Innovation and finance are in a symbiotic and twin-track relationship: a well-functioning financial system spurs innovation by identifying and funding stimulating entrepreneurial activities which trigger economic growth. Innovations also open up profitable opportunities for the financial system. These mutual dynamics cause and need innovative adaptations in the financial system in order to better deal with the changing requirements of a knowledge-based economy. The volume comprises different contributions which focus on the central imperative of this evident connection between financial markets and innovation which, despite its importance, is only barely considered in academia, as well in practice so far.
The book is about the mutual interdependence of innovation processes and finance. This interdependent relationship is characterized by a high degree of complexity which stems, on the one hand, from the truly uncertain character of innovation and, on the other hand, from the different time scales in both domains. Whereas innovation processes are long-term and experimental, financial markets are interested in shortening time horizons in order to optimize financial investments. Economies which do not manage to align the two realms of their economic system are in danger of ending up in either financial bubbles or economic stagnation. The chapters of this book deal with different aspects of this complex interrelationship between innovation and finance, highlighting, for example the role of stock markets, venture capital and international financial transactions, as well as the historical co-development of the financial and industrial domains. Thus far, the communities in economics dealing with both issues are almost completely disconnected.
The book brings together economic research dealing with the interface between innovation and finance and highlights the importance of the Neo-Schumpeterian perspective. This topic is of particular interest in the current economic crisis affecting the Eurozone and its currency. Most of the policy instruments discussed and implemented so far are focused on short-run targets. This discussion of the relationship between innovation and finance suggests a long-run perspective to create new potentials for economic growth and a sustainable way out of the economic crisis.
Table of Contents
1. Introductory Remarks Andreas Pyka and Hans-Peter Burghof 2. Financial Bubbles, Crises, and the Role of Government in Unleashing Golden AgesCarlota Perez 3. Innovation, Financial Activities and the Future of the EU Pier Paolo Saviotti 4. Innovation and Economic Performance (Industrial and Financial): Recent Results and Questions for Future Research Pelin Demirel and Mariana Mazzucato 5. An Essay on the Emergence, Organization and Performance of Financial Markets: the case of the Alternative Investment Market Valérie Revest and Sandro Sapio 6. Financing Instruments to Combat the Crisis Ryszard Wilczyski 7. Automotive Dynamics in the Stockholm and Southern German Regional Economies – A Comparison Gunnar Eliasson 8. Innovation Policy, Innovation and Innovation Finance Co-Evolution: The Israeli Case and Some Implications Morris Teubal 9. Venture Capital in Canada Jorge Niosi
Andreas Pyka is Chair of Economics of Innovation at the University of Honenheim, Germany
Hans-Peter Burghof is Chair of the Banking and Finance Department at the University of Hohenheim, Germany