How does innovation contribute to growth?

How does innovation contribute to growth?

Innovation is an essential engine of economic progress that benefits consumers, businesses and the economy as a whole

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How does it fulfill that function, how does it contribute to economic growth and what can be done to promote it?

What is innovation?

From an economic point of view, innovation is any development or application of ideas and technologies that improve goods and services or make production more efficient.

Why do we need innovation?

One of the greatest benefits of innovation is its contribution to growth. In simple words, innovation makes possible an increase in productivity, that is, it allows producing more with the same resources. When productivity increases, more goods and services are produced and the economy grows.

Innovation and increased productivity bring enormous benefits to consumers and businesses. As productivity increases, workers' wages rise and they can acquire more goods and services. At the same time, companies are more profitable and can invest more and hire more employees.

How do the effects of innovation manifest?

Invention usually begins on a small scale, for example, when a company applies a new technology that it has developed. However, for innovation to pay off, it must be extended to the entire economy and benefits companies of different sectors and sizes equally. Experts use the term diffusion of innovation to refer to this process.

How can innovation be encouraged?

Structural measures to promote innovation include increasing investment in R&D and education, as well as simplifying procedures for the creation of new companies or for the closure of bankrupt companies. For their part, companies can facilitate innovation by investing in the training of their employees and in R&D.

Advantages of product innovation

In order for a company to offer better services, it is necessary to carry out an innovation process from time to time in which it can bring new products or services to consumers and thus satisfy their needs. At the moment that a company performs this action, there are many advantages that it will experience in a short period of time.

Of course, by offering a wide range of products the industry's growth will be greater when it reaches a large number of consumers. This growth will help the company to expand through other countries or locations and thus attract more customers who may be interested in these new products created. It is important to highlight that with the manufacture of new elements, competitiveness will fall in favor of the company, since it will be able to gain a foothold in the industry, differentiating itself from other entities that are also part of that sector and that, on the contrary, do not offer products that have characteristics exclusive, Therefore, innovation helps the business to position itself as unique, making it more attractive to customers.

In addition, we must also bear in mind that the product innovation process will give the brand greater visibility, scaling positions within the industry itself and highlighting these products as the first and most commercial. Therefore, sales will increase significantly and customers will opt for what our company offers in the market.

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This article has not been reviewed by Odyssey HQ and solely reflects the ideas and opinions of the creator.

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