Financing Investments. The Partnership shall only make investments (other than Temporary Investments) that qualify as Financing Investments. A “
Financing Investments. Faced by increasing difficulties, southern firms showed an interesting reaction which led to a recovery of the pace of investment in the last three years analysed (1995-97) (Table 7.2). 57 per cent of these investments are in innovative equipment (against 36 per cent in the North). Table 7.2 Fixed investments (per cent on sales) SOUTH NORTH 1992 1993 1994 1992 1993 1994 < 50 employees 3,3 2,8 2,9 4,0 12,2 4,9 51-250 employees 5,6 6,5 6,2 3,5 4,3 2,7 251-500 employees 4,2 4,3 2,7 4,3 3,6 3,6 TOTAL 5.9 5,4 4,8 3,9 5,1 3,2 1995 1996 1997 1995 1996 1997 < 50 employees 9.0 5.9 9.4 10.8 11,2 11.1 51-250 employees 4.6 5.1 6,9 4.8 4,6 4.6 251-500 employees 4.5 5.4 6.2 4,5 4.0 3.8 TOTAL 5.8 5,4 7.4 6.2 6.0 6.0 Source: Mediocredito Centrale It is worth pointing out two key aspects in this process. While in the period 1992–94, capital accumulation is mainly concentrated in the firms belonging to the 51–250 class of employees, and is particularly weak for firms with fewer than 51 employees, in the last period (1995–97) small firms show significant activism nationwide. As far as southern firms are concerned, both innovation and investment are concentrated in non-exporting firms, i.e., those that have been most affected by increasing competition in the domestic market. In terms of the source of finance for investments, Table 7.3 gives such information as well as (last row) information on the share of firms rationed on the credit market. Considering all firms, we see that in the 1992–1994 period, internal contribution, via retained profits, and additional equity capital are far less substantial sources of finance in the South (46 per cent) than in the North (64 per cent). Public subsidies (capital grants) and subsidized medium long term loans, instead, account for 18 and 21 per cent respectively in the South, against the 2 and 12 per cent in the North. On the contrary, non-subsidized loans (ordinary credit) contribute much less (5 per cent against 11 per cent) as well as other financial instruments like leasing (5 per cent against 8 per cent). Interestingly enough, these general characteristics do not apply in that period to southern firms with fewer than 51 employees, or – for relevant aspects – to the class of 51-250 employees. In fact, for smaller firms the main source of finance is represented by self-finance (54 per cent), quite unlike the situation in the North (26 per cent). As regards the contribution of equity capital, we end up with 56 per cent in the South and...
