Over the last decade Slovenia has achieved clear and positive macro-economic results that have placed it among the most successful transitions countries. The basic indicators show that it has been integrating and catching up with European Union member states at an ever increasing pace. Despite this, the challenges of a global economy-where only innovation and entrepreneurship can compete successfully, and the relative lag in the competitive capacity of our economy behind numerous other countries in the world rankings, require drastic changes to be made to Slovenia’s economic structure to adopt as much as possible to the demands of the knowledge based economy. That means the transformation from an economy with low added value whose competitiveness is based on low operative costs into an economy based on production and service activities whose competitive advantages are high added value, quality, innovation and entrepreneurship. Entrepreneurship and the diffusion of innovation, which considerably increase the speed at which new high-quality and low cost products replace existing products, are two driving forces of the knowledge based economy and they are changing the economic structure of leading countries. These are also the two key factors in competitive advantage on a world scale. Slovenia lags behind the most economically successful countries in precisely these areas. Slovenia must therefore become more innovative and more entrepreneurial. Without competitiveness, there will be no stable economic growth, no high quality of living and no social cohesion. In the article I will create the diamonds of entrepreneurship activities. Although competitiveness, innovation and entrepreneurship fall within the domain of the private sector it is also undoubtedly true that business success is dependent on state policy, which sets the conditions for commerce. The new concept of qualitative economic development requires the directing of state policy away from traditional interventionist measures and towards the promotion of the development of knowledge, innovation, information and new technologies.