Innovation and Competitiveness in European Context

An almost unanimously accepted issue is that the path to competitiveness of economies, whose companies are exposed to international competition, goes through innovation. This enables companies to adapt quickly to the pace of the technological change, in order to increase competitiveness. This article aims to test the links between innovation and competitiveness having considered the results of the performance evaluation models in matters of innovation and competitiveness for different countries, such as the Innovation Union Scoreboard and IMD World Competitiveness Yearbook. Using these models we can evaluate the connection between the composite indicators calculated by using the methodologies mentioned above. To determine the connection we will use a panel-type econometric model. The econometric analysis aims to confirm a cause-effect relationship between innovation and competitiveness through which we will be able to assess the impact of innovation on competitiveness growth. In accordance with the European and national policies for stimulating innovation through increased R&D funding intensity, raising the average level of spending in the EU of R&D to 3% of GDP could significantly enhance the competitiveness of European economies compared to other states.