In a theoretical and practicî-applicable aspect this paper has clarified the interaction between innovations and economic development. It has been proven that the positive influence of innovations on the economic development of open small-scale economies is determined by the specific public impact (governance) on the conversion of the new knowledge into a market product or service. A generalized analytical scheme of the main participants in this process has been suggested, the same being grouped in five basic interacting sectors: research and development, education, business, non-commercial and state, each of them having its international equivalents. It has been taken into account that the environment – legal, institutional and financial, renders substantial impact upon the efficiency of their interaction. The scheme has been proven by the practice of the European Union innovation policy. It is applied at the characteristics of the interaction between the innovations and the economic development of Bulgaria. It is used also in the analysis of the results of an inquiry carried out with 50 innovative organizations, the result of which allowed defining priorities for the national innovation policy.
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