Abstract

Relative strengths of the innovation system are in Innovation-friendly environment, human resources, and employment impacts. Relative weaknesses are in innovators, attractive research systems, and linkages. Notable structural differences are a larger share of employment in Agriculture & Mining, a smaller share of employment in High and Medium high-tech manufacturing, a larger share of micro enterprises and SMEs in turnover, a smaller share of large enterprises in turnover, a larger share of foreign controlled enterprises, lower GDP per capita, a higher growth rate of GDP, a lower and negative growth rate of population, and lower population density. According to the conducted studies, Latvia's economic development is impossible without implementing radical structural changes in the production and updating of its technologies, using modern advances in scientific and technological progress. It is precisely the application new advances in science and technology that allows for high profit for enterprises and stimulates economic growth of the country. It is possible to determine the possibilities of innovation and economic development of Latvia through the assessment of innovative potential. The country's innovative potential can be judged by the level of development of research and development work, educational institutions, and technical innovations.