Are R&D Loans Relevant for Supporting Industrial R&D: The Case of TTGV in Turkey. MSc. Serkan B ÜRKEN METU, STPS, PhD. Candidate Technology Development Foundation of Turkey ( TTGV ). ABSTRACT.
Are R&D Loans Relevant for Supporting Industrial R&D: The Case of TTGV in Turkey
MSc. Serkan BÜRKEN
METU, STPS, PhD. Candidate
Technology Development Foundation of Turkey ( TTGV )
2) Supporting and Funding Mechanisms
1) Those supports might lower the private cost of R&D and turn an unprofitable project into a profitable one.
2) It may speed up an ongoing project or upgrade research facilities in such a way that further R&D projects can be afforded with lesser costs.
3) Firms also gain know-how and learning capabilities as much as performing R&D activities.
Mutual guarantee consortiums (Ughetto, E. and Vezzulli, A. (2008))
Limited capability of banks in sustaining investments in innovation (Myers and Majluf (1984))
1) To increase the competitiveness of Turkey in international markets changing continuously,
2) To provide the mechanisms of seed capital required for the improvement of Turkish industrial infrastructure.
In this support scheme, R&D loans (soft loans) are provided for industrial R&D projects.
Upper limit: 1 million USD
50 % of the project budget is proposed
Project Duration: Max. 24 months
Back payment: Payback is started one year later after the project has been completed. The granted amount is repaid in three years period with seven instalments departed by six months. (in US dollars, hence there is an exchange rate risk)
Resource: Undersecretariat of Foreign Trade (25% from TTGV’s own resource)
3 % of the project budget as a service fee
No. of applicant projects
About 40 % of projects are supported.
No. of supported projects
(In last four years, there have been an significant increase)
Amount. of contracted funds
(in million US dollars)
Cumulatively, about 300 million USD for 891 projects
R&D volume of 600 million USD has been created until now.
Amount. of provided funds
(in million US dollars)
Cumulatively, almost 200 million USD for the supported projects.
(In last four years, there have been an significant increase as well)
No. of employment distribution Age distribution of supported firms
This support mechanism of TTGV is highly directed to the financial requirements of SMEs which have financial constraints and needs liquidity in its operations.
1) The number of applicants was doubled
2) The share of SMEs was remained about 80 percent.
3) The repayment ratio was above 80 percent for the first part (between 1993-2000) and 94 percent for the second part (between 1999-2005) and “the repayment ratio is extremely high for such a risky activity”.
4) “The great majority of firms were pleased that the quality of evaluation and monitoring improved over time”.
5) “TTGV’s R&D support program has a substantial additionality effect, especially on SMEs”.
6) There is an “acceleration effect” because an average firm increases its own R&D spending if it receives any R&D support”