Research of the Impact of the Quality of Governance on Innovation and Economic Growth

Abstract

Modern growth theory believes that the most important determinants of the long-term sustainable economic growth are innovations and institutions that define total factor productivity. However, poor quality institutions, policy failures and ineffective governance can restrain innovation and slow economic growth. The purpose of this study is to use cross-country data for 2012 – 2021 to examine the impact of the quality of governance on innovation and economic growth. This study used methods of systemic and comparative analysis, synthesis and analogy, the method of structural analogy, the methods of regression and correlation analysis. Among the main conclusion of this research, the following should be noted. The influence of institutions on economic growth is mediated, among other things, by the impact of government policies on innovation and technology, which determine the long-term possibilities of growth in the economy. A positive relationship has been established between the governance quality and the innovative development of the country: inefficient governments do not work well in conditions of uncertainty and often generate economic risks themselves disrupting economic stability; they cannot generate the financial resources and long-term incentives needed for the create of innovations. The state policy aimed at stimulating economic growth and increasing the innovativeness of the economy requires innovative approaches to management, modernizing the system of governance of the economic and improving the quality of government regulation. DOI: https://doi.org/10.53486/cike2023.22; UDC: 354:[001.895:330.35]; JEL: O31, O47.