AN INTEGRATED SYSTEM FOR EVALUATING THE IMPACT OF FIRM-BASED INNOVATIONS ON GDP

Abstract

The study analyses the impact of innovation on the economy in the EU and related countries (Norway and Switzerland), highlighting the large differences between these countries. An integrated measurement framework is proposed to assess the long-term impact of firm-based innovations on GDP comprehensively. The literature analysis sheds light on the link between firm-based innovations and economic growth, and the study follows a three-step methodology: firstly, data on innovation and GDP are collected from Eurostat and OECD, followed by an econometric analysis to identify the links between firm-based innovation performance and economic growth, and finally, a cluster analysis is performed. This cluster analysis grouped countries according to their level of innovation and economic performance. The empirical results showed that Germany, Denmark, Finland, the Netherlands, Sweden, and Ireland have high innovation and GDP growth rates, and their innovation ecosystem contribute significantly to economic prosperity. The study confirms that innovation drives GDP growth, but its impact varies across countries depending on R&D investment, workforce skills, and policy environment. Therefore, policymakers should develop innovation strategies that consider each country’s specificities following the results of cluster analysis to maximise the economic impact.