Financing Model and Legislative Recommendations

Financing model and legislatiee eecooeenatces
AUTHOR: GUNDARS KULIKOVSKIS COPYRIGHT 2012. GUNDARS KULIKOVSKIS. Deske esea eheis nceuoeetebasenecee esea ehepape seof authc easepa tecfetheep cjeeteSoalleIeeciatiee BusieesseSuppc teNetwc keSIBeNet (EU 31398). Resea eheconsists of aealysisecfeeaeeialetcclsetcep coctee eewehigheg cwtheieeciatiee os. Legislatiee eecooeenatcesefc eLatiiaeaeneEstceiaefceusiegeceesuppc te fc eeewehigheg cwtheieeciatiee os included. Opieiceseexp esseneieethee esea ehea eepe scealecpieicesecfe authc easeienepeeneeteexpe teaenenceecteeeeessa ilye eeetetheecpieiceecfeecet aetegeauthc ityeaeneitse ep eseetatiesse esea ehep cjeetepa tee sec eaeyecthe ec gaeizatceeieiclieneietcetheep cjeett DESK RESEARCH REPORT
6/4/2012 Revision 1 RigaseMaye2012
EstceiaeaeneLatiiae equi eest cegeechesiceepclieyetce enueeeeconomic pe fc oaeeeegapebetweeeeEstceiae aeneLatiiaeaenecthe eEu cezceeeecuet iesteP cnuetiityegapewitheoc eeneielcpeneEUeoeobe eecuet ieseis main scu eeecfenie eeeeeieeecopeesatceecfewc kfc eesenie eeeeeieewellbeiegecfesceiety and uefaicu ableeoig atceepaae es. Clcsiegetheep cnuetiityegapeasescceeasepcssibleeis keyep ic ity fc eeu eete iop cieoeeteand futu eepcteetaleof economy cfeLatiiaeaeneEstceia. Deielcpoeetecfehigheg cwtheecopaeiessecfeeeeallenegazelleseiseceeecfetheewaysecfeiee easing cutputeaene p cnuetiity of economy. Gcie eoeets shculneputeoc eeec tseieee eatceecfepclieieseaenesuppc te p cg aooesetcefaeilitateee eatceeaeneneielcpoeetecfesueheecopaeiesteIeec ne etcefaeilitate Gazelle e eatceegcie eoeeteshculnetakeeaetiee clet Gcie eoeeteeaeectepu ehaseseieeciatieeessecfeeececoyselikeeiteeaeebuilne cansseb ingesec eb canbaene nataelieesteNuobe ecfe esea eheseienieatesethatethe eea eeeuobe ecfep cbleosefc egcie eoeetse ieiclieoeeteieesuppc tegeieeciatieeeete p isesebyep ciisiceeni eetesubsinies fc eeete p isesteMcste iopc taetep cbleosea e eliableeineeteatceecfepcteetalep cjeets and dealiegewitheageet-p ieeipale p cbleot Gcie eoeeteshculnepayespeeialeaaeetceetcee eatceecfesuppc tieebusieesseeeii ceoeetseaa aetceecfe talents and aa aetceecfeglcballyeeceeeetene iskeeapitaleaeneieetu eeeapitale osteTheegccneexaoplesea ee p ciineneby sueeessfuleexpe ieeeeecfeIs aelseFielaen and Siegapc e. Nuobe ecfeiopc taet shc tecoiegsein f aoewc keecenitces cfeLatiiaeaeneEstceiaebusieesseeeii ceoeetseineetenteIteiseeeeessa yetceelioieatee theoeieec ne etcebuilnebusieesseeeii ceoeeteecenuetieefc eieeciatces ieiestoeeteaeneg cwth. Globally connected ieetu eeeapitale osewhiehep ciineep aetealeexpe tseeieeoa ketseaeneteeheclcgiesealcegewithe app cp iateeeaeeiegeocnels a eeiopc taetepa tecfesclutce. Veetu eeeapital osetake thee iskss a ee actielyeieiclieneieeoaeageoeet aeneequallyepa teipates ieeupsineeaenencwesineecfebusieessteVeetu ee eapitaleiete estsea eebeae ealigeenewitheiete estsecfeeete p iseselcckiegefc eeaeeiegt Speeialeaaeetcee gcie eoeeteshculnenenieateetceglcbaleeceeeeteneessecfeieetu eeeapitale oseiteaa aetst P ciisiceecfe subsinieseieefc oecfeg aetsselcaesec ee enitegua aetesebyegcie eoeeteie yecfeeeleansetcefasten aieiegecfe publiee escu eesewithcuteiisibleeeeetteThee easceeisespeeiesecfehigheg cwthepcteetalebusieessesuehease skewene esultseieestatstealefaicu etcefailu eeaenelaekecfe eliableeaeneineeteatceeoethcnsecfeocste p coisiegep cjeetste Suggested types of actiites Pclieyeoeasu eseieec ne etcee eatee equi enef aoewc keecenitcesefc eIeeciatce and Gazelle Fieaeeialesuppc tep cg aos. F aoewc keecenitces shculnebeeeesu en p ic etceaeyecthe etypeecfeaetiites. The most impo tant f amewo k conditons Legislatce whieheiseecofc tableefc eleaniegeglcbaleieetu eefuenseaenebusieesseaeeele atc sseespeeiallye f cm USA iee ega netceecopaeyee eatcesepa tee ships a aegeoeet aenesha ehclne se elatceship Taxelegislatceeehaegesetceha oceizeetheoewithep cieeep aeteesep ciiniegeapp cp iateetaxe egioeefc e glcbaleieetu eeeapitale os Iooig atceeaeneEUepe oitseissuaeeeepclieyetcwa nseenueatceeaeneexpe tseeawayef coeoceeta ye ieiestoeeteiee ealeestate P ciisices fc etaleeteaa aetceo o Iop cieoeeteieesceietyetcle aeeeetcwa nseoiec iteseasee itealefaetc etceectelcseetaleets and maeifestatceecfesceietyetcle aeee. Gcie eoeetesuppc teieesueheaetiites Page 1
EXECUTIVE SUMMARY
Financing model and legislatie ecommendatons
May 25, 2012
Financing model and legislatie ecommendatons o Measu ese elatenetcelifeequality.
May 25, 2012
Oeeeseieeeeeaenebusieesselaeguageespaeeewitheieeciatceeleane secfetheewc lne focused on used of Eeglish P e-eoptieee eatceecfelcealescphisteateneneoaeneaeteipatenelate eelsewhe e whe eeaiailable. Use of ecuet yesmall sizeeasecppc tueityeaenest eegthewhe eepcssible Ha oceizatceecfelegislatiee equi eoeets leading to oc eecpeeeoa ketsteDee easeseba ie sefc e iete eatcealizatce Legislatceefc eocbileewc kfc eesep ciiniegecppc tueityefc efastewc kplaeesee eatceeaenenest uetcete Eoplcyoeeteseeu ityeiesteanecfejcbeseeu ity Suppc tefc eR&Deieiestoeetseietceeeweteeheclcgies; Suppc tetceaeeesseoaeage ialeskills Miensetseaeneialueseehaegeefaeilitatceetcestoulateeoc eeaobitceefc eg cwtht P oposed nancial suppo t actiites Aa aeteleaniegeaeeele atc etceb iegetcgethe ebeste egicealeineasewithebesteeete p iseeaeeele atcee kecwlengeeaeneeceie teineaseietceieetu es Aa aeteaenesuppc teglcbaleecopeteeeeeaeneexpe tseeieeieetu eeeapitaleienust yetceeaeeeethee aeeele ateneieetu esetceeexte cuensecfeeaeeiegeaenep ciineeeeeessa yesuppc tefc eg cwtheaene neielcpoeet Ccopleoeeta yeR&Desuppc tewitheni eetestateefueniegeshculnebeee eatenefceusiegeceeecllabc atceeaene eetwc kiegeshculnebeep ciinent Dueetcesoalleoa ketsetheebeste esultseeaeebeeaehieienebyeusiegeecc nieategebusieessesuppc teec tse betweeeeEstceiaeaeneLatiiaseasewelleaseLithuaeiaeaeneNc nieeecuet iesteNeie thelesssesome ecopettcee betweeeeecuet ieseshculnebeeexpeeteneaeneiseueaicinable beeauseecfelioitenesizeecfethee egicet
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TABLE OF CONTENTS ................................................................................................................................ 3 INTRODUCTION ....................................................................................................................................... 5 LITERATURE REVIEW ................................................................................................................................ 6 P cnuetiity ..................................................................................................................................................6 Ieeciatce.....................................................................................................................................................8 IeeciatceesituatceeieeLatiiaeaeneEstceia.................................................................................................9 Ma ketesizeeaenespeeializatce....................................................................................................................11 Eececoiesecfesecpe .................................................................................................................................11 Language.....................................................................................................................................................11 Ma keteexpe ieeee .....................................................................................................................................12 Iesttutceseaene enetape ............................................................................................................................12 Mappiegep cbleo .......................................................................................................................................12 CONCEPTS OF INNOVATION AND FINANCING INNOVATIVE ENTERPRISES ............................................. 14 Natcealeieeciatieeeapaeity ......................................................................................................................14 Deoaeneecenitces ..................................................................................................................................15 Ccetextefc e iial y ....................................................................................................................................16 RelateneaeneSuppc teg ienust ies ..........................................................................................................16 Faetc eecenitces .....................................................................................................................................17 Gcie eoeete cleeieesuppc tegeieeciatce ................................................................................................17 Dis uptieeieeciatce .................................................................................................................................18 Rescu eeenepeeneeeeethec y ..................................................................................................................20 Heene sce-Cla keeceeept ...........................................................................................................................20 Expeetenesueeesseaenep cjeeteeaeeials .....................................................................................................21 P c-Cyeliealepaae eecfeR&D ........................................................................................................................22 Ccopettieeesseaenebusieesseocnel ........................................................................................................23 Eoplcyoeeteseeu ityeie suseJcbeseeu ity...................................................................................................23 Agent-p ieeipalep cbleo.............................................................................................................................24 Aa aetceecfetaleet .....................................................................................................................................24 Quality of life ...........................................................................................................................................25 Oppc tueitesetcespeeialize ......................................................................................................................25 Reputatceefc etcle aeee .........................................................................................................................25 Conclusion ...............................................................................................................................................25 Aeeessetceeaeee ........................................................................................................................................26 Aeeele atc seaseaeeeweeceeeptetceieeubatce ..........................................................................................28 Thieeoa ketep cbleo ...............................................................................................................................28 Legaleaenetaxest uetu esesuppc tegeiete eatcealeieetu eeeapital ............................................................28 P efe enesha essep efe enestcek............................................................................................................29 Delawa eepa tee ship ..............................................................................................................................30 Flcweth cughetaxestatus ........................................................................................................................30 Soa tespeeialisatceest ategy......................................................................................................................30 Skewene etu es ...........................................................................................................................................31 LEGISLATIVE RECOMMENDATIONS ........................................................................................................ 32 Iet cnuetce ................................................................................................................................................32 Sclutcese elatenetcef aoewc keecenitces ................................................................................................33 Page 3
TABLE OF CONTENTS
May 25, 2012
EXECUTIVE SUMMARY ............................................................................................................................. 1
May 25, 2012
Pclieyecfebeecoiegeexteesiceecfetheeoa ket ...........................................................................................33 Scphisteateneneoaenseaeteipateneelsewhe e........................................................................................34 Aa aetceecfetaleet ..................................................................................................................................34 Legalest uetu es .......................................................................................................................................35 Flexieu ityeiop ciiegewc kfc eeeocbility ................................................................................................36 Iop cieeEeglishelaeguageeskillseaeneuse ..................................................................................................36 Values and mindsets ................................................................................................................................37 Annitcealesuppc teoeasu es .....................................................................................................................37 AeeessetceMaeage ialeSkills ......................................................................................................................37 AeeessetceMa ketseaeneIete eatcealisatce ............................................................................................37 AeeessetceNeweTeeheclcgyeaeneIeeciatce .............................................................................................37 FINANCING RECOMMENDATION OF NASCENT ENTREPRENEURS ........................................................... 38 Regicealeleieleaeeele atc ..........................................................................................................................38 Ratceale ..................................................................................................................................................38 Goal ..........................................................................................................................................................38 Expeetene esults.......................................................................................................................................38 Iopleoeetatce .......................................................................................................................................39 Othe eecesine atces ...............................................................................................................................40 ReiitalizatceecfeVeetu eeCapitaleienust y ..................................................................................................41 Ratceale ..................................................................................................................................................41 Goal ..........................................................................................................................................................41 Expeetene esults.......................................................................................................................................41 Iopleoeetatce .......................................................................................................................................42 CONCLUSIONS........................................................................................................................................ 43 BIBLIOGRAPHY ....................................................................................................................................... 45 TABLE OF FIGURES AND TABLES ............................................................................................................. 48
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Fasteg cwiegeeete p isesea eeceeecfetheefastestewaysetceaehieieeeeeessa yeeceie geeeeecfeeececoiesteLatiiae and Estonia eeenefasteeceie geeeeewith the Eu cpeaeeUeiceein eececoieeneielcpoeett AlthcugheEstceiae hasesigeieaetlyebeae e esultssestllepe fc oaeeeegapebetweeeeEstceiaeaeneneielcpeneEUeeatceseiseg eate e thaeegapebetweeeeEstceiaeaeneLatiiateIeethise ega necommon EU oa ketecan be seen as aeecppc tueityease theeoa ketecfe300eoilliceeeitzeesewithepu ehasiegepcwe epe eeapitaefa eexeeeniegepu ehasiegepcwe ecfe Latiia and Estonia. Opeeebc ne sseteeheclcgyeneielcpoeetseIete eeteaenesceialeeetwc ksee eateeannitcealeeewehcocgeecuse oa ketespaeesewhiehea eeect limited to ecuet yec epclitealeueiceebcuena iesteFc eexaopleeFacebook witheitse use ebase eaeebeeecesine eneaseceeecfetheebiggesteoa ketseieetheewc lnewitheecooceeeec-systeoefc e p cnuetseoa ketegseneliie yeaenepayoeetep ceessiegt Ieeciatceewasekeyen iie efc efastesteg cwiegeeececoieseieetheewc lnseasewelleasekeyen iie ecfefasteg cwiege eete p isesteNewep cnuetssese iieeseaeneteeheclcgiesea eeeeeessa yetceeaptu eetheebeeetsecfeCcoocee Ma ket aeneeeweoa ketespaeest Despiteetheeuseecfeoc eethaee1.5 billion EUR 1secfeEUefueniegefc esuppc tegeieeciatceseR&Deaene eete p iseseLatiiaestlleiselaggiegeatetheeie yeeenecfeEUeecuet ieseieebctho (a) eececoieeneielcpoeeteieete ose cfep cnuetiity aseienieatceecfeeu eetestateecfeaai s;e(b)eieeciatceeaseienieatc ecfeecopettieeesseaene pcteetalefc efutu eeneielcpoeet (Eu cpeaeeCcooissicese2012). Estceiaehaseoc eefaicu ableepcsitcee ega niegetheseeienieatc steStllseeieeefc eEstceiaehugeeiop cieoeete ega niegeieeciatceeaenefasteg cwiege eete p ises iseeeeessa y. Bctheecuet iese LatiiaeaeneEstceiaeieelasteneeanee eeeiienela geeaocuetsecfeEUe funding.
INTRODUCTION
May 25, 2012
hapo::wwwtesfcenitli: accessed 2012.05.05
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LITERATURE REVIEW
P oductiiity
May 25, 2012
Figu e 1: Estmated laaou cost pe hou in the ausiness economyy 200 EEUR) ou ce: Eu ostaty 20 R.
Iee easiegep essu eefc efaste eeececoieeeceie geeeeeecoesef coenie eeeeeieewageseaene esultege uefaicu ableeoig atceepaae esteFigu ee1 shcwseecopa ableestatstesetcecthe eEUeecuet iese ega niege Labcu eCcstepe eHcu teLabcu eecstsepe ehcu eieeLatiiaeaeneEstceiaea eefa ebelcwetheesioila egu eseiee Weste eeEu cpet LatiiaeaeneEstceiaenceseectehaieepcssibilityefc ewageeiee easeewithcutep cpc tceale p cnuetiityeiop cieoeetsteOeeecfetheeocsteiopc taeteoeasu ese- UeiteLabcu eCcstseaeec niegetce 2 3 Eu cpeaeeCeet aleBaek UeiteLabcu eCcsts iee2011eieeLatiiaeise137%seEstceia-115%eaeneGe oaeye107%te LatiiaeaeneEstceia a eestllelesseecopettieenueetcehighe eUeiteLabcu eCcsts eieeetaking into account wagee anjustoeetenu ieg latesteeaeeialee isis. HigheUeiteLabcu eCcstseoakesetaskecfeeceie geeeeeehalleegiegteOpeeelabcu eoa ketsewilleexe tefu the e p essu eeceebusieessesetceiee easeewages. Relatielyefastewageeiee easeewillebeeeeeessa yeto slcwencweec e stcpeuefaicu ableewc kfc eeeoig atceebetweeeeLatiiaseEstceiaeaenecthe eoc eeneielcpeneEUeecuet ies. In theesaoeetoeeieec ne etceiop cieeUeiteLabcu eCcstse(ceeecfekeyeoeasu esecfeeececoyeecopettieeess)e LatiiaeaeneEstceiaehaieetcecutpaeeeexpeeteneiee easeeieewagesebyeeieeefaste eiee easeeieep cnuetiityt
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Financing model and legislatie ecommendatons P cnuetiity eaeebeeiop cienebyo a) iop ciiegequaettatieecutput b) Iop ciiegecutputeialuet
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May 25, 2012
Quaettatieecutputeeaeebeeaehieienebyeiee easiegehcu lyep cnuetiityecfephysiealecutputec eiee easiege wc kiegehcu steLatiiaeaeneEstceiasewc kiegehcu seexeeensetheewc kiegehcu secfesioila lyepcsitceene 5 wc kfc eeeieeEUe15eCcuet ies teThateelioieatesepcssibility of use of oeehaeiealeiee easeecfewc kiegeweek fc efu the eiop cieoeetecfelabcu ep cnuetiity. Iesteans iop cienehcu lyep cnuetiity willeleanetce sustainable p cnuetiityeiop cieoeets. (O gaeizatceefc eEececoieeCc-cpe atceeaeneDeielcpoeetse2012). Hcu lyep cnuetiityeeaeebeeexp esseneiiaesiopleeexp essiceeasephysiealecutputeoultplienebyeiteoeialueteIee bctheecopceeetseLatiiaeaeneEstceiaehaieepcssibilityetceiop ciee esultsteIop cieoeetsein physiealecutpute pe ehcu ea ee elatenetceiet cnuetceecfebeae eoaeageoeeteoethcnseaeneaequisitceecfeoc eep cnuetiee equipoeette Best p cnuetiityegaieseeaeebeefcuenebyeecobieiegep cnuetiityeieete osecfephysiealecutputeaeneiee easieg p cnueteialue addedteIee easeneialueeadded can be esultecfebeae equalityec eeewseoc eescphisteatene p cnuetsec ese iieessebeae eoa ketegec elesseoate ialseeapitaleaeneeee gyeecstsepe eueitteMcstecfethee scu eesecfeanneneialueea ee elatenetceceeec eaecthe etypeecfeieeciatcet Ieec ne etceiee easeep cnuetiityebusinesses can ncefcllcwiege(theeehcieesea eeectelioitenetcetheelistebelcw)o iet cnueeebeae eoaeageoeeteoethcns iet cnueeeoc eep cnuetieeteeheclcgies beae espeeializatce e eateeeeweoc eescphisteatenep cnuetsec ese iieeseieec ne etcepu sueeeustcoe setcepayehighe e p ieeseaeneea eehighe eoa gies iee easeeiteoeialueebyeiee easing qualityecfep cnucts nee easeeecstecfeiteoebyeiee easiegep cnuetceeicluoes iop cieeappealecfep cnuetebyebeae eoa keteg Dee ease ieputs byeeoplcyiegeoc ee escu eeesaiiegeteeheclcgieseaenep ceessest
Althcughetheelisteabcieeiseectealletheepcssibilitesehcwetceiop cieep cnuetiityseiteieeluneseocsteeoplcyene st ategiesetcencescteAlleoeetceeneaetiitesenepeenseceeieeciatce.
Ieetheeecetextecfethisenceuoeetenet productivtt aseanneneialueepe ehcu ewillebeeecesine enteAlsceialue in ecetextecfep cnuetiityeiseecesine eneaseialue added. hapo::statstceentc g:IenextaspxoDatasetCcneYANHRS Aeeessene2012:05:05t
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Innovation
Aeec niegetceWc lneBaekeRepc tevnnoiatonn aa rouuglt prooved t TF (or wgat cannot e eoplavned avmplt t factor vnputa)n va tge major contrv utor to tge dverencea vn deielopment leiela acroaa countrvea. Moreoiern wgvle capvtal deepenvnu va more vmportant vn eoplavnvnu tge urowtg of countrvea at lower leiela of vncomen TF urowtg accounta for more tgan galf tge urowtg vn tgoae economvea (tge tuer economvea) tgat gaie urown tge faateat . (IBRD:Wc lneBaekse2010). Thise eeetseectecelyeec elatceebetweeeetwce datasets butealsceienieateseni eeteeausalityebetweeeeneielcpoeetecfeieeciatons and TFPebaseneg cwthecfe economy.
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Figu e 2 How Innoiaton ont iautes to
owth:
ompa ison of hana and the Ko ean Uepualic) ou ce IBUD/Wo ld Banky 202R.
Theeieeciatceeaseneeenebye(OECDeaeneEu cstatse2005septe46) An vnnoiaton va tge vmplementaton of a new or avunvcantlt vmproied product (uood or aerivce)n or proceaan a new marketnu metgodn or a new oruanvzatonal metgod vn uavneaa practcean workplace oruanvaatona or eoternal relatona. Thuseieeciatceehasefcllcwiegeiopc taetefeatu esoe(a)eiteisescoethiegeeeweieegiieeeecetexte(sceietyse eete p ise)se(b)eiteisenisseoieatenteIeecthe ewc nseiteiseieetheeuseec eoa ketteOppcsiteeitealscet uee- If it is only neielcpensebuteecteuseneiteiseecteieeciatcete Ieeciatceeiseoeasu enebyeR&DeintensityteR&Deiseecteitselfeieeciatce;eiteisebestekecweep cxy tceoeasu eeit. Neie thelesssescoeeieeciatcesenceecteieeluneeR&Dsec eieeluneeiteatesoallep cpc tcesteLots cfeR&Deeeie e end c eleansetceieeciatceteCausalityecfeR&Despeeniegeaeneieeciatceeiseecoplex. Stlletheeoeehaeieale app caehecfegiiiegeoc eefuensetceR&Despeeniegeisep efe eneehcieeecfegcie eoeetsseeieeeifethat may not be theeocsteeeetieeapp caehein eie yecase.
TctaleFaetc eP cnuetiitye(authc eecte)t
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F coeaecthe epe speetie ieeciatceeeaeebee eiieweneaseaep ceessteAeec niegetc the (Haeseee&eBi kieshawse 2007) ieeciatceeeaeebeeexplaieeneaseaeialueeehaieeecop isiegecfeth eeephasesoeineaegeee atceseeceie sicee and niusicete Innovation situation in Latvia and Estonia The eea eeseie al R&D ienieatc sewhieheeaeebeeusenetceassessetheeieeciatceesituatceeieeecuet yteMcste pcpula ea eeR&Deexpeenitu eseasesha eecfeGDPsepateeteapplieatcesec esha eecfeieeciatieeeete p isest Eu cpeaeeCcooissiceeieeitse epc teIeeciatceeUeiceeoeetcesetheeeeeessityecfeeeweienieatc sewhiehewille beae eshcweecuet iese aekiegecfeieeciatceteAte4eFeb ua ye2011eEu cpeaeeCcueeilecalled for tge deielopment of a newn avnule vnteurated vndvcator to allow a eter monvtorvnu of proureaa vn vnnoiaton. ge European Commvaavonn vn cooperaton wvtg tge atonal ltatatcal oacea and wvtg tge tEC n va currentlt deielopvnu aucg an vndvcatorn focuavnu on tge agare vn tge emplotment of tge faat-urowvnu vnnoiatie enterprvaea. (Eu cpeaeeCcooisicese2011septe2). Aeec niegeIeeciatceeUeicee epc teEUencesespeenepublieeexpeenitu eeceeR&DeaseoueheaseJapaeeaene5%e abcieeUSAsehcweie ebiggestenie eeeeeiseieeBERD (Busieesseeete p iseeexpeenitu eeceeResea eheaene 7 Deielcpeete)egu eseEUehaieeBERDease%ecfeGDPe(-122%) ecopa iegewitheJapaeeaene(-66%)eecopa iegewithe USA. Theeec espcensealscewithehugeenie eeeeebetweeeeEUeaeneJapaeseUSAeieete osecfeLieeeeeeaenepateete eieeuesef coeab canease%ecfeGDPseEUehaiee(-156%) and (-201%)efc eJapaeeaeneUSAe espeetielyteThateeaee beeexplaieenebyelaekecfeieeeetieefc ep iiateeeete p isesetceieeciateebeeauseecfelaekecfeoa ketep essu eec e laekecfe escu eest
Die eeeeeiseshcweeaseEUelesseecopa eneecuet yease%ecfeEUe
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Financing model and legislatie ecommendatons ount y EU weden Finland e many Denma k United Kingdom F ance ust ia I eland Estonia Spain zech Uepualic Poland Italy Lithuania yp us Latiia Bulga ia Romania eece Pualic 8 secto 0.74 1.06 1.14 0.90 0.99 0.67 0.81 0.80 0.60 0.76 0.66 0.60 0.48 0.57 0.64 0.29 0.29 0.36 0.29 0.42 P iiate 9 secto 1.27 2.54 2.79 1.92 2.03 1.20 1.39 1.95 1.17 0.67 0.72 0.92 0.19 0.69 0.20 0.17 0.17 0.16 0.19 0.16 Total 2.01 3.60 3.93 2.82 3.02 1.87 2.21 2.75 1.77 1.42 1.38 1.53 0.68 1.27 0.84 0.46 0.46 0.53 0.48 0.58
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May 25, 2012 Ta get 11 2020 3.00 4.00 4.00 3.00 3.00 3.00 3.76 3.00 3.00 2.70 1.70 1.53 1.90 0.50 1.50 1.50 2.00 2.00 GCIR 3 4 6 8 10 18 19 29 33 36 38 41 43 44 47 64 74 77 90
12
Taale 1) U&D intensity 229 and U&D intensity 2 2 ta getR selected count ies) ou ce Eu opean ommisiony 200R and Wo ld Economic Fo umy 200R.
Latiiaehasesioila itesewithetheeg cupecfeecuet iesecfeG eeeeseRcoaeiaseBulga iaseCyp usseLithuaeiaeaene PclaenteThiseg cupehasesigeieaetlyehighe epublieespeeniegeceeR&Dethaeep iiateeoneteEstceiaehase iesigeieaetenie eeeeebetweeeep iiateeaenegcie eoeetespeeniegteOthe eEU ecuet ieseaboieeEstceiaeiee ienexehaieep iiateeR&Despeeniegehighe ethaeepublieteTheeec elatceecfef aetceecfep iiateespeeniegeieetctale R&Despeeniegeaeneecuet ye aekeceeGlcbaleCcopettieeesseienexeienieates thatebusieesseR&Despeeniege iee easesecelyeafe epublieeR&Despeeniege eaehesescoeee itealepciet. Withcutehistc iealepaae eecfenata it is ha netcep ccfecie alleannitceallyeeeetsecfepublieeR&Despeeniegseeieeeifeweenceecteseeepaae eecfee cwniege out eeetteIeeLatiiaeeaseeCcuet yeexpe ieeeenebiggesteBERDenee easeenu iegeeaeeialee isist BERDenee easee wase(-12t4%)eagaiesteEUeaie ageecfe(-3t1%)te R&DeieteesityeieeLatiiaeisecelye0t46%ewhieheiselasteplaeeeieelistecfeEUeoeobe setcgethe ewitheneielcpene eatceseaeneRussiaeFene atceseTu keyteIteisefa ebelcweEUeaie ageecfe2t01%teEstceiaehaseR&Deieteesityecfe 1t42% aeneLithuaeiaecfe0t84%teSpeeniegenceseecte eeetecelyeGERD
8 9
Scu eeeIeeciatceeUeiceeCcopettieeesseRepc te2011 Scu eeeIeeciatceeUeiceeCcopettieeesseRepc te2011 Scu eeeIeeciatceeUeiceeCcopettieeesseRepc te2011 Scu eeeIeeciatceeUeiceeCcopettieeesseRepc te2011 Ccuet yeglcbaleecopettieeesse aekteTheeGlcbaleCcopettieeesseIenexe2011-2012e aekiegs (Wc lne EececoieeFc uose2011)
10 11 12
Page 10
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IeeLatiiaesha eecfeieeciatieeeete p isese eeeiiiegepublieefueniegeiselessethaee15%ecelyeabcieeBulga iaeaene Rcoaeia;ehcweie eLatiiaeisetheecelyeecuet yeiee epc tewhieheuseseexelusiiely EUefuensefc epublieefueniegefc e ieeciatieeeete p isese(Eu cpeaeeCcooisicese2011septe87) Estceiaehasesigeieaetlyebeae e esultseieethise aspeett Highe espeeniegeasepa tecfeGDPeieeEstceiaeienieatesepcssibleehighe eleielecfeieeciatcesehcweie eth cughe nisseoieatceecfethee esulteaenep cxioityeLatiiaeeaeebeeetef coetheeR&DeieeEstceiat
Ma ket size and specialization

Cu eetebusieesseeeii ceoeeteiseeha aete izenebyeiee easiegespeeializatceetcgethe ewitheeustcoizatcete Some sehcla sea eeniseussiegeabcuteatcoizatceecfetheejcbseand theeageecfehype -speeializatcete(Malceese Laubaehe se&eJchesse2011). Ieec ne etcebeeecopettieeieesueheeeii ceoeeteecopaeiesehaieeto beae espeeialize. Speeializatcee equi ese aequi ieg speeializene escu eeseaeneeapabilitesteLea eiegeeu ieeaeneeececoiesecfeseale alsceise esultecfe speeializatce. Speeializatceeusuallyeleansetceea cwe eoa keteeiehesteBigge eoa ketsea ee equi eneieec ne e tcegeteeeeessa ye etu esenueetcesoalle eeiehesteUefc tueatelysencoesteeoa ketsecfeLatiiaeaeneEstceiaence ectep ciineeeecughesealeefc eiee easiegespeeializatceteTheesizeecfeoa keteiseiesuueieeteeieeefc ep ctctypieg cfeie yespeeializenep cnuetsec ese iieesteLatiiaeaeneEstceiaehaieea cuene2t4eaene1t3emillion iehabitaetsewithe GDP 19 and 24 billion US$s espeetielyteTctallyeiteise0t28%ecfeGDPecfeUSAec e0t3%ecfeEUeoa ketteSuehe p cpc tceee eateseuefaicu ableeecopettieeecenitcesefc eneielcpoeeteaenesealing of businesses. Gcie eoeetseshculnenealewitheitseieec ne etcep ciineeecenitcesefc efasteg cwtheeete p ises. Economies of scope St ategyecfeeececoiesecfesecpeepa tlyeise esultecfeecopa atieenisaniaetage aeneiesuueieeteoa ketesizeefc e cthe est ategies. Eececoiesecfesecpeea e ecstegaiesepe ep cnueteaseecopaeyeiee easeseecuetecfep cnuetsebye eusiegetheesaoeeassetebasese escu eeec eecopeteeeyteSea eest asset fc eecopaeyecpe ategeieesoalleoa kete is its eustcoe . Squeeziegecutesiegleeeustcoe ewitheoaeyenie eetsecfeeeue elatenep cnuetseaenese iieese nceseectep ciineelea eiegsedoes not iop cieep cnuetequality aenenceecteleanetcebeae ep cnuetiitysequitee cppcsite. ThisenisaniaetageeiseecneneietcetheeDNAecfemany LatiiaeeaeneEstceiaeeecopaeies. Iteeaeebeepa tly ei euoieeteneieesoalleoa ketsebyefceusiegetceglcbaleoa ket f coeie yesta tseiesteanecfeecuetegeceelocal one.
Language
Eeglisheiselieguaef aeeaecfeseieeeeeaeneteeheclcgyteNce-eatieespeake secfeEeglisheecwecuteuobe eeatiee speake sebyeaefaetc ecfe3etce1seaeec niegetceDaiineC ystalseauthc ecfeEeglisheaseaeGlcbaleLaeguageteC ystale ectesethateeeie ehaieeoc eepecpleespckeeetheesaoeeseecenelaeguageteIeeAsiaealceesetheeeuobe ecfeEeglishe speake setcpse350eoilliceseaenein 2007 an estoatene100eoilliceeChieeseeehiln eeea eelea eiegeEeglishe aeec niegetceJchee_act (_acse2007)teOie e400eoilliceepecpleeuseetheeEeglisheiceabula yeaseaeocthe etceguese celyesu passeneieeeuobe ssebuteecteieenist ibutceebyespeake secfetheeoaeyeia ietesecfeChieeseteEeglisheise fc eigeelaeguageefc ecie e700 oilliceepecpleseoc eethaee75% cfewc lneoailsetelexeaeneeablesseoc eethaee 50% cfeteeheiealeaeneseieeteepe icniealsseaeneoc eethaee80% cfetheeiefc oatceestc eneieetheewc lndse ecopute sea eeieeEeglisht Theeiopc taeeeecfetheeEeglishetcepa teipateeieeglcbalekecwlengeeaenetaleetepccleiseeec ocusteScoeea guee thatekecwlengeecfeEeglishenceseectee eateeecopettieeaniaetage. Hcweie eoissiegethisekecwlengeee eatese sigeieaetenisaniaetageteWinesp eaneuseeaenekecwlengeecfeEeglisheieeiete eatcealeecooueieatceef coe pa teula elceatceetcecutsineewc lneeaeebeeecesine eneaseiopc taetehygieeeefaetc e ega niegeieeciatiee eapaeityteLaekecfesuehekecwlengeeg eatlyelioitse egicealeeapabilitesetceabsc belatesteteeheclcgyeaene kecwlenget
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Cu eetlyegapeiseg cwiegebetweeeeEstceiaeaeneLatiiaeieeeuobe ecfepecpleeusiegeEeglisheaseseecenelaeguagee c elaeguageecfebusieesseaeneteeheclcgyteEstceiaeaeec niegetceSibNete esea ehehaseecopa ableebeae e situatcesebeeauseeneefaetceiete eatcealebusieesselaeguageefc eoc eeEstceiaeethaeeLatiiaeebusieesseseise EeglishteAeec niegetce esea eheiee easiegeeuobe ecfeEstceiae businesses ehccseeEeglisheaseiete eatceale ecooueieatceelaeguagete IeeLatiiaeRussiaeelaeguageeisestllekeepiegest cegepcsitcn as second business language. TceelcseetheegapeLatiiaeshculneoc eeaetielyesuppc teEeglisheas second business language to not lcseecppc tueityetceaa aeteglcbaletaleeteaeneglcbalep cnuetceseseieeeeeaeneoaeageoeeteexpe tset
Ma ket expe ience

Cu eetegeee atce cfeeitzeesecfeLatiiaeaeneEstceiaehaieecelye20eyea secfeexpe ieeeeeieef eeeoa kete eececoyteThateleansetcelioiteneexpe ieeeeeieeecopaeyebuilniegseexiteaeneieiestoeetteIteiseespeeiallye iopc taetefc eVeetu eeCapitalefuenssebeeauseeeu eeteVeetu eeeapitalists haieeie yelioiteneexpe ieeeeeof p ic esueeessfuleexitste Estceiaehaseecopa atieeaniaetageeieeelnecfeieetu eeeapitalsebeeauseefcuene secfeSkypeea eestlleiee busieessseaetielyewc kiegeieeEstceiaeaenetheyehaieesueeessfuleexpe ieeeeecfeexitef coehigh-teeh Ccopaeye aenetheyep ciinesegccneexaopleefc eaeeewegeee atceecfeeet ep eeeu ste
Institutions and ed tape

Maeyeieeciatceeexpe tseoeetceeRed ape p cbleoeisebigecbstaeleetceieeciatceeeapaeityebuilniegteLatiiae aeneEstceiaeoaneehugeep cg esseaenep cbablyeRed ape p cbleoeiseectebiggesteissueteAteleastef coetheered tape aspeeteLatiiaenceseectehaieep cbleosteAeec niegetceienexeDciegeBusieesse2012 (Doing Business aekiegsse2012) Latiiase aekse21e(upe10eplaeesef coe2011)seEstonia - 24e(ncwee6eplaees)te Hcweie elaweeefc eeoeeteaeneecet aeteeefc eeoeeteieeLatiiaebeecoeeeie eg cwiegeissueteIfesueheissuesea ee ectenealtesuueieetlyeitewillelioiteLatiiaeabilityetceaa aetec ekeepeieeciatieehigheg cwthebusieessest
Mapping p oalem
TheeEececoisteIetelligeeeeeUeiteieeits esea eheanoitsethateieec ne etceanneoa keteniseiplieeeaeyestatee suppc tefc eieeciatceseshculnebeeoatehenebyep iiateefuenste Byeoa keteniseiplieeeweeeaeeexpeetetheefcllcwiego oc ee espcesibleeeialuatceecfep cjeetsethaeeifeitewillebeenceeebyepublieebcny oa ketekecwlengeebeae euene staeniegecfebusieessep ceess Lessebu eaue aeyseoc eefceuseceethee ealeoeasu ablee esultst Theeageeteea yiegeoa keteniseiplieeeiseieetu eeeapitalteIteiseexpeetenethateieetu eeeapitalists haieeaeneepe uene staeniegecfetheebusieesseiteiseieiestegeieteTheekecwlengeecfetheebusieesseecoesef coeexpe ieeeese ocstep cbablyef coep ic esueeessfuleieiestoeetseaeneexitsteThe eea eegeee ieep ieeiplesecfetheebusieesse whiehea eeapplieableetcenie eeteienust ies. Neie thelesseeie eiee easiegespeeialisatceecfeecopaeiese equi eseneepe uene staeniegecfeienust yespeeieep ieeipleseieec ne etcesueeeeneaenefc eieiestc etcebee helpfuletceeeweeet ep eeeu steSituatceewheeeeaeeiegeecoesetcgethe ewitheienust yekecwlengeseeetwc ke aeneexpe ieeeeecfetheebusieessegiiesetheebeste esults. IeeLatiiaeaeneEstceiaenu iegetheelaste20 yea setheeoaieewealtheisegeee ateneieetwcewayso By sueeessfulep iiatsatceecfeSciietetoeeecopaeiesteThisep cbleoeiseoc eeaetualefc eLatiiaenue to nie eeeeseieeapp caehetcep iiatzatce By neielcpiege ealeestateep cjeetseaenesueeessfullyeselliegetheoenu iegebccoetoesebefc eeeaeeiale e isist Page 12
May 25, 2012
Suehesituatceee eatesemappvnu pro lemsewheeeneoaenefc ekecwlengeenceseecteoapewithesupply cfesuehe kecwlenge aeecopaeienetcefuenieg. Iee ega netceoappiegep cbleoehcweie eLatiiaeaeneEstceiaeieescoee ienust iesehaieesigeieaetlyenie eetesituatceteeEstceiaehaseieetu eeeapitalefueneAobieeteScuene Ieiestoeetssewithefcuene secfeSkypeeasefcuene steHcweie etcee eateeoc eeiib aeteienust yeoc eeglcballye eceeeeteneecopaeiesea ee equi enewithe ighteexpe ieeee also in Estonia.
Page 13
P cbablyebesteeategc izatceecfep cbleoecfeieeciatieeessecfeecuet ieseisep ciinenebyeMiehaeleEtePc te eete al. in pape NatcealeIeeciatieeCapaeity. Aeec niegetcePc te eetealteivtalvtt of vnnoiaton vn locaton va agaped t atonal nnoiatie Capacvtt atonal nnoiaton Capacvtt va a countrta potentalaa otg a polvtcal and economvc entttto produce a atream of commercvallt releiant vnnoiatona. gva capacvtt va not avmplt tge realvzed leiel of vnnoiaton ut alao reeecta tge fundamental condvtonan vnieatmentan and polvct cgovcea tgat create tge enivronment for vnnoiaton vn a partcular locaton or naton. (Pc te e&eSte ese 2001) Pc te eetealteaealyseep cbleoewhyeieeciatieeaetiityeeceeeet ateseieeae elatielyesoallseth cugheg cwiege euobe ecfeecuet iesteTheeeniegsecfethee esea ehea eeialin tceaeyeecuet y stlletcnayseeieeeifeeececoiese pcliteal aeneteeheclcgiealelaenseapeeiseehaegent Aeec niegetcef aoewc keNatcealeIeeciatieeCapaeityeisebaseneceetwceeleoeetso CcooceeIeeciatceeIef ast uetu ee Cluste eSpeeieeCcenitceste
CONCEPTS OF INNOVATION AND FINANCING INNOVATIVE ENTERPRISES

May 25, 2012
National innovative capacity
CcooceeIeeciatceeIef ast uetu eeisea set of ieeciatceesuppc tegeieiestoeetseaenepclieieseth cughcuteaee eet eeeececoyteIteieelunesehuoaeeaeneeaeeiale escu eeseecuet yeneictesetceieeciatceseasewelleasecie alle teeheclcgiealescphisteatceecfeeececoysepublieepclieiesefcste iegeecopettceseaett ustelawssep cteetceecfe ietelleetualep cpe tysecpeeeessecfeeececoyetceiete eatcealet aneeaenest cegebasiee esea eht (Pc te e&e Ste ese2001) . Hcweie ePc te eetealteensethatevnnoiaton and tge commercvalvzaton of new tecgnolouvea take place dvaproportonatelt vn cluateraueourapgvc concentratona of vnterconnected companvea and vnattutona vn a partcular eld (Pc te e&eSte ese2001). Lceatceseoie ceececoieeaa ibutesewhieheaeetse thee ateecfeieeciatceeieeeluste ea eeeaptu eneieef aoewc ke(E o ! Uefe ence sou ce not found)). St cegeeluste seaenefaicu ableeCcooceeIeeciatceeief ast uetu eea ee elatenteP eseeeeecfeeluste se iop cieseecooceeieeciatceeief ast uetu esewhieheisebeeeeialeecenitceetcefu the eneielcpoeetecfe eluste ste
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May 25, 2012
Figu e 3: The Natonal Enii onment fo Innoiaton) ou ce: Natonal Innoiatie apacity 2001R) Michael E) Po te and cot te n)
Gcie eoeetepclieieseusuallyea eeni eetenetcwa nesuppc tegecfeeluste ee eatceeasewelleaseiop cieoeetecfe ecooceeief ast uetu eteP ciinenef aoewc keallcwsebeae euene staeniegeaeneneielcpiegesuggestcesefc e nie eetepclieieseoeaetetcesuppc teieeciatcet F aoewc keienieatesetheeaa ibutesecfetheeeececoyeaene oie ceececoieeeeii ceoeetewhe eegcie eoeeteeaeeiete ieeeetcestoulateeieeciatcet Demand conditions Scphisteateneaeneneoaeniegelcealeeustcoe (s)eaeneHcoeeeustcoe eeeenseaeteipated elsewhe e a eetwce iopc taetefeatu esefc estoulatceecfeieeciatce. Local c eHcoe eustcoe ep ciinesetaeitekecwlengeeabcute eeenseieeelnewhe eeectealleiete aetceewithetheeeustcoe eiseecnenteScoeesehcla seeieeece eieeciatcee f aoewc ksewhiehea eebaseneceecbse iatcesecfeeustcoe seieeuseecfetheep cnuetec ese iieee(Beaeeecu te&e Ulwiekse2008). Hcweie eecenitcesefc esuehecbse iatceetcehappeeea eenie eetefc enie eeteienust iest
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May 25, 2012
Lcealeeustcoe eisetheeceeeabcutewhcoetheeecopaeyeiee egiceehaieebeae ekecwlengesehaieefaste eaeeesse aeneeaeeecooueieateeni eetlyteNea lyealwayselocal iseassceiatenewithetheegecg aphiealep cxioityteeFie eee glcbaleecopettceseteeheclcgiealeehaegeseaenesceialeeetwc ksenee easesetheeiopc taeeeecfegecg aphieale p cxioityeieeoaeyeienust iesseespeeiallye elatenetceITCeaenekecwlengeeieteesiieep cnuetsteThuseoeaeiegecfe theete oelocal beecoeseiagueeieescoeeienust ies. Ieespeeieeienust iesecthe eaa ibutese athe ethaee gecg aphiealep cxioityeiseeeeessa yetcesepa ateelocal f coethee estecfeeustcoe s. Sueheaa ibuteseeaeebeethee saoeelaeguageecfeecooueieatcesetheesaoeeteeheclcgiealebasesesioila eeultu esesceialeeetwc keetet Seecenee itealeaa ibuteecfefaicu ableecfeneoaeneecenitceseisethat hcoeeeustcoe eeeensea eeaeteipatene elsewhe eteIeescoeeienust ieseieeLatiiaeaeneEstceiaegcie eoeeteisebiggesteeustcoe tePa teula lyeieeLatiiae gcie eoeetestlleiseocsteiopc taeteeustcoe efc eoaey ITC osteEesu iegethate equi eoeetsecfegcie eoeete as custcoe ecan ae antcipated elsewhe e ieeglcbaleoa ketsea eeceeecfetheewaysetcwa nehealthie eaene beae epe fc oiegeeluste s ieeienust iesewhe eegcie eoeeteiseiopc taeteeustcoe . Qualitye equi eoeetse aenelceale egulatcesea eealso iopc taetteSuehe egulatcesecaeebeeie yeecuet yespeeiese equi iegeecopaeiese tcee eateespeeializenep cnuetsewhiehea eeectesuitableefc eglcbaleoa ketsec eha oceizenewitheglcbaleoa ketse allcwiegefc eecopaeiesetcese ie eHcoeeoa ketewithetheesaoeep cnueteasecutsineeoa ketteByeha oceizieg lceale egulatceein fullyec epa tlye egulateneienust ies gcie eoeeteeaeenceaelctetcehelpetceecopaeiesetce beecoeeoc eeecopettieeaeneni eetseecopaeiesetcespeeieec eglcbaleoa ketst ontext fo iial y
TheeEececoisteIetelligeeeeeUeiteieepublishene esea eheceeleaniegeglcbalep aeteesefc eieeciatce-led eluste ensethatewhile some clusters might work without government backing, none will work without market forces. (TheeEececoisteIetelligeeeeeUeiteLioitense2011). Vigc cuseecopettceeeesu ese ise equi eneecenitceetcehaieehealthyeeluste est uetu e. Ha oceizatceecpeesetheeoa ketefc eglcbale ecopettceteEieeeifesueheectceeisebeeeeialefc eecopettieeessecfeienust yeiteisehighlyeuepcpula teFc e exaopleeglcbaleecopettceeiee caneecest uetceeieeLatiiaeiseabseetteAlleecet aetc secfe caneecest uetceea ee lcealeecopaeiesteThee esulteiseie yelcwequalityecfe cansseie yeecstlyeoaieteeaeeeeaeneie yelcwe ecopetieeessecfeienust yteEesu iegecfeglcbaleecopettceewculnebeeocst beeeeial fc eienust yeitselfseeieee ifepa tecfetheelcealecweeneecopaeiesewculnehaieetcebaek uptec ebeesclnetcefc eigeeecopaeiesteTheesaoee easceiegeeaeebeeapplienetceITCeienust yt Uelated and uppo ting indust ies Du iegelasteneeaneeteeheclcgiealeneielcpoeeteaeneglcbalizatceeehaeged eatu eeaenest uetu eecfesupplye ehaieseieeoaeyeienust iesteLatestet eenseieeteeheclcgyeallcwefc escoeeienust iesetcee eateeii tualeeluste s aeneeejcyebeeetsecfeeluste s withcutegecg aphiealep cxioityteOeeecfethee easceseisethatesueh ienust iese haieehighep cpc tceecfeecnienekecwlengeeagaiestetaeitekecwlenge. Vi tualeeluste sebeeetef coethee teeheclcgiealep cg essteDueetcelcweecstecfet aesfe ecfeecnenekecwlengeeaeneeueieeeyecfesuehet aesfe e gecg aphiealep cxioityeieesaoe easeseiseecteiopc taeteaeyoc eteSueheienust ies a eeeleet ceiesse seoiecenuetc sseITseecooueieatceseaenesioila te Ienust iesewhieheieiclieeaelctecfespeeieeskillsseaenelcwe eteeheienust iesestllehaieeaehugeep cpc tceecfetaeite kecwlenge 13 and thusegecg aphiealep cxioityeaeneni eetelieksebetweeeeecopaeieseieec ne etcee eatee eeetieeeluste a eeie yeiopc taet.
13
TaeitekecwlengeeiseniseusseneateOslceoaeuale(OECDeaeneEu cstatse2005).
Page 16
Financing model and legislatie ecommendatons Facto conditions
May 25, 2012
Faetc eecenitceseoeetceenebyeMiehaelePc te eetealteieeluneehuoaee escu eessebasiee esea ehe ief ast uetu eseiefc oatceeief ast uetu eeaeneaopleesupplyecfeieetu eeeapitalte MiehaelePc te eetealtea eeecte explieitlyelcckiegeatetheequalityecfeieetu eeeapitalteHcweie eexpe ieeeeecfeIs aeleienieateseiee easene sigeieaeeeecfequalityecfeieetu eeeapitaleiesteanecfequaettyteConieetcealewayetceestablisheeeeessa yefaetc e ecenitceseisetcee eateetheoebyeieiestegeieehuoaee escu eessebasiee esea eheief ast uetu eseiefc oatcee ief ast uetu eeaenee eatceecfesupplyecfeeapitalteAecthe ewaysetceestablishesueheecenitces willebeeaealysed ieeaealysiseseetce. Teeheclcgiealep cg esseaeneglcbalizatceeallcwsecie ecoiegescoeecfefaetc eecenitcese ineeteneby Pc te eeteal. byee eategefaicu ableef aoewc keecenitcesefc eeet ep eeeu ialeaetiitysewhieheiee tu eeeoplcyseoa ketefc eesetceneliie scoeecfetheeecenitcest
oie nment ole in suppo ting innovation

Government generally cannot directly purchase innovativeness of economy, like it can build roads, railways and ports. Ieeciatceeise esultecfebusieesseaetiityseeieeeifesuppc tenebyegcie eoeete funding. Wc lneBaekea guesethateGcie eoeeteshculneaeteasega neee eieep ciiniegefewegeee ieefueetcese ecopa ableetceeu tu iegeplaetsetcehelpetheoeg cwte(IBRD:Wc lneBaekse2010). E o ! Uefe ence sou ce not found. illust atesetheeeceeeptteCceeepteillust ateseecoplexep cbleoeaenef aoewc keecenitceseeeeessa ye fc eieeciatceetceth iiete
Figu e 4 oie nment as ga dene ) ou ce: IBUD/Wo ld Banky 202R
TheeFielaenestunye(Luukkceeese2010) ceeVeetu eeCapitaleoa keteassuoesethateaeoajc e cleefc epublieeaetcee isetcesuppc teei euostaeeeesuppc teei euostaeeesefc ee eatceecfeeete p isesteThee cleecfetheegcie eoeeteise tcep ciineeena lvnu enivronment tgat wvll allow vnformed and tranaparent marketa to work eacventlt. (Luukkceeese2010).
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Ieeciatceeiseeeeessa yepa tecfeecopaeyest ategyetcep ciineesustaieenesupe ic ep ctability. Thateusually leansetceieec eeteassuoptceethateecopaeieseeatu alewayecfethiekiegeisetcwa nseieeciatceteResultecfesuehe assuoptceseiseawseieenesigeecfeoaeyegcie eoeetep cg aosesuppc tegeieeciatceteDueetcesuehenesigee awsescoeep cg aosseespeeiallyetheeceesewhieh ieeluneesubsiniesec ep ciisiceecfeni eetefuensetcebusieessesse a eeeeut aletceieeciatceec eeieeee eateelcegelastegeeegatieeeeetsteThisehappeeseifegcie eoeeteigec ese theefaetethateieeciatceefc etheeecopaeyeisecelyetccletceaehieieehighe ep ctssewhe e p ctsea eethee ultoateegcalteAse eecgeizenebyeHcbsbawee t va ofen aaaumed tgat an economt of prviate enterprvae gaa an automatc vaa towarda vnnoiatonn ut tgva va not ao. t gaa a vaa onlt towarda prot. t wvll reiolutonvze manufacturea onlt vf ureater prota are to e made vn tgva wat tgan otgerwvae. (Hcbsbawose1168septe 14 40) . Theepheecoeeaecfenie eeteiete estsea eepa tecfeageet-p ieeipalep cbleoteIeeeaseecfegcie eoeetesuppc te alignment ofeiete estsebetweeeegcie eoeeteaenebusieesseseshculnebeeeefc eenebyenesigeecfetheep cg aoe and its p cpe emanagement.
Dis uptiie innovation

ClaytceeMteCh isteeseeeiet cnueeneeceeepteaenethec yecfenis uptieeieeciatce (Ch isteeseeeCteMtse1117). In inealeoa keteaeyepcteetalep ctecppc tueityeshculnebeeexplciten. Busieessewithescuenebusieesseocneleaene leaniegeoa ketesha eeshculnebeeatep efe ableepcsitcesetceuseeaeyecppc tueityteLcckiegeatenie eeteoa ketse esea ehe s eaeeen euoe cuseeasesewheeescueneecopaeiesefaileaenelcseeoa ketetceeeweieeuobeetsteSuehe incumbents may appea elite allyef coeecwhe eewithelesseR&Deeapaeityselesseeaeeialeaenehuoaee escu eest Aeec niegetceCh isteeseeeieeuobeetseieeienust ieseecopetegefc ethei oaieeeustcoe ebaseeiee eoeetallye eceteueetceiop cieep cnuetequalitesewhileeeustcoe sea eewilliegetcepayep eoiuoefc etheseeiop cieoeetse (Ch isteeseeeCteMtse1117)teHcweie epaeeeatewhiehep cnuee seeaeeiop cieep cnuetequaliteseieec ne etcegete highe -oa gieeoa ketsebyep ciiniegehighe -pe fc oaeeeep cnuetseisecfeeefaste ethaeeeustcoe seeaeeancpte aenehi eesuehep cnuetst Atescoeeocoeetesueheecopettceee eatesesegoeetecfeeustcoe ewhcseeeeensea eecie -satseneaenetheye wculnelike tceuseep cnuetewithelessefeatu esefc elessep ieeteSueheuene se ieneoa ketesegoeetsee eateeeet ye pcietseieeoa ketetceeete efc eeeweeet aetseeoplcyiegenis uptieeteeheclcgieste Aeec niegetceCh isteeseeethe eea eetwc typesecfenis uptieeieeciatcesoelcweeeneaeneeeweoa kete nis uptcest
14
Halic eMehluose_a leMceeeeaeneRagea eTc iike efe setceHcbsbawoeieethei epape eDest uetiee e eatiityteCitatceeusenef coeDest uetieee eatiityt
Page 18

Disruptive innovations create assimetric competition
Performance
Incumbents nearly always win
May 25, 2012
ogi nol ech of t gress ce pro Pa tion s
cal
Su
sta
inin
n g in
ova
Different measure of performance
Performance That customers Can Utilize and absorb
g etin mp Co ns: ption atio um nov ons e in onc ptiv inst n ru Dis aga
Time
N o co nc ns on um su in me g rs oc o ca r n si on on s
Entrants nearly allways win
Time
Source: Disrupting class. How Discruptive Innovation Will Change the Way the World Learns. Clayton M. Christensen, Michael B.Horn, Curtis W.Johnson. McGraw-Hill, 2008.
Figu e 5: New ma ket dis uptons) ou ce
h istenseny Johnsony & Ho ny 228R.
Thee stetypeecfenis uptceeiseeet aeeeeatelcweeeneoa ketssecie -satsenewitheexistegep cnuetsse uene se ienebyeieeuobeetsteEet aetseusiegethisetypeecfeeet yea eeatesta tea eese iiegeeieheeieetheesaoeetoee neielcpiegeeapabilitesetceocieeupoa ketseusuallyealocsteuenistu benebyeieeuobeetst Theeseecenetypeecfeieeciatce iseeet yewheeeeet aetseecopeteeagaiesteece-ecesuoptceteIteisealsceusuallye ueecetestenespaeeebyeieeuobeetsteScoetoeseeeweteeheclcgiesecpeesepcssibilitesetcece ep cnuetefc e oa ketsewhiehebyescoee easceenineecteusenep cnuetseateallte(Ch isteeseee&eRayec seTheeIeeciatc dse SclutceteC eategeaeneSustaieiegeSueeessfuleG cwthtse2003). Ch isteeseee eoa ksethateestablishene oselcckiegeatenis uptieeteeheclcgyetypieallyeiiewethei ep ioa ye neielcpoeeteehalleegeeaseteeheclcgiealeceeteIteoeaesethatetypieallyetheeneeisiceewculnebeeoc eeR&De speeniegteHcweie s ecopaeiesewhieheocstesueeessfullyeecooe eializenenis uptieeieeciatcesewe eethee ceesewhcelcckeneatetaskeaseoa ketegetaskte(Ch isteeseeeCteMtse1117) Dis uptieeieeciatceethec yesuggests bestewayehcwetceexplcitesustaieiegeieeciatcee(ectenis uptie). Fc e ccopaeyeneielcpiegesustaieableeieeciatceeocste easceableest ategyeis to sell it to incumbent oa kete leane teThee easceeisethateieeuobeetseeea lyealwaysewieseatesustaieiegeieeciatcesewheeeatenis uptiee ieeciatceeeea lyealwaysewieseeet aet (Ch isteeseee&eRayec seTheeIeeciatc dseSclutceteC eategeaene SustaieiegeSueeessfuleG cwthtse2003). Ccobieatceecfethec yecfenis uptieeieeciatceeaene ealityecfe oseieeLatiiaeaeneEstceiaeleansetcefcllcwiege assuoptceso because most ecopaeieseieeLatiiaeaeneEstceiaeise elatielyesmall tcethei eglcbale iial yebestewayeisetce fceuseceenis uptieeteeheclcgiese(Skypeefc eexaople) Dis uptieeteeheclcgyeisebesteiopleoeetenebyeeeweieetu esteWeeshculnefceuseaaeetceeceeecenitcese faicu iegee eatceecfeeeweieetu est Neweieetu esesueeessfullyeiopleoeetegenis uptieeieeciatceea ee besteeaeninatesefc efasteg cwtheieeciatieeeete p isest Page 19
May 25, 2012
Some incumbentse eecgeiziegep cbleoecfenis uptieeieeciatceet yetcecie ecoeeitewithee eatege elatielye autcecocusespie-csteGcie eoeetesuppc tefceuseneonly ceeestablisheneecopaeiesewilleeegleetesuehe pe speetieep cjeetste Despiteeniueultesecfeapplieatceecfetheethec yefc ep cjeeteseleetceescoeeiopc taeteeceelusiceseeaeebee n aweteFi stsethe eeiseeopi iealeeiineeeeeaenethec etealef aoewc kethateeeweecopaeyeeaeeg cweie yefaste aeneeaeebeecoeetheeleane ecfetheeoa keteifeiteeete setheeoa ketewitheae ightetypeecfeieeciatceteSeecenseife ecopaeyee eatesesueeessfulesustaieableeieeciatceeaequisitceecfesueheecopaeyebyeoa keteleane eiseecte aeeineeteaeneshculneectebeeaicinenteIesteaneiteiseeextelcgiealestepeieeecopaeyeneielcpoeetteEieeeifethee ieeciatceeiseaequi enebyeoa ket leane ewhieheiseoulteatcealeecopaeyef coeab canesuehet aesaetce bccstseeet ep eeeu ialespi iteieethee egice aenep ciineselcegelastegepcsitieeeeets. Uesou ce dependence theo y Rescu eeenepeeneeeeethec yegiiesescoeeexplaeatceewhyeieeuobeetsea eeectescesueeessfuleatenis uptiee ieeciatceteRescu eeenepeeneeeeethec yealsceleansetceeophasiziegeiopc taeeeecfee eatieeesseaene expe ieeeeecfeieiestc seaeneeapitalep ciine st Also laekecfeieeciatcesein some cases eaeebeepa tlyeexplaieenebyethec yecfe escu eeenepeeneeeeeaeec niege to Salancik et al. (Pfee e&eSalaeeikse2003)teTheethec yestatesethateecopaeiesehaieelioitenef eencoecfe aetceetcesatsfyetheeeeensecfetheecutsineeeettesewhiehep ciinese escu eesetcesu iiieteThee escu eeseto su iiieea eefueniegteThe main cutsineeeettesewhiehep ciineethesee escu eesea eeeustcoe seaeneieiestc ste Thisethec yeisen aweef coeeceeeptsecfebiclcgiealeeiclutcesewhieheiopliesethatecelyethcseec gaeizatcesewille su iiieewhiehewillebesteateghtegefc elioitene escu ees. In economy it means bestese iiegeexistegeeeensecfe existegeeustcoe seaeneieiestc ste Theeioplieatceecfethisethec yeisethateoaeage sehaieeie yelioitenesecpeetceieueeeeepathecfeecopaeiesteThee patheisesetebyeeustcoe seaenesha ehclne s iesteanecfeoaeage steTheeoaeage sea eeoc eelikeen iie secfeea se ceep enietableepathteHcweie seweeeaeeseeeexeeptcesef coethise ulesefc eexaopleoeAoazcetecoeaeneApplee IeeteBcssesecfebctheecopaeiesegaieeneeecugheba gaieiegepcwe etceigec eetoeef coetoee equests of sha ehclne seieec ne etceeoplcyelcegete oenis uptieeieeciatceest ategiest Theseea eeexeeptcese athe e thaee uleeaenep cbablyegcie eoeeteeaeecte elyeceetheoteIesteansegcie eoeeteieueeeiegelcealeneoaene eaeebeae eni eeteecopaeiesetcepe speetieeteeheclcgiesteAseitewaseoeetceeneea lie seiteiseiopc taetetce stoulateecelyesueheneoaenewhieheeaeebeeaeteipateneelsewhe et
Hende son- la k concept

Olne eeceeepte- Heene sce-Cla keeceeepteisebaseneceetheeiiewecfetheep cnueteaseecegu atceecfe ecopceeetst Sueheiieweieelunesetwcenioeesicesoeecopceeete(whateecopceeetsea eeusen)eaene a ehiteetu ale(hcwetheeecopceeetsea eeliekenetcgethe )teIeeciatceeiseseeeeaseehaegeseieep cnuetealcegeceee c ebcthecfetheseenioeesicest Heene sce-Cla keocneleniiineseieeciatceseieefcu esqua eseaeec niege ega niegetwcenioeesicesoe(a)e Relatceetcetheeec eeeceeeptsse(b)eRelatceetcetheeeatu eecfeehaegeseieeliekageebetweeeeCc eeCceeeptseaene Ccopceeetst (Heene scee&eCla kse1110)teHeene sce-Cla keeceeepteisewinelyeusenetceeategc izeetheeneg eee cfeieeciatceseieefcu enie eetetypest
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May 25, 2012
Core Concepts Reinforced Overturned
Linkages between Core Concepts and Components
Unchanged
Incremental Innovation
Modular Innovation
Changed
Architectural Innovation
Radical Innovation
Source: Rebecca M. Henderson; Kim B. Clark

Figu e 6: F amewo k fo dening innoiaton Hende son & la ky 0992R.
Theep cbleoewithethiseapp caeheisefcllcwiego Iteiseie yeeasyetceuseteSiopleeeheeklistseeaeebeeoaneetceeategc izeeieeciatcesteSueheaa aetieeesse oakeseiteie yeeasyetceieec pc ateeietceeialuatceee ite iaefc ep cjeetseieegcie eoeetesuppc tep cg aost Categc izatceeaeec niegetheseenioeesiceseannselialeetcequalityecfep enieton of ieeciatceeecooe eiale sueeessseouehelesseateleastethaeenis uptieeieeciatceethec yt Aseaeecesequeeeeethisetypeecfeeategc izatceeisep efe enebyegcie eoeetecueialeieep cjeeteseleetcee p ceenu esteIteleansetceieeeetiesetcelcckeatetheeieeciatceeaseteeheclcgiealeehalleegee athe ethaeeoa ketege whieheiseecuete p cnuetiee ega niegeecooe eialeeeett
Expected success and p oject financials

Aeec niege tce esea ehe easceewhyesceoaeyesoa tseha nwc kiegeoaeage seieewell- ueeecopaeieseeneite iopcssibleetceieeciateesueeessfullyeisenueetceeophasiseceeDCFe(nisecueteneeashecw)eaeneNPVe(Netep eseete ialue)ewheeeeialuategeieeciatceep cspeetse(Ch isteeseese_aufoaese&eShihseIeeciatcee_ille seHcwe FieaeeialeTcclseDest cyeEcu eCapaeityetceDceNeweThiegsse2008) teCh isteeseeeet al. elaiosethatethesee eceeeptsea eeoisappliensenueetceassuoptceethatenciegeecthiegewillekeepeeu eeteeashecwseietaetteSame eaeeial eceeeptse(DCFseNPV)ea eeuseneby gcie eoeeteageeeieseatepiekiegewieee sefc estateeg aets. As a esultesioila eecesequeeeesecfeoisapp cp iatceecfefuensehappeete The eea eecthe eeceeeptsesuggestenetceeialuateelikelihccn of success. tne aucg proceaan wgvcg Rvta Guntger McGratg and an MacMvllan call dvacoiert-drvien plannvnun gaa tge potental to ureatlt vmproie tge aucceaa rate. vacoiert-drvien plannvnu eaaentallt reieraea tge aeeuence of aome of tge atepa vn tge ataueuate proceaa. (Ch isteeseese_aufoaese&eShihseIeeciatcee_ille seHcweFieaeeialeTcclseDest cyeEcu eCapaeitye tceDceNeweThiegsse2008).
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Ieec ne etcehaieescoeecbjeetieep cjeeteseleetceee ite iaegcie eoeeteseleetceep ceesseieicliese igc cuse eaeeialeaealysiseusiegeNPVeaeneDCFealcegewith cthe eienieatc steUefc tueatelyethatenceseecteallcwse seleetegetheebestec eoc eep coisiegep cjeetsseaseitegiieseuejusten aniaetageetcetheeieeuobeeteecopaeiese ceetheebasesecfethei eeu eeteeashecwsteOeetheecthe ehaeneuse of sueheienieatceefc eeseapplicants to make aealysisecfeexpeeteneeaeeiale esultsecfethei ep cjeetsteAteleasteieethec yeiteshculneleanetcelesseiefc oatcee asyooet yeaenebeae eoaeageableeageet-p ieeipalep cbleot Iopc taeeeeaeneweightecfeeaeeialefc eeasteiee p cjeeteseleetceeshculnebee e-eialuatente Hcweie epcssibilitesefc eapplieatceecfealte eatieeeceeeptsesuggestenebyeCh isteeseeeetealtebyegcie eoeete ageeeiesefc ep cjeeteseleetceea eelioitenteApplieatceecfetheseeeceeeptse equi eseneepsespeeieeienust yeaene p cnuetekecwlengeewhiehegcie eoeetenceseectepcssessteTheeeceelusiceeeculnebeethatetheebestewhate gcie eoeeteeaeenceisetcenee easeeiopc taeeeecfep cjeeteseleetceee ite iaebaseneceeDCFeaeneNPVeaeneieethee saoeetoeeiee easeefceusiegeceesustaieabilityecfeeu eeteeashecwt
P o-Cyclical patte n of U&D

Aeec niegetcecppc tueityeecstea guoeetecfeR&Dse oseatetheetoeecfeoa keteecet aetceea eefaeiegelcwe cppc tueityeecstseaenewilleiee easeethei espeeniegeieeR&DteIeepe icnsecfehigheg cwthsehcweie secppc tueitye ecsteisehighefc e osetceuene takeeR&Dethe efc e osewillenee easeeitseR&Deexpeenitu esteF coethisepcietecfe iieweR&Deshculnebeeecuete eyeliealseitetetoeecfeoa keteecet aetceeisetoeewheeeecopaeiesefceuseieelcege te oeieiestoeetseieeR&Deaenep epa atceefc elcegete oeg cwtht (Meeascce&eMe ikllse2011) Thee esea eh giiesescoeeienieatceeceetheebestetoiegecfenie eetetypeecfeiete ieetceteIeeec oaleecenitcese R&Desuppc teis likely to be uep cnuetieewheeeoa ketsea eebccoiegsebeeauseeecopaeiesewillebe oc ee fceuseneceeaequisitceecfecppc tueiteste Du iegeg cwthephaseecfeeececoyecfepa teula eoa ketec eienust ye ieeciatceesuppc tewillebeelessep cnuetieethaeeieetoeecfestageatceec eecet aetcet _an ieMeeascceetealte(Meeascce&eMe ikllse2011)sehcweie selcckiegeatenataef coeCeet alseScutheEasteaene EasteEu cpeaeeecuet ieseensethateatetheetoeecfeoa ketebccoeEea se2001-2007eitewaset uesehcweie seatethee toeecfeabec oalefallecfeneoaeneate2008-2010eecopaeiesenee easenespeenieg ceeR&Dseeieeeifecppc tueitye ecstsewhe eeie yelcwteTheeecopaeiesefceuseneceesu iiialec ieetenest ategieseaeneiesteanecfep epa iegefc e g cwthseecesclinatenteIete estegeeniegeieethei e esea eheisethatee eniteecest aiet 15 playseoiec e clesewhiehe iseexplaieenebyein context of underdeveloped credit markets the firms reliance on external funding is lowteIteoeaesethateecopaeiesefc eR&Despeeniegestlle elyeceeiete eale escu eesteSuehep ceyelieale espceseetceneoaeneecenitceseoayeha oeeececoieselcegete oeg cwthecutlcckteResea ehe sealsce enethateafe ee isisecfe2008eecopaeiesea eestlleieesu iiialeocnete Ta getenegcie eoeeteiete ieetceetcesuppc teR&Deaetiiteseatethisetoeeaeneocstep cbablyefc eeexte3eyea se willehelpefc eecopaeiesetcep epa eefc ehighe ep cnuetiityef cete eaeec niegetce_an ieMeeascceetealte (Meeascce&eMe ikllse2011).
15
Aeec niegetce_an ieMeeascceetealte- Theee eniteecest aieteia iableeiseneeeneieeaesioila eoaeee efc e bcthetheecbse iatceepe icnssebeiegeecenitceeneceetwcete osse stethee osenepeeneeeeeceeexte eale eaeeeeaeneseecenlyeitseaeeessetceeaeeeteAlle osethatea eenepeeneeteceeexte ealefueniegebutea ee ejeetenebyeleene sec enisecu agenef coebc cwiegea eeneeeneasee eniteecest aieenteThee estecfethee ossewhcseeeeenefc eexte ealee eniteiseoetec ewhcenceecteeeeneexte ealefueniegsea eeneeenease ueecest aieent (Meeascce&eMe ikllse2011)
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ompetitiieness and ausiness model

Higheg cwthepcteetalebusieessesea eeusuallyeeha aete izenebyescalability of sta t-upsebusiness model. Sealableebusieesseisebusieesseocnelewhiehenceseectehaieep cnuetceefaetc sec eecstefaetc sewhiehe sigeieaetlyelioiteg cwthepcteetalecfetheebusieessteUsually ma gieale eieeueseexeeeneoa giealeecstebaseec e oa giealeoa keteialueecfetheeecopaeyeexeeens oa giealeieiestoeetsetcegeee ateesueheiee easeeieeialuete It can be assumed thateife steecenitceenepeensecelyef coep cnueteoa ketetheelaae e equi eseneielcpene eapitaleoa ketsteIeec ne etceself-sustaieefasteg cwths exeesseeashegeee ateneshculneecie eaequisitceeecstsecfe eeweoa ketsteSuehebusieessehasetcehaieesuueieeteueecetesteneoa keteecopa iegewithetheesha eeitecwese eu eetlytteIeesueheeaseeiee easeeieeoa ketesha eealceeep ciineseeeeessa yeannitcealeialueee eatceetce 16 p ciineeeeeessa yesealabilityt Ve yecfeeesealabilityenepeenseceeeetwc keeeets sebeeauseeeetwc keeeeteise eatu alescu eeecfeialueeiee easeewithcuteec espceniegeecstst Scalable business model usually sha esefcllcwiegeecooceefeatu esoe a) theyea eeie yep ctableesta tegef coesmall scale 17 b) theeeetwc keeeeteeaeewc keiee eie seeni eetce c) theyee eateeoa ketsecfefewe and wieee setakesealletheeoa keteleaiiegelcegetailecfeeieheebusieesse withealocsteecthieg d) Theyehaieesigeieaetlyehighe eleielecfe iskseni eetlye elatenetcethe leielecfesealabilityt Theefeatu esecfetheesealableebusieesseocnelea eescu eeecfeniueultesefc egcie eoeetesuppc teaenelioiteitse abilitesetceni eetlyestoulateeitt
Employment secu ity ie sus Joa secu ity

Oeeecfepclieyeissuesefc efasteg cwiegeecopaeieseisewc kfc eeeocbilityteWc kfc eeeocbilityeaeetseectecelye theelea eiegeabilitesecfewc kfc eeeiee egiceebutealsceagilityecfe oteJcbeseeu ity p ciinenebyelawebeecoese liabilityecfeecopaeyeand iee easeseiee taecfe oteIee taecfe oeisesuoecfeallefaetc seexte ealeaeneiete eale whiehelioitsefaste espceseetceoa ketec eteeheclcgyeehaegesebyefasteehaegiegecfest ategyseoa ketegsesalese ehaeeelsec eteeheclcgyteAecthe ewayetceoeasu eeiee taeisetceoeasu eeecstsecfeecu seeehaegiegteSigeieaete pa tecfesueheecstseiseecstsecfe iegsehi iegecfewc kfc eeteIeec ne etcesuppc teieeciatieeessegcie eoeetehase tcenee easeeiee taecfeecopaeieste Exeessiieeecsts of eoplcyeese ing nee easeseabilityecfeecopaeyetceehaegeeecu seteItelioitsefasteehaegeseiee p cnuetseaeneteeheclcgiessebeeauseesueheehaegeeusuallye equi esefasteehaegeecfeecopeteeeies whieheeaeebee aehieienecelyebye iegepa tecfefc oe eeoplcyeeseaenehi iegeeeweceesewithe equi eneskillse athe ethaee et aieiegetheo.
16
Netwc keeeeteisesituatceewheeeuse epa teula ep cnuetec ese iieeee eateseialueefc ecthe euse secfe p cnuetteFc eexaopleetelephceeeecopaeieseeejcyeeetwc keeeetteValueecfephceeeiee easeseifeeuobe ecfe subse ibe eiee easesteThee easceeisethatetheefueetceecfetheephceeeisetceecooueieateewithecthe st Eieeefc oe eoa keteleane e(MySpaee) expe ieeeenefastelcssecfeeustcoe setceFaeebcckewheeetheyestatene tceoig ateeieela geeeuobe s
17
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Mcnelecfeexieu ityef coeDeeoa keis good exaopleehcwetcenealewithetheep cbleoteFlexieu ityeoeaesethate stateenceseectep ciineejcbeseeu itysewhieheiopcseseecstseceeecopaeiessebutseiesteansep ciineseeoplcyoeete seeu ityteEoplcyoeeteseeu ityeoeaesethateifeaeeeoplcyeeelcsesetheejcbetheegcie eoeetep ciinesewellfuenene et aieiegteIeesueheaewayeecstsecfetheejcbeseeu ityeiseecteliabilityecfetheeecopaeiest
Agent-p incipal p oalem

Agency c eageet-p ieeipalep cbleoea iseseieeecenitceecfeiefc oatceeasyooet yec ewheeeiefc oatceeise ieecopletesewheeep ieeipalehi eseaeeagent aenewheeeageetehasenie eeteiete estsethaeep ieeipal. Thise p cbleoeise eleiaetetceaeyebusieesset aesaetceteTheealigeoeetecfetheeiete estsecfetheeageetewithethee iete estsecfep ieeipalehaseecststeSueheecstsecfeeeeaeeexeeeneaeyebeeetsecfehi iegesueh ageetteIeeecetextecfe gcie eoeetesuppc teageet-p ieeipalep cbleoeisewhe eep ieeipal isegcie eoeeteaeneagent is business. Gcalecfegcie eoeetesuppc teusuallyeiseineeteneoa ketefailu eseaeneoeasu esetceecopeesateec eelioieatee suehefailu esteIeetheesaoeetoee oseultoateegcaleisep cts nie eetef coetheeieteetceecfegcie eoeette Alignment of os iete estsetcetheegcie eoeetseieeusiegegcie eoeetefuenieg equi eseext aeec ts nu iege design and management of suppc tep cg aot Ifesuehealigeoeeteiseectenceeep cpe lyeoisuseecfefueniegeise esultt Die eete esea eheseshcwsethategcie eoeeteteenetceuene estoateeubiquityecfeageet-p ieeipalep cbleosease welleasetheyeteenetcecie estoateethei eeapaeityetceoaeageetheep cbleoewheeeiteappea steAseae esulteageetp ieeipalep cbleoeiseocsteecoocee easceewhyeoaeyewelleieteenenegcie eoeetep cg aosefailteP cbleoeeaee beenealtebyeann essiegeaeyecfeitseaa ibutesoe(a) iefc oatceeasyooet yec elaekecfeiefc oatce;e(b)ealigeoeete cfeiete estsep ciiniegeeeeessa yeieeeetiesefc e ot Dealiegewitheiefc oatceeasyooet yeiseecstlysebeeauseeite equi esefc egcie eoeetetceaequi eespeeiee ienust yekecwlengeeieeeie yeseetc ewhe eesuppc teiseneliie enteDu iegeneeitecfeskillenewc kfc eee gcie eoeetewilleecopeteewithebusieessefc etheesaoeepcclecfekecwlengeteSueheecopettceewillewc seee busieesseeeii ceoeeteieespeeieeseetc eiesteanecfeiop cieoeetteIeeecet a ysealigeoeetecfeiete estsencese ecteeeeessa ilyewc seeebusieessecppc tueiteseieesuppc teneseetc ec efc ebeeeeia iesecfesuppc tte Alignoeetecfeiete estseisestek-and-ea ctest ategyewhe eestekeiselioitatceecfeuseecfefueniegec est iegse aaaehenetcesuppc teaeneea cteisesuppc t itselfeaeneutlityeieeoceeta yete osefc eecopaey.
tt action of talent
Mcst eececoistseag eeethatehuoaeeeapital isep ioa yekeyetceeatcealesueeess ieeieeciatces. Past decades eecgeizeseiee easiegeiopc taeeeeof talents fc eeececoic success - seleeteneieniiinualsewithecutstaeniege wc keaeneieeciatceseeapabilitesteTaleetsea eeecesine eneaseocsteiopc taetepa tecfeeatcealeieeciatiee eapaeityteFc eexaoplee elategetceeluste seEececoisteIetelligeeeeeueiteanoitsethatetalent is single most important factor in developing successful clusters. Taleetsea eebeecoiegeiee easieglyeocbilete Pa tlye iteise esultecfe eecgeitceeaeneiee easiegeneoaenseasewelleaseaa aetceepclieiesebyegcie eoeetsecfenie eete ecuet iesteAeec niegetcetheeEececoistetheetaleetewa eisep cnueiegeaeglcbaleoe itce aey (TheeEececoistse 2006)teTaleeteisebeecoiegeoc eeecsocpclitaeewhieheoeaesethatekeepiegeexistegeaeneaa aetegeeewe equi eseeeweapp caehesseieeluniegenie eeteoeasu essescoeeeieeeecteni eetlye elatenetcebusieesse ief ast uetu ete Glcbalewa efc etaleetsealsceisen iiiegep ieeeupteFc eexaopleeSiegapc eeieec ne etcelu eeseeic etaleetef coetcpe jcbsea cuenetheewc lnece esala iesewhieheeaee eaehe$1eoilliceeaeyea ec eoc eteAeec niegetceJchee_aceao farn tge recruvtnu vll gaa come to more tgan .. vllvon for aome 155 rankvnu centrvata (_acse2007) Aa aetceecfetaleetseiseceeecfekeyeissuesealscefc eLatiiaeaeneEstceiatePa tecfesclutceeisetceiop ciee aa aetieeessecfete itc yefc etaleetst Iopc taeteaa ibutesecfete itc yeieeaa aetceecfetaleetsea eo qualityeof life Page 24
Financing model and legislatie ecommendatons cppc tueitesetcespeeialize Reputatceefc etcle aeeet Quality of life
May 25, 2012
Jchee_ace eekcesethatefc eexaopleeUSAeeityeAtlaetaebetweeee1110eaene2000esawe46%e ise ieetheeeuobe ecfe 25 to 34-yea -clneecllegeeg anuateseliiiegethe ete(_acse2007)teFc eexaopleeieePc tlaeneO egceeUeiteneStatese alscehaseseeeeaebigejuopeieeycuegeecllegeeg anuatesethateiseaa ibutene ejuieeatceecfefc oe lye uencwee nist ietsewithea tegalle ieseaeneelegaete estau aetsteThe eea eeexaoplesethatequalityecfelifeeisepcssibly ceepa e cfecthe easpeeteieeaa aetegetaleetst (_acse2007) Oppo tunities to specialize Theespeeialisatceealsceiee easeseaa aetieeessecfethee egiceteFc eexaopleeEniebu ghseSectlaeneaeneeea bye Dueneeefc eexaopleehasebeecoeeaeoeeeaefc eecopute egaoiegeienust y;ethe eea eeecopaeieselikeeReale TioeeWc lnseaeneRcek-sta eGaoesee eatc secfefaocuseiinecegaoeeG aeneThefeAutcteTheespeeialisatcee ec espcensetceineaseecoiegef coetheeEu cpeaeeCcooissiceeabcuteSoa teSpeeialisatceecfethee egions. Hcweie espeeialisatceeeaeebeeaehieieoeeteocstlyebyeeet ep eeeu ialenisecie yse athe ethaeebyestatee ni eeteneieiestoeetec ep coctceest ategieste Speeialisatceeallcwseeceeeet ategetcpeleieletaleetsethuse eiefc eiegetheeioageecfeoeeeaecfepa teula e teeheclcgyec eelnecfeseieeeet Cceeeet atceeeaeebeeaehieienebyep coctegesepa ateeeluste sec eeieee qua te seieetheeeityewhe eeeewetaleetsseaa aeteneaenelcealeeaeeocieetcgethe teApp cp iateestateepclieyeeaee bee eiiewen;ehcweie eae iskecfehuoaee ightseissues shculnebeeeialuateneieeeie yeeaseeifepclieiesewilleta gete suppc tefc eaa aetceecfeieniiinualsebaseneceethei eoeetaleabilitesseskillsec eenueatcet Ueputation fo tole ance AseJchee_aceoeetceseWvnnvnu cvtea vn tge gunt for vnnoiatie talent are tolerant of dvieravtt and welcome all aorta of newcomeran from vmmvurant forevunera and conienton-eoutnu artata to entertavnera and tge uat communvtteiteoeaesethateniie sityecfetheeeityespu see eatiityte(_acse2007) Mc eeiete estegea eeeniegsecfeRieha neFlc inasep cfessc eaeneheanecfetheeMa teeP cspe ityeIesttuteeatethee RctoaeeSehcclecfeMaeageoeetseheeseesetheeaeeeptaeeeecfegayseaseaeeiopc taet faetc eieetaleete ecopettceteHeeexplaiesethateaest cegegayep eseeeeeiseaeeienieatc ecfeaeplaeeethateisecpeeetceoaeye nie eetekiensecfepecpleeaenethateisetheekienecfeplaeeetaleeteneycuege epecpleep efe etceliieeaenewc kte (_acse2007)teFlc inaseineaseaenethec iesea eeecet cie sialeaene eeeiieeaelctecfee iteiso.. Conclusion Some featu essesueheasecppc tueitesecfespeeializesea eeni eetlyeaeetenebyeeuobe ecfetaleetste Aa aetceefc eeep cpc tcealetceeuobe ecfetaleetseisebestenese ibenewitheaealcgyecfeg aiityecfeoass. Some conclusions elaten tcetaleeteaa aetceeeaeebeen aweo Taleetsehaieesome kind uraivttsebeeauseetaleeteeceeeet atceealone haieepcsitieefeedback on ecenitcesefc ethei eaa aetce Tceienueeetheeagg egatceecfetaleetsealleecenitceseoustebeeeesu eneaenestateeiete ieetceeise equi en Taleeteaa aetceeiseze cesuoegaoeteIee easiegeeceeeet atceeieeceeepa tecfewc lnewillen aieetheetaleetse f coecthe epa tsteIteiseiopc taetetcebee steieethisequestteDeepe e egicealespeeializatceeeculnebee sclutcesewheeeagg egatceecfetaleetseecoesetcgethe ewithee eatceecfespeeializeneassetseaene ief ast uetu et
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May 25, 2012
Access to finance
Figu e 7 P oalems in nancing chain) ou ce: P esentaton ay esa anhanen D Ente p ise and Indust yR at the E Ljualjana on 09)5.08. EEU D y 200R
S emina in
Aeec niegetceiete eatcealeexpe ieeeeetheebiggestep cbleoefc eeete p iseeisetceaeeessep e-seed and seed eaeeiegeusuallyeieep e-salesepe icnteAtethisepe icnethe eea e ecteeecugheseeneieiestc sewhieheeculn eaeeee ecopaeyeupetceb eakeieeepcietec eeieeetce eaehesalesteAlsceea ly-stageeieiestoeeteiseaep cbleote JuopSta teieeOhicee eateneeecsysteoewhiehecpe ateseieefcllcwiegewayo
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May 25, 2012
Figu e 8: pace in which Jump ta t ope ates) ou ce:EERADA. EEU D y 200R
Ieethisewayejuopsta tescliesetheeseeneeaeeiegep cbleoebyeieeubatceseocbilisiege escu eesefc eitte Aeec niegetce esea eheieeLatiiaesupplyecfeeaeeiale escu eesefc eea lyestageeeaeeiegeexeeensetheeability of theeoa ketetceabsc betheoeieeecooe eiallyesoa tewayt (SoalleIeeciatieeBusieesseP coctceeNetwc kse 2010)teIeecthe ewc nsetheecwecfeineaseiselessethaeeaiailabilityecfeeaeeiegefc etheoteThisep cbleoeise iopc taetebyeaeeea lyestageeeaeeiegep ciine steThisep cbleoeoayehaiee cctseieetheenie eeeeeof expeetatcesebetweeeeieiestc eaeneeet ep eeeu teIfethe eeisewineegapebetweee expeetatceseecet aeteiseecte pcssible. Repc tealsceoeetcesetheeelashecfeoeetalitesebetweeeeieiestc seaeneseieetststeRepc testatesethateVCe expe tseoeetceeeuobe ecfeeasesewheeeaeeineaewculnebeepcteetallyeiete estegehcweie eseieetstseeaeecte beeeegctateneceetheete osecfeequityeaenethee iskesha iegtePe suasiceeaeneexplaeatceetakesetcceouehetoee fo eieiestoeetetcebeeiiableeagaiestetoeeaene escu eeespeeteieep epa atceteDu iegepe icnef coe2007etce 2013enie eetestateeaineseheoaseiet cnueenteHcweie sesuppc teseheoeseusuallyea eeehaegeneshc tlyeafe e theeiet cnuetcesewhe easeeaeheehaegeeieep aeteeeoeaeseceeeyea eceeaie ageefc esuppc teseheoeetcebeecee hclnt Oeetheecthe ehaenetheeoeetalityecfeieiestc seieeLatiiaeaeneEstceiaeiseecopletelyenie eetef coeoeetalitye aene isketcle aeeeecfeieiestc sef coeUeiteneStatesec eU_teDie eeeeeieeexpeetatceseeaeebeeillust atenebye expeetatcesecfeieetu eeeapitalistseieeLatiiaeaseusuallye30%ecfetheeecopaeyefc eseene cuenecfeieiestoeeteiee 18 ecopa isceecfeeceoc eethaee10%ecfeecopaeyef coeaeeele atc eS omainato in US.
18
hapo::yecobieatc teco:
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Financing model and legislatie ecommendatons ccele ato s as a new concept to incuaation
May 25, 2012
Aeeele atc eiseecopletelyeeeweeceeeptecfeieeubatceseaniisc yese iieeseaenesta t-upefueniegeieeceeesclutcete Theebiggestenie eeeeeisethateieeubatceefceuseceetheebusieessecfe ealeestateeecopleoeetteIesteansebusieesse aeeele atc eis fceuseneceetheeecesultegetcgethe ewitheseeneeaeeiegteTheeseecenenie eeeeeisethate ieeubatc seexpeetefc eieeubategeecopaeiesetcepayefc ese iieeecfeieeubatc teVe yecfeeesuehese iieesea ee heaiilyesubsinisent Theeieeubatceebusieesseisebaseneceetheest eaoecfepayoeetseienepeeneetef coesueeesse cfeieeubategeecopaeyteOeetheeecet a yeaeeele atc eiseaepayoeetefc eitsese iieeeaeneeaeeiegetakesesoalle sha eecfeeeweecopaeyteAeeele atc also p coctesefavl faat oeetalityseoeaeiegethateteams shculnequieklye anoitetheeoistakeeaeneeithe estcpeaetiityec eehaegeeni eetceteAeec niegetceiefc oatceef coeEeCcobieatc e ocstecfeineaseseleetenebyetheeteaoeiseecopletelyeehaegiegeni eetceenu iegesixeocethsteTheeecopaeye epc tsethatef coe36eineaseseleeteneiee cueneieesuooe ecfe2011se30 gcteeexte cuenecfeeaeeiegeafe e3 ocethescoeeexeeeniege1 oilliceeUS$eeSueheae esulteisecutecfethee eaehefc etheeeceieetcealeieeubatc te Alscetoeecfeieeubatceec ese iieeeiseie yenie eetteIeeubatc seusuallyeallcwefc eaeecopaeyetceieeubateef cm 1 to 3 yea sseaeeele atc ep ciineseaeeele atceese iieeeusuallyeeceoc eethaeesixeocethste Aseaep cnuetsecfeEeCcobieatc ea eeecopaeieselikeeD cpBcxeaeneIestag aosebcthe eaehiegeialuatcesecfe5e billiceeUS$eaene1ebilliceeUS$eiee3etce1t5eyea se espeetielyte EeCcobieatc eiseth eatetcelcealeieetu eeeapitaleienust yeaeneespeeiallyetcebusieesseaegelsteTheeapplieaetse may applyetceEeCcobieatc ebyee-oailewitheidea p cpcsalef coeallecie etheewc lnteIfetheeineaeiseiete estege teaoeiseieiitenetce15eoieutesep eseetatcn. Theeai plaeeeteketefc eecoiegetcep eseetatceeisepa tlyeecie ene byetheeEeCcobieatc efc eeie yepa tee teTcnayeEeCcobieatc e epc tseiee easieglyeiete eatcealeteaoseaeneEe Ccobieatc eiseecopetegefc etheesaoeeineaseaeneieetu eseaselceale(LatiiaeaeneEstceia)eieetu eeeapitalists and business angels. Thin ma ket p oalem Theeauthc secfeSibNete esea ehe(SoalleIeeciatieeBusieesseP coctceeNetwc kse2010) alsceoeetceethee lioitatcesefc eiesttutcealeieiestc setceieiestethei eassetseieeieetu eeeapitalefuenst Lioitatcesea eethe eebute ceetheecthe ehaenethee iskep cleecfeiesttutcealeieiestc seiseecopletelyeieecopatbleewithe equi eoeetsefc e ieiestoeeteieeGazelleetypeecfeecopaeyteThe efc eelioitatcesecfeiesttutcealeieiestc semay be ectethee biggestep cbleoecfethee egicete Ieeecet astecthe e esea ehe(VinzeoeeIeeciatceeaeneEet ep eeeu shipeeeet ese2011) eiealsethatethe eeiseae gapeieep e-seenefueniegesupplyeieeLatiiaeaeneEstceiasewhe eeneoaenseaeec niegetceauthc sseecesine ablye exeeensesupplyteTheeauthc secfefeasibilityestunye eecooeeneiee easiegeaeneiop ciiegep e-seed funding supplyeieeLatiiaeaeneEstceiateTheyesuggesteiee easiegetheefueniegepe eecopaeyeaenetctalesizeefuense aiailableteEet ep eeeu seienieateetheep e-seeneaeneseenephaseeeaeeiegeasebiggestep cbleoefc eeewe ecopaeies aeec niegetcepcllteOeetheecthe ehaenetheesaoee esea eheeiteseexpe tse(M tViestu seZeps)ethate the eenceseecteseeoetcebeeexeessiieeuesatseneneoaenefc ep e-seenesuppc teiest uoeetteIeecthe ewc nse theeexpe tsenceecteseeetheecwecfenealsefc ep e-seeneeaeeiegeexeeeniegetheeeaeeiegeaiailablet Bcthe esea eheseoaye eiealethieeoa ketep cbleoeiesteanecfelaekecfebalaeeeebetweeeesupplyeaeneneoaent
Legal and tax st uctu es suppo ting inte national ientu e capital
Glcbaleieetu eeeapitaleeoplcysetcclsethatea eeie yewellesuitenetceeu tu eehighe iskeecooe eiallyep coisiege ineasteIteiseestoatenethate1eUSenclla ecfe iskeeapitaleneliie setheesaoeeaocuetecfeieeciatceease3eUSenclla se cfeeceieetcealeec pc atee esea eheaeneneielcpoeete(Le ee se2001). In c ne etceeoplcyetheseetcclseiteise iopc taetetcep ciineelegalest uetu eseaenetaxest uetu esewhiehea eeuseneglcballyt
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May 25, 2012
Aeec niegetceLe ee e eseetesueeessestc iesef coeSiegapc eeaeneIs aeleshcwsethate eplaeeoeetecfe ieexpe ieeeenelcealeieetu eeeapitalistsewitheiete eatcealeieetu eeeapitale osep ciineseg cwthefc eienust yte Sueheocieeisebeeeeialealscetcelcealeieetu eeeapitaleaenelceale osesta tsetceplayesigeieaete cleecelyeafe e b ieieg-ieeiete eatcealeplaye steGlcballyep cieeelegaleaenetaxest uetu esea eeiopc taetetceaequi eeaenebuilne ieetu eeeapitaleienust yewithest cegeglcbaleteseaeneecopeteeeet Nuoe cuse esea ehesealsceenethateeet ep eeeu setce iseegiieeeoceey haieetcesellelesseieete osecfesha eseiee ecuet iesewitheoc e ieiestc ef ieenlyelegalesysteo (Le ee se2001). Resea eheseenethate oseusuallyehaiee highe eieesueheecuet iesteHighe eialuatceseaenebeae ete oseceeaequi iegeeapitalefc ehighe isksehighepcteetale ieetu eseshculneleanetceiop cieoeetecfetheeseetc t USehaieeocsteiib aeteaeneocstesueeessfuleieetu eeeapitaleienust y. Legaleaenetaxest uetu eseeoplcyenein USA a eeuseneasebesteexaopleewc lnwinet Mcsteiopc taetecfetheoeniseussenebelcwt P efe ed sha esy p efe ed stock P efe enesha esec ep efe ens sep efe enestcekeisehyb ineiest uoeetewithep cpe tesecfebcthetheeequitye aenenebtesioultaeecuslyteP efe ensea eeseeic etceecooceestceksebutea eesubc nieateetcebcenseieete osecfe elaioetcethei esha eecfeassetseieetheeecopaeyteP efe enestcekeusuallyenceseectehaieeictege ights;ehcweie e ieespeeieeecenitcesesuehe ightseeaeebeecbtaieent WheeeUS ieetu eeeapitalistseieiestetheyeusuallyehclnep efe enestcekeiesteanecfeecooceestcekteThee sigeieaetenie eeeeeisethateieeeaseecfeliquinatceec ecthe etypeecfe etu eeoceeyetcesha ehclne ssehclne secfe p efe ene eeeiiesepayoeetebefc eeeie yceeeelseencesseexeeptenebtc sewhiehea eeseeic etcep efe enestcekte Veetu eeeapitalistseusuallyeannsenie eeteecenitcesetcep efe enestceksesueheasepcssibilityetceasse teecet cle ifescoethiegeueexpeetenehappeesseeeceie tep efe enestceketceecooceestcekec e eplaeeetheeeet ep eeeu te Eet ep eeeu eneliie iegep coisene esultseeaeebeesu eethateitestllehas fulleecet clecfetheeecopaeyeaene ieiestc sewilleectebeeableetceuseethei espeeiale ightetcetakeeawayeha neea eenegaiest Suehesetegep ciinese bestepcssibleealigeoeetecfeiete estseaeneoctiatceefc eeet ep eeeu etceeegageeietce elatceshipewithe ieetu e eapitalistt Legislatcee ega niegep efe enestcekeallcwseengaging ieeecoplexe elatceshipebetweeee ieiestc seaeneeet ep eeeu ssebeeauseeaeec niegetceiete eatcealestaena neeaehe cuenecfeeaeeiegeusuallye haieenie eetetypeecfep efe enestcekteFi ste cuen cfeeaeeiegeusuallyehaieep efe enestcekewitheocste cee cusete os aaaehent Speeialetypeecfep efe enestcekeiseeceie tbleep efe enestcekewhe eecwee ecfetheestcekeeaeeneeineeeithe etce eceie tep efe enestceketceecooceestcekegetegeallebeeetsecfesha ehclne sec eleaieetheep efe enestceke getegeoc eep cteetceteWheeeieiestegeiee iskyeieetu esesueheecoplexeecest uetceeisebeeeeialetcealle pa test C eatceecfelegislatceefc ep efe ensewithcuteapp cp iateet aieiegefc etheeecu tsewillebeeuep cnuetiete Le ee egiieseexaoplesecfeLateeAoe ieaewhe eefc eigeeecopaeieseleaieetheeecuet yefaeiegeieabilityetce eefc eeelegislatceeiiaeecu tteP epa atceecfetheeecu tsetcenealewithetheenisputese elatenetcep efe enesha ese ise equi ente
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19
P efe en stcekeuene eecooe eialelawecfeLatiiaeiseialineiest uoeetefc eJcietestcekeecopaeiesteThe eea ee nie eetelioitatcesetcetheeiest uoeeteaenelioiteneuset
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Financing model and legislatie ecommendatons Delawa e pa tne ship
May 25, 2012
Delawa eetypeecfepa tee shipseisestaena nelegalep aeteeefc eieetu eefuenseieeUSeaeneelsewhe eteAncptceecfe suehefeatu eeisee itealetceaa aetefc eigeeieiestc ssealcegewithetaxeth cughestatuseaenehaiiegep efe ene sha eseieeecooe eialelawt In 1992 State of Delawa e in USA passenep ciisiceeallcwiegepa tesetcelioitenepa tee shipeag eeoeetsetce waiieetheenuteseiopcseneceetheegeee alepa tee seuene estateelawt Iteoeaesethatecbligatcesec igieateneiee ecooceelawebeeaoeenefaultecbligatcese athe ethaeeoaenatc yteDelawa e p ciisiceeallcweneeete iegeietce lioitenepa tee shipeag eeoeetsewhiehewhe eeag eenesclelyebyetheepa tesetheoseliesewithcute efe iegetce geee alelawte Uene eag eeoeets whieheuseseexibilityecfeDelawa eepa tee shipelawseieetu eeeapitalistsea eeallcwensetcea la geeneg eesetceoakeeneeisicesewithefa - eaehiegeecesequeeeesetceieetu eeeapitalefuen ieiestc ssewithcute allcwiegesueheieiestc setceieueeeeec eseecen-guessetheeneeisiceseoaneenu iegetheelifeecfetheepa teula e ieetu eeeapitalefuen (Rcseebe gse2002). Aeec niegetceLe ee eIs aelecelyeafe eaeeeptegetceancptep ciisicesecfeDelawa eetypeecfepa tee shipeaa aetene fc eigeeieetu eeeapitalistefc ethei eEczoaefuent Delawa eetypeecfepa tee shipeiseecet a yetceectceecfelegislatceeieeLatiiaetcesioplifyeecopaeye egist atcee byeiopcsiegeoaenatc ye equi eoeetsteCc-existeeeeecfeeu eetelegislatceebaseneceeoaenatc yete oseaene Delawa eepa tee shipeoayebeeehalleegiegteHcweie eoc eescphisteatenelegislatceeshculnebeebeeeeialefc e allepa teseieiclient Flow th ough tax status Iopc taetep ciisiceefc esueeessfuleaa aetceecfeglcbaleieetu eeeapitalefuenseisep ciisiceecfecweth cugh taxestatusetceieetu eeeapitalepa tee shipsteAeec niegetcethisestatus suehepa tee shipsea eeieiisible ieete osecfe taxesteIeesuehep ciisiceeeaehecfepa tee secfepa tee shipeisetaxeneaseifeitehaneoaneeieiestoeeteni eetlyteThiseise iopc taetenie eeeesebeeauseenie eetepa tee seieepa tee shipeeaeehaieenie eetetaxestatusteAlscesepa atee eaeeialeieiestc seeaeeea yelcssesef coeceeeieiestoeet (f coenie eeteieetu eefuen) to successful ceese nee easiegetaxebu neet Giieeeskewene etu eseaenehighe iskecfeieiestoeetesuehetaxe egioeeiseiopc taett Ienust ialeecuet iesef coeJapaeetceGe oaeyea eeancptegethiseec oeietcethei etaxeecnee(Le ee se2001).
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ma t specialisation st ategy
Latiiaeaseallecthe eEu cpeaeeUeiceeoeobe estatesehasetceecoeeupewithethee egicealeieeciatceest ategyefc e Soa teSpeeialisatceteSoa teSpeeialisatceeSt ategyeisep eecenitceefc eusiegeEu cpeaee egiceale DeielcpoeeteFuene(ERDF)eiee2014-2020.
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Aecw-th cugheeettye(FTE)eiseaelegaleeettyewhe eeieecoeeecwseth cugheetceieiestc sec ecwee s;ethateisse theeieecoeecfetheeeettyeiset eateneasetheeieecoeecfetheeieiestc sec ecwee steFlcw-th cugheeettesea ee alscekecweeasepass-th cugheeettesec eseally-t aespa eeteeettesteDepeeniegeceetheelcealetaxe egulatcessethisest uetu eeeaeeaicineniiineenetaxeaenencubleetaxatceebeeauseecelyecwee sec eieiestc se a eetaxeneceethee eieeueteTeeheieallysefc etaxepu pcsessecw-th cugheeettesea eeecesine eneeeceeetteseebeeauseetheyea eeectetaxen;e athe setaxatceeecws-th cugheetceaecthe etaxe etu et Scu eeoe hapo::eetwikipeniatc g:wiki:Flcw-th cughSeetty
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May 25, 2012
Soa teSpeeialisatceeineetesetheeueiqueeeha aete isteseaeneassetsecfeeaeheecuet yteOeeecfethee ec ee stceesecfeSoa teSpeeialisatceeiseeet ep eeeu ialenisecie yeth cughewhieheeaeheecuet yeiseexpeetenetce eneitseueiqueest eegtheaeneecopettieeessteVeetu eeCapitaleeaeeplayee iteale cleeieeSoa teSpeeializatcese espeeiallyeieetheeseleetceecfeocstep coisiegeteeheclcgiest St ategyeasep cpcsenebyeEu cpeaeeCcooissiceeieeluneseleie agiegeexistegest eegthseassetseaene escu eesse asewelleaseaequi iege escu eeseeeeessa yec ebuilniegeeapabilitesetceuseetheoteSoa tespeeialisatceest ategye neeitelyeieeluneseectecelye esea eheaetiitesec eieeciatceeaetiitese elatenetceief ast uetu esebutealscescfe ief ast uetu eseieeluniegeaeeele atc seaeneieeeetiesetceocbiliseepecpleteOeeecfetheekeyeoultplie secfe ieeciatceeiseec-cpe atceteCc-cpe atceeeaeebeesuppc tenebyetheeecopeteeeyeeeet essewhiehea ee ecesine eneaseaeeeoe giegetypeecfeStateeSuppc tefc eieeciatceeaeec niegetceRIS3S Guide (Fc ayseetealtse 2011).
kewed etu ns
Higheg cwtheeete p iseseeha aete izeseatetheebest by feweie yela geewieee steTheetypiealecutecoeeise nisappcietegteTheenataecfeieetu eefuensep eseetenebelcweshcws theet eent Ccop eheesiieenataegathe ene in United States.
Figu e 9:Uetu ns of Enited tates entu e funds f om incepton to Ma ch 0y 228) ou ce: Le ne y 229R.
Di eetesubsiniesec eeaeeiegetheehigh-g cwtheeet ep eeeu ialebusieessewilleleanetcepa teipatceecelyewithe sigeieaetepc tceecfencwesinee iskseaenesha iegepcteetaleupsinee etu esewillebeeie yelioitente Combining lioitenecptcesewithetheepaae eecfe etu eep eseeteneabcieseni eetepa teipatceec efueniegecfeeete p iseewille quieklyen aieepublieeoceeyteDataeabcieeise elatenetcetheeieetu eefunds. Veetu eeFuensebyethei eeatu ee al eanyehaieesigeieaeteniie sieatceef coesiegleeecopaeye iskseitetedataebaseneceeaetualeecopaeye etu ese oayebeeoueheoc eeskewente
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Rega niegefasteg cwthepcteetaleeete p isessethise esea ehseSibNetep cjeete esea ehes asewelleasecthe e esea eheseienieatesesituatceewhe eeis laekecfeieiestableeineaseasewelleaselaekecfeapp cp iateeeaeeiegefc e sueheineasteFc eexaopleeieeSibNetep cjeete esea eheIesttuteecfeBalteeStuniesetcgethe ewitheVeestpilseHighe teeheclcgyepa ke eecgeizeseltlln tge major pro lem vn otg countrvea va tge amall num er of vdeaa andn to an eien laruer eotentn of tge potental gvug-urowtg vdeaa . (IesttuteecfeBalteeStuniessVeetspilseHighe TeeheclcgyePa kse2011). Iteoeaesethatesclutceeshculneiop cieo aa aetceeaeneaocuetecfeieiestableeineas seleetceeaenep ciisiceecfesuppc tetcesueheineaseieeallestages Suppc tecfefasteg cwtheeete p isesebyep ciiniegeeeeessa yeeeabliegeecenitcest
LEGISLATIVE RECOMMENDATIONS
May 25, 2012
Int oduction
Speeieeeatu eeaeneskewene etu esecfefasteg cwtheeete p iseselioitsegcie eoeetepcssibilityetceni eetlye pa teipateeietcefueniegecf sueheeete p isesteIesteansepa teipatceecfeieetu eefueneisesuggestentee Gcie eoeetseaseaeeexaopleecfeIs aelseeaeeuseeitsefuensetceaa aeteglcbaleieetu eefuensteHcweie etcesueeeene scoeeecenitcese ega niegelegaleaenetaxesysteoehaieetcebeeoette Theepclieies theegcie eoeeteeoplcyetceeeecu ageeieetu eeeapitaleaenetheeeet ep eeeu ialeaetiityetakeetwce fc osoeceeeisetceeesu eethatetheeeececoieeeeii ceoeeteiseecenuetieetceeet ep eeeu ialeaetiityeaene ieetu eeeapitaleieiestoeeteaenetheeseecenethateiseni eeteieiestoeetseieep iiateeeettesteIeec ne etcebccste neielcpoeetecfefasteg cwiegeieeciatieeecopaeieseecc nieateneaetceeceeallef ceteliees iseeeeessa yte Ccc nieateneaetceseshculneieelunee p ciiniegeeeeessa yef aoewc k:enabling ecenitcesseieiestablee cppc tueitesee eatceesuppc teaeneieetu eeeapitalesuppc tebaseneceeieiestableecppc tueitesee eatent Le ee epcietsetce esea ehenceeebyeCh istaee_euseheiggeoeetceiegethatethatepclieyoake seeeenetcebee sioultaeecuslyeaetieeceeseie alef cetste(Le ee se2001). Aeec niegetceLe ee eIfepclieyoake seaeteieelieea e oaeee enistc tceseoayeceeu . Thiseoayeleaieeeet ep eeeu seieewc seesituatceethaeebefc eepclieiese applien. Fc eexaoplesetheegcie eoeetesubsinisiegesta t-upseiseexpeetenetceiee easeep ctsefc e eet ep eeeu seaeneieetu eeeapitalists. Hcweie s uelessesupplyecfeineaseiseiee easiegseoc eeecopaeiesewille beeehasiegeafe etheesaoeeineasteThusseieetu esewillenep essep ctseaeneatetheeeenecfetheenayeoakeeoa kete lesseaa aetieefc eieetu eeeapitalists. Multeatcealeieetu eeeapitalisteecopaeiesewilleectespeenetoeeanjustegetcespeeieeeatcealelegislatcete Theyea eelcckiegefc e eany-oaneeglcballyeaeeeptenelegislatcee elatenetcetheeecopaeyebuilniegseliquinatcee aeneecet aetuale elatceshipebetweeeeieetu eeeapitalisteaeneeet ep eeeu ste Oe en sclutceeiseniiineneietcefcllcwiegeeategc ieso Eesu iegef aoewc keecenitces; Aeeele atc eaa aetce - suppc tep cg aoefc eineaeineeteatceeaeneeceie siceeietcehighepcteetale ecopaeiesebyeaa aetegeleaniegeaeeele atc eecopaeieseaenesuppc tegeaeeele atceeaetiites Veetu eeCapitaleIenust ye eiitalizatcee- suppc tep cg aoefc eglobally connected Veetu eeCapitale aa aetce Suooa yelesscesecfegcie eoeeteiete ieetceebaseneceeLe ee eBculeia necfeB ckeeeD eaose(Le ee se2001) shculnebeetakeeeietceaeecuetoe C eateeeet ep eeeu ialeeeii ceoeet Wc kewitheaeaneoiase esea ehebase
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Financing model and legislatie ecommendatons Neenetcelisteeetceoa ketsenietates Fielnecfen eaosenaege ;ecie -eegieee iegep cg aos Dealeexteesiielyewitheauent-prvncvpal p cbleo
May 25, 2012
Ueiie saleteoptatceetcesha eetheewealth Matehiegefuenseocsteapp cp iateeway
Aicinep cg aosethatea eetccesoallec etccebig
Iesttutcealizeeea efuleeialuatcesecfep cg aos.
Solutions elated to f amewo k conditions

Fcllcwiegesclutces withe espeetieep cbleosea e ce ent olutons eaton of sophistcated demand whe e possiale Ha monizaton of eeui ements whe e necessa y Help to access Ma kets and Inte natonalizaton Talent at acton iia imp oiements in tole ancey esidence pe mission in EE fo educated wo kfo ce P oiision to access management skills Implementaton of Delawa e type of pa tne ship Implementaton of P efe ed ha es in comme cial law fo Limited Liaaility ompanies P oiision of ow th ough tax status fo ientu e capital pa tne ships Implementaton of Flexicu ity p inciples Policies fo imp oiement of English P omoton of success sto ies ccess to New Technologies and Innoiaton Policy of aecoming extension of the ma ket Thec yecfenis uptieeieeciatceep enietsethateieec ne etcesueeeenefc eoa keteeet aetsetheyeshculnebaseethei e eet yeceenis uptieeieeciatceeeithe ef coelcw-ecstec ef coeecopettceetceece-ecesuoptceteIeec ne etce pu sueesuehest ategyeecopaeyeshculnefceuseceeeieheeuenese ienebyeexistegeoa keteleane steIfeeet yeise successfuls ecopaeiesehaieetcebeeableetcequieklye aopeupetheesealeteThateoeaesethatefc eeieheetcebee sigeieaetesizeeof oa ketehaieetcebeehugeeecopa iegewithencoesteeoa ketsecfeLatiiaeaeneEstceiateIeec ne e tcecie ecoeeecest aietsecfesizeecfelcealeoa keteLatiiaeaeneEstceiaeshculnebeecoeeexteesiceecfebigge e oa ketsteMa keteba ie seshculnebeeineeteneaene eociensebeeauseesueheba ie sea eesyooet ies meaning any ba ie setceeet yeietcetheencoesteeoa ketea eeba ie setceleaieencoesteeoa kette Ma keteisetccesoallealscefc ep ctctypiegteDeielcpoeetecfesueeessfuleeete p iseewitheea cwefceusecee speeieeteeheclcgyep cnuetec eoa keteeieheeiseiopcssibleeifeecteecesine iegeiooeniateegciegecutsineethee ncoesteeoa ketsteG cwthecfesalessefc eexaopleseaeeuallyeg cwiegebye20%ewillebeeiopcssibleetcesustaieeife fceusiegeceepu elyencoesteeoa ketsteTheeoa keteexteesiceeshculnebeep ic ityecfetheepclieiest dd esses p oalem Soalleoa ket
Shc tageecfetaleetseaenewelleenueatene huoaeeeapital Legalest uetu eseaenelegislatceeeecte suppc tieefc ep cieeesclutceseiee ieetu eeeapitaleienust y
Limitenewc kfc eeeocbility LioitenekecwlengeecfeEeglish Laekecfeaobitcesse elateneialueseaene mindsets Shc tageecfekeyeeeabliegeteeheclcgies
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Financing model and legislatie ecommendatons Sophisticated demand, anticipated elsewhe e
May 25, 2012
One cfefeweaniaetages c ecppc tueitesecfesoalleoa ketesteosef coeNasheequilib iuo thec y. Nashe equilib iuoeeaeebeeexp esseneaseavtuaton wgere eiert plater vn a market elveiea tgat ge or age va makvnu tge eat poaav le cgovcea and tgat eiert otger plater va dovnu tge aame. Eeuvlv rvum vn a market lenda ata vlvtt to tge platera eopectatonan ialvdatea tgevr cgovcean and revnforcea tgevr egaivoura. (Chak aic tse 2004). Soalle eoa ketssewithefewepa teipaetsehaieelesseliekageseaenelesse eiefc eeoeetecfebehaiicu teIte shculnebeeeasie etceeceiieeeeplaye setceehaegeeapp caeh ieesueheoa ketethaeeieela geeceeteThateleansetce pcssibilityefc esoalleoa ketetcelceallyeiet cnueeeaeteipateneoa keteneoaeneof glcbaleoa ket befc ee eie yceeeelseences. Aeec niegetceceeecfe epc tseThiseiseiopc taetefc e oseseekiegetceanaptethei ep cnuetse aenese iieesetcetelcealeeeenste37%ecfeexeeutiesepcllenefc ethee epc teeiteetheesizeecfetheelcealeoa keteaseae keyefaetc seseecenecelyetcetheeaiailabilityecfetaleet (NESTA;BVCAse2001). Mc eeiopc taetethaeetheequaettyecfeneoaeneisetheescphisteatceecfeneoaenteThiseisewhaten iiese [ecopettieeessssesayseD eLienqiisteiee esea eheabcutebusieesseieeubatc senceeebyeTheeEececoiste IetelligeeeeeUeitte gva doeant vmplt tgat onlt wealtgt conaumera drvie vnnoiatonn far from vtt ao-called fruual vnnoiatonn for eoamplen va avmvlarlt drvien t tge leiel of aopgvatcaton of tge marketa vn wgvcg vt emeruea. (TheeEececoisteIetelligeeeeeUeiteLioitense2011). TheepheecoeeaecfeNckiaeieeFielaenewase pcssibleepa tlyethaeksetcea teiallyee eatenescphisteateneneoaenefc eocbileeneiieeseietcetheeec thecfe Seaenieaiiaeeecuet ieste Aeec niegetceTheeEececoisteIetelligeeeeeUeiteecteselome cluateran aucg aa araelan gaie aucceeded vn apvte of tge a aence of a avunvcant local marketn aa rma are forced to tgvnk ulo allt from tge outaet. But from an R& perapectien tge relatie aopgvatcaton of local demand va more vmportant tgan tge euanttt (Thee EececoisteIetelligeeeeeUeiteLioitense2011). EstceiaeaeneLatiiaeeaeepu sueest ategyecfee eategeaeteipateneneoaensefueneiteifeeeeessa yeaeneallcwefc e localeecopaeiesetceecopeteeaenee eateeteeheclcgiesseeapaeiteseaeneecopeteeeeetcese ieesueheneoaente Sueh neoaeneisethateiteshculnefceuseceeteeheclcgyeieteesiieeelnste Fc eexaopleeLatiiaeaeneEstceiaeeaeeexplcitetheetgvrd vnduatrval reioluton as it iseeallenebyeTheeEececoistte LatiiaeaeneEstceiaehaieeie yehigheecopute elite aeyeaocegesceietyteE-se iieesea eewinesp eaneaenenatae eetwc ksea eeceeecfetheebesteieetheewc lnteWc lneeececoyeaeneteeheclcgyegceseieeni eetceecfeglcbalehype speeialisatceeeea ing to atomvzaton cfetheejcbseth cugheexteesiieeuseecfeICTteTcebeeetef coesuehe neielcpoeeteweehaieetceneielcpeecopeteeeiesecfetheeoaeageoeeteaenelcgistesecfesuehejcbsseiesteanecfe beecoiegenigitalesweat-spctecfetheewc lnec eaetualedoera cfetheejcbtePa tecfesuehenigitalisatcee eliesecee teeheclcgieseaene escu eesewhiehea eeseesitieetceeececoiesecfesealesesueheaseelcuneecoputegse neielcpoeetecfe3Dep ietegeeteteSueheteeheclcgieseaseAoazceeMeehaeiealeTu kseAoazceeSiopleeStc agee Se iieeeand othe sea eeie yeseesitieetcetheesealeeaeneshculneectebeeecesine eneaseieiestoeetecppc tueitye ieeLatiiaec eEstceiateIesteans applieatceecfetheseeteeheclcgiessese iieesseplatc osetceeie ynayelifeep cbleose shculnebe p ioa yeecopeteeeeetceneielcpte Fc eexaopleeLatiiaeaen Estceiaeieec ne etcesuppc teneielcpoeetecfesueheecopeteeeesemay ehaegee p ceu eoeete equi eoeetsefc ee-se iieesebye equi iegeeie yeeewee-se iieeetceuseeelcuneecoputegese iieee cfeleaniegeecopaeiesecfetheewc lnelikeeAoazceseiseGcG inseRaekSpaeeec eGccglet Gcie eoeeteeaeeeegageease scphisteatenebuye ecfescoeecfetheep cnuetst Hcweie seiteiseiopc taetetceeesu ee igc cuseecopettceeiee suehep ceu eoeetep ceenu est tt action of talent Aeec niegetceTheeEececoisteIetelligeeeeeUeite epc teceeCluste eneielcpoeetelvnuaporea cluater aucceaa va laruelt owvnu to vta lonu-term eorta to deielop tge eualvtt of vta workforce. A related focua agould e on encourauvnu tge vnward mvuraton of talent from around tge world. Atractnu a atar name vn a uvien eld can be a crucval cataltat. (TheeEececoisteIetelligeeeeeUeiteLioitense2011). The eea ee3 scu eesecfetaleetso Page 34
Financing model and legislatie ecommendatons Existegepccl Taleetsecfelcealec igieeab can Fc eigeetaleetst
May 25, 2012
Dueetceg aiityseocbilityeaeneecsocpclitaeeeatu eecfetheetaleetseallescu eesecfetaleetseshculnebeeexplcitente Theetaskefc eexistegepcclecfetaleetseisekeepiegetheoebyep ciiniegeeeeessa yeeeii ceoeetefc eneielcpoeette Hcweie seecenitcesefc ekeepiegeexistegetaleetsea eeexaetlyetheesaoeeasefc eaa aetceecfeeewecees. Neeessa yeeceeeet atceec etppiegepcieteoayeectebee eaehenecelyebyeiescu eiegte Oeeecfepcssibleeoeasu eseis tceaa aeteoc eetaleetef coecutsineeEUeiseehaeging theepclieyecfeissuaeeeecfeEUe esineeeyepe oitsteSueheissuaeeeeshculnebeeoc eefceuseneceetheetaleeteaa aetceethaeeceesizeeof ieiestoeeteieeaeLatiia- egiste eneecopaeyteTheeehaegeeshculnebeetwcfclno P ioa yeissuaeeeecfeEUe esineeeyepe oitseshculnebeefc eseieetstsseR&Depe sceeelewithePhDeneg eeefc e wc kiegeieeecuet yeissuiegepe oitteIteshculnealsc allcwefc esuehepe sceeeletceestablisheecopaeyeaenetce beecoeeieiestc ; Second issuaeeeecfeEUe esineeeyepe oitseshculnebeefceusenecelyeceeecesine ableeieiestoeetseietce _eyeEeabliegeTeeheclcgieseiesteanecfeieiestoeeteieegeee alt TcnayeLatiiaeaeneEstceiaefaeesep cbleoecfelaekecfeSoa teMceeyeectelaekecfeeaeeiegeieequaettatiee exp essiceteAseaesuggestceefc efu the e esea ehsetheequestceecfeEU-oeobe shipeaenelcealelegislatcee iopaeteceefc eigeeeapitaleieiestoeeteieeLatiiaeeecopaeieseeaeebeeecesine en. Tole aeeeecfesceietyeiseiitalepa tecfeaa aetegetaleetsteNGOsewc kiegewithetcle aeeeeissueseieesceietyeshculne beesuppc teneieebigge eneg eeteAsewelleaseoulteultu aleattunesehaieetcebeetaughteatesehcclte Exaopleecfesepa ateetypeecfetcle aeeeec eattuneeehaegeeisegiieeebyeSiegapc eteIeec ne etceiop cieepubliee seetc etcle aeeeeshculnebeeiop cienoef eewheeliegeeete taieoeetse ieeluniegeoassiieebeaehsinee aiese thaten aweBcheoiaeetypesef coeallecie eEu cpeseespeeiallyeSeaenieaiiaeshculnebeeeeecu agenteFoavtiua FestialeieeSalaeg iiaeisegccneexaoplesehcweie eoc eesuppc tieeaetiitesef coegcie eoeetetceeeecu agee aenep ciineesuppc tieeeeii ceoeete(seeu itysesafetysepublieet aespc tseaeneanie tsieg)eshculnefcllcwt Aeeessetcepublieeief ast uetu eseespeeiallyeieesuooe efc esuehetypeecfeeete taieoeetseshculnebeep ciinente Aecthe epcssibilityefc egcie eoeeteisetceanie tseeLatiiaeaenepa teula lyeRigaeasecpeeeeityewithetcle aete pecpleteFc eexaopleegcie eoeeteeculneanie tseeglcballyeaenep ciineeeeeessa yesuppc teto Baltc Frvde pa anee(aeeualegayeaenelesbiaesepa aneeieeRiga)eaenesioila eaetiiteseiesteanecfee eategecbstaelesetceitt In sueheaewayeBalteeP ineef coepclitealeliabilityeeaeebeeeceie teneietceeececoieeassetefc etheebeeetecfe society. T aespc teaen connections Aeeessetcebiggesteeeet esecfeieeciatceeshculnebeeiop cienteSubsiniziegeaenesuppc tegecfeni eeteightsetce biggesteeeet esecfeteeheclcgyeaeneieeciatcesesueheaseSae-F aeeisecseNeweEc kseLcenceec eSiegapc eeshculne beeecesine ente Legal st uctu es Le ee eoeetcesethee esea ehewhiehefcuenethateialuatceseassigeenetcetheeecopaeieseieeecuet iesehise ieiestc ef ieenlyeaenebeae ecpe ategelegalesysteoea eehighe t (Le ee se2001) Fc eexaoplesefc eigeeieiestc se willeectespeenetoeenealiegewitheecuet yespeeieelegaleissueseifetheeta geteoa keteiseectecfetheesizeecfeChiease iesteaneieiestc ewilleocieetcetheeecuet yewhe eesheeiseecofc tableewitheexistegelegislatceteScoeelegale equi eoeetseeaeebeeaa ibutenetcesc-eallenehygieee faetc ssewhiehea eecfee itealeiopc taeeeetcefullebefc ee bungetege escu eeseietceni eeteieiestc eaa aetceeaetiitest
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May 25, 2012
Theeocsteiopc taete equi eoeetselegalesysteoe equi eoeetssewhiehehaieep cieee eec neieeUeiteneStatese aeneelsewhe esea eo P efe enesha esefc ealletypesecfeieetu es Delawa eepa tee shipse cweth cugh taxestatusefc eeeweieetu esewitheieetu eeeapital Eeetieeecu teeefc eeoeet Eeetieelitgatceep ceenu et Theseelegale equi eoeetsea eeectefulllenetcnayesceneielcpiegeaeneeefc eiegeeeeessa yeehaegeseshculnebee stestepecfeaeyeeexteieiestc eaa aetceeaetiityt Flexicu ity imp oiing wo kfo ce moaility Iopleoeetatceecf Daeishejcbelegislatce wculn allcwefc eeoplcye setce eeaenehi eeeoplcyeeseceeshc te ecteeteThisewculnebeebigeehaegeeaenewould g eatlyeiop cieeabilityecfeecopaeiesetcequieklye espcenetce oa keteehaegesteItewculnebeeespeeiallyeiopc taetetcehigheg cwthepcteetaleieetu essebeeauseeaeec niegetce E-Ccobieatc eocstecfeineasewillen aoateallyeehaegeeni eetceeatetheepathecfeneielcpoeetecfetheeecopaeyt Imp oie English language skills and use Tcehaieeaeeessetcebiggestseocsteeeetieeaeneocbileepcclecfetalents Eeglishespeakiegeseieeeeeand eegieee iegecommunity oc eeec ts shculnefcllcwef coetheegcie eoeet. Scoeecfethisehas tceiee easee iopc taeeeeaenekecwlengeecfeEeglishteOeeecfeleaniegeeececoistseVjaeeslaiseDcob cskiseeieeesuggestse 21 oakiegeEeglisheaseseecenestateelaeguage teMaenatc yeseecenelaeguageeieesehccleoayebeeapp cp iatee oeasu eeatesta tt At least Eeglisheshculnebee eecgeizeneaseneefaetceiete eatcealebusieesselaeguageecfethise egicete Iop cieoeeteieeEeglisheuseeaenekecwlengeewillegiieefcllcwiegebeeetso beae eieeciatceeabsc ptieeeapaeity beae eecenitcesefc eaa aetceecfebiggesteaeneocsteocbileetaleetepccl iop cieoeetecfencoesteetaleetepcclenueetceiee easeneocbility Lesseba ie setcenisseoieateeineaseaeneeccpe ateebetweeeeFielaenseEstceiaseLatiiaseLithuaeiaeaene Sweneee(SeaenieaiiaehaieeEeglisheaseseecenelaeguageeieebusieesse elatces)t Fc eexaopleebeeeeialewculnebee equi eoeetefc eteleiisicesetceshcweociieseaenep cg aoseieec igieale laeguagee(whieheiseocstlyeEeglish)ecelyesubttliegeieestateelaeguage. Suehepclieyeisesuccessfully wc kiegeiee Estonia.
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Financing model and legislatie ecommendatons Values and mindsets
May 25, 2012
EstceiaeeaeneLatiiaeeeete p isesebcth sta t-upsec eexistegeecopaeiesenceecteealwayseseteaobitcuseta getse ieete osecfethee apineg cwthebutetheye athe eiieweeet ep eeeu ialeaetiityeaseae lifeestyleteThe efo e success sto ies like kype o Weamedia should ae mo e p omoted as ole models and sta t-up ent ep eneu s should ae encou aged to focus f om the ie y st moment on g owth) Theesueeessestc iese shculnebeep cocteneieetheeeet e egicet
dditional suppo t measu es

Suppc tep cg aoseoeetceeneabcieeeaeebeeiesuueieetetcegiieeeeeessa yebccst aenehelpetceallep coisiege ineasteOelyetheebesteineasewillebeeseleetenebyeiete eatcealeieetu eeeapitalsehcweie eseecenete ecfeineasec e ineaseecteineetenebyeieetu eeeapitalistsesilleeaeehaieetheesaoeepcteetaleaseseleeteneceest Scoeeannitcealeieni eet suppc tep cg aosestlleeculnebeeie yehelpfulteBaseneceep iiateesuggestcesecfeM t Rene Tonnisson theesuppc tep cg aosebelcweshculnebeeecesine eneasepa tecfeoixt ccess to Manage ial kills Aecthe ehiene iegefaetc efc esoalleecuet yelikeeEstceiaeiseaeeessetce eleiaetebusieesseoaeageoeeteskillsteIee spiteecfehugeesupplyecfeycuegepe sceset aieeneieebusieesseoaeageoeetebyeueiie sitesetheeGazellesewculne eeenepecpleehaiiegesigeieaeteexpe ieeeesebctheieesueeesseseaenefailu esteThcseepecpleehcweie ea eesea eee as thei etctaleeuobe eiselioiteneaenetheyea eeal eanyeceeupienewitheexistegebusieesseseaenethei e cppc tueityeecstsea eeie yehighteThe efc eeitewculnebee atcealetcelcckefc eoaeage ialeskillsef coecthe e ecuet ieseaeneenesuitableepecpleecutsineecfeEstceiaeaeneLatiia;ehcweie epublieeiest uoeetsetceallcwethise p ceessetcetakeeplaeeeshculnebeefu the eneielcpeneaenealscep cocteneaocegsteEstceiaeeaeneLatiiaee gazellestee ccess to Ma kets and Inte nationalisation Publieeiest uoeetsehelpiegetheoetceaeeessecthe eoa ketsesueheaseeluste eieitatiesefceusiegecee iete eatcealisatceseexpc tesuppc teoeasu esseeteteshculnebeefu the eneielcpeneaeneoaneeaiailableebye nefaultetceallegazelleetypeecfeecopaeiest ccess to New Technology and Innoiation Ieespiteecfetheefaetethateoaeyegazellesea eeteeheclcgyesta t-upseaenehaieecfeeetheefcueniegeteaoewithegccne teeheclcgiealeecopeteeeesethee apineg cwtheoighte equi eeehaegesec eupg aniegecfeteeheclcgiealeplatc ose aeneeniegeeeweteeheclcgiealesclutcesteThe efc eeiest uoeetsecpeeieg upef coeceeehaenethee esea ehe iesttuteseaeneueiie sitesefc egazelleseaenef coeseecenehaeneiest uoeetsesueheaseEete p iseeEu cpeaee Netwc kecpeeiegeupetheeteeheclcgieseceeiete eatcealesealeeshculnebeefu the eneielcpeneaeneanaptenetce gazelleseeeenste Othe ewayehcwetceiop cieeaeeessetceteeheclcgyeaene esea eheiseiiaeCcopeteeeeeCeet esteCcopeteeeee Ceet eseaseecllabc atceeplatc oee eateseeecugheieeeetiesetceb iegetcgethe e oseaene esea ehe c gaeizatceseieec ne etceaehieieebeae eieeciatcee esultsteHcweie seecopeteeeeeeeet esealceeeann essiege oaielyetwceissuese R&Deieteesityeaeneeccpe atceeaeneeluste iegteIeec ne etcefaeilitateefaste ep cnuetiitye iop cieoeetseecopleoeeta yeoeasu esehaieetcebeetakeet
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FINANCING RECOMMENDATION OF NASCENT ENTREPRENEURS

May 25, 2012
Regional level accele ato

Rationale
Regicealeleieleaeeele atc ewithe stete eglcbaleaeeele atc epa teipatceeshculnesuppc telastegeehaegeeiee eet ep eeeu ialeeultu eeaenep ciineecwecfecppc tueitesetceieiestefc eieetu eeeapital ienust yteTheelastege ehaegeewculnebeeioageee eatceecfeLatiiaeaeneEstceiae egiceecfeieeciatceeaenefasteg cwiege ose suppc tenebyeeeeessa yeecenitceseaenese iieesteAeeele atceeifesuppc tenebyeexpe ieeeeneaniise sef coe USAeshculneleanetcebeae e esultseaenegccneexaoplet Regionaleleieleaeeele atc esuppc tep cg aoeineaeisetceancptebusieesseaeeele atc eineaetcethise egiceebye aa aetegeecopeteeeeeni eetlyef coeleaniegeUSA aeeele atc steGecg aphiealesituatce oayegiieelioitene aniaetageeasetheenistaeeeef coeUSA p ciinesecppc tueityetceaa aetescoeetaleetsefc ewhcoe elceatceetce USA wculnebeeaep cbleo c eba ie . Theeiete eatcealeplaye selikeeEeCcobieatc eaenecthe sehaieeeeeessa yeeaeeiale escu eesseecopeteeeeeaene t aeke eec netceaa aetetheebestetaleetsef coetheeBalteseaenewhcle egiceteCu eetlyeleaniegeUSeaeeele atc se a ee epc tegeceeaa aetegeeewetaleetseaeneineasef coeG eeeeseRussiaseSpaieeetet Fc besetcpeteeeUSAeaeeele atc elistseshcwethatescoeeaeeele atc ssepa teula lyeTeehSta s al eanyeisep eseete iee5eeiteseae cssetheeUeiteneStatesseanneD eaoIteVeetu eseeieeehaieep eseeeeeieefc eigeeecuet yeIs aelteIte seeosethateiteisecelyequestceecfetoeewheeescoeecfetheseeaeeele atc sewilleieec pc ateeietceNc theEu cpete BalteeStateseshculnetakeep e-eoptieeec tetceallceateesueheaetiityeieeeeet eecfeBalteeStatese LatiiateJciete ec tssewculneeesu eethateitewculnebeebeeeeialefc ealleBalteeCcuet iesteTheeth eateisethategiiiegesoalle egiceesizeeieete osecfeiehabitaetseaenesoallesizeecfencoesteeoa ketethe eeeaeebeecee c etwceplaeesewhe ee sueheaetiityeiseeceeeet atent F aoewc keecenitcesewillebeee itealefc eehcieeecfeallceatceecfeaetiityt Goal Theegcalecfesuppc tep cg aoeisetcesuppc te1etce2eaeeele atceefueniegeeyelessewitheateleaste50eineas:teaose fc esuppc teseleeteneaene40eieiestableecppc tueiteseasecutputte Ieeecc nieateneec tebye eiitalizatceecfeieetu eeeapitaleienust yetheseeineaseiseexpeetenetcebeesuppc tenebye lcealeieetu eeeapitalefuenssec ebyepa teipatceecfelcealeieetu eeeapitalefuenst Atetheeeenecfetheep cg aooeeLatiiaeshculnebeetheeplaeeewhe ee stebusieesseaeeele atceeaetiiteseieethee egiceeiselceatenteSueeessecfe steaetiityeshculnebeeeecughetce eiefc eeeeexteaetiitesebaseneceetheeoa kete p ieeiplest Expected esults Theeexpeetene esultsea eo
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May 25, 2012
RegicealeioageecfetheeLatiiaeaseteeheclcgyeaeneieeciatieeeaeeiegetcclsehubteAlsce egiceeshculne iop cieeioageease egicealeeeet eewhe eeallef aoewc keecenitcesea eep ciinenefc eieec pc ategefaste g cwiegseieeciatceeleneeet ep eeeu ialeaetiity; Du ieg 3 yea seafe eaeeele atcee cueneateleaste10 eeecu agiegsewc lnekecweesueeessestc iesselikee Skypeseeeecu agiegeeewegeee atceecfeeaseeeteeet ep eeeu sseaeneaa aetegeexpat iatesebaeketcehcoe; Wc kiegeoa ketefc eaeeele atc sefueniegep iiatelyeceeoa ketete osteIfelioitenestateesuppc tewillebee p ciinensetheeeie yeelea esueseteecenitceseshculnebeeieeplaeet Implementation Tctaleoaxefueneeeeessa yseestoatceoe500.000 EURefc eaetiityse500.000 EURefc eoatehiegefuenseife eeeessa yt Fcllcwiegeaetiiteseshculnebe pa tecfetheep cg aoeieec ne etcesueeeenetceaeteceealleeeeessa yeiete ieetcee nioeesiceso p epa iegef aoewc keecenitces aetieegcie eoeet ieiclieoeetseni eetlyeaenepe sceallyeapp caehiegeleaniegeeaoeseieeaeeele atc e busieessselikeeEeCcobieatc e(McetaieeVieweCalifc eia);eTeehSta se(5eeites)seD eaoIteVeetu ese (PhilanelphiaseNeweEc kseIs ael)seAegelPan (Fc besse2012) p epa iegesuppc tep cg aosewhiehehelpsefc eaa aetegeineassep ciiniegep eoisesseanie tsieg iee egice Vcuehe esuppc tep cg aoetcep ciineeeaeeialesuppc tefc eliiiegefc etheeteaosecfeeaseeeteeet ep eeeu s Taskseexpeetenetcebeenceeebyeaeeele atc eaenesuppc tenebyeseleetenese iieeeecopaeyec estateeageeeyo o o o o o Reiiewecfeeoaileapplieatces Ieiitatceecfeseleeteneteaosefc ep eseetatce Seleetce Aeeele atceeaeneaniisc y DEMOenayt
Fcllcweupeaeneeesu iegewhieheecenitceseshculnebeeiop cieneieec ne efc eoa ketetcewc kt

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F aoewc keecenitices Opeeeeallefc ep cpcsaleaenese iieee p ciine eseleetice

P epa aticeecfesitesep eoises Att aeticeecfep cjeetsseaetiiee egiceale anie tisiegecfeaeeele atc Seleeticeecfetheeecopaeiesseemail applieatice Ccopaeyeseleeticeseieiitaticeecfethee teams Aeeele aticeecfeseleeteneecopaeies DEMOenay
Figu e 10: Implementaton tmeline of accele aton suppo t)
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Financing model and legislatie ecommendatons F aoewc keecenitceseshculneieeluneeateleasto EUe esineeeyepe oitsenu iegeaeeele atceefc eteaosepassiegeseleetce
May 25, 2012
Gcie eoeeteVIP ep eseetatieeiisitsetceNc theAoe ieaetcehelpetceaa aetefc eigeeecopeteeee Chaegeeieelegislatceeieec ne etceanaptetcelegalest uetu eefc etheeieetu eefuensethatefc eigeeieiestc se wculnebeeecofc tableewithteSueheanaptceeshculneieeluneelioitenepa tee shipseocnelethateafe e Delawa eepa tee shipsethatea eestaena nep aeteeeieeUSeaenealscesetupecweth cughetaxestatusteIs aeli expe ieeeeesuggestseiteiseuelikelyefc etheep cg aoetcesueeeeneieeaa aetegefc eigeeieiestc seifesuehe featu esea eeecteanaptenebefc ehaent (_acse2007). Di eetegcie eoeeteieiclieoeeteshculneplayeaeeiest uoeetale cleeieeaa aetegetheebiggesteeaoesef coethee ienust yteLatiiadseasseteecweiseP ioeeMieiste eValniseDcob ciskissewhieheeaeebeeleaniegepe sceeni eetlye app caehiegetheeienust yeleane setceaa aetetheoetceLatiiateSueheapp caehewculnehaieetwcebeeetsoe(a)eite eaeebeeoaiee easceewhyewealthyeieniiinualsef coeie yeneielcpeneoa ketewculneecesine epa teipatceeiee sueheaetiity;e(b)eitewculneneocest ateegcie eoeets lcegete oeaenese icuseecooitoeett Expe ieeeeecfe esea eheauthc egiieseaeeexaopleecfehigheleielep cfessicealsep efe iegeieec pc ategeieeLatiiae only because of occasional ni eet ecooueieatceewitheseleetenecueialsef coeLatiiateSueheapp caeheise winelyeusenebyeSiegapc esewhieheisefaocusebyeeoplcyiegeieegcie eoeetest uetu eseIiyeLeagueeg anuatesse whcea eewc kiegeaseheanhuetegeageetsetceaa aetetaleetsetceSiegapc eebyeni eeteecooueieatceewithe selected ones. EstceiaeaeneLatiiaeasewellehaieecthe eeaoesekecweeieetheewc lneaenehaiiegepe scealeappeale beiegeableetceecooueieateeaeneaa aetep cfessicealst Ieec ne etceoaietaieeoa keteniseiplieeecelyeecstse elatenetcec gaeisiegetheeeieeteshculnebee eiobu senteThee oatehiegefuensefc eieiestc seieeaeeele atc eshculneecteexeeene50%teIeiestc senealtewitheaeecopaeieselikee D cpBcxseIestag aoeeaeectebeeaa aetenebyestateesubsiniesteTheyeoayebeeaa aetenebyeeeweoa kete cppc tueites c epe scealeappeal. Vcuehe esuppc tep cg aoeiseeeeessa yetcenealewitheaeyesu p isesewhieheeaeea iseef coetheeecstecfeliiiegeiee Latiiaseecstecfelegalese iieesteSubsinyebaseneceeoa ketep ieeecfe eetegeaep eoise aeneecstecfeliiiegeaene a cueneeapitaleshculnebeeeecughetceeesu eethateteaoseseleetenebyeaeeele atc ewillebeeableetceeceeeet atee ceetheetaskeneliie iegetheep cnuetec ese iieeteAlsceVcuehe esysteoeshculnebeeableetceecie epa tecfetheeecstse cfelegalese iieeecfeieec pc atceecfeecopaeyte Alte eatieewculnebeetceoakeeaeecpeeeeallecfep cpcsalsefc ep ciisiceese iieeesueheaso P eoisesefc ehcusieg P ciisiceecfefccn P eoises fc eaeeele atceese iiees Legalese iiee. Theeupsineecfesuehealte eatieeisesioplieityteIteiseie yeeasyetceseleeteceeeecopaeyep ciiniegealletheese iieese aeneiteiseeasyetcefcllcweupetheeuseecfesuehese ie steHcweie esueheapp caehehasehugeencwesineteFi stseite elioieateseecopettceeaenepcssibilityecfeteaosetceget theebesteaeneocsteapp cp iateese iieeteSeecenlyseiteise agaiestetheephilcscphyecfeNc theAoe ieaeebusieessecfef eeeoa ketteThee easceseoeetceenea eeeecughetce ejeetetheealte eatieeaenetcegcefc etheeVcuehe esysteoewhiehekeepseecopettceeietaetseaenenceseectewc ke agaiesteoa ketefc eest Othe conside ations In c ne etcep ciineeeeii ceoeetefc efuenieg ieetheeeexte cueneisesueeessfulesta t-upsep cg aoefc e iitalizatceecfeieetu eeeapitaleienust yeieethee egiceeiseeeeessa yteP cpcsalefc esuehep cg aoenese ibene belcwte Page 40
May 25, 2012
Ueiitalization of entu e apital indust y

Rationale Due tcetheeoappiegep cbleoenese ibeneabcie expe ieeeeneieetu eeeapitalistsewithep cieeet aeke eec neisecfe shc tesupply ieealleBalteeStateste Pasteexpe ieeeeecfeSiegapc eegiieseexaopleecfeaesiopleeni eetesubsinye ec tsea eeecte ealisiegteAfe egcie eoeetecfeSiegapc eet ienenie eeteni eetesubsinyeec tseieethee1110se theye ealisenethatewhileeeuoe cuseieetu ee osefc oeneiee espceseetceeaeeialeieeeetiesteMcsteteenenetce fceuseceeieiestegeieeoatu eeecopaeiesetheeceesewhiehewe eeal eanyep ctableseaiciniegeieiestoeeteiee awe sta t-upsteAfe ethiseexpe ieeeeeSiegapc eefceuseneceee eategefaicu ableeeet ep eeeu ialeelioatet Aeec niegeLe ee e o atempt to uvld a local entrepreneurval aector and ienture capvtal vnduatrt wvtgout atronu ulo al tea va a recvpe for an vrreleiant and unaucceaaful aector. et vn mant vnatancean vnternatonal partcvpaton va actielt dvacouraued.e(Le ee se2001). Ieescoeeeasesseglcbaleeceeeetceseeaeea iieewithcute iete ieetceteFc eexaopleseSkypeegcteglcbaletesewithcutegcie eoeetepa teipatceteHcweie sesueheeieetse ceeu e elatielye a elyeaenseieec ne etcegeteeceie geeeeewithetheeEUeaie ageeleielecfeeececoieeneielcpoeete gcie eoeetehasetcepa teipateeaeneiete ieeet GccneexaopleeiseIs aeliegcie eoeeteiete ieetceewheeeiteieeJueee1112eestablisheneEczoaeVeetu eeCapitale LtnteItewase100eoilliceefuenewhcllyecweenebyetheepublieeseetc t TheesituatceeieeIs aeleateaetoeewaseie ye sioila etcetheeceeenese ibenetcetheeSibNete esea eheso Ccuet yehanewellet aieen-eegieee sewc kiegeceep coisiegeteeheclcgieseaenetheseewculn-beeecopaeye fcuene sewe eesuspieicusecfeieetu eeieiestc s The eewe eecelyeceeecpe ategewheeeieetu eefueneaetie Natceehanefailu eecfeea lie eec tsetcep cocteehigheteeheclcgyeeet ep eeeu ship Ccopaeies p efe enetce elyeceebaekenateefc eeaeeiegt TheekeyegcalecfeEczoaewasetceb iegefc eigeeieetu eeeapitalistsetceIs aeletcgethe ewithethei eieiestoeete expe tseeaeneeetwc kecfeecetaetsteThategcaleiseie yesioila etcetheecee setetcethee step cpcsalteTheeIs aele pclieyeoake sesawefc eige expe tseeasekeyetcecie ecoiegetheep cbleot LatiiaeaeneEstceiaehaieeie yesioila esituatceteReiitalisatceecfeieetu eeeapitaleienust yeshculneieicliee builniegeglcbaletesewitheexpe tsecutsine lcealeoa ket. Latiiaestllehas ERDFeoceeyeaiailableefc e iskeeapitalefuensteUecueialeiefc oatceeceetheeMaye2012eisethate the eea ee21eoilliceeaiailableefc eeaeeialeiest uoeetesuppc tteSueheaocuetecfefueniegeshculnebeeeecughe tce eiitalizeeieetu eeeapitaleienust ysebyeb iegiegeieeglcbaleexpe tseefcllcwiegeIs aelieexpe ieeeet Goal Gcaleisetceb iegeglcbaleexpe tseetcgethe ewithetheeoatehiegefuenecfe50eoilliceeieeeaeeiegelceale ecopaeiesteSpeeialefceuseshculnebeenealtethcugheeaeeiegeecopaeiesewhieheiseexpeetene esultecfe aeeele atceeieitatiete Giieeepastet aeke eec nesuehegcalehasetcebee eaehenenu iegeieeyea steTheeie yewineesp eanecfe esultsecfe iete eatcealeexpe ieeeeenceseecteallcwetcefc eeastetheeaocuetecfeecopaeieseceetheetoeewheeesuehe ieetu eefuenehaieetcebeeneliie enetcetheeeete p isesseieiestent Expected esults Expeetene esultesioila etcetheeexaopleecfeIs aeleisethatelcealepa tee sewillebee ee uitenebyetheeieetu ee eapitalistseaenetheyewillebeeableetcespieeceaeneestablishenethei ecwee ossewhiehewillebeeeeeaenesainelate e byetheeglcbaleieiestc steHcweie ecbligatceetce ee uitelcealepa tee seshculneectebeeieeluneneietcetheenesigee cfetheep cbleot Page 41
Financing model and legislatie ecommendatons Implementation Tctaleoaxefueneeeeessa yseestoatceoe30.000.000 EURefc eoatehiegefuenst Theeiopleoeetatceecfesuehefcuenehaieetcebaseeceefcllcwiegep ieeipleso Theefueneitselfeisewhcllyecweenebyetheegcie eoeet; Seleetceecfepa teipaetso o
May 25, 2012
Asegeee alep ieeipleetheefueneshculnehaieeoeehaeisosewhieheaetielyenisecu ageeLatiiaee aeneEstceiaeeeaeeie sef coepa teipategeieetheep cg ao;
Pa teipatceeieesuehep cg aoeshculnebeelioitenecelyetcetheeieetu eefuensewitho o AssetseUene eMaeageoeeteoc e thaeeUS$100 million witheocstecfeieiestoeetseieeUSAe aeneU_e P cieee eec necfep ctabilityenu iegetheelaste10 yea s; Focus ceehigh-teehehigh- iskeieiestoeets; Focus ceeseeneaenesta t-upeieiestment Annitcealep ic ityeshculnebeegiieeetcetheefuensepa teipategeieeeaeeiegesta t-upseecoiege cutef coebusieesseaeeele atc s Veetu eeeapitalehasetcehaieeae ightetcebuyebaeketheegcie eoeetestakeewithiee steth eee yea sefc etheeieitaleialueepluseiete este ateecfe7%; Repc tegep ceenu eseshculnebeelioitenecelyetcethee eec nsecfep ciisiceecfeoatehiegefuense tcetheeeaeeeneieetu es; F aoewc keecenitceseshculnebeep ciineneaseieetheeieitatieecfeaeeele atc steLegale st uetu eeshculnebeeanaptenetcetheestaena nep aeteeseieeUeiteneStatest
o o o o
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Latiiasep ic eapp caehewasebaseneceeni eetesubsiniesetcestoulateeieeciatceeieiestoeeteietceeewe ieeciatieeteeheclcgieseaeneneielcpiegeeewep cnuetsteLatiiaeisestllelaggiegebehieneEUeieeeececoiee neielcpoeete ega niegep cnuetiityeaeneieeciatcesenespiteetheeaaeoptsetceiitalizeetheeeececoyetcwa nse ieeciatceeaeneecopettieeesst Cu eetef aoewc kseaenethec iesecfeieeciatceeasewelleaseexistegeexpe ieeeeecfesueeessfuleecuet iese suggestethatef aoewc keecenitceseoayebeeoc eeiopc taetethaeeni eetesubsiniesteAteleastescoeef aoewc ke ecenitcesea ee equi eneieec ne efc eni eetesubsiniesetcesta tetceneliie e esultst Wc lneexpe ieeeeesuggestsethatescoeeieeciatceseeaeebeeiopleoeetenewithcuteR&Dec :aenethee gcie eoeetesuppc tsehcweie eececeeewillesueeeenewithcuteoa ketefc eesteThateleansetcetheeeeeessityefc e fast-g cwiegseieeciatiesespeeializeneeete p isesetce eaeheglcbaleoa keteaenetestethei eineaseieep aeteete Eececoiesecfesecpesest ategyepu suenebyeoaeyeecopaeieseieeBalteseiseecteiiableeieetcnayeecopettiee eeii ceoeetteSuehest ategyeshculnebee eplaeenebyeeececoiesecfesealeewhieheieeluneselea eiegse speeializatceeetete Scoeecfeieeciatceethec ieselikeenis uptieeieeciatceethec yesuggestethateocstesueeessfulenis uptiee ieeciatcesea eethcseewhe eeecopaeyetcckeieeciatceeaseoa ketegeehalleegeeiesteanecfeteeheieale ehalleegeteThateleansetce eiiewepclieieseceesubsinisiegeR&D. Insteads ite equi esetcelcckeelcse eateoa kete fc eeseaenetcehelpetheoewc keoc eeeueieetlyewhe eetheyea eeweakec eieeueieett Oeeecfetheeleaniegeoa ketefc eesepushiegeecopaeiesefc eieeciatceeieetheewc lneiseieetu eeeapitalte P cfessicealeieetu eeeapitalefueneeaeebeae eseleetetheeocstep coisiegeineasteIteseeosethategccnenesigeene ieetu eeeapitaleaa aetceep cg aoetcgethe ewitheaeeele atceeaetiitesetcep ciineenealecweeculnebeeoc ee easceableewayecfeaetceetcesclieetheep essiegep cbleoecfeeececoieeneielcpoeetteSueheapp caeheallcwse alscebyenesigeetceaicinenealiegewitheexteesiieeauenct-prvncvpal p cbleo;ebyenesigee equi eseannitceality;e sclieseoappiegep cbleoeaeneannsewc lnebusieesseietelligeeeeetcelcealebusieesseeeii ceoeetteeIete eatceale ieiestc eisealso ceeecfetheebesteehaeeelsetcequieklyeaeeessewc lneoa kett P aeteale eecooeenatceeisetceiopleoeetetwcestateesuppc tep cg aosebefc eeeie ythiegeelseo Business aeeele atcesebyeaa aetegewc ln-elassebusieesseaeeele atc etcecpe ateeieeRigaep ciiniege suppc tefc e steaeeele atceeeieeteiee2013 C eateewhcllyestateecweeneieetu eefuenewithetheegcaletc aa aetefc eigeeieetu eeeapitalefuenseaene expe tseteSuehefueneshculnee eateeeeeessa yeecenitcesefc eglcbaleieetu eeeapitaleienust yetcetakeeceiee BalteeStatest Bctheaetiitesetcgethe eeaeebeewayetcep ciineeeeeessa yeexpe tseetceeceie teineaseietceieetu eseaene p ciiniegeeeeessa yeeaeeiegetcetheeieetu esefc eneielcpoeetteTheeaeeele atceeiseexpeetenealscetce eceeeet ateeaeneaa aetetaleetseaeneineasetceLatiiaeaseeeweeeet eecfeieeciatieeneielcpoeett Iteiseexpeetenethatelcealeieetu eeeapitaleieetheep ceessewillebeesubecet aetenebyefc eigeeceeeaeneieethatewaye willeaequi eeeeeessa yeecopeteeeeteLate eiteiseexpeetenethatelcealeieetu eeeapitalewillebeeableetcewc keceeitse cweeieetheesaoeequalityeaseglcbalecee aseexpe ieeeeecfeIs aeleshcwst Theseeaetiiteseaene esultegesueeessfule ieetu eseshculnehelpetceehaegeeexistegeialueseaeneoiensetseieesceietyeaenep ciineeexaopleecfeaobitcuse ta getseieete osecfethee apineg cwtht P ic etcelaueehiegeaeeele atceeaeneieetu eeeapitaleaetiiteseiteiseiopc taetetcenealewithef aoewc ke ecenitcesewhiehea eeeeeessa yetcefullefc esueeessfulecpe atceecfeoeetceeneaetiitest Suehef aoewc ke ecenitcesea eelegalest uetu esseecu teeefc eeoeetseocbileewc kfc eeelegislatceseaeneoa ketee eatceefc e eeweoa ketsewitheneoaeneaeteipatenelate eelsewhe eteLegalest uetu eseieeluneo p efe en sha esseDelawa ee typeecfepa tee shipep ieeiplessecweth cughetaxestatusefc eieetu eeeapital pa tee shipsteWithcuteeesu iege theseeecenitcesetcebeefulllenethe eeisehighelikelihccn cfefailu eecfeaeeele atceeaeneieetu eeeapitaleaetiityt Page 43
CONCLUSIONS
May 25, 2012
May 25, 2012
Taleetepccleiseceeecfeocstee itealeissuesefc eieeciatieeeapaeityefc eecuet iesteScoeeecenitcesea ee espeeiallyeiopc taetefc etaleeteaa aetceo Oppc tueityetcespeeialize Lifeequalityseseeu ityt Tcle aeeeecfesceiety. Ieep aetealete osetheesuggestcesea eo Chaegeeiooig atceeaeneEUepe oitseissuaeeeepclieyetcwa nseenueatceeaeneexpe tseeawayef coe oceeta yeieiestoeeteiee ealeestate. Requi ieget aeslatceecfefc eigeeTVeociieseaeneieec igiealelaeguageseallcwiegecelyetcesubttleetheoe Chaegiegegcie eoeeteattuneetceBalteeP ine aenesioila eeieetssebyep coctegeaeneanie tsiegeiteiseae pa tecfeeultu aleeieetseieeRigateIteshculnebeebigestepetcwa neioageecfetcle aetesceietyewhieheiseoustefc e aa aetegetaleets P cocteesueh eieetseasePcsitiuseieeSalaeg iiaeaseieteg alepa tecfeLatiiaeeeultu alelife Thee equi eoeetecfeEu cpeaeeCcooissiceefc eEu cpeaeeUeiceestatesseieeluniegeLatiia and Estonia to iopleoeeteRegicealeIeeciatieeSoa teSpeeialisatceeSt ategyeiseeexteehalleegeefc cu eecuet ies. Vital and wc kiegeieetu eeeapitaleienust yeshculnebeehelpfulefc eeet ep eeeu ialenisecie yetcegaieeocoeetuoeaene helpeineetfyewhe eenisteetiee egicealeecopeteeeieseeaeebeebuilteaeneexisteg and eeeessa y assetsse kecwlengeseskillseaene escu eest Latiiaeeeensetceoakeegccnequality aeneienepeeneete esea eheceeR&Deief ast uetu eeiee esea eheiesttutcese aeneieep iiateeseetc se esea eheeapaeiteseaenethei eutlizatceseasewelleasepcssibilityetceiop cieeutlisatceecfe esea eheeapaeiteseieefaicu ecfeni eete esea eheaetiitesseoieioisiegeuseecfeeapaeitesefc ebu eaue atee pu pcses.
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Fc ayseDtseDaiinsePteAtse&eHallseBte(2001)telmart lpecvalvaaton ge Concept. B uxellesoee_ecwlengeefc e G cwtheeExpe teG cupteRet ieieneMaye5se2012sef coehapo::eeteu cpateu:ieiest-inesea eh:pnf:ncwelcanSee:kfgSpclieySb iefSec1tpnf Fc ayseDtseGcnna nseJtseBelna aieseXteGtseLaenabascseMtseMeCaeesePtseMc gaese_tseteteteMulate cseFte(2011)teR l 3 Guvde (draf). B uxellesoeEu cpeaeeCcooissiceteRet ieieneMaye5se2012 Fc beste(2012seMaye5)te op ltartup ncu atora And Acceleratora: Com vnator opa Wvtg $..8 Bvllvon n ValueteRet ieieneMaye5se2012sef coeFc beseMagazieeoe hapo::wwwtfc besteco:sites:tcoicge ce:2012:04:30:tcp-teeh-ieeubatc s-as- aeken-by-fc besy-ecobieatc -tcps-with-7-billion-in-ialue: Gilbe tseCtse&eBcwe seJteLte(200seMay)teDis uptieeChaegeoeWheeeT yiegeHa ne eIsePa tecfetheeP cbleote Hariard Buavneaa Reivew. Gcu iilleseJteTte(2006seJuee)teEage eSelle seaeneStceyeBuye steUene staeniegetheePsyehclcgyecfeNew-P cnuete AdcptceteHariard Buavneaa Reivew. HaeseeseMteTtse&eBi kieshawseJte(2007seJuee)teTheeIeeciatceeValueeChaieteHariard Buavneaa Reivew. Heene sceseRteMtse&eCla kse_teBte(1110)teA ehiteetu aleIeeciatceoeTheeReecegu atceecfeExistegeP cnuete TeeheclcgiesteAdmvnvatratie lcvence uarterltseppte1-30. HippelseEteVte(2005)te emocratzvnu nnoiaton. Caob ingeoeMITeP esst HcbsbawoseEteJte(1168)te nduatrt and Empvre. Ha ocenswc thoePeeguieeBcckst IBRD:Wc lneBaekte(2010)te nnoiaton Folvct. A Guvde for eielopvnu Countrvea. TheeIete eatcealeBaekefc e Reecest uetceeaeneDeielcpoeete:eTheeWc lneBaekteWashiegtceseDCoeTheeIete eatcealeBaekefc e Reecest uetceeaeneDeielcpoeete:eTheeWc lneBaekt INNO-Pa tee iegeFc uoe(IPF)te(2011)teHvug Fotental ltart-Upa (HFlU) aupporta from Enterprvae reland. DublieteRet ieieneMaye05se2012sef coehapo::wwwtp cieec-eu cpeteu:pa tee ieg-fc uo IesttuteecfeBalteeStuniessVeetspilseHigheTeeheclcgyePa kte(2011)teFre-feaav vlvtt reaearcg of Buavneaa Anuela etwork (BA ). Ta tuseVeetspilsoeSibNett _acseJte(2007)te nnoiaton aton: How Amervca a Loavnu ta nnoiaton Eduen Wgt t Materan and Wgat We Can o to Get t Back. NeweEc koeF eeeP esst Le ee seJte(2001)teBouleiard of Broken reama: Wgt Fu lvc Eorta to Booat Entrepreneuragvp and Venture Capvtal Haie Tavled--and Wgat to o A out t. P ieeetceoeP ieeeetceeUeiie sityeP esst LleeMciecte(2011)teTeaav vlvtt atudt on ecgnolout ncu atora and ew ttpea of Buavneaa ncu atora. Rigaoe SoalleIeeciatieeBusieesseSuppc teNetwc ke:eSIBeeete(EUe31318)t LuukkceeeseTte(2010)te ge eectieneaa of tge Tvnnvag pre-aeed and aeed polvct acgemea to promote nnoiatie Hvug-Growtg Entrepreneurval Venturea. ELIN_EINOELMNeTUT_IMUSLAITOSteHelsiekiooe TheeResea eheIesttuteecfetheeFieeisheEeonomy. MalceeseTteWtseLaubaehe seRteJtse&eJchesseTte(2011seJuly)teTheeBigeIneaoeTheeAgeecfeHype speeializatcete Hariard Buavneaa Reivew. Meeasccse_tse&eMe ikllseJte(2011)teR&DeieebccoeaenebustoEiineeeeef coetheeWc lneBaekeFIeaeeialeC isise Su ieyte3rd European Conference on Corporate R& and nnoiaton Ct CtR -25 . Seiillet Page 46
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OECD. (2002). Traacat Manual. Fropoaed atandard practce for aurieta on reaearcg and eopervmental deielopment. Pa isoeOECDePublieatceseSe iieet OECDeaeneEu cstatte(2005)tetalo Manual: Guvdelvnea for collectnu and vnterpretnu vnnoiaton data (3 ne ent)tePa isoeOECDePublishiegt O gaeizatceefc eEececoieeCc-cpe atceeaeneDeielcpoeette(2012seMaye5)teAieraue annual goura actuallt worked per workerteRet ieieneMaye5se2012sef coeOECDtStatExt aetsoe hapo::statstceentc g:IenextaspxoDatasetCcneYANHRS Pfee seJtse&eSalaeeikseGteR. (2003). ge Eoternal Control of truanvzatona: A Reaource ependence Ferapectie. Staefc noeStaefc neUeiie sityeP esst Pc te seMteEtse&eSte eseSte(2001)te atonal nnoiatie Capacvtt. Ret ieienef coe hapo::wwwtisethbstenu:IeeciS1211tpnf Rcseebe gseDte(2002)teVeetu eeCapitaleLioitenePa tee shipsoeAeStunyeieeF eencoecfeCcet aetteColum va Buavneaa Law Reivew(2). Silie steieseDtseDeCa lcseNtse&eSlceuoseMte(2007)te naourcvnu nnoiaton: How to Acgveie Compettie Eocellence Uavnu R Z. BceaeRatceoeAue baehepublieatcest SoalleIeeciatieeBusieesseP coctceeNetwc kte(2010)teReaearcg report on earlt ataue nancval aupplt. Rigaoe SoalleIeeciatieeBusieesseP coctceeNetwc kt TeeeeseDteJte(1186)teP ctegef coeteeheclcgiealeieeciatceoeIoplieatcesefc eieteg atces ecllabc atcese lieeesiegeaenepublieepclieyteReaearcg polvctse285-305. TeeeeseDteJte(2006)teReeetceseceeeP ctegef coeIeeciatceeteReaearcg Folvctse1131-1146. TheeEececoistte(2006seOete6)teMe itce aeyeaeneitseniseceteetste ge Economvat. TheeEececoisteIntelligence Unit Limited. (2011). Toatervnu vnnoiaton-led cluatera. A reivew of leadvnu ulo al practcea. TheeEececoistt VinzeoeeIeeciatceeaeneEet ep eeeu shipeeeet ete(2011)teTeaav vlvtt atudt on pre-aeed funda. Valoie aoe SoalleIeeciatieeBusieesseSuppc teNetwc ke:eSIBeeete(EUe31318)t VinzeoeeIeeciatceeaeneEet ep eeeu shipeCeet ete(2012)teTeaav vlvtt atudt on proof of concept funda. Desk esea ehseSoalleIeeciatieeBusieesseSuppc teNetwc ke:eSIBeeete(EUe31318)seValoie at WatkiesseAtse&eAgapitciaseNte(2001). Creatnu a 2 at Centurt atonal nnoiaton ltatem for a 2 at Centurt Lativan Economt. Wc lneEececoieeFc uote(2011)te ge Glo al Compettieneaa Report 25 Fc uot -25 2. GeeeiaoeWc lneEececoiee
Page 47
TABLE OF FIGURES AND TABLES

May 25, 2012
Figu ee1oeEstoatenelabcu eecstepe ehcu eieetheebusieesseeececoyse2011e(EUR)teScu eeoe(Eu cstatse 2012). 6 Figu ee2eHcweIeeciatceeCcet ibutesetceG cwthoeAeCcopa isceecfeGhaeaeaenethee_c eaeeRepubliete Scu eee(IBRD:Wc lneBaekse2010)t 8 Figu ee4oeTheeNatcealeEeii ceoeetefc eIeeciatceteScu eeoeNatcealeIeeciatieeCapaeitye(2001). MiehaeleEtePc te eaeneSecaeSte et 15 Figu ee3eGcie eoeeteasega neee teScu eeoe(IBRD:Wc lneBaekse2010) 17
Figu ee5oeNeweoa ketenis uptcesteScu eee(Ch isteeseeseJchescese&eHc ese2008)t19 Figu ee6oeF aoewc kefc eneeiegeieeciatcee(Heene scee&eCla kse1110)t 21
Figu ee7eP cbleoseieeeaeeiegeehaieteScu eeoeP eseetatceebyeVesaeVaehaeeee(DGeEete p iseeaene Ienust y)eatetheeEASEeSeoiea eieeLjubljaeaecee11t5t08te(EURADAse2011) 26 Figu ee8oeSpaeeeieewhieheJuopSta tecpe atesteScu eeoEURADAte(EURADAse2011) 27 Figu ee1oRetu esecfeUeiteneStateseVeetu eefuensef coeieeeptceetceMa ehe31s2008teScu eeoe(Le ee se 2009). 31 Figu ee10oeIopleoeetatceetoelieeecfeaeeele atceesuppc tt 39 Tablee1teR&Deieteesitye2001eaeneR&Deieteesitye2020e(ta get)eseleeteneecuet iesteScu eee(Eu cpeaee Ccooisicese2011)eaene(Wc lneEececoieeFc uose2011)t 10
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Financing Model and Legislative Recommendations

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Financing model and legislatiee eecooeenatces

6/4/2012 Revision 1 RigaseMaye2012

Financing model and legislatie ecommendatons

May 25, 2012

Financing model and legislatie ecommendatons o Measu ese elatenetcelifeequality.

May 25, 2012

Financing model and legislatie ecommendatons

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EXECUTIVE SUMMARY ............................................................................................................................. 1

Financing model and legislatie ecommendatons

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Financing model and legislatie ecommendatons

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hapo::wwwtesfcenitli: accessed 2012.05.05

Financing model and legislatie ecommendatons

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hapo::snwteebteu cpateu:quiekiiewtncoSERIESS_EEY111tESAtAtLVtNt1000tUNLACOt0000tECSEtDtNtI 100%easecfe2005

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Althcughetheelisteabcieeiseectealletheepcssibilitesehcwetceiop cieep cnuetiityseiteieeluneseocsteeoplcyene st ategiesetcencescteAlleoeetceeneaetiitesenepeenseceeieeciatce.

Financing model and legislatie ecommendatons

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Figu e 2 How Innoiaton ont iautes to

TctaleFaetc eP cnuetiitye(authc eecte)t

Financing model and legislatie ecommendatons

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Die eeeeeiseshcweeaseEUelesseecopa eneecuet yease%ecfeEUe

Financing model and legislatie ecommendatons

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Ma ket size and specialization

Financing model and legislatie ecommendatons

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Ma ket expe ience

Institutions and ed tape

Financing model and legislatie ecommendatons

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CONCEPTS OF INNOVATION AND FINANCING INNOVATIVE ENTERPRISES

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National innovative capacity

Financing model and legislatie ecommendatons

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Financing model and legislatie ecommendatons

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Financing model and legislatie ecommendatons Facto conditions

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oie nment ole in suppo ting innovation

Figu e 4 oie nment as ga dene ) ou ce: IBUD/Wo ld Banky 202R

Financing model and legislatie ecommendatons

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Dis uptiie innovation

Financing model and legislatie ecommendatons

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ogi nol ech of t gress ce pro Pa tion s

Different measure of performance

Performance That customers Can Utilize and absorb

Entrants nearly allways win

Figu e 5: New ma ket dis uptons) ou ce

h istenseny Johnsony & Ho ny 228R.

Financing model and legislatie ecommendatons

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Hende son- la k concept

Financing model and legislatie ecommendatons

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Core Concepts Reinforced Overturned