Innovation policies for the knowledge economy

We recognise that the knowledge economy needs a faourable business environment that is governed by the rule of law, supported by government and free of corruption. As part of the Knowledge Economy Initiative, we work with countries on innovation–related policy issues to help improve the efficiency and effectiveness of a country’s innovation system. 

There are three priority areas for the EBRD:

• improving telecoms regulation (including modernising spectrum management, introduction of infrastructure sharing, etc.);
   
• helping to address specific gaps in national innovation plans or strategies, with a focus on intellectual property and the right policies and incentives to encourage private sector investment in research and development; and
   
• developing ecosystems that allow venture capital and private equity firms to grow.

In all cases, the EBRD collaborates with other major stakeholders – including fellow international financial institutions (IFIs) and international organisations, the European Union (EU), business associations and institutional investors – to ensure a co-ordinated approach.

Taking into account the different levels of development across the region while seeking to stimulate competition, these efforts will attract investors and encourage entrepreneurs to commercialise their ideas.

The Baltics Integrated Approach

The Baltic States are famed for their innovative flair. Estonia, for example, was the home of Skype and the knowledge economy is more integrated into daily life in these countries than in many other parts of the EBRD region. But the financial crisis and the deep recession that followed took their toll on their private equity and venture capital sectors, resulting in a loss of expertise and capital formation.

The EBRD is helping to reverse this trend with a dual approach. On the policy and capacity-building side, we are working with venture capital and private equity associations to improve the availability of information that investors require before entering the market. We are also providing training for various actors in the sector to boost levels of know-how and advice for governments on regulatory issues, such as collective investment laws for capital formation.

The second part of the approach sees the EBRD investing in venture capital and private equity funds across the full company financing lifecycle, from early-stage venture capital financing onwards. The EBRD believes that this two-pronged effort will contribute to the emergence of a strong and sustainable private equity and venture capital sector in the Baltics.