1. World Bank Forum: the Knowledge Economy in Accession Countries (Paris, 22nd February)
Stephen Wright
Projects Directorate to

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

3. LOANS AND BORROWINGS (1996-2000)
1997
1998
1999
2000 30 25 20 15 10 5 35
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 ( )
Pre-accession facility ( )
Mediterranean countries ( )
ACP countries ( )
South Africa ( )
Asia, Latin America ( )
Partner for economic development 24

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

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

7. 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:
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 35

8. THE EIB’S RESPONSE: INNOVATION 2000 INITIATIVE (« i2i »)
Human capital formation
Research and development
Information and Communications Technology networks
Development of SMEs and entrepreneurship
Audiovisual industry/diffusion of innovation
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. …HUMAN CAPITAL
New to the Bank – only since 1997 in EU and 1999 in Candidates
Education and health were “schools and hospitals, for employment”; now accepted in Bank as “human capital, for employability”
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… 39

11. …RESEARCH AND DEVELOPMENT
EIB cooperates with Commission (Busquin-Maystadt memorandum)
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
15 projects in last year, €2.4 b. approved
EIF for venture capital seed/start-up equity 39

12. …ICT NETWORKS 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 35

13. …SMEs AND ENTREPRENEURSHIP
SMEs do much innovation, but their access to finance is often inadequate (and Basel rules impact on commercial banks?)
« 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 42

14. …AUDIOVISUAL
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 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