In the last few years lively discussions have been held in Estonia about what the country’s hitherto economic growth has rested on and how to speed it up in order to catch up with the average living standard of the European Union. Current Review of research and development activities analyses the foundations of the hitherto economic growth in Estonia and relates these to the objectives of the strategy Knowledge-based Estonia. Compared to the previous research and development studies this analysis pays more attention to the economy, its competitiveness, innovativeness and demand for research and development. The Review relies on various international surveys that have analysed the competitiveness of Estonian economy, combines their conclusions into an integrated whole, and analyses the situation in the context of implementing the strategy Knowledge-based Estonia.