In today's business world of highly developed technology and easy availability, it is very difficult to stand out in business. This paper is focused on the European Union, which in the last few years has emphasized innovation policy and believes that it is the key to maintaining competitiveness in the world market. To succeed in competing in the market, the European Union adopted several strategies that member states are obliged to implement. Some of the strategies are Europe 2020 – a strategy for smart, sustainable, and inclusive growth, Cohesion Policy, and Horizon Europe. The purpose is to explain in more detail the importance and role of innovation in the economy, and how the European Union implements its policies. The work aims to investigate the strategies issued by the European Union and to recognize the advantages and qualities that they bring with them. The scientific methods used in the work are analysis method, description method, generalization method, proof method, synthesis method, compilation method, Delphi method, and statistical method. The results of the conducted research indicate that the European Union invests significantly less in research and development than its biggest competitors. Reduced productivity and unemployment stand out as a result of less investment in research and development. The EU finds solution to these problems in the adopted strategies for the following periods. It is important to improve the implementation of adopted strategies in all countries, the cooperation of member countries and better national implementation. The EU sees the potential of developing innovations in small businesses and start-ups, and with the help of adequate national strategy implementation, financial assistance, and qualified workforce, EU could become a leader in the world market.