Prepared by Dr. Riyadh Malik Mohsen The world today is witnessing rapid economic transformations driven by globalization, technological advancement, and intense international competition, making innovation and entrepreneurship among the most important pillars of modern economic growth. Natural resources alone are no longer sufficient to achieve progress; rather, a knowledge- and creativity-based economy has become the primary driver of development. Hence, the importance of innovation and entrepreneurship emerges in supporting the national economy and enhancing its competitiveness. Concept of Innovation Innovation is defined as the ability to transform new ideas into products, services, or production processes that have economic value. The Austrian economist Joseph Schumpeter emphasized that innovation is the driving force of economic development and introduced the concept of “creative destruction,” meaning the replacement of traditional methods with more efficient and productive ones. Types of Innovation: • Product Innovation: Developing new products or improving existing ones. • Process Innovation: Improving production methods to reduce costs and increase quality. • Organizational Innovation: Developing management and work methods. • Marketing Innovation: Using new methods for promotion and reaching customers. Concept of Entrepreneurship Entrepreneurship refers to the process of establishing a new venture or developing an existing one by exploiting available opportunities and assuming risks to achieve profit and growth. Management pioneer Peter Drucker argued that entrepreneurship is not merely about starting a business; rather, it is the systematic search for change and responding to it as an investment opportunity. Characteristics of an Entrepreneur • Initiative and risk-taking • Creativity and the ability to innovate • Planning and organization • Future vision The Role of Innovation and Entrepreneurship in Supporting the National Economy Enhancing Economic Growth: Entrepreneurial ventures contribute to increasing the Gross Domestic Product (GDP) by creating new goods and services, opening new markets, and stimulating competition. Job Creation: Small and medium-sized enterprises (SMEs) are among the most important sources of employment, helping to reduce unemployment rates and raise income levels. Diversifying Sources of Income: Entrepreneurship reduces dependence on a single sector (such as oil in some countries) by developing sectors such as technology, industry, agriculture, and services. Attracting Investment: An environment that encourages innovation attracts both domestic and foreign investments, especially in modern technology and the digital economy. Enhancing Competitiveness: Innovation helps improve product quality and reduce costs, thereby increasing the competitiveness of national products in global markets. Requirements for Promoting Innovation and Entrepreneurship • Providing a supportive legal and regulatory environment • Facilitating business establishment procedures • Supporting financing for startups • Developing education and linking it to the labor market • Promoting a culture of creativity and initiative among youth Innovation and Entrepreneurship in the National Economy (Applied Perspective) In countries that rely heavily on natural resources, supporting entrepreneurial projects represents a strategic means of achieving economic diversification. Supporting startups in the fields of technology, agriculture, and industry can contribute to reducing unemployment, increasing exports, and achieving sustainable development.