Innovation-driven economic growth under global turbulence: how countries strengthen innovation systems to deal with threats

The role of innovation as a major force of economic growth is not to doubt. Despite this, geopolitical challenges in recent years pose difficulties for countries, especially for those who struggle with lower GDP per-capita, to enhance innovative performance and grow. Building upon the national innovation system concept and using the methodological framework of country-level composite innovation indexes, this paper aims to explore features of innovation systems inherent in lagging economies and their relevance for economic growth. The analysis, based on a panel dataset comprising the Global Innovation Index elementary indicators on 76 countries during 2015–2021, demonstrates the lower initial state, but faster development of innovation system components in lagging economies. Crucial to their growth is the external validation of national innovation efforts, proxied by international trade and foreign investment indicators. In addition, a sustainable economic growth requires balanced and synergetic development of all components and functions. Therefore, bottom-up approaches are needed to sustain further growth of lagging economies, starting with the provision of effective resource allocation, knowledge creation and its diffusion.