The research results indicate some new aspects concerning the role of the government in acceleration of economic development. Based on economic theory which places the increase of competitiveness in the in the center of economic policy, it was found that the market by itself does not ensure an optimum speed of transfer and generation of knowledge in developing economies. In economic literature entrepreneurship is accepted as the basis of competitiveness, but the market itself does not necessarily generate sufficient entrepreneurial activity. In the countries where entrepreneurship is lagging, economic policy can significantly accelerate the development of entrepreneurship. In the transfer and generation of knowledge among enterprises, it is shown that government progress can accelerate the process of cooperation among enterprises without jeopardizing the competition among enterprises on the final markets. Also, organizational and management knowledge in the framework of enterprises are not generated spontaneously at sufficient speed and therefore the government can accelerate the introduction of such knowledge by subsidizing acquisition and introduction of such knowledge. This is in accordance with the fact that knowledge is a public good and therefore the market does not supply it in optimal quantity and structure. The traditional approach to acceleration of generation of socially and economically useful knowledge is awarding of patents and licenses. Alternative approach is the purchase of patents, license and other knowledge rights by the government and giving this knowledge to the general use. The research on this problem will in future gain in importance and research results of this research program will be an important contribution to the understanding of this problem. The leader of the research group became a member of the prestigious international competitiveness forum the International Competitiveness Council The research of the research problem is also an important contribution to the application of structural models in entrepreneurship research. One of the members of the research program received award for the best entrepreneurship research paper at the yearly conference for management science, Academy of Management, Toronto, 2000. Within international circles of competitiveness and entrepreneurship research, the work of the members of this group is increasingly acknowledged.