THE IMPACT OF INNOVATION DEVELOPMENT ON INTERNATIONAL COMPETITIVENESS OF COUNTRIES
Abstract
In the context of globalization and the structural transformation of the world economy, innovation has become a key factor shaping the international competitiveness of countries. The transition toward a knowledge-based economy has strengthened the role of innovation in promoting sustainable economic growth, improving living standards, and enhancing countries’ positions in global markets. This study analyzes the impact of innovation potential on international competitiveness, with particular attention to its relationship with economic development and global investment processes. The research examines the interdependence between the Global Innovation Index (GII) and selected macroeconomic indicators, including GDP per capita based on purchasing power parity and foreign direct investment flows. GDP per capita in PPP terms is used to ensure comparability across countries by reducing distortions caused by differences in price levels and exchange rates. The Global Innovation Index serves as an integrated measure of innovation potential, reflecting institutional quality, human capital, infrastructure, business sophistication, and innovation outcomes. The results reveal a positive relationship between innovation performance and economic prosperity, as countries with higher GII scores tend to achieve higher income levels. Furthermore, the findings indicate that innovation affects not only the level of economic development but also countries’ roles in global capital flows. Innovation-driven economies are characterized either by high investment attractiveness or by active outward investment, reflecting their ability to accumulate and export capital and advanced capabilities. In contrast, countries with limited innovation capacity tend to be weakly integrated into global investment networks, which constrains their international competitiveness. Overall, the study confirms that innovation potential is a critical determinant of long-term international competitiveness and highlights the importance of comprehensive innovation policies aimed at strengthening national innovation systems and supporting sustainable economic development.
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