Innovation investment and sustainable development

Abstract

Innovation and technological progress are essential approaches to sustainable growth, but what will affect enterprises’ innovating motivation hasn’t been thoroughly analyzed. We establish an endogenous growth model to analyze the factors that influence an enterprise’s innovation investment, and find that the cumulative technology plays a key role: the more cumulative technology an enterprise has, the more its R&D investment will be. Empirical researches confirm the theoretical conclusions. Our study provides suggestions for policies to promote technological progress and sustainable development.