Financial instruments – an answer for economic development policy in a climate of austerity?


Financial instruments

Financial instruments – an answer for economic development policy in a climate of austerity?

Financial instruments (FI) – loans, guarantees and equity - have a long history in some European countries, and have recently come to greater prominence in economic development policy at the EU level. FI have been heavily promoted by the European Commission and the EIB as alternatives to grants because they are more sustainable (money has to be paid back, so can be reinvested), they generate higher quality projects (because the obligation to repay focuses recipients on success) and they are more cost-effective (because they can be used to attract private funds). EPRC research in this area explores these claims and analyses the use of FI across a range of economic development policies and regional contexts.