We believe that economic growth is the only long-term solution to Latvia’s severe demographic, labour and welfare challenges.
However, economic growth is not automatic. Latvia must establish a legal basis and physical infrastructure to provide competitive national industries with the opportunity to flourish. The EUR 4.4 billion worth of European funding available to Latvia between 2014-2020 can serve as a powerful economic stimulus. However, there are no one-size-fits-all policies that suit all countries. Not every European Union initiative, no matter how valuable, will benefit Latvia. Different countries have different competitive advantages. Expert debates and discussion of the various policy options available are vital to identifying Latvia’s competitive advantages.
However, evidence and research based policy-making is not Latvia’s strong suit. There are only a few domestic sources of policy formulation and innovation in Latvia. The Saeima is the only legislature in the Baltic Sea region that does not have a research department to support deputies and political parties in drafting legislation and policies. Ministries lack resources, and studies, if they are conducted at all, are usually financed from European Union structural funds. Latvia’s political parties are small; they lack the personnel and financial resources required to develop and institutionalise research capacity. Latvia’s active think tanks and academic research centres are either geared towards participation in national and European Union research funded research projects or otherwise conduct national (Latvian) case studies as a part of large-scale comparative research projects. While this is both valuable and important, it also means that these institutions often lack a uniform and broader perspective of Latvia’s development.
The objective of Certus – an independent, non-partisan think-tank – is to focus on developing strategies, that can raise the competitiveness of Latvian industry and the Latvian economy as a whole.
We use a process that Harvard Professor Dani Rodrik termed strategic collaboration between the state and the private sector. We bring Latvian economists and researchers together with entrepreneurs, associations, NGOs and policy-makers with the aim of raising economic competitiveness. A deep, structured and ongoing dialogue will create ideas and policy initiatives that will propel Latvia towards faster economic growth.
At the centre of this strategic collaboration process is the annual Latvia Competitiveness Report.
It provides a study of Latvia’s current economic problems and challenges, an analysis of economic sectors, and proposes policy initiatives to increase competitiveness. In addition to the annual report, Certus will publish regular policy briefs that offer a review of current and potential growth drivers in various sectors, as well as analysis of current events.
This is not the first overview of Latvia’s competitiveness. In addition to the World Economic Forum’s annual country report on Latvia, in 2012 the Baltic International Centre for Economic Policy Studies (BICEPS) published the Latvia Competitiveness Report. This comprehensive and valuable publication offers a vital insight into various dimensions of Latvia’s competitiveness, including education, taxation and demography. The Certus report has a narrower approach, focusing on only two main ‘horizontal’ challenges and five industrial sectors. Moreover, we have formulated more precise, policy-oriented and feasible recommendations.
A large number of scholars and researchers from Latvia’s leading universities, business schools and research centres have taken part in researching amd writing this competitiveness report. They intensively collaborated with industry association, business, government and public sector experts and consultants over the summer months. They interviewed, researched, considered, discussed and developed innovative solutions to grow Latvia’s competitiveness.
The report touches on horizontal challenges, which encompass all aspects of Latvia’s economy including depopulation and regional development, SME access to finance and investment, as well as analysis of five economic sectors with major growth potential.
The recommendations are fiscally responsible. The report does not propose additional expenditures without specifying potential sources of funding – whether European Union structural funds or the reallocation of budget funds. In some cases no direct costs are necessary.