THE ROLE OF INNOVATIONS IN DRIVING ECONOMIC GROWTH: CASE OF ADVANCED ECONOMIES

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  The paper explores the impact of innovations on the cross-country income differences among advanced economies based on the economic and mathematical models construction. As indicator that defines level of innovations production in the country, we have used number of researchers in R&D sector (per million people). Therefore, it has been constructed panel data model to estimate the effect of number of researchers in R&D sector on GDP per capita in advanced economies. Results of estimation have shown the significant impact of researchers in R&D sector on GDP per capita for the group of advanced economies testifying that innovation really matters in driving economic growth.