In this work, we present a Monte Carlo simulational model of technological growth and innovation diffusion under the influence of government intervention. Our goal is to show how company markets behave under varying intensity and effectiveness of state intervention. We also aim to specify conditions in which government intervention increases economic growth. Using the Monte Carlo method, we performed vast simulations of interacting and competing companies in a market, under a varying degree of outside intervention. Our model's predictions about the average level of market technology were compared to empirical data for several countries. We found that there is no one-size-fits-all intervention policy. Our model also suggests that often the quality of the intervention is much more important than its quantity. However, a policy that maximizes economic growth must be tailored for each country, depending on its market's susceptibility to technological backwardness. Our model allowed us to find conditions for which an intervention policy can positively impact economic growth. Finding an intervention policy that will rapidly increase economic growth can be of profound practical importance, especially in the current pandemic situation. One of the most significant advantages of the model is its flexibility. It is easy to incorporate further extensions to the model that will make it more realistic in the future, such as specifying the state’s budget constraints and sources of funding for intervention.
