Public and Private Investments in Increasing Competitiveness: Case Study for Machinery Industry

The concept of the knowledge economy and the development of innovation is an important aspect of new economic theory. The importance of education, science and research results are the primary determinants for competitiveness and long-term economic growth. Increasingly attention is devoted to knowledge, technology and information as prerequisites for economic development. Innovation and know-how are resources with an essential character that outweighs other economic factors of production. The use and dissemination of knowledge and innovation is essential. Knowledge spillovers, called spill-over effects, are of particular importance; they affect a broad spectrum of economic entities. Firms, industries, cities, regions and universities gain the benefits of knowledge created by others via knowledge spill-over without spending their financial resources. The results of the knowledge economy innovations that create opportunities for the growth of a company's competitiveness in the market, an increase in sales, finding new market outlets, etc. - are of crucial importance for companies. Being innovative is a key point for companies 'strategic thinking and planning. Businesses that are able to create and absorb innovations are themselves creative and have the ability to adapt to changes in their surroundings. This paper will examine data at the micro level. Data was obtained from the Community Innovation Survey for the years 2010 - 2012, and attention will be focused only on the machinery industry. Individual companies operating in the sector of the machinery industry are an important part of the manufacturing industry and thus have a significant influence on the Czech Republic's economy. The paper will deal with evaluating the creation of innovation in the Czech Republic. As a powerfull competitive tool, innovation requires considerable investment. Enterprises invest financial resources into the research and development of innovation in order to transform these innovations into new market opportunities, increase their profits, strengthen their market position and other possible alternative company goals. Financial support is also provided to enterprises from national resources and from EU funds, but it is provided by nationwide. This report contains an empirical investigation of innovation and innovation potential in companies; furthermore, comparison of these subjects was conducted for the Czech Republic's regions. The aim of this paper is to create multiple regression model and use it to evaluate the effect of inputs (cooperation, R&D costs and financial support for science and research) on creating innovation. It will also analyze the impact of innovation on the competitiveness of businesses and take their innovation potential into account. The results will help reveal the areas to which allocating private or public investment in R&D is effective.