The Impact of Innovation on Competitiveness and Economic Growth in EU Countries

In macroeconomics models, we can observe the key role of technological progress for competitiveness and economic growth. The first part of the paper discussed the relationship between innovation capability of European countries and their level of competitiveness. The innovation capability is expressed by the selected aggregate innovation indices (the Summary Innovation Index of the European Commission and independently developed the FBA Innovation Index), competitiveness is expressed by the Global Competitiveness Index of the World Economic Forum (WEF). According to WEF, competitiveness is defined as "the set of institutions, policies, and factors that determine the level of productivity of a country". But the total factor productivity is an important or a key factor for economic growth. For this reason, the second part of the contribution deals with the relationship between innovation capability of European countries and their economic growth which is measured by the growth rate of their gross domestic products.