The Correlation Between Innovation and Economic Growth

Abstract

This article analyzes the correlation between innovation and economic growth. This paper aims to analyze and explore how economies can successfully increase their capabilities through innovation policy. Innovation is considered the key factor in technology improvement, the new driver of economic growth, and the crucial strategy for developing the national economy. In order to establish a proper innovation policy is required a deeper analysis of the innovation system, which usually deals with complex interactions between R&D, human capital, and innovation diversification. Due to a virtuous circle that exists between R&D expenses, which can generate new technology and innovations, the result of innovation usually has a direct impact on the increase of productivity and GDP per capita. This thesis emphasizes the importance of structural industrial transformation in determining long-term sustainable economic growth and upgrading the traditional labor-intensive industry to technology. And determining which factors has the greater impact on economic growth and how this can be integrated into innovation policy? UDC: 001.895:330.35