Innovation capacity - problems and solutions for successful development

Innovation capacity has to be viewed as a consequence of properly operating innovation system. Well established and functioning innovation system is a result of enhanced by government innovation policy. In comparison with other European Union (EU 27) countries, innovation capacity indicators in Latvia remain low and considerably underperform, reflected in the 'European Innovation Scoreboard 2008', where Latvia took the 30th place among 32 countries. Problems and solutions are illustrated to represent innovation capacity in Latvia. This article consists of the following parts: first - theoretical aspects are selected to describe the essential definition of the analyzed subject. In the second part, experience from abroad is described, at the end – Latvian innovation policy and situation is analyzed and suggestions for further needs are formulated. The main results of analysis show that only a few elements of innovation capacity building are functioning at Latvian enterprises, whose aim is to build a base for the innovation capacity of the country.