1. Regional Governance and Private-Public Partnerships
Vittorio Modena

2. The triple (quadruple?) helix
Researchers seeking scientific results
Enterprises seeking expansion
Policy makers seeking sustainable economic development
Private investors seeking profit
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007

3. V.Modena - Regions for economic change. Bruxelles, March 7th, 2007
How to make it work?
What laws, what schemes, what organizations, what networks will make these different interests converge and make the region blossom?
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007

4. Multiregional governance - a European challenge
Many projects are very suitable for the multi-regional level:
-What legal/political problems accompany them?
-What are the best forms of governance for such projects?
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007

5. Public-Private Partnership, Rationale and Framework
The private sector seems to be more efficient in managing projects
The public sector funding is needed to overcome market failures
Incentives
to attract private capital and management and overcome
market failures
Restrictions
to direct the investment into publicly
desirable projects
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007

6. V.Modena - Regions for economic change. Bruxelles, March 7th, 2007
PPP - Guidelines
Incentives
Should be:
- Strong enough to address market failures
-Not enough to make anything worth while
e.g - Grants, loans, tax allowances
(national, regional and local)
Restrictions
Should be:
-Strong enough to direct the investment into publicly desirable projects
-Not strong enough to make projects
commercially impossible
e.g. - to invest only in certain geographic areas, to invest only in certain sectors, to run precompetitive research projects
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007
V.Modena - Inforegio conference Brussels March 7th, 2007

7. V.Modena - Regions for economic change. Bruxelles, March 7th, 2007
PPP - Dangers
-Forgetting the regional/local comparative advantage
-Bureaucracy
-Public agenda interfering with commercial decisions
-Private investment departing from the original mission
Wasting public moneys
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007

8. PPP example - the ESTER project in Latvia (I)
A public fund of funds was set up with 16m. It has coinvested (at 50%) into three seed funds with private entities.
-Both the private investors and the managements companies received strong incentives.
-Funds are restricted to invest into small firms and up to a certain amount per firm (seed capital).
-Management is strictly private with public sector only allowed to monitor
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007

9. PPP example - the ESTER project in Latvia (II)
Public Fund of Funds
50%
Private investors
50%
Start-up fund
(private)
Company
Company
Company
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007

10. V.Modena - Regions for economic change. Bruxelles, March 7th, 2007
Thank you !
Tel
Web
ESTER Project
V.Modena - Regions for economic change. Bruxelles, March 7th, 2007