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Globalization is a fact in the 21st century and due to that, Silicon Valley and Asian Tigers are only next door to European gateways. Thus, all theories demanding new approach to the economy, new basic understanding of driving forces in economic growth and world competitiveness, are driven from the simple truth there is no other choice as to improve the European growth capacity through knowledge, intellectual capital, innovation and theories of management that concentrate on knowledge management. The main idea of this work is to find concepts, theories, best practices for innovative capacity building in Estonia, what must be done to bring along changes to further knowledge economy and innovation in Estonia.