Analysis and understanding of the national innovation system can help policy-makers to identify strategies for improving innovative performance and overall competitiveness of the national economy. Nowadays we know too little about how to identify and measure specific problems in the system (if at all possible), despite several attempts to define them. Until now, little analysis on the Latvian innovation system was made. The paper aims to analyse the Latvian national innovation system and to provide a factors of well-functioning Latvian national innovation system. This research gives a possibility to researchers and policy makers to investigate the mismatch between policies and problems and identify policy gaps.