DOMINANTS FOR THE NATIONAL ECONOMIES’ COMPETITIVENESS

Abstract

This article is devoted to innovation as a prerequisite for the national economies' sustainable development and a domain for their global competitiveness. The paper aims to highlight the internal essence of mutual relations between innovation, competition, and economic growth. It was assumed that innovation positively affected the competitive behaviour of economic agents and eventually contributed to an increase in public welfare. Regarding the period from 2007 to 2022, we considered the sample of Central European countries and the Baltic states. Theoretical generalization has been applied to systematize the factors determining competition and innovation. We used statistical methods and comparative analysis to investigate the indicators' dynamics. The interdependencies between macroeconomic dynamics and a set of competition and innovation indicators have been assessed. It was proved that the proportion of medium and high-tech industry value added in the total value added of manufacturing was quite important, yet not the ultimate criterion for ensuring high growth rates and sustainable development. The dynamics of commercial spending on research and development had been ambiguous and unsustainable. To ensure strategic competitiveness, national governments should encourage innovation in their respective business communities. The sampled economies have been examined considering a set of innovation and competition indicators (e.g., gross capital formation, research and development expenditures, logistics performance, export technological structure, carbon dioxide emission, and renewable energy consumption). Considering the implications of globalization, tax burden as an integral characteristic of the national economy's competitiveness has been evaluated as well. It was pointed out that: a) a stable, understandable and transparent tax policy should be implemented to protect the investors' property rights; b) a system of total anti-corruption measures aimed at preventing the practices of receiving undue benefits should be set; and c) the business sector should improve own environmental and social responsibility complexly, introduce resource-saving, green and circular economy.