intelligence Unit 2004 Reaping the benefits of ICT Europe's productivity challenge Three ways ICT can boost the economy 1. ICT investment.
Economists believe ICT capital investment has made a sizeable contribution to GDP growth in many developed countries in the past decade,
Across the OECD, the share of ICT investment in total investment has expanded over the past decade, especially in the US, Australia, Canada and the Nordic countries.
However, Europe continues to lag behind in terms of the share of ICT investment in GDP: in the EU in 2001 it accounted for 2. 6%of GDP compared with 4. 2%in the US.
Will the high levels of ICT investment that have produced this effect be sustained in the future? Despite a dip since 2000, many economists see ICT investment growth in both the US
and Europe remaining buoyant in the medium term a view our survey supports, with 70%of companies saying they plan to increase investment in the next two years.
One notable sceptic is Robert Gordon, an economist who argues that the 1990s boom owed much to transitory factors
On this view, ICT investment growth should still continue, but at a much more moderate pace than in the second half of the 1990s.
What are your plans for investment in ICT in the next 2 years?(%%respondents) Over 100%increase in investment 6 50-100%increase in investment 11 25-50%increase in investment 10 10-25%increase in investment 21
Up to 10%increase in investment 22 Same level of investment 25 Up to 10%decrease in investment 3 10-25%decrease in investment 2 25
-50%decrease in investment 0 50-100%decrease in investment 0 ICT investment in the European union, 1995-2001 (Gross fixed capital formation in 14 EU
countries in constant 1995 prices, billions of Euros) Source: Marcel Timmer, Gerard Ypma and Bart van Ark, IT in the European union:
software has attracted the largest share of ICT investment since the technology boom began in the early 1990s.
By 2000, it accounted for about 14%of total nonresidential capital investment in the US,
and nearly 40%of overall ICT investment growth1. ICT investment in the EU as a whole has been weighted more heavily towards IT and communications infrastructure,
where price declines have been steepest. Software nonetheless accounted for onethird or more of ICT investment in the UK
France and The netherlands in 2000, and substantially more in the Nordic countries2. Software investment tends to lag purchases of hardware.
This may explain the more rapid growth of software investment relative to total investment in the US,
where firms made an early start in deploying IT and networking infrastructure. Assuming that Europe is playing catch up to the US in overall ICT investment
and has invested heavily in hardware since the late 1990s, software vendors can probably look to good times ahead in their European markets.
But it is equally clear that high levels of ICT investment and adoption do not, in themselves, guarantee faster growth and productivity.
ICT investment has grown impressively on both sides of the Atlantic, yet most of the EU countries continue to be outpaced by the US economy.
European managers struggle to turn technology investment into gains in productivity or revenue. The implication is that it is not enough to deploy new enterprise software or a
The gap is felt not so much in technical expertise as in managers'ability to capitalise on ICT investments for commercial benefit.
and their likelihood of generating productivity gains from ICT investments. Reorganising the workplace to adapt to new technology can involve anything from automating manual processes to overhauling product design, production or logistics systems.
For some managers, ICT investments trigger a decision to spin off a new entity, or to leave
%respondents could provide a maximum of three answers) Initiatives to encourage technology transfer from universities 29 Government leading the way in innovative use of ICT 35 Encouragement of foreign direct investment in ICT
and secondary schools 33 Availability of specialist high tech qualifications in further and higher education 10 Policies to redress under-representation of women in ICT jobs 2 Financing schemes for ICT-related investment
Although overall private equity investment levels in Europe approach those across the Atlantic, the amount channelled into earlystage financing is substantially less in Europe than in the US (in 2002,10. 6%in Europe compared with 21.1%in the US, according to Pwc).
Industry veterans point out that European venture-capital firms are extremely selective in their investments partly because they had burnt their fingers in the dot com crash,
that their managers are fully aware of the potential benefits of an ICT investment, as well as the specific workplace factors that may complicate it,
in that most of these have focused on ICT investment across countries. Despite the considerable work that has gone into making the ICT investment measures comparable across countries,
a number of question marks about the comparability of these investment figures remain. We used instead a"physical"indicator of ICT endowments (use and infrastructure), based on a composite index of various ICT indicators.
The EIU model allows us to estimate the impact of ICT on growth differences between countries for example between the US
The explanatory variables in the initial specification of a standard"neoclassical model"(equation 1 in table 1) include initial income levels, investment shares, demographic variables (rate of growth of total
INV average share of fixed investment in GDP (at current prices) in 1996-2002. POPG 15-65 average annual rate of growth of population aged 15-65.
The growth advantage that the euro zone economies had in terms of lower initial GDP per head (the catch up potential) and higher investment rates is cancelled roughly out by the effects of the US's superior business environment and schooling.
Forecasting We can also use our framework to generate mediumterm forecasts (using equation 3 of table 3). To do this we use the EIU's forecasts of investment shares in GDP in 2004-08
33 Reaping the benefits of ICT Europe's productivity challenge Ahmad, Nadim, Paul Schreyer and Anita Wölfl, 2004, ICT Investment in OECD Countries and Its Economic Impacts, Chapter
Investment in ICT and Economic growth, mimeo. Bartelsman, Eric, Andrea Bassanini, John Haltiwanger, Ron Jarmin, Stefano Scarpetta and Thorsten Schank, 2002, The Spread of ICT and Productivity Growth Is Europe Really Lagging Behind in the New Economy?
European commission, 2003, European Competitiveness Report 2003, Commission Staff Working Document Gordon, Robert, 2003, Five Puzzles in the Behavior of Productivity, Investment and Innovation, Global
The Contribution of ICT Investment to Economic growth and Labor Productivity in Poland 1995-2000, Warsaw:
How do European countries compare with other global markets in providing an attractive environment for ICT investment and innovation?
and ICT investment 14 Restrictive working practices 14 Publicity ramifications of automating jobs 5 Other 2 The Economist Intelligence Unit 2004 39 Appendix C:
and secondary schools 33 Initiatives to encourage technology transfer from universities 29 Encouragement of foreign direct investment in ICT sector 23 Financing schemes for ICT-related investment 22
What are your plans for investment in ICT in the next 2 years?(%%respondents) Over 100%increase in investment 6 50-100%increase in investment 11 25-50%increase in investment 10 10-25%increase in investment 21
Up to 10%increase in investment 22 Same level of investment 25 Up to 10%decrease in investment 3 10-25%decrease in investment 2 25
-50%decrease in investment 0 50-100%decrease in investment 0 Harnessing ICT in business
What proportion of your organisation's overall budget did you invest in ICT in the last 12 months?(%
and marketing channels 21 Enterprise resource planning 16 Outsourcing of IT services 14 On average how long does it take your company to achieve return on investment from ICT projects?(%
and metrics to measure return on investment from ICT initiatives 40 We measure total cost of ownership for our key technology platforms 32 We formally review our ICT suppliers on a regular basis 29 We offer incentives to encourage innovation at all levels of the business 26
%respondents) Impact on productivity 55 Impact on profitability 40 Return on investment models 32 Impact on customer retention 23 Speed to market 21 We don't use measures to evaluate ICT benefits 15
and help to ensure the European public and private investments required for the implementation of the research and development (R&d) strategies.
applying efficient investments to solve infrastructure ageing; Security of supply: limited primary resources of traditional energy sources, flexible storage;
They are required to undertake necessary investments to guarantee high levels of power quality and system security,
Investment remuneration and stable regulatory frameworks will be necessary for a level playing field competition in a liberalised market.
As with grid companies, technology providers will have important investment decisions to make. A shared vision will be critical to ensuring sound strategic developments that provide open access, long-term value and integration with existing infrastructure.
which secure a grid with increasingly open access, a clear investment remuneration system and keep transmission and distribution costs as low as possible.
it reduces investment risk; Smartgrids: The Vision Europe's electricity networks in 2020 and beyond will be:
The need for investment in end-of-life grid renewal in an innovative way to better position the networks for the next 50 years of operation;
The need to reduce uncertainty and risk to businesses making investment decisions; The progress in technology,
It's not a vision for specific infrastructure projects or about the details of investment funding and risk management;
Significant investment will be required to develop and renew these infrastructures: the most efficient way to achieve this is by incorporating innovative solutions, technologies and grid architectures.
Global investments required in the energy sector for 2003-2030 are estimated an $16 trillion, according to the IEA.
In Europe alone, some €500 billion worth of investment will be needed to upgrade the electricity transmission and distribution infrastructure.
and investment remuneration in innovation The best strategy for managing these uncertainties is to build flexibility and robustness into the networks.
Scarcity of primary energy sources on one hand and climate change on the other is likely to greatly affect decisions on new investments in generation.
for example allowing network companies to conduct limited commercial activities with respect to long time investments. Grids will become intelligent systems with flexible
to mobilise the private and public investments required for the implementation of the RTD strategies.
ETP-Smartgrids must ensure widespread cooperation and sufficient investment to fund extensive research. It is divided into different bodies, each
The platform must mobilise private and public investments to allow crucial research to be carried out.
tools such as multicriteria decisionmaking and social return on investment analysis may allow policymakers to take explicitly into account the social innovation aspect of their decisions.
Investing in entrepreneurship education is one of the highest return investments Europe can make Whether or not they go on to found businesses or social enterprises,
Matthias Ummenhofer, Head, Venture capital, European Investment Fund Figure 13: New Venture Funds Raised in Europe by Investors,
This is illustrated by the fact that the visible share of business angel investments only amounts to approximately 10%of the overall market estimate of €5. 1 billion for 2012.38 However,
the primary focus was on the missing middle of financing larger-thantypical angel investments (up to around €500,
Part of it is linked to higher levels of risk aversion following the financial crisis as investors struggle with an increased regulatory burden. 39 This drop in private investment has seen the role of government agencies in venture capital raised from institutional investors increase from pre-crisis
and expansion stage Private Focusing on private actors The European Business Angel Week will increase visibility of angel investments;
Chief executive officer, Illycaffè Publicprivate Rethinking the role of public entities as co-investors joining private investments Co-investment funds provide 1) the opportunity to invest in larger companies
and 2) increased potential to diversify investment amounts. Take the EBAN/EIF collaboration between business angels and the EIF, for example.
In Portugal, business angels invested €2 million on average prior to the launch of a co-investment initiative;
afterwards, the average investment became €11 million. In the United kingdom, the Scottish Co-Investment Fund (SCF) is a £72 million equity investment fund.
In venture capital, for example, the fund invests £0. 5-2. 0 million in deals of £2-10 million.
provision of pre-seed investment, usually taking a minority share in the start-up; start-ups profit from both events and mentoring.
In SMES, an investment of €1 by Finland's funding agency Tekes produces €21 of turnover annually;
if collaboration fails, loss of investment/independence Ideas/concepts, possibilities to test ideas quickly and outside complex structures, access to technology, rapid prototyping Commercialized innovation in an accelerated process IP
Miles Kirby, Managing director of Qualcomm Ventures, responsible for investments in Western and Eastern europe To systematically foster collaboration between large companies and entrepreneurs we have to start with specific topics e g. 3d printing around
whether that means procurement (corporates buy products and services from startups), strategic investments and eventually acquisition. 56 Finding the right entry point
It is important that we bring something more to the table than investment and scalability potential for the innovations being developed by them.
but the projects would still require substantial investments from other sources. Under Horizon 2020, about €140 million is expected to be allocated until 2020 for Cluster facilitated projects for new industrial value chains
Including a fund of funds of €120 million for business angel co-investment, venture capital and expansion capital (of this,
In addition, the Baltic Innovation Funds (for Estonia, Lithuania and Latvia) has a volume of €200 million for later stage and bigger investments
The Vigo accelerator programme for innovative, high-growth companies has attracted a great deal of direct foreign investment in Finnish start-ups.
For instance, the flagship enterprise Supercell received a €1 billion investment from Japanese investors. This proves that the quality of deal flow has improved.
including loans, guarantees and venture investments, to help tackle the issue. Furthermore, the Danish regions are exploring the opportunity to include successful serial entrepreneurs and professionals from large, existing companies in networks for entrepreneurs with particular potential.
The new Tax Investment Law will introduce radical policy measures, such as 0%corporate tax rate for start-ups in the first three years of operation and a 6%bonus on technology innovation activities.
and we must act decisively in nurturing the best investment environment possible. Against this background, the government recently launched its Industrial Development Strategy for Growth
In 2013, it supported over £650 million of total lending and investment. Current and future challenges of high priority on the policy agenda:
and find new models of co-investment by complementary resources in order to improve capital supply. European states have shown massive engagement to support entrepreneurship.
Co-investment models, both those enabling the state Fostering Innovation-driven Entrepreneurship in Europe 47 to join hands with private actors to top up investments
Investments in pan-European fund structures support the above-mentioned development towards a European single market for risk finance.
Formal long-term employment contracts between individuals and corporations would become investment relationships in which individuals dedicate capacity and skills in a corporate ecosystem.
, European Investment Fund, Luxembourg Fostering Innovation-driven Entrepreneurship in Europe 61 Jeroen Van der veer, Executive Member of the Governing board, European Institute of Innovation and Technology, Hungary;
17 The Foreign Direct Investment Strategy...18 Policy implications: Broadening Government Support and Coping with the Diversity of Needs...
statistics on trade flows (exports and imports), foreign direct investment, international capital flows, and inter-country labour mobility.
Investment in innovative activities seems to be on the rise in SMES. The National Science Foundation (1999) shows that total expenditures for industrial R&d by SMES has increased by almost three times between 1985 and 1995 in the United states,
and not limited to formal R&d investments. 20. In a more systematic approach to understanding innovation in SMES
The CIS has shown that the pattern of innovation in SMES is mostly non-R&d investment based.
Only as firm size increases does the importance of R&d investment in innovation increase too.
whose investments in and use of innovations cannot be uniformly characterised. SMES fall roughly into four subgroups.
(which may or may not involve own investments in R&d). -The information technology strategy, which makes innovative uses of information technology
-The foreign direct investment strategy, in which SMES exploit firm-specific ownership advantages abroad. 29.
the relationship between R&d investments and patenting is very strong. The most innovative countries, such as the United states, Japan and Germany, also tend to undertake high investments in R&d.
By contrast little patent activity is associated with developing countries which have very low R&d expenditures.
therefore able to appropriate some of the returns accruing to investments in new knowledge made externally.
in order to recoup your R&d investment.""11"The Little Guys Are Making It Big Overseas,"Business week, 27 february 1989, pp. 67-69.12 Ibid.
Foreign direct investment plays a central role in these companies. And their fiveyear revenue growth was 16.2,
They investment abroad in plant equipment, and technology, and they investment in people. Even when a high initial investment may not be justified in terms of short-term returns,
the small and medium-sized enterprises consider it important to undertake such global investments because of the demonstration effect--to show potential customers
and business partners that they are committed to the local economy. The Mittelstand companies also espouse a strategy
whereby they insist on the same high standards in the host market as they do in the home market,
that makes a strategy of foreign direct investment so central to the German Mittelstand. In order to understand the peculiarities of each host market,
) WK1 16 because it maximises the ability of firms to appropriate economic value accruing from their investments in new knowledge,
and high investments in human capital. -Continual innovation. Both the nature of the products, as well as production and organisation methods, are continually being improved.
Clusters of firms have experienced high levels of investment into process technologies, particularly in manufacturing automation, NC, CAD-CAM,
The Foreign Direct Investment Strategy 62. There is considerable evidence that the transnational economic activities of SMES have been increasing over time.
Not only has the absolute value of foreign direct investment activities by small and medium-sized enterprises increased over time,
but so has their share of the total foreign direct investment, at least in several countries including Italy, The netherlands and Japan. 63.
The effectiveness of a foreign direct investment strategy for enhancing SME competitiveness is shaped by three fundamental sets of factors.
Examples of this new policy approach include measures to encourage R&d investment, venture capital creation, and the rapid establishment of start-up firms.
As for SME specific measures, a great emphasis is placed now on promoting investments in innovation.
so is by increasing the amount of capital available for access to or investment in innovation and new firm creation.
Governments should encourage such a trend by improving the conditions for private capital investments to support SME innovation. 77.
including to ensure the rapid diffusion of expertise in technological rating that would help reduce the uncertainty that limits private sector investments in high risk innovation projects (Box 1). They may also want to consider subsidising programmes that help
R&d grants seem to have substantial additivity to the size of the R&d investments of leading technology users
and provide a greater financial incentive for private investments in R&d. The problem is that technology followers do not under-invest in R&d,
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