Today, innovation performance is widely recognised as a crucial determinant of economic growth and a means to address global challenges, such as climate change, food security and public health. As noted in the G20 Blueprint on Innovative Growth, technological progress will be key to achieving the Sustainable Development Goals (SDGs) of the United Nations.
Based upon the degree to which the innovation presents an advancement of the state of the art, economists distinguish between incremental and radical innovation. Whereas incremental innovation involves refinements and relatively small extensions of existing technologies, radical innovation produces considerable technological advancements that have the potential of completely substituting products and industries by new ones. However, in practice, any radical improvement of a technology invariably draws on a series of incremental improvements.