The theoretical background of this work is based on Schumpeter's theory of economic cycle and the rationalisation for state intervention in the market research, development and innovation. Consequently is described the general background, which is based on the Seventh Framework Program and the definitions contained in the Frascati manual, and the Oslo manual. The analytical part consists of a sub-analysis, which focus on legislative and institucional framework in the Czech Republic and the expenditure, human resources and outputs of research and development. The sub-analysis is supplemented by comparisons with the position of Finland and the European Union. Part of the analytical section is an overview of programs to support research, development and innovation activities. Subsequently, the entire analytical part is summarized with the SWOT analysis. In conclusion of this work are outlined possible solutions to streamline the existing system in the Czech Republic in research, development and innovation.