Improving the Efficient Use of the Government Budget Allocations for Financing Innovation Activities

Đuričin, Sonja (2018) Improving the Efficient Use of the Government Budget Allocations for Financing Innovation Activities. In: Digital transformation : new challenges and business opportunities. Silver and Smith Publishers, London, pp. 311-328. ISBN 978-1-9993029-4-8

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Abstract

The aim of the research is to improve the efficient use of the government budget allocations for financing innovation activities. The subject of the research are the projects of innovation organisations co-financed by the government budget funds in the period 2007-2017 and their financial statements for 2017. The application of the desk research identified the companies that, according to the current legislation, have the status of innovation organisations, and then it indicated the participation of their projects in the total number of projects co-financed by the budget funds of the Republic of Serbia. The research found out the percentage of projects launched by successful innovation organisations in the total number of co-financed projects, as well as projects launched by innovation organisations that no longer exist. Bankruptcy risk was assessed by applying the Altman's Z-score for all innovation organisations, which in 2017 had the “active” status and for which financial reports were publicly available. The assessment of bankruptcy risk for innovation organizations provides the possibility of more efficient use of budget funds in the future. Efficiency is reflected in the reduced risk of budget funds being wrongly used for co-financing of projects of innovation organisations in the distress zone. The research results show that in the Republic of Serbia in 2017, 19% of innovation organisations are in the distress zone characterised by the high bankruptcy risk. There is 30% of innovation organisations in the grey zone with 50% probability of bankruptcy, while 51% of innovation organisations are in the safe zone with a negligible bankruptcy risk.

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