ABSTRACT
Innovation is one of the generally accepted key factors of sustainable economic growth; identifying its determinants to develop effective policies for modelling the sustainable economic growth is therefore of utmost importance. Therefore, the aim of this chapter is twofold: (1) to determine the key factors of innovation and (2) to shed light on the policies and innovation behaviors relating to the country-level production of innovation. The innovative activities affected by several factors are investigated and tested with national-level data for 18 transition economies between 2001 and 2017. In line with the literature, the empirical results show that education expenditure and the number of R&D researchers per million people have a significant positive relation with the number of patents. Besides, more education expenditure has the potential to raise well-educated individuals and this will trigger sustainable innovation at the country level. However, contrary to the mainstream literature, foreign direct investment, R&D expenses, and trade (openness) have an insignificant relation with patent numbers in transition economies.
