SUMMARY
The object of research is the small and medium size enterprises (SMEs) of Taiwan. The implementation of the program Europe 2020 – construction of the innovation economy of the European Union (EU) countries is a priority of the EU. In Latvia, both on average and in the EU, 99.8 % of enterprises are SMEs. The search for indicators that influence the creation of an innovative economy and the inclusion of small and medium-sized businesses in the innovation environment is a problem not only for Latvia and the Baltic countries, but for the whole EU.Taiwan is one of the «Asian tigers», which made a huge economic jump-start from an agrarian country to an industrial one. The release in 2016 of a number of high-tech products, such as: Motherboards – 89.7 % of the world market, Cable CPE – 84.5 % and Notebook PCs – 83.5 % of the global market place. The country in a number of countries with innovative economies.Therefore analysis of Taiwan’s experience in building an innovative economy deserves further study and implementation in other countries.For the research, the author used the following methods: content analysis – Information source form and content of a systematic, numerical processing evaluation and interpretation,and statistical analysis – Pearson, Spearman and Tau-Kendall correlation method. Using these methods indicators affecting the number of SMEs were selected. During the theoretical analysis, the author has formulated the advantages of small and medium businesses, conducted a search for indicators affecting small and medium enterprises and their involvement in the innovative environment of Taiwan.The establishment of a linear relationship and the use of the correlation analysis of Pearson, Spearman and Tau Kendall, using SPSS program allowed the author to find the relationship between the indicators:Number of Researchers (full time equivalent);Annual Papers in Science Citation Index (SCI);Annual Papers in Engineering Index (EI);Number of SMEs;Total Employment SMEs;Number ofregistered patents.The use of interrelated indicators solves an important economic task – improving the standard of living of the population based on innovation. Evaluation of these perfomences in the EU countries using econometric methods will allow to implement the innovation policy of states.