In today's global market, innovation is essential. Innovation is directly related to competitiveness. For a country to be competitive, it must also be innovative. The innovativeness and competitiveness of a country is influenced by many factors, among them the important role is played by the state as well as its policies. The way countries shape their innovation policies and the way they protect intellectual property are areas that affect innovation and, accordingly, competitiveness. Being innovative and competitive is of great importance for countries that want to grow their economy and provide a better standard of living for their citizens. Countries are therefore competing to achieve the best results in these areas. There are organizations that have developed a methodology for measuring innovation and competitiveness and that publish their results annually in the form of reports. Such reports provide a good basis for comparing countries. For measuring innovation, one of the most significant such reports is the Global Innovation Index, and for measuring competitiveness, the Global Competitiveness Report. Croatia and Estonia are European countries with similar geographical, historical and demographic characteristics; however, they differ significantly when looking at their levels of innovation and competitiveness. According to the Global Innovation Index and the Global Competitiveness Report, Estonia is far ahead of Croatia.