Economic growth and the welfare of nations today depend mainly on innovation. For this research purposes term innovation authors understand as a designing, creative and collaborative process on all levels, starting from the team and the company to the country. There are many successful countries in the world what we can analyse as an example for growing innovative capacity. One of reasons of the emergence of innovation performance gap among countries is different innovation ecosystems and approaches to development of national economies. According the information of the annual Innovation Union Scoreboard (furthermore - IUS) which provides a comparative assessment of the research and innovation performance of the EU Member States and is considered as the main evaluation system of innovation performance in EU countries. Latvia as a small country with 64 589 sq/km area and 2 070 371population is one of European economies with innovation performance well below of the EU average. At the same time Israel - other small country with 770 sq/km area and 7 306 000population according to statistics is considered among the best in a world in seeking for the key to innovation. Israel is one of the world’s foremost idea factories, and provides clues for the meta-ideas of the future and the world has much to learn from it. What can Latvia learn from Israel in the area of innovation? The research methodology is based on the systematic review of different literature sources (overview, rapid review), case studies, interviews of experts, and identification of main ecosystem elements. There is a discussion about: Education system: 45 percent of Israelis are university educated, furthermore university education meets the needs of a competitive economy. In the military people obtain experience, perspective, and maturity at a younger age they are in an environment where they have to make life-and-death decisions, learn about discipline, learn about training of mind to do things; › Government’s support: innovation friendly legislation, government’s decision to invest to create ten new venture capital funds, to promote Israel’s start-ups; › Business culture: A cultural core built on a rich stew of aggressiveness and team orientation, on isolation and connectedness, and on being small and aiming big; › Technological innovation: Innovations in technologies are very important ingredient to ensure growth of entrepreneurship. Israel provides innovations that change global industries. To create such groundbreaking innovations, special skills and culture are needed for all involved parties – engineers, scientists, entrepreneurs and marketing experts. Israel’s military industry must be mentioned as it plays important role in creation of spin-off companies; › Foreign direct investments: The good signal for investors is the fact that after the United States, Israel has more companies listed on the NASDAQ than any other country in the world. Within an investigation authors answer the research question and recommend to build legislative framework within which Latvia can create appropriate innovation ecosystem. Education system of Latvia and science and technology management is mentioned in the conclusions of the article as main areas for further research.