Summary 

Institutions play an important role in the interplay of subjects in the knowledge economy, as in any other economic system. They help to build a sustainable structure of interaction and impact the economic process through the exchange and production costs.

For the development of the knowledge economy, it is important to create incentives that encourage the activation of innovation activities, increase the commercial attractiveness of innovative projects and more. Although there are various methodologies for determining the level of innovation development of a country in world practice, the problem of measuring it is an important issue in the knowledge economy.

Undoubtedly, in a knowledge-based economy, countries that have a promising scientific background and have managed to create relatively effective institutional conditions for innovative activities will gain advantage on the world market. Innovative development institutions are state policy instruments that stimulate innovation processes.

The European Bank for Reconstruction and Development views Georgia as a country with a low innovation culture. This is mainly explained by the fact that very little funding is invested in research and development in Georgia, which impedes innovation. In order to develop an innovative economy, first of all, it is necessary to develop a state policy that will create a favorable environment and conditions for the development of an innovative economy. To this end, priority must be given to the development of the scientific and research field, and close collaboration between science and research institutes and the scientific sector of manufacturing, production and services and the educational complex should be pursued. Otherwise it would be impossible to create and develop the country's innovative potential.