Abstract
Innovation is the key factor for economic growth. RDI policies pursued in a wholesome manner can have long term social significance. The true value of an invention depends upon factors such as its economic value, strategic value, cultural value and social value. Estonia and Germany share a long historical and legal connection. The German economy is strong and Germany has safeguarded it’s manufacturing, mining and construction sector through incremental innovation and focused state funding for RDI activities. Germany runs cost efficient entrepreneurship promotion programs. RDI in Estonia is dependent upon EU funding. Estonia lags behind Germany in respect of several global rankings related to technology and innovativeness. To make the Estonian economy knowledge-driven and technologically intensive, the state must focus on cultural, economic, social and strategic factors. Estonia should adopt RDI policies similar to Germany and also use the new UP regime to help its SMEs to acquire foreign patents.