Innovation in Vidzeme Planning Region is realised in the frame of National innovation system, the elements of which correspond to innovation and innovation system theories, and the best practices of which are applied in the most innovative countries of the world. Nevertheless, innovation in Vidzeme Planning Region is fragmented and is being introduced slowly, and its impact on economic development is faintly visible. It witnesses a problem, which was identified, analysed and its solutions searched by the authors. The aim of the paper is to research the potential of capacity building of innovation system elements in Vidzeme Planning Region. For the achievement of the objective the following tasks were carried out: 1) to analyse the most significant theories on innovation, innovation systems, and regional economic development; 2) to characterize and analyse the innovation system in Vidzeme Planning Region and capacity of innovation elements; 3) to work out the capacity building opportunities and directions of innovation elements of Vidzeme Planning Region. In scope of the research, the essence of innovation was identified, theoretical aspects of innovation system and its elements were examined; the elements of innovation system were defined; the existing elements of innovation system in Vidzeme Planning Region were identified, analysed and assessed; and proposed capacity building measures of the elements of innovation system were elaborated by the authors. The authors have concluded that Vidzeme Planning Region has the necessary elements of innovation system in place; the capacity of these elements is insufficient; and the preconditions and opportunities exist for increasing the capacity.
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