MBS686 Report: Innovation and Economic Growth in Australia Analysis

This report investigates the impact of innovation and technological progress on the economic growth of Australia, focusing on how businesses can leverage innovation to meet their objectives within a competitive global environment. The study explores the relationship between economics and business strategy, highlighting the significance of technology and innovative products in driving economic growth. The report employs the Solow Growth Model to analyze the impact of innovation on economic growth, examining factors such as opening new markets, securing new sources of supply, and increasing the discounted value of profits. The literature review supports the importance of innovation and technology, with a particular focus on research and development spending. The report also discusses the model's implications for labor, capital, and technology, emphasizing the positive impact of innovation and technological progress within the Australian economy. The research aims to determine the impact of innovation on economic growth, using the Solow growth model, and explores the rationale, scope, and objectives of the study, offering insights into how companies can improve their performance and contribute to the overall economic growth of Australia. The report is a research project plan or outline for an economics and business strategy course.

Economics and Business strategy

Table of Contents
INTRODUCTION......................................................................................................................2
Background of the study........................................................................................................2
Literature review....................................................................................................................3
Research methodology...........................................................................................................5
Timeline.................................................................................................................................7
CONCLUSION..........................................................................................................................8
REFERENCES...........................................................................................................................9

INTRODUCTION
Economics and business strategy are interrelated to each other. Such that the financial
and operational strategy is the fundamental to the structure and operation of a business in
competitive and constantly changing global environment. In the same way, current study is
also focused upon the business strategy that help the business to meet the define aim and
objective sin better manner. The chosen country for this report is Australia which is a well-
developed country that helps the business to grow by introducing new innovative products
and by complying the technological factors.
Background of the study
In the era of digitalization, every company is uses the advance technology and
innovative product to their customers in order to meet the demand of users. In the same way,
almost more than half of the company uses this advance technology in order to improve the
business operations. Also, majority of the company start offering new and innovative product
in order to improve the business operations and attract range of customers. In addition to this,
it can be stated that if people invest huge amount in innovative product then it will help to
increase the economic growth of the company as well.
In the same way, current study is also based upon the Australia which is a top country
that mainly focus on developing business strategy which in turn help to meet the define aim
and objectives. Similarly, the entire report main purpose is to draw attention of many
companies to start complying advance technology which in turn help to improve the business
operations and increases the efficiency level as well. This in turn assist to improve the
financial position of the company and direct raise the economic growth of the country as
well. Hence, by using effective secondary study, the researcher will develop an importance of
using innovative product within a country which directly improve the growth rate, saving rate
and technological progress as well.
Aim : The aim of this report is to investigate the impact of innovation and technological
progress on economic growth of a country: A study on Australia”
Objectives:
 To analyze the impact of innovation and technological progress on economic growth
of a country by using Solow growth model

Research question:
 What is the impact of innovation and technological progress on economic growth of a
country?
Rationale : The reason behind choosing this specific topic is such that it will help the
researcher to enhance the knowledge and this in turn assist to determine the importance of
using innovative product will creates direct impact upon the economy of the country. Also, it
is analyzed that study on this topic will help to know about the models which also contribute
to determine the impact of innovation on the economic growth of the country. On the other
side, another rationale for choosing this topic is such that University also, suggest researcher
to conduct study on this topic so that it will develop an opportunity to learn new thing related
to innovation and technological factors.
Scope: By study on this particular topic, will help to determine the importance of innovative
product and impact of technological progress on the economic growth of Australia. Also,
study on this specific topic, will assist the researcher to let other companies understand that
by providing innovative products to the customers will assist the customer to draw attention
of many customers. In addition to this, it is also analyzed that through effective research on
this topic and applying model will assist to investigate the impact upon the economic growth
of the country.
Literature review
According to Katırcıoğlu and et.al., (2016) innovation and technology plays an
important role in the economic growth. Such that innovation can lead to higher productivity
and the same input help the company to generate the higher output as well. In the other
words, when the productivity rises, more goods and services are produced and as a result, the
economy automatically grows. So, Moloi and Marwala (2020) stated that innovation describe
as the development and application of the ideas and technologies which improve goods and
services in order to make their production more efficient. For example, development of the
steam engine technology in 18th century which is put in the factories, help in mass production
and revolutionized the transport with railways. That is why, Australia, is keep spending on
research and development so that it focused on innovative products which in turn assist to
meet the define aim of the company.

Solow Model
In the view of Wilson (2017) Solow Growth Model is an exogenous model of
economic growth which determine the changes in the level of output in an economy with the
changes in the population. This model is made by Prof. Robert M. Solow which is an
alternative of Harrod- Domar model of growth. The model also make sure the steady growth
in the long run period without any pitfall, while Harrod- Damor model is actually based on
some unrealistic assumptions such that fixed factor proportions, constant capital output ratio
etc.
As per the view of Rahman and Shahari (2017) Solow Model of long run growth is
also made up from the different assumption such that the production takes place as per the
linear homogeneous production function like, Y= F(K,L) where Y= output, K= Capital stock,
L= Supply of labor force. Hence, it is refers as when meeting the long run growth, assume
that both labor and capital both increases, but with a condition i.e. capital increases at faster
rate as compared to labor that is why, capital labor ratio is high. That is why, when this ratio
is increases, the output per worker is decline and as a result, national income of Australia is
falls. On the other side, Zhang, Zandi and Kim (2020) argued that this process of decline is
continues till the growth of capital become equal to the growth rate of labor. So, capital labor
ratio and capital output ratio remain constant and this ratio is further known as “Equilibrium
ratio”. That is why, there is a need to maintain the ratio and this is possible only when there is
an innovation strategy and technology progress within a country which in turn help to meet
the define aim.
Sasaki (2019) present their views that with the help of variable technical coefficient,
many employment opportunities can be creates. For instance, in agriculture sector, company
may increase the wage rate of the worker which assist to increase the production. On the
other side, in industrial sector, the company should focus on the different innovative product
which in turn assist to maximize the product range and this directly creates impact upon the
economy of a country. As a result, to attain the sustained growth, the capital labor ratio must
be high and underdeveloped economies which is attain through this model.
According to Phung and et.al., (2019) Solow growth model is an exogenous model of
economic growth which is analyse the changes in the level of outputs in an economy over the
time as a result of making changes in the population. Innovation is a new combination of
productive means and interdependent variable. Innovation is very important and effective part

of the life which is creates great experiences for purchasing products and services in positive
manner. Innovation is the very voluminous and divers. The main element of innovation is
uses in the production areas. Innovation is directly bear the technological changes and key
drivers of organizational and nation. This creates the positive and significant impact on
economic growth of Australia. These sources are created effective changes within the
economic and its growth factors. This consists with various factors like attracting customer,
increasing purchasing power of customers. Through that economic stability is increased.
Impact of innovation on economic growth of Australia by using Solow growth model is as
follows:
Opening into the new market: this is the benefit for economic growth of Australia.
Innovation is create a new product and services through that businesses attract new customers
as well as open into the new market which is adding effective growth into the economic
growth. This help to increase economic growth in positive manner because through that
customers are purchased various products with new market.
Conquest of a new source of supply of raw material and semi structured goods: this
other positive impact which is also come with innovation by using Solow growth model (Du
and O’Connor, 2019). This model is help to analysis result of changes which are comes at
market place. With the help of innovation is increasing the supply of raw material and goods
into another country. Through currency of Australia and other country increased and
circulated into the Australia. This help to increase GDP of country. With the help of this
model changes are comes after analysing its affect on business.
Innovation is increase the discounted value of the maximum effective profit obtained
under the given market condition. This gives qualities impact on economic growth of
Australia. The product innovation of new product and services introduced for meet an
external user and market need and the process of innovation is used in production operations.
This added quality and positive impact on economic growth. This help to make effective and
stable economic growth of country (Perez-Trujillo and Lacalle-Calderon, 2020). With the
help of innovation gross domestic price is also increased which is analysed by using model.
The impact of innovation on the exchanging economic growth is an initial condition of the
cleared markets by interacting agents is assumed. Through this, another country is taking
interest, like business try to learn about innovation as a result, this increases visiting of
customers from another country. Hence, it increase effective economic growth of Australia
which is analysed through Solow growth.

The model also state that when the growth process is start with high capital labor
ration, then the variables will proceed in forward direction with high speed and also there will
be high growth rate. On the other side, when the growth process start with the low capital
labor ratio then the development variables will also move in forward direction, but it takes
lesser speed (Sasaki, 2017). Thus, it is stated that if economy of Australia has a fixed
population and hence fixed workforce then the output is also grow which assist to increase
the overall economy.
Ozdemir (2017) reviewed that Solow model predicts that if country have similar
saving rates, population growth and technical progress as compared to the initial outputs per
capita, then it help to increase the economy of the country. Thus, it can be stated that it is an
exogenous model of an economic growth which also analyze that changes in the level of
output in an economy over the time, as a result of changes in the population. That is why,
with their target market’s traits, companies can build the profile for their customer base. As
the entire model is depend upon the three factor such that labor, capital and technology, in
which if the company uses technology resources than it will help the company to encourage
the employees in order to meet the define aim and objectives.
Hence, Hossain (2020) present that there is a positive impact of innovation and
technological progress within the economy of the Australia. As the country have advance
techniques and most of the top companies also uses this tools in order to stay ahead in the
competition and this in turn assist to increase the overall economy of the country as well.
Also, the model stated that if companies operating in Australia, should keep provide
innovative product to their customers and this in turn help to increase the company’s
performance and it directly assist to improve the overall economy of the country as well.
Overall it is analyzed that there must be a positive impact upon the country’s economy when
new and advance technologies are used which in turn help to smoothen the business operation
and also reduce the wastage of time (Moloi and Marwala, 2020). Therefore, it directly help to
enhance the economic growth of the country as well.

Research methodology
This section is the specific procedure and techniques which is used to determine,
select and analyze the information related to topic. Hence, this section allows the researcher
to conduct the research in more better manner so that it will help to meet the define aim and
objectives of the company. There are many key element of the research methodology section,
which help researcher to meet the define aim and objectives in better manner.
Research methods: there are three research method, qualitative, quantitative and
mixed research methods. Among all, qualitative research methods will be adopted by the
researcher because it mainly focused on the words rather than numbers and through this
methodology the researcher uses theory i.e. Solow Growth model which in turn assist to meet
the define aim and objectives as well. Further, through this methodology, researcher collect
the data through open ended and conversational communication and this in turn help to meet
the define aim.
Research Philosophy: It is the notion or a way, through which the information is
gathered and analyzed. There are four types of philosophy such that Interpretivism, Realism,
Positivism and Pragmatism (Hennink, Hutter and Bailey, 2020). Among all, researcher will
chooses Interpretivism research philosophy which help to interpret the key element of the
study and assist to understand the views of the respondents in better manner. Hence, through
this study, researcher integrates the human interest into a study and this in turn help the
scholar to meet the define aim. Also, through the study, researcher further meet aim and
determine by using Solow Growth model to the impact of innovation and technological
progress upon the economy of the country.
Research Approach: It is the plan and procedure which is consist of the steps of
broad assumptions into a detailed methods of the data collection, analysis as well as
interpretation. Thus, this theory is based upon the nature of the research problem which is
being addressed. There are three types of research approach such that Deductive, inductive
and Abductive. Among all, Inductive research approach will be chosen by the researcher
because it is start with the observation and theories which is proposed towards an end. In the
same way, through this method, researcher will also uses the theory and concept which in
turn assist to reach at conclusion and analyze the impact as well.
Data Collection: It is the method through which data are collected and gather in
better manner. There are two types of data collection method such that Primary and

secondary. Researcher will chooses both types of method such that under primary,
questionnaire is design under survey method in which questions related to impact of
innovation and technological factor upon growth of economy (Ghauri, Grønhaug and
Strange, 2020). While on the other side, under the secondary research, relevant text, books
and Journals are used which are published in latest year in order to determine the impact.
Hence, through this methods, researcher will easily meet the define aim and conduct the
research in more precise manner as well.
Data Analysis: It is the process of cleaning, transforming and modeling the data
which is used to discover the useful information in order to make better decision. Further, the
researcher will chooses qualitative study and that is why, uses thematic data analysis in which
graphs and charts, tables are used that help to interpret the results in better manner. Also, it is
analyzed that through this, researcher will able to interpret the views and present them in
systematic manner so that it will help to meet the define aim and objectives as well.
Sampling: It is the process which is used in statistical analysis through which
predetermine number of observation are taken. In the other words, it is stated that sample
from the large population is selected so that it will assist to accomplish the aim. There are two
types of sampling such that probability and non- probability. Such that researcher will
chooses simple random sampling method in which respondents are selected randomly
without any bias (Kaae and Traulsen, 2020). Therefore, it is analyzed that around 20 IT
specialist will be chosen from Australia because they have enough knowledge related to
innovation and technological progress. That is why, through this, it will be easy to determine
their views and this in turn assist to meet the define aim and objectives as well.
Ethical considerations: The most important key element of the section which state
that researcher has to take consent from the selected respondents and also, researcher should
ensure that there is no miscommunication between the respondents and researcher so that it
will help to accomplish the aim and objectives (Brooks, Lainio and Lažetić, 2020). On the
other side, it is also analyzed that researcher should comply with the data protection act and
this will help to make the data confidential and third party will not used any data. Also,
researcher should maintain the dignity in front of selected sample size so that it will not leads
to generate any wrong results.
Timeline
Activities Week 1 Week 2 Week 3 Week 4 Week 5

Selection of
topic
Research
aim and
objectives
Secondary
study
Research
methodology
Conclusion
Submission
CONCLUSION
By summing up above report, it has been concluded that innovation and new
technology plays an important role in the success of the company and this in turn assist to
improve the overall economy of the country as well. As the report concluded that by using
Solow Growth model, if the economy of the country increases, then company has to develop
new research and development department which in turn assist to meet the define aim. Also,
report concluded that with the use of specific research methods, researcher also conduct the
study in better manner by using qualitative study in which different IT specialist are chosen
who help company to develop new product and enhance the overall business operations as
well.

REFERENCES
Books and Journals
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difference. An introduction to the special issue. International Journal of Social Research
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Du, K. and O’Connor, A., 2019. Examining economic complexity as a holistic innovation
system effect. Small Business Economics, pp.1-21.
Ghauri, P., Grønhaug, K. and Strange, R., 2020. Research methods in business studies.
Cambridge University Press.
Hennink, M., Hutter, I. and Bailey, A., 2020. Qualitative research methods. SAGE
Publications Limited.
Hossain, I., 2020. Extended Exogenous Growth Model: Application and Investigation the
Long-Term Growth Determinants of Bangladesh. Asian Economic and Financial
Review. 10(1). pp.35-53.
Kaae, S. and Traulsen, J.M., 2020. Qualitative methods in pharmacy practice research.
In Pharmacy Practice Research Methods (pp. 31-54). Springer, Singapore.
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and real income in Canada: an empirical investigation from a new version of the Solow
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