The global economy becomes more dependent on knowledge, on growth of production effectiveness and on harmonized interaction of all components of innovation system. On the basis of the research, which was done by the authors, the regional competitiveness model and Regional Competitiveness Index were worked out. They were applied to planning regions of Latvia. In the innovation sector Riga region is the most competitive that ranked the first place in all indicators characterising the innovation sector. The indicators of other planning regions significantly lag behind Riga region. By analysing the Innovation Index of the planning regions in dynamics it can be concluded that the Innovation Index does not have an expressed tendency to increase or decrease. It shows that in the innovation sector there is no significant increase or decrease of differences between the regions. In Latvia only 20% of enterprises are involved into innovative activities. The financing from state budget for science and research is less than in developed EU countries. One of the essential problems in the development of innovations in Latvia is insufficient cooperation between entrepreneurs and scientists. To promote and develop innovations in Latvia and its regions, it is necessary to increase government and private investments in the research and development; to promote transfer of knowledge and technologies in the industry; to increase capacity of innovation sector; to support development of new products and technologies; to develop innovation incubators, centres of competences in the regions.