Enabling investment: general factors

Transcription

1 6: Investment in the ICT sector Financing and investments in the ICT sector - global and regional challenges and opportunities Ibrahim Akoum Andrea Renda Expert Group Meeting on Investment, Research, Development and Innovation in the ICT Sector Hammamet, Tunisia, 7-8 May 2013 Enabling investment: general factors Macroeconomic and political stability The rule of law and the quality of institutions Openness of the economy Market size Investment-friendly tax system Quality of infrastructure 2 1

2 Enabling investment: ICT-specific factors Promoting venture capital in ICT Depth of capital markets is essential Yollies are the real enging of ICT innovation Focus on Layer 2 innovation Venture capital and business angels Two models of capital markets US model based on a dedicated stock exchange Models based on banks (German/Japanese model) Dubai Stock exchanges Venture capital and equity financing in general require a mature financial market: this can be achieved through the setting up of dedicated stock exchanges, although these platforms tend to be very volatile and incorporate fluctuations that are not ICT-specific. To the contrary, IP financial markets can become a key accelerator of ICT investment by providing platforms for exchanging information on innovative new ventures and business opportunities, as well as complex financial transactions that help young innovative companies (e.g. patent sale and lease-back, or securitization). 4 2

3 Creating and improving IP financial markets Improvement of the patent system. Improving disclosure of patent and license information Match-making services. Support of patenting/licensing in public research Training, education and outreach to small firms. Regulations and guidelines for exploitation. Financial incentives for patent licensing. Valuation tools. Disclosure and reporting guidelines. 5 Modern forms of IP intermediation IP-management support IP-trading mechanism IP portfolio building and licensing Defensive patent aggregation/framework for patent sharing IP-based financing 6 3

4 Venture capital More than 50% of all VC in the US is on ICT Source: OECD Internet Economy Outlook Venture capital as a share of GDP Source: European Investment Bank 4

5 Venture capital in ICT Venture capital investment in the ICT sector, OECD countries, 2011 Source: OECD Internet Economy Outlook 2012, p Is venture capital the right choice for Arab states? Only for those that have a mature financial system In other countries, gorilla-gazelle agreements backed by strong education and infrastructure wold be preferable Government involvement in setting up dedicated facilities such as incubators, tech parks and development centers is key 10 5

6 Mind the layers Investment can take place in layers 2 and 3, if dynamic, lively competition is organized. This means that some competition can be sacrificed at layer 1, in the name of investment incentives E.g. United Stated and broadband Brazil and Broadband EU? 11 The yollies problem Source: Veugelers and Cincera (2010) 6

7 Investment and SMEs: the valley of death 13 Investment and SMEs: the valley of death SMEs play a paramount role in the creation of innovation both in case of disruptive as well as incremental, follow-on innovation. Large firms lack the flexibility and adaptability needed for the development of entirely new products. SMEs are better at high-risk, high-potential innovation. In the case of incremental follow-on innovation, SMEs can specialize in: components of existing system goods selling innovative services that rely on products that are widely used in the market developing applications for existing platforms. 14 7

8 SME programs US, UK, Netherlands small business innovation research (SBIR), and small business research initiative (SBRI) Use of pre-commercial procurement European Union EIT: mobilizing the knowledge triangle COSME: various financial instruments for SMEs, delivered by the EIB/EIF New instruments for SMEs in Horizon2020 «Think small first» and SME test in policymaking 15 Dev centers, incubators, tech parks 16 8

9 Clusters and prosperity 17 Source: European Commission (2007), Innovation Clusters in Europe: A statistical analysis and overview of current policy. Clusters and patenting Source: The European Cluster Observatory (2009), EU Cluster Mapping and Strengthening Clusters in Europe. 18 9

10 The age of GVCs More distributed production, open innovation, competition to attract investment What drives investment Low energy prices Smart regulatory constraints Strong IP protection Rule of law Cheap, skilled jobs World-class infrastructure Cloud/storage Education Market size Temptation: top-down industrial policy Example 1: iphone s value capture Source: Dedrick (2012) 20 10

11 Example 2: smartphone producers Source: Dedrick (2012) 21 Example 3: Nokia N95 s Bill of Materials Source: ETLA 22 11

12 Example 3: Nokia N95 s countries of origin Source: ETLA 23 Modern types of clusters 24 12

13 Canada Poland Czech Republic Hungary Romania USA Morocco Bulgaria China Japan Mexico Egypt India El Salvador Panama Costa Rica Brazil Singapore Malaysia Philippines Australia Chile Argentina Rest of the world 2% Mature location (> 50 centers) Emerging location (15-50 centers) Nascent location (5-15 centers) Demand for offshore services No major activity (0-5 centers) Demand for offshore services % Asia- Pacific 16% Europe 31% USA & Canada 51% Main findings (I) Promoting investment in ICT requires a suitable, fertile business environment and sound knowledge of the ICT ecosystem. Investors place broadband connectivity and resilient energy networks first, followed by strong rule of law and IP enforcement. With the evolution of cloud computing, areas such as cybersecurity and data protection become more and more important to attract investment. Local development should target global value chains and layer 3 platforms 26 13

14 Main findings (II) Developing countries often focus on venture capital: however, attention to absorptive capacity is needed in ICT Arab states seem to be very attentive to venture capital, with many funds being launched: however, rule of law and broadband infrastructure should be improved Also, IP financial markets could be developed alongside stock exchanges to enable trading of technology and, consequently, more targeted and dynamic investment in ICT. Government intervention is useful to steer the development of gorillagazelle partnerships, investment-attraction facilities, and investment friendly policies (even beyond ICT policy) 27 6: Investment in the ICT sector Financing and investments in the ICT sector - global and regional challenges and opportunities Ibrahim Akoum Andrea Renda Expert Group Meeting on Investment, Research, Development and Innovation in the ICT Sector Hammamet, Tunisia, 7-8 May