The economies of Southern Europe face special difficulties in restructuring their industries to face Europe-wide competition. Despite the important EC effort to channel technology and funds to local manufacturing firms, the progress in convergence achieved during the 1980s is slowing down in the 1990s as only relatively few such firms have become competitive and able to continue both the innovative process and corporate expansion.
This project offers a new approach to the problem, which will focus on the nature of investment decisions by firms, as conditioned by their 'triangular' relationship between manufacturing firms,financial intermediaries and suppliers of technology. Competitive innovation clearly requires long-term funding, but any investment in new technology exposes the firm itself to uncertainty; so larger firms who control markets and can generate internal funds for R & D are preferred by foreign firms as partners and by banks as borrowers. The project will establish the extent to which manufacturing firms in less developed Southern European regions are consequently at a scale disadvantage in both the innovation and acquisition of new process and product technologies. Public intervention has mainly involved the funding of 'horizontal' technology provision, while this project will focus on the nature of the private investment decision required to incorporate such technology and the special needs of Southern European manufacturing firms in the `transition' to sustained and competitive corporate growth in the Single European Market. From this analytical approach, well-grounded proposals for policies to overcome market failure can be derived.
This project will be undertaken by the United Nations University Institute for New Technologies and the Oxford University Finance and Trade Policy Research Centre and local research teams in Portugal, Spain and Greece. The project will make extensive use of the mass of available case-study material on the topic, much of it undertaken by the EC itself.
The project output will take two main forms: on the one hand, a report to the EC containing a methodology of evaluating bank loans by providing benchmarks for effective investment decisions and recommendations for enhanced policy initiatives in the future; on the other, a series of published studies of technological innovation and corporate finance in Southern Europe. An additional benefit from the project will be institutional capacity building in the three chosen countries.
Funding SchemeCSC - Cost-sharing contracts
105 59 Athenes - Athina -Tavros
OX1 3LA Oxford