What is the most likely scenario for Latvia’s economic development? Discussed by experts and entrepreneurs / Article

On Monday, April 29, “Turība” Business School held a round of opinions or a discussion about the most realistic scenario of Latvia’s economic growth and whether we will save more and more in the future or spend directly.

Previously, a study by the Latvian Institute of Strategy and Economic Solutions looked at the future in Latvia until 2040 through four possible development scenarios:

• One of them envisages deepening the cooperation of the Baltic states, including the creation of a new common eastern border defense line.
• The second scenario envisages that Latvia would be one of the eight Nordic countries with an appropriate economic and political “model”. Taxes and prices of goods would also increase and, in the long run, welfare.
• In the researchers’ third vision of the future, Latvia continues its current growth rate and develops more slowly than neighboring countries.
• In the fourth variant, Latvia in 2040 is the most isolated and authoritarian country among the Baltic states.

In the discussion, the fourth scenario was called unlikely by businessmen and other participants in the discussion.

Experts mostly put the first scenario as the most desirable, but admitted that the most likely reality is the tired scenario of the existing pace. Daunis Auers, the author of the above-mentioned study, chairman of the board of the Institute of Strategic and Economic Solutions of Latvia, also agreed to this, at the same time highlighting Latvia’s potential in the context of the Baltic states.

“That we cooperate where we get some benefit and can also save money. For example, why don’t our diplomats cooperate? Do Latvia, Lithuania and Estonia really need their own representation in Madrid and Lisbon? The Nordic countries already have such unified representations, the most famous one is in Berlin , where there is one house where all five countries have based their diplomats. There are many such examples where it just makes sense for the Baltic States to cooperate. A good example is taxes. Do we really have to compete?

If we agree on common taxes, then we have an incentive to do a lot more qualitatively,”

said Auer.

Andris Vanags, chairman of the board of the company “Sakret holdings”, stated that the scenario of the current pace for business is deadly. He, too, is convinced that we should move in the aforementioned direction of closer cooperation between the Baltic states.

The chairman of the board of SIA “UPB Nams”, former director of the Latvian Investment and Development Agency (LIAA), Kaspars Rožkalns, currently does not see any indications that the current pace of development will change.

On the other hand, Rožkalns also mentioned the challenges in the field of investment regarding the desired Baltic cooperation scenario: “So we have to understand that in that case investments are attracted to the Baltics. And we are no longer measuring ourselves against Lithuania and Estonia, but we are probably measuring ourselves against Poland and the Scandinavian countries. And then I want to see how to construct it in such a way that it doesn’t matter whether the factory opens in Lithuania or Latvia. Because if we look at the cooperation between the Baltic countries, for example, “Rail Baltic” is where such cooperation is already taking place, but it is not so easy Therefore, I really hope that in future studies a concrete proposal will appear, how to find it,

why should the Estonians give up the Finns and why should the Lithuanians give up the Poles in order to be attracted to the Baltics.”

Meanwhile, sociologist, director of public opinion research center SKDS, Arnis Kaktiņš drew attention to the fact that the political and higher administrative elite are probably too comfortable in the existing situation. “They have largely disconnected themselves from all these dynamics. For one thing, if we take the pay levels at the top of the public administration, then we know that people are really comfortable there. And the same goes for the top political elite (party funding).

Those who are the real decision makers and movers, they are actually in a pretty comfortable position. And then the question of who and how will shake them out of that situation.

We can, of course, hold such discussions, but we need actions, not words,” said Kaktins.

The authors of the mentioned economic development scenarios – Latvian Institute of Strategy and Economic Solutions – are currently working on the next study on the vision of Greater Riga, which will be presented in October.