Every innovative product or solution that has been in use during history has certainly had an impact on the development of that country's economy or even wider. Innovations will firstly be verified in crafts and small and medium-sized businesses. The introduction of a new product on the market is a long-lasting, hard-laboring and developmental process that requires at least 10 years of investments. The paper deals with the impact of innovation on the economy and it has been written from the perspective of a real Croatian innovator. It studies the world trends and the situation in Croatia. At the beginning author speaks about innovations, entrepreneurship and the economy and their interconnectedness. He makes historical cross-section of innovation and entrepreneurship, mentioning influential people and innovations, and contemporary trends in innovation. He also mentions a negative phenomenon in the world of innovations that in today's world of globalization is getting more and more present. It is the phenomenon called "innovation-mercantilism" which even international organizations such as the WTO, the MMF or the World Bank cannot successfully control in spite of the signed agreements regulating mutual trade relations. Author also speaks about innovations in the Croatian economy, the position of innovators, what steps the Croatian government is undertaking to create favorable conditions for innovation and entrepreneurship, the historical cross section of Croatian innovation made through a list of the most influential inventions and their authors. As a backbone of this paper author talks about an innovation product made in Croatia which was commercialized. Through this example one can get the best insight into the real situation of innovation policy in Croatia. The effects and concrete actions on innovation policy, according to the actual author's experiences, are still of a cosmetic nature, i.e. they do not work properly in real life. The state and various associations and organizations must provide support to innovators and entrepreneurs through a quality innovation strategy, a series of legal and regulatory tools, leadership through the process of product commercialization and business start-ups, tax incentives, removal of administrative barriers and help product placement in new markets.