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Technological innovation in companies supposes benefits in terms of improving competitiveness both for the companies themselves and for the country as a whole. However the innovation process is not a path without obstacles, and financing is one such obstacle, as shown in most surveys. A recent survey carried out by the Tomillo Centre for Economic Studies (CEET) for the Ministry of Science and Technology highlights the fact that 77% of innovating companies feel that lack of finance is a very important or quite important barrier to innovation. In terms of the type of finance available, the data is rather different. While risk capital seems to be an instrument that is not often used by Spanish companies (only 21% of innovating companies have been financed by risk capital), public finance tends to be common. 51% of innovating companies have used public finance for their innovation projects. It should also be pointed out that the central government and the autonomous regions lead the way in the European Union amongst administrations providing finance. On the other hand, it should be noted that data from the OECD indicate that, in recent years, direct aid from the public sector has been decreasing in relative terms, a trend which Spain has also followed, in fact more markedly than other countries. In 1992, in the EU, 11.9% of business spending on R&D was financed by the public sector, with 11.4% in Spain. However, by 1999 these figures had dropped to 9.3% in the EU and 6.6% in Spain. More recent data is provided by R&D Statistics. In 2000 the National Statistics Institute (INE) basic indicators calculated that 7.23% of internal costs on R&D in Spanish companies came from the public sector.

We shall now provide a brief description of the different forms of assistance, according to source, available to Spanish companies wishing to offset the costs of introducing technological improvements into their activities. The table below also provides a summary.

Public assistance from the EU

European Union VI R&D Framework Programme

This Programme is the main instrument for scientific and technological policy in the EU and defines priorities with respect to research, technological development and demonstration. The VI Framework Programme will come into effect from 2003-2006.

The VI Framework Programme invites participation from public and private companies, universities, public or private research centres or any type of legal body established in any of the Member or Associate States of the EU. Calls for proposals are published every three months in the Official Journal of the European Union (OJEU). To participate in the Programme, partners are required from at least two other countries. Information about the VI Framework Programme is available from the Research Results Transfer Office (OTRI) and the Managing Bodies of the Community R&D Programmes (Ministries and certain public bodies with responsibility for R&D, such as the Centre for Industrial Technological Development (CDTI).

Structural funds

The structural funds, whose objective is to contribute to reducing the existing differences in the levels of development in the various regions, also have a section aimed at innovation. Specifically, the Knowledge Society (Innovation, R&D, Information Society) is one of the priorities for development to be reached by the structural funds.

Of the four current structural funds, the most significant in relation to innovation is the European Regional Development Fund (ERDF). Financial aid is given in the form of non-refundable subsidies.

State public assistance

From among the various forms of public assistance provided by the state, the most significant are those granted by the Ministry of Science and Technology (MCYT) and by the Centre for Industrial Technological Development (CDTI).

PROFIT (2004-2007)

The Programme for Promoting Technical Research (PROFIT) is the MCYT's main instrument for providing aid and subsidies. Its aim is to stimulate companies and other organisations to develop research and technological development activities.

The PROFIT is aimed at companies, SMEs, groups or associations of companies, non-profit private research and development centres, technology centres, public research bodies (including those that are attached to or are dependent on government bodies and non-profit universities) and state-owned enterprises.

Financial assistance for projects may consist of subsidies, refundable advances and combinations of subsidy and refundable advance.

España.es (2004-2005)

An action programme with two main aims: firstly, to promote public demand for connection to new technologies and, secondly, to improve the infrastructure, content and services available to encourage such connections.

These two aims, together with the need to connect small and medium-sized businesses (SMEs) with new technologies, are the programme's three main guiding principles:

1. To reinforce the supply of content and services on offer in order to improve demand.

2. To improve accessibility in a broad sense, by offering points for public access and making an attempt to provide training and communicate the advantages of the Information Society.

3. To "connect" SMEs, by increasing their business via the Internet, so that they can access Information Society services, with the subsequent improvements in productivity and economic growth that this should bring.

Other MCYT assistance

As well as PROFIT, the MCYT has other forms of assistance, subsidies and awards aimed at various economic agencies: researchers, technicians, companies and organisations, etc. Amongst these are the grants of assistance and subsidies in the National R&D and innovation Plan. Their terms can be consulted on the Ministry's web page.

Assistance from the CDTI

The Centre for Industrial Technological Development (CDTI) is an organisation which depends on the Ministry of Science and Technology (MCYT), whose objective is to promote innovation and technological development in Spanish companies. It organises:

·          Finance for R&D projects

·          Promotion of international technology transfer.

·          Support for Spanish participation in international R&D programmes.

FINANCE FOR R&D PROJECTS

The CDTI assesses and finances R&D projects drawn up by companies, with assistance which ranges from 40 to 150 million pesetas (for fixed assets, staff, materials and other project costs). Finance provided by the CDTI comes from its own resources and from the European Regional Development Fund (ERDF).

Three types of project are eligible for CDTI finance: technological development projects, technological innovation projects and approved industrial research projects.

The form of finance provided by the CDTI consists of credits at zero interest and with a long depreciation period (a minimum of five years) that cover up to 60% of the project's total budget.

As well as direct CDTI finance, the Technological Innovation Line of the Official Credit Institute (ICO) and the CDTI also exist. This line consists of long-term loans (five and seven years) and a favourable interest rate for business projects of a technological nature that cover up to 70% of the budget, with a maximum sum of 1.5 million euros (approx. 250 million pesetas) per beneficiary per year.

INTERNATIONAL TECHNOLOGY TRANSFER

The CDTI supports the development of joint projects between Spanish and foreign companies, promotes technologies developed by Spanish companies in other countries, and undertakes to disseminate new technologies for incorporation into Spanish companies. The CDTI uses these instruments to carry out its activities: Technology Promotion Projects, the Network of delegates abroad, the Iberoeka projects and the Innovation and SME programme, which is part of the EU's V Framework Programme.

MANAGING INTERNATIONAL PROGRAMMES

The CDTI is responsible for managing and promoting Spanish involvement in various international technological cooperation programmes: the European Space Agency (ESA), the European Union's R&D Framework Programme, Eureka, Iberoeka, the European Laboratory for Particle Physics (ELPP), European Synchrotron (ESRF), Hispasat and Eumetsat.

NEOTEC INITIATIVE

The MCYT, via the CDTI, has promoted the creation of this initiative with a view to supporting the creation and consolidation of new, technology-based companies. The instruments vary according to the phase in which the technology-based company finds itself, but there are basically two types: consultancy and finance.

National Innovation Company (ENISA)

ENISA is a company formed by public capital attached to the Treasury Department, which offers SMEs a finance formula that consists of participative loans. ENISA makes a line of finance available for technological projects undertaken by SMEs with a view to supporting business projects in technology-based companies.

SME Consolidation and Competitiveness Plan (PLAN PYME)

The SME Policy General Board, together with the autonomous regions, has set up the Plan Pyme, which will be in force from 2001-2006. Through this Plan, assistance is granted in the form of direct subsidies for financing actions undertaken by SMEs and Intermediary Bodies (specific organisations that provide business support services to SMEs). The objective of this assistance is to bring the Information Society closer to the Intermediary Bodies, and to facilitate the incorporation of the most innovative business techniques by them and by SMEs.

Spanish Institute for External Trade (ICEX)

It is the objective of the Spanish Institute for External Trade (ICEX) to provide assistance to Spanish companies in order to promote their exports and growth abroad. The ICEX has a range of instruments to promote Spanish technology abroad: the Expotecnia (a Spanish exhibition shown in other countries which brings together companies from the equipment and technology industry), the sector plans (a set of coordinated actions to promote a sector, which were created by the ICEX and the sector associations) and the Project Total Assistance Fund (FAIP) (a programme aimed at Spanish consultancies and engineering companies and industrial project contractors to promote their involvement in international tenders).

Other sources of finance

Risk capital

This is a form of finance used mainly by SMEs. Generally speaking, the risk capital organisation takes a temporary minority shareholding in certain companies which are not quoted on the stock exchange and which need finance. The investing company will draw future benefits from the profits taken from liquidating the holding after the company's value has risen. Normally, the companies that use this type of finance tend to be companies in the "seed" phase (in the process of being set up), in the "start-up" phase (recently created) or in a  growth phase.

Assistance from autonomous regions

The autonomous regions, like central government, have their own scientific and technological policies. Thus regional governments have drawn up  regional R&D and innovation Plans through which they seek to achieve various objectives, such as promoting and driving innovation in their regions, improving the competitiveness of their companies, and encouraging the transfer of results between research centres and companies, etc. Similarly, the autonomous regions also offer numerous types of assistance in the form of subsidies, credits, etc. to finance innovation-related activities, such as the implementation of R&D projects, transferring research results or creating technology-based companies. For further information, refer to the section Regional assistance for R&D and innovation in tecno-logica