Abstract
Innovation based growth and development is a hot topic in all economies of the world. Openness of mind, openness of businesses and openness of innovation are the key characteristics and success factors of the global world today. Growth and development strategies are becoming smarter transforming economy towards creation of higher added-value products, services and more effective use of resources. Such a high-priority aim may be achieved by R&D activities, which raise the innovation growth and, positively influence productivity, thus providing a platform for sustainable growth and development. Productivity is perceived as the ability to properly use the production factors to create value-added, implement innovations and to maintain the country’s competitiveness. In the macroeconomic researches of different scholars (Solow, Saliola, Seker, Kathuria, Puharts etc.) special attention is given to the quantitative measurement of the various factors of growth and development. These researches have shown that one of the more accurate methods of the productivity measurement is a calculation of total factor productivity (TFP). TFP notion is closely related to the innovation concept as proved by many empirical researches. Industry and firm-level studies concluded that R&D investments to a great extent determine TFP growth. The aim of this research is to calculate the total factor productivity by industry both in Latvia and Lithuania for better understanding of economic growth and development perspectives in those countries.
Highlights
Economic development is perceived as a complex phenomenon, which essence is to adapt to the constantly changing environment and promote the economic development of the country
Productivity is often understood as the ability to use the available factors of the production to create valueadded – product
A proper assessment of the results of productivity analysis is an essential prerequisite for fostering the efficiency of the competitiveness and economic systems
Summary
Economic development is perceived as a complex phenomenon, which essence is to adapt to the constantly changing environment and promote the economic development of the country. The key factor of the economic development is the productivity and purposeful use of the labour and capital resources. Productivity is often understood as the ability to use the available factors of the production to create valueadded – product. Proper use of this two essential factors of production leads to the country’s value creation and to stimulate economic growth. A proper assessment of the results of productivity analysis is an essential prerequisite for fostering the efficiency of the competitiveness and economic systems (country’s, company’s). Economic growth is depended on the country’s human capital and its efficient use. It is essential to properly assess and purposefully use the available capital and using it, to foster the objectives of the welfare
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