Page 57 - Azerbaijan State University of Economics

Namiq Abbasov: The Nature of Innovatıve Economıc Growth and Development

Dırectıons of Its Formatıon

Thus, in an innovative economy, science is a source of new knowledge, discoveries,

inventions, and innovations. Innovation is a key form of knowledge transformation
and plays a key role in an innovation-based economy. Reports from the Organization
for Economic Co-operation and Development (OECD) show that more than half of
economic growth in countries over the past two decades has been driven by
innovation [Khokhlov U.E., Shaposhkik S.B., ‘Economics based on knowledge of
socio-economic trends and political goals’].

It should be noted that the inexhaustible resource of innovative economic growth is
scientific knowledge. Under the concept of "knowledge-based economy",
knowledge is not only being taught in universities as traditional knowledge, but also
it is the more effective ideas and efforts in the organization of production and
product development. The main benefit of a knowledge-based economy is not only
the production of high-tech products, but also their usage in all areas. Knowledge is
not only the creation of new knowledge, but also how to use it effectively [Dagaev
Alexander. ‘Levers for innovative growth’].

I also believe that innovative economic growth is based on the development
initiatives of entrepreneurs in the market, scientific, technical, organizational, and
economic spheres. Its preconditions are the modern stages of the scientific and
technological revolution, globalization, and fierce competition between firms of
different nationalities. Therefore, leading companies build their businesses not only
for sales but also to offer products preferred by consumers, as well as to create new
products and take measures to increase demand for these products.

The innovative type of growth is a modification of intensive economic growth by its
nature, as both are based on the improvement of factors of production. However, the
innovative type is more responsive to changing demands and is actively formed on the
basis of continuous improvement of products and the creation of new products based
on the achievements of scientific and technological progress. I think that another
important criterion for innovative economic growth is the information and
communication technologies (ICT) sector. The development of ICT creates long-term
economic growth, has a positive impact on globalization and a transparent economy,
stimulates overall production growth and increases the efficiency of economic
activity. In this way, it effectively influences the course of innovative growth.

In the 40s and 60s of the last century, technological progress played an important
role in building the neoclassical model of growth, and as a third factor, it stood
alongside labor and capital, which are common factors of production.

57