Financial Development and Innovation in the Context of a Human-Centered Growth Model

Abstract

Currently, the world is witnessing the emergence of a human-centered model of economic development. The principles of human-oriented approach are applied in business management and in developing state development strategies, which makes it possible to use the growth potential of the economy to achieve the ultimate goals of society – improving the well-being and quality of life of the population. The central element of the human-centred development model is innovation and scientific and technical policy. It’s the effective implementation depends on the financial conditions of development of the state and the effectiveness of mechanisms of financial stimulation of technological innovation. In this context, the purpose of the article is to study the impact of financial development on innovation and economic growth. The methods used in the study are analysis, synthesis, comparison, generalisation, econometric modelling. The paper discusses the essence of financial development and the functions that the financial sector performs in the economy. The main channels of influence of financial development on innovation and economic growth are described: channels of capital accumulation and investment, innovation and R&D, structural and technological changes and economic complexity. Based on international data for 2015 – 2021, the relationship between financial development, innovation and economic growth is investigated using econometric methods. A quantitative assessment of the impact of financial development on economic growth through the action of the main channels of the transmission mechanism is obtained. The existence of a close positive relationship between finance and innovation and growth is confirmed. CZU: 336:[001.895+330.34]; JEL: E44