The article examines investments in research and innovation of EU Member States. It determines that innovations play a crucial role in economic development and the growth of countries' wealth. The work found that the European Union, trying to compete with other world economies, creates a framework of innovation policy to introduce, support, and spread innovative potential in all spheres of socio-economic life. The economies of the most prominent innovators among European countries in their vital strategic documents strongly emphasise sustainable and "green" economic growth. It has been identified that the innovation policy of the EU is based on supporting the sphere of entrepreneurship. The author concluded that sustainable economic development is increasingly linked to the ability of regional economies to innovate and transform, adapting to a constantly changing and more competitive environment. This means that the EU needs to do much more to create ecosystems encouraging research and development, innovation and new types of entrepreneurship. Innovation is key to several EU priorities, including the European Green Deal, an economy that works for people, and creating a Europe that is fit and competitive as the fifth stage of industrialisation unfolds in the new digital era.