Question

Relationship between Innovation and Economic Growth: Technological progress and R&D spending.

Please, summarize on a page.

Answer 1

One of innovation's key benefits is its contribution to economic development. Simply put, innovation will lead to higher efficiency, which means greater output is produced by the same input. As productivity increases, more goods and services are produced-that is, the economy is growing.

Development in innovation and efficiency offers huge benefits for both customers and companies. As productivity increases, workers' salaries increase. They have more money in their pockets, and so can buy more goods and services. Around the same time , companies are becoming more competitive, allowing them to spend and recruit more workers. Innovation typically begins on a small scale , e.g. when the organization where it was created first introduces a new technology. Nonetheless, in order to achieve the full benefits of innovation, it needs to spread across the economy and support enterprises in different industries and different sizes equally. Experts refer to this method as spreading creativity.

Structural initiatives aimed at fostering innovation include increasing spending on research and development ( R&D) and investment in education, as well as making it easier for entrepreneurs to start businesses and quicker for failed companies to exit the market. R&D investments to foster innovation in technology , science or product are just the first steps towards success. The challenging part of creativity is that the technologies and goods we create gain commercial acceptance. Some of the world's most innovative firms don't spend much on R&D in proportion to their revenues. In fact, companies that are ranked among the top 10 in innovation are just as likely to be low or high in terms of their R&D spending. Amazon, for instance, invests 13 per cent of its sales on R&D and ranks in the top 10 in innovation. Apple invests just 5 percent of its sales on research and growth, but is also ranked in the top 10 in innovation.