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Quantifying the Impact of Innovation-Driven Supply Factors on Economic Growth and Innovation-Development Security

Author

Listed:
  • Yurii Kharazishvili

    (Institute for Sustainable Development and International Relations, WSB University, Dabrowa Gornicza, Poland; National Institute for Strategic Studies, Kyiv, Ukraine)

  • Aleksy Kwilinski

    (United Nations Economic Commission for Europe, Geneva, Switzerland; Royal Economic Society, London, United Kingdom; Institute for Sustainable Development and International Relations, WSB University, Dabrowa Gornicza, Poland; Department of Marketing, Sumy State University, Sumy, Ukraine)

  • Olena Grishnova

    (Taras Shevchenko National University of Kyiv, Kyiv, Ukraine)

  • Olga Miroshnychenko

    (Taras Shevchenko National University of Kyiv, Kyiv, Ukraine)

Abstract

The accelerating transition toward knowledge-based and innovation-oriented economies has intensified the need to assess how innovation-driven supply factors influence economic growth and innovation-development security. Although many studies have examined the relationship between innovation, productivity, and competitiveness, important research gaps remain, particularly regarding the quantitative assessment of innovation-driven macroeconomic factors within the aggregate supply framework and their direct contribution to innovation security as an element of national economic resilience. Furthermore, existing international evaluation approaches, including the European Innovation Scoreboard, do not adequately capture systemic sustainability, vulnerability thresholds, or stability margins of innovation systems. Addressing these limitations, this study provides a scientifically grounded quantitative evaluation of the contribution of classical aggregate supply macro factors and innovation-related macro factors to economic growth, while operationalising resulting indicators of innovation-development security for comparative assessment across potential (Ukraine, Georgia), actual (Poland), and former (United Kingdom) EU member states. A neoclassical Cobb–Douglas production function embedded within a Keynesian analytical framework is applied, incorporating Hicks-neutral technical progress, constant returns to scale, and diminishing marginal productivity. Innovation drivers—such as gross domestic expenditure on R&D, innovation expenditure, and total education expenditure—are integrated into a dynamic model establishing causal relationships between inputs and outputs without requiring extended time-series datasets. The Solow residual methodology formalises the contribution of innovation and classical macroeconomic determinants to total factor productivity and economic growth, while key innovation security indicators are proposed, supported by defined safe-existence boundaries. The results demonstrate a substantial and heterogeneous influence of innovation inputs on growth dynamics, resilience, and systemic stability, revealing structural asymmetries and potential vulnerabilities. The study concludes that innovation is not only a fundamental driver of economic development but also a crucial determinant of innovation-development security, offering policymakers analytical tools for monitoring resilience, identifying risks, and strengthening long-term competitiveness.

Suggested Citation

  • Yurii Kharazishvili & Aleksy Kwilinski & Olena Grishnova & Olga Miroshnychenko, 2025. "Quantifying the Impact of Innovation-Driven Supply Factors on Economic Growth and Innovation-Development Security," Virtual Economics, The London Academy of Science and Business, vol. 8(2), pages 33-58, July.
    • Handle: RePEc:aid:journl:v:8:y:2025:i:2:p:33-58
    DOI: 10.34021/ve.2025.08.02(2)
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    References listed on IDEAS

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    1. Rana P. Maradana & Rudra P. Pradhan & Saurav Dash & Kunal Gaurav & Manju Jayakumar & Debaleena Chatterjee, 2017. "Does innovation promote economic growth? Evidence from European countries," Journal of Innovation and Entrepreneurship, Springer, vol. 6(1), pages 1-23, December.
    2. Eglantina Hysa & Alba Kruja & Naqeeb Ur Rehman & Rafael Laurenti, 2020. "Circular Economy Innovation and Environmental Sustainability Impact on Economic Growth: An Integrated Model for Sustainable Development," Sustainability, MDPI, vol. 12(12), pages 1-16, June.
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