How can corruption in the national system of awarding non-refundable financial grants for innovative business ventures undermine the development of innovation and science?
In what way can corruption in the national system of granting non-refundable financial subsidies from the public finance system for innovative business ventures be an important element in the decline of the credibility of key public institutions supporting cooperation between business and science, a decline in the level of innovation in the economy, a decline in the effectiveness of the implementation of innovative solutions and patents created during research work, a weakening of the development of national science?
An important factor for the effective economic development of the country is the development of innovativeness, including the creation of new, innovative technologies and their implementation and development in business applications. Important factors for the activation of innovation and entrepreneurship in the economy include efficiently and reliably functioning systems of financial subsidies la innovative startups and companies and enterprises implementing and developing new, innovative technologies in business applications. However, when this system is flawed, does not function efficiently and reliably, is permeated with corruption and the extortion of funds from the state's public finance system, then the process of activating innovation and entrepreneurship in the economy does not work. This is particularly relevant in a paradise where investment banking is underdeveloped and, as a result, the development of innovative startups is, outside of grants from the national public finance system and outside of financial grants from the European Union, financed mainly on the basis of family loans, equity financing provided by business angels, specialised investment funds and crowdfunding available on the Internet. These are therefore not great opportunities to finance the development of innovative startups in a situation where commercial banks avoid lending to this type of entity. Commercial banks are unlikely to grant loans to finance the development of an innovative startup because they assess the credit risk as high for this type of business venture or they are also unable to precisely quantify the credit risk for startups that plan to implement and develop new, innovative technologies. In such a situation, a system of non-repayable financial subsidies coming from the public finance system and distributed systemically to such ventures can be of great help in activating the development of innovation and entrepreneurship. In order for this kind of system of distributing grants for innovative projects to work efficiently and effectively, the process of distributing funds under this kind of non-returnable grant schemes should be conducted in the form of competitions, during which genuinely innovative technological solutions should be selected. The competitions should be carried out taking into account the real expertise in innovation, reliable processes of analysis and evaluation of the level of innovation and determination of the level of usefulness, possibilities of practical applications, improvement of the effectiveness of economic processes, improvement of the level of profitability, obtaining specific positive effects of applying new innovations in a company or enterprise, etc. It is also necessary to carry out a number of market studies and analysis of the demand in specific markets, in specific spheres of economic activity, the demand from specific types of economic entities and/or citizens for products and services that will be created by the implementation and development in business of specific new innovative technologies. However, when corruption, including embezzlement of public money, occurs in this system of distributing financial subsidies then the whole system does not work effectively. When corruption occurs in public institutions distributing financial subsidies then the process of activating innovation and entrepreneurship does not work effectively. In view of the above, corruption in the national system of awarding financial grants from European Union funds for innovative business ventures may be an important element of a decrease in the credibility of key public institutions supporting cooperation between business and science, a decrease in the level of innovation in the economy, a decrease in the effectiveness of implementation of innovative solutions and patents created during research work, a weakening of the development of national science. In the country in which I operate, further cases of this type of corruption have been detected, which has been taking place in the National Centre for Research and Development, i.e. in the institution that distributes European Union financial grants to innovative start-ups and companies and enterprises implementing and developing new, innovative technologies in business applications.
In view of the above, I address the following question to the esteemed community of scientists and researchers:
In what way can corruption in the national system of granting non-refundable financial subsidies from the public finance system for innovative business ventures be an important element in the decline of the credibility of key public institutions supporting cooperation between business and science, a decline in the level of innovation in the economy, a decline in the effectiveness of the implementation of innovative solutions and patents created during research work, a weakening of the development of national science?
What do you think about this topic?
What is your opinion on this subject?
Please respond,
I invite you all to discuss,
Thank you very much,
Best regards,
Dariusz Prokopowicz
https://www.investopedia.com/articles/investing/012215/how-corruption-affects-emerging-economies.asp
Corruption will allow weak (or zombie) firms to have cheaper access to capital and loans, even when such firms contribute little or nothing to economic growth. On the other hand, corruption can prevent innovative firms from accessing cheap financing. As a result, innovative firms will have limited access to finance and will not contribute much to economic growth
Corruption can have a significant impact on the development of innovation and entrepreneurship, and can ultimately limit a country's economic development opportunities. Here are some ways in which corruption can undermine innovation and entrepreneurship:
1.Lack of investment: Corruption often diverts resources away from productive uses and towards personal gain. This can result in a lack of investment in research and development, which is crucial for innovation and entrepreneurship.
2.Limited competition: Corruption can create an uneven playing field where only a select few have access to business opportunities, contracts, and licenses. This can limit competition and stifle innovation.
3.Weak institutions: Corruption undermines the rule of law and weakens institutions such as the judiciary and law enforcement agencies. This can create an environment where intellectual property rights are not protected, contracts are not enforced, and entrepreneurs do not feel secure in their business activities.
4. Lack of trust: Corruption erodes trust in government and institutions, making it more difficult for entrepreneurs to do business. This can lead to a lack of confidence in the market, a reluctance to invest, and a lack of motivation to innovate.
5.Brain drain: Corruption can also lead to a "brain drain" where talented entrepreneurs and innovators leave the country in search of a more stable and fair business environment.
All of these factors can limit the development of innovation and entrepreneurship, which are critical drivers of economic growth and development. By promoting transparency, accountability, and a level playing field, countries can create an environment that fosters innovation and entrepreneurship, leading to greater economic opportunities for all.