The aim of the research is to develop a sustainable economic environment. The key result – investigated innovation as factor of competitiveness for sustainable development of society. Latvia has set quantitative target to increase investment in research and development funding for 1,5% of the Latvian GDP by 2020. The main objective of the EU Sustainable development strategy are environment protection. Prevented and reduce environmental pollution, promote sustainable consumption and production, in order to prevent a direct link between economic growth and environmental degradation. In research the theoretical research methods, analysis of literature, documents, legislation, information obtained on the internet and graphic analysis were used. The results show, that science, technology, and innovation (STI) and innovation are crucial for sustainable long-term economic growth, both in developed and developing countries, even more so in the aftermath of the economic crisis. Action needs to be taken by governments at national and regional levels to help promote innovation, research, and development in both the private and public sectors, including putting in place the necessary “framework conditions” such as openness to international trade and investment