Innovation and Applied Knowledge as the Basis for Economic Development

The paper focuses on the problems of managing the development of the national economy. The application of a system approach allowed the authors to highlight a critical aspect of innovation. This aspect lies in the fact that innovation and innovative development of society are not exclusively scientific and technological problems: the cyclic life of society depends on its ability to create and use scientific and technological achievements. The authors prove that the issue of choosing the direction of development (which, in simplified form, can be formulated in terms of domination of raw material or innovative ways) is the most important for the national economy. Over time, innovation as a factor and impulse for the development of society started to determine and program the orientation of society, which, ultimately, made innovation a single process and formed the socio-economic paradigm of the new stage of society. In the institutional environment, a particular role is played by the government. It must permanently and rationally provide conditions for the effective interaction of other social institutions and the emergence of a new social and cultural environment promoting the development of new relationships between the owners of the production means and the carriers of ideas and experience. A failure to fulfill this task undermines the accumulation of capital and entails destructive changes in the structure of private capital. © 2022, The Author(s), under exclusive license to Springer Nature Switzerland AG.