Innovative capacity as a driving force of national competitiveness

Abstract

Each national economy has specific characteristics that determine its innovative capabilities to a greater or lesser extent. National innovation capacity can be a source of prosperity and growth for the national economy. Measuring national innovation capacity is very important because it provides knowledge about the dynamics of inventions in economic activities. By measuring the innovative capacity of the economy, indicators are obtained that are significant for the creation of development policy and are an important element in evaluating the success of its implementation. The connection between innovation and competitive advantage is direct and positive because the innovative capacities of companies can create, support, and make sustainable competitiveness both in the domestic and foreign markets. This paper aims to determine whether there is a relationship between national innovative capacity and competitiveness. To allow for data mutual comparability and generalization, the research included four countries: Serbia and three neighboring European Union member countries (Bulgaria, Hungary, and Romania). The evaluation was conducted using statistical data from international databases (WEF, INSEAD, and WIPO) covering 2008 to 2018. The findings indicate a positive relationship between a country's competitiveness and innovative capacity, as measured by the Global Innovation Index and the Global Competitiveness Index. In the cases of Serbia and Bulgaria, there was a strong correlation between national competitiveness and the country's innovation index. In Hungary and Romania, on the other hand, the correlation coefficient is low. The paper's originality is reflected in the analysis and comparison of the innovation capacities four Eastern European countries (Serbia, Bulgaria, Hungary and Romania), which are rarely the subject of research in innovation.