Despite the numerous works devoted to innovation, ways to encourage innovation activity are still unclear. The paper shows that an increase in the factors of production has a negative impact on productivity growth. It is also argued that to encourage firms to increase productivity, monetary...

The paper argues that inequality is due to a difference in profitability of firm, and the larger the difference in profitability between high profitable and low profitable firms, the lower the innovation activity. It is also claimed that at low inequality an increase in inequality slightly...