World Bank Forum: the Knowledge Economy in Accession Countries (Paris, 22 nd February)

1. World Bank Forum: the Knowledge Economy in Accession Countries (Paris, 22nd February) Stephen Wright Projects Directorate E-mail to s.wright@eib.org; www.eib.org

2. Created by the Treaty of Rome in 1958 Shareholders: the Member States ofthe European Union (15… but rising) Subscribed capital: EUR 100 billion THE EIB The European Union’slong term financing institution 2

3. 35 30 25 20 15 10 5 0 1996 1997 1998 1999 2000 LOANS AND BORROWINGS (1996-2000) Loans: EUR 147 billion • Outside the EU • Within the EU Borrowings: EUR 128 billion • Non-Union currencies • Union currencies • EUR “AAA” borrower: non-profit loans 5

4. EXTERNAL LENDING MANDATES(since February 2000) Mio EUR • Central and Eastern European countries 8 680 (2000-2006) • Pre-accession facility 8 500 (2000-2003) • Mediterranean countries 6 425 (2000-2006) • ACP countries 3 328 (1996-2001) • South Africa 825 (2000-2006) • Asia, Latin America2 480 (2000-2006) Partner for economic development 24

5. Regional development European communicationsinfrastructure Natural and urban environment Energy International competitiveness ofEuropean industry and support for SMEs Human capital:education, health EIB PROJECT ELIGIBILITY Projects promoting Union objectives 11

6. Regional or central government Banks Municipalities Commercial companies Public-Private Partnerships Government agencies WHO CAN BORROW ? Anybody, as long as there is a good project and they have good credit! 40

7. Promoting the information society, R&D, innovation and competitiveness Investing in human capital and modernising the European social model Applying an appropriate macro-economic policy mix LISBON – THE PROCESS AND THE STRATEGY « The Union has today set itself a new strategic goal for the next decade: to become the most competitive and dynamic knowledge-based economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion » STRATEGY: 35

8. Human capital formation Development of SMEs and entrepreneurship Research and development Information and Communications Technology networks Audiovisual industry/diffusion of innovation THE EIB’S RESPONSE: INNOVATION 2000 INITIATIVE (« i2i ») Supporting Europe’s knowledge-based economy 19

9. WHAT i2i MEANS… It recognises that sustained growth can no longer be achieved by increasing physical investments alone. And that growth is spurred by development of human capital and by process and product innovation: i2i involves a shift of internal emphasis and a signal to our outside stakeholders (governments and borrowing clients) 2

10. Share of EIB turnover 2-3% p.a. till 2000, but 8.5% in 2001 and growing fast Mostly public sector, recent concentration on PPP eLearning and ICT in schools Projects in Czech R. (Masaryk University) and Poland (Lodz Infrastructure) but more under way in Slovenia, Poland, Romania, Latvia… Education and health were “schools and hospitals, for employment”; now accepted in Bank as “human capital, for employability” New to the Bank – only since 1997 in EU and 1999 in Candidates …HUMAN CAPITAL 39

11. Care over whether debt is the right instrument to finance R&D – ex post R&D is easy! EIB finance to ex ante commercial R&D, public research structures, science parks EIB cooperates with Commission (Busquin-Maystadt memorandum) 15 projects in last year, €2.4 b. approved EIF for venture capital seed/start-up equity …RESEARCH AND DEVELOPMENT 39

12. Key issues are access, competition and broadband technology In EU, access is no longer an issue. In Accession, fixed line access lower Incumbents (DSL) versus entrants (cable systems) – but these may be either/or choices UMTS licenses will make 3G mobile introduction problematic everywhere Bank’s role is supply of capital (€2.3 b. in 2001, 6% of turnover, doubling in 2002?) and catalytic effect on availability of other capital finance …ICT NETWORKS 35

13. « Global loans » are a major activity for the EIB – some may be risk-sharing EIB Group contains European Investment Fund: venture capital equity ("fund of funds") and guarantee instruments to financial credit institutions EIF support for high tech is of business angels, incubators, techno funds (biotech, internet convergence, content) and microcredit SMEs do much innovation, but their access to finance is often inadequate (and Basel rules impact on commercial banks?) …SMEs AND ENTREPRENEURSHIP 42

14. Working with Commission, EIB policy is to promote pan-European AV and strengthen stability of AV firms Foster the adaptation of the industry to new technology (digitalisation, digital networks): overlap with funding of ICT networks Encourage European content and European culture: financing of intangible investments …AUDIOVISUAL 5

15. EIB AND THE i2i PROGRAMME – SUMMARY 1) EIB is the biggest world IFI by turnover, the largest source of external capital for CEE, and the biggest single source of venture capital in Europe 2) i2i involves a shift of internal emphasis and a signal to outside stakeholders – i2i, as all our lending policies, applies in Candidates as in EU 3) EIB is not have an independent KE strategy for ourselves or for you, nor are we prescriptive to clients. We are not a prime mover for projects. We simply release client funding constraints, in support of all wider EU innovation policies 2