The research programme has in the context of new growth theory introduced some specific features typical for small economies and for post-socialist transition countries, new EU members. Innovation model is based on innovation, new quality products, imperfect markets and knowledge based growth. On the basis of intensive collaboration with foreign research institutions (Joanneum Research - Graz, Fraunhofer ISI - Karlsruhe and VATT - Helsinki) the new methodologies were introduced in the analyses of international competitiveness at macro, mezzo and enterprise level. Within KNOGG project 5 books were published. For the first time HERMIN model was estimated for the purpose of analysing the functioning of Slovenian economy. This model was primarily intended to analyse peripheral EU economies (Ireland, Spain, Portugal, Greece). Later, Slovenia was included. This model was chosen because: - it is based on the theory of small open economies, - it combines Keynesian theory with the elements of the supply side theory, - it is based on statistical national accounts.