Innovations as a Crucial Factor of the Catch-up Economic Growth

Abstract

Most developing countries, especially transitive economies, face the problem of incapability to significantly increase the value of the national product. This article provides arguments that a fruitful approach to elaborate its challenge is Schumpeter’s theory of innovation economic development. Schumpeter’s little-known methodological invention is analyzed, i.e. that ‘innovations’ are an isolated factor of the catch-up economic growth. Such an approach allows getting to better recognizing the leading role of the strong innovation activities in the catch-up economic policy. The successful economies confirm this invention of Schumpeter and demonstrate that innovation activities provide the desired economic development of the emerging countries. The main findings of this article reveal a conceptual meaning of Schumpeter’s category of ‘innovations’ as an isolated crucial factor of economic development which creates a new added value and distinguishes the phenomenon of ‘innovation’ as a separate factor of economic development in traditional models of economic growth. It becomes very important to recognize the crucial role of the innovation economic policy that supports enterprises with new advanced technology and promotes the high-tech industries development in order to reach dynamic economic growth and to overcome the problem of the ‘middle income trap’ for the emerging market economies, including Ukraine. The methodological possibility to use the innovation policy as a special factor of the catch-up processes in order to enhance country competitiveness is demonstrated.

Keywords

• factors of economic growth
• schumpeter’s theory of economic development
• the catch-up economics
• innovations
• total factor productivity
• economics