The article deals with the issue of disparities in regional development. The approach implemented in this study is based on a modified production function, a follow-up evaluation of the quality of business environment (including groups of businesses, labour, regional and local, infrastructural, price and environmental factors) and aggregate factors concerning both the utilization of human resources (including the unemployment rate and economic sensitivity) and innovative potential (including the innovative activities of companies according to results of a Czech Statistical Office survey and Association of Innovative Entrepreneurship databases). The indicated methodology was applied to 206 micro-regions in Czechia and calculated values were subsequently aggregated at the level of 14 Czech NUTS 3 regions (kraj). Evaluation of the results obtained led to the formulation of a number of recommendations for regional policy applications, in terms of both traditional and strategic concepts of regional policy.