This paper is devoted to research of newest complex tendencies of innovation and business climate in Latvia and EU. The main goal of this papers is to give evaluation of the current situation, tasks and development trends. In Latvian industrial low value added branches are dominated. Various studies show that the economy is changing stereotypes, when the driver becomes the most significant creative ideas, knowledge and ability to reinvent. Basis for further successful economic development lies in the innovative development model, which is an important competitive factor in the crisis.