LV

COUNTRYPROFILE LATVIA

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IMD World Competitiveness Yearbook, Talent & Digital 2020: summaries

WORLD COMPETITIVENESSRANKING 2020

All data are available from theWorld Competitiveness Online.

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BASIC FACTSCapital

Land area (square km '000) 652019

Exchange Rate (per $) 0.8932019

Population - market size (millions) 1.922019 59

Gross Domestic Product (GDP) (US$ billions) 34.12019 59

GDP (PPP) per capita (US$) 30,9772019 40

Real GDP growth (%) 2.22019 28

Consumer price inflation (%) 2.752019 43

Unemployment rate (%) 6.502019 43

Labor force (millions) 0.972019 59

Current account balance (% of GDP) -0.522019 38

Direct investment stocks inward ($bn) 17.32018 61

Direct investment flows inward (% of GDP) 2.642019 22

PEER GROUPS RANKINGSEUROPE - MIDDLE EAST - AFRICA (40 countries) POPULATIONS < 20 MILLION (34 countries)

COMPETITIVENESS TRENDS - OVERALL

LATVIAOVERALL PERFORMANCE (63 countries) Rank

Riga

CHALLENGES IN 2020Covid-19 crisis and recovery from it.

Banking sector reform.

University of Latvia Centre for European and Transition Studies,

LU CETS

COMPETITIVENESS LANDSCAPE

3740 40 40 41

2016 2017 2018 2019 2020

51

37

62

52

2226

44

30 32 33

43 4351

3438 37

24

54

3226

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Tax

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Busi

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Leg

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Soci

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Fra

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Prod

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Effi

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Man

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Prac

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Att

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Economic Performance Government Efficiency Business Efficiency Infrastructure

24

27 27 27 27

2016 2017 2018 2019 2020

22

25 25 24 25

2016 2017 2018 2019 2020

• Covid-19 crisis and recovery from it.• Banking sector reform.• Territorial reform and growth in peripheral regions.• Increase in wages and insufficient productivity.• Increase in inequality due to low redistribution through the tax

and benefit system.

Provided by:University of Latvia Centre for European and Transition Studies, LU CETS

IMPROVEMENTSWCY 2019

WCY 2020 DECLINES

WCY 2019

2.3.08 Exchange rate stability 0.046 0.005 4.4.23 Environment-related technologies 0.01

2.1.02 Government budget surplus/deficit (%) -1.00 -0.21 1.1.18 Gross fixed capital formation - real growth 16.39

1.2.02 Current account balance -0.96 -0.52 3.2.14 Labor force long-term growth 2.39

2.1.09 Public finances 4.21 5.51 1.1.14 Real GDP growth 4.8

2.3.10 Adaptability of government policy 4.17 5.29 1.1.15 Real GDP growth per capita 5.62

3.4.10 Social responsibility 4.50 5.69 1.4.04 Employment - long-term growth 6.34

4.3.02 Total expenditure on R&D (%) 0.51 0.64 2.4.18 Immigration laws 5.13

1.4.10 Youth exclusion 10.3 7.8 3.3.16 Credit 5.54

1.4.08 Long-term unemployment 3.10 2.40 2.4.02 Protectionism 6.79

4.4.04 Health infrastructure 3.96 4.80 2.4.09 State ownership of enterprises 6.75

2.1.11 Pension funding 4.00 4.71 2.2.12 Real personal taxes 5.29

4.2.18 Cyber security 5.92 6.93 4.2.14 Funding for technological development 6.46

4.3.22 Knowledge transfer 4.33 5.02 3.2.21 Brain drain 3.63

4.4.18 Renewable energies (%) 38.2 44.0 3.3.19 Corporate debt 5.88

4.3.05 Business expenditure on R&D (%) 0.14 0.16 3.3.06 Banking and financial services 5.54

COMPETITIVENESS EVOLUTION & ATTRACTIVENESS INDICATORS

LATVIACOMPETITIVENESS EVOLUTION

0.00

2.96

5.04

4.27

4.62

5.69

5.78

5.20

The criteria below highlight the 15 biggest Improvements and the 15 biggest Declines in the overall performance of the economy. They are

determined by the largest percentage changes in the value of each criterion from one yearbook to the next.

WCY 2020

4.95

KEY ATTRACTIVENESS INDICATORSFrom a list of 15 indicators, respondents of the Executive Opinion Survey were asked to select 5 that they perceived as the key

attractiveness factors of their economy. The chart shows the percentage of responses per indicator from the highest number of responses

to the lowest.

3.06

1.06

2.2

4.62

5.69

3.20

2.2%6.7%11.1%11.1%15.6%17.8%17.8%20.0%22.2%35.6%40.0%48.9%57.8%62.2%64.4%

0% 10% 20% 30% 40% 50% 60% 70%

Effective legal environmentQuality of corporate governance

Policy stability & predictabilityCompetency of government

Strong R&D cultureCompetitive tax regime

Access to financingEffective labor relations

Open and positive attitudesBusiness-friendly environment

Dynamism of the economyReliable infrastructureCost competitiveness

Skilled workforceHigh educational level

WORLD COMPETITIVENESSDIGITAL RANKING 2020

All data are available from theWorld Competitiveness Online.

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Alpha AlphaLabelBeta BetaLabel Gamma GammaLabel1 2 2 2 2 2 24 4 4 2 2

6.5 4 4 2 28.5 4 4 2 211 4 4 2 2

2016 2017 2018 2019 2020

33 35 35 36 38

33 34 34 36 36

33 32 32 23 34

39 41 39 45 42

OVERALL

Future readiness

PEER GROUPS RANKINGS

EUROPE - MIDDLE EAST - AFRICA (40 countries) POPULATIONS < 20 MILLION (34 countries)

COMPETITIVENESS & DIGITAL RANKINGS

Technology

DIGITAL TRENDS - OVERALL

LATVIA

OVERALL PERFORMANCE (63 countries)

OVERALL & FACTORS - 5 years

Knowledge

33 35 35 36 3837 40 40 40 41

2016 2017 2018 2019 2020

Digital

Competitiveness

23 24 24 2527

2016 2017 2018 2019 2020

22 23 23 23 24

2016 2017 2018 2019 2020

36 27 27 49

34 37 50 1338

42 51 45 37

Knowledge Talent Training & education Scientific concentration

Technology Regulatory framework Capital Technological framework

Future readiness Adaptive attitudes Business agility IT integrationThe direction of the triangle indicates the performance change from the last year: improved or stabledeclined

Overall Factors Sub-Factors

N.B. This graph provides only a comparison of the country’s performance in the two rankings.

u Overall top strengths

w Overall top weaknesses

Subfactors 2016 2017 2018 2019 202028 29 28 32 27

12 20 28 27 27

48 47 46 47 49

Talent Rank Rank Rank

Educational assessment PISA - Math 23 39 46 International experience 29 u 12 37 Foreign highly-skilled personnel 40 32 u 4 Management of cities 32 18 w 53 Digital/Technological skills 26 46 39 Net flow of international students 32 25 34 49

Subfactors 2016 2017 2018 2019 202035 34 31 30 37

45 31 36 35 50

23 24 26 14 13

Regulatory framework Rank Rank Rank

Starting a business 15 - 25u Enforcing contracts 14 40 20w Immigration laws 61 52 u 13 Development & application of tech. 35 36 u 14 Scientific research legislation 44 39 18 Intellectual property rights 39 w 54 20

Subfactors 2016 2017 2018 2019 202038 46 52 52 51

46 41 41 47 45

38 36 37 44 37

Adaptive attitudes Rank Rank Rank

w E-Participation 59 39 43 Internet retailing 34 w 58 49 Tablet possession 28 42 14 Smartphone possession 49 30 40 Attitudes toward globalization 45 41 41

Training & education Scientific concentration

Talent

Robots in Education and R&D

IT integration

Business agility IT integration

Scientific concentration

Capital Technological framework

FACTORS BREAKDOWN - STRENGTHS AND WEAKNESSES

LATVIA

FUTURE READINESS

TECHNOLOGY

Technological framework

Opportunities and threats E-GovernmentWorld robots distribution Public-private partnerships

IT & media stock market capitalization Communications technology

Regulatory framework

Capital

KNOWLEDGE

Entrepreneurial fear of failure

Agility of companies Cyber securityUse of big data and analytics Software piracyKnowledge transfer

Adaptive attitudes

Business agility

Venture capital Internet bandwidth speedInvestment in Telecommunications High-tech exports (%)

Funding for technological development Mobile Broadband subscribersBanking and financial services Wireless broadbandCountry credit rating Internet users

Training & education

Employee training Total expenditure on R&D (%)Total public expenditure on education Total R&D personnel per capitaHigher education achievement Female researchersPupil-teacher ratio (tertiary education) R&D productivity by publicationGraduates in Sciences Scientific and technical employmentWomen with degrees High-tech patent grants

WORLD TALENTRANKING 2020

All data are available from theWorld Competitiveness Online.

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Alpha AlphaLabel Beta BetaLabel Gamma GammaLabel1 2 2 2 2 2 24 4 4 2 2

Value

u 5.8 % 12 4,975 US$ 34u 12.00 ratio 14u 9.53 ratio 13 5.07 Survey [0..10] 32 5.69 Survey [0..10] 39u 50.07 % 3 4.80 Survey [0..10] 43

Value

76.20 index 26w 6.04 Survey [0..10] 50 5.86 Survey [0..10] 35w 3.20 Survey [0..10] 54 6.09 Survey [0..10] 41 4.89 Survey [0..10] 40w 11,431 US$ 51 103,020 US$ 46 22.84 % 47 5.11 Survey [0..10] 38 14.11 micrograms 26

Value

w -1.11 % 60 5.60 Survey [0..10] 40 6.09 Survey [0..10] 40 5.86 Survey [0..10] 29 5.87 Survey [0..10] 32 6.58 Survey [0..10] 28w 20.17 % 47 6.22 Survey [0..10] 34 6.36 Survey [0..10] 36u 7.60 Survey [0..10] 19 3.91 number 22 487 Average 28

Investment & Development 2020 Rank

Health infrastructure meets the needs of society

2020 Rank

Total public expenditure on education Percentage of GDP

ApprenticeshipsEmployee training is a high priority in companies

Readiness 2020 Rank

Educational assessment - PISA PISA survey of 15-year olds

Appeal

Exposure to particle pollution Mean population exposure to PM2.5, Micrograms per cubic metre

Labor force growth Percentage change

Index of a basket of goods & services in the main city, including housing (New York City = 100)

Skilled labor is readily available

Cost-of-living index

Female labor force Percentage of total labor force

Pupil-teacher ratio (secondary education) Ratio of students to teaching staff

are sufficiently implemented

Total public exp. on education per student Spending per enrolled pupil/student, all levels

Pupil-teacher ratio (primary education) Ratio of students to teaching staff

Management education meets the needs of the business community

Language skills are meeting the needs of enterprises

Student mobility inbound Foreign tertiary-level students per 1000 inhabitants

Primary and secondary education meets the needs of a competitive economy

Graduates in Sciences % of graduates in ICT, Engineering, Math & Natural Sciences

University education meets the needs of a competitive economy

Finance skills are readily available

International experience of senior managers is generally significant

Competent senior managers are readily available

Justice is fairly administered

Gross annual income including supplements such as bonuses, US$

Remuneration of management Total base salary plus bonuses and long-term incentives, US$

Effective personal income tax rate Percentage of an income equal to GDP per capita

Attracting and retaining talents is a priority in companies

Worker motivation in companies is high

Brain drain (well-educated and skilled people) does not hinder competitiveness in your economy

Quality of life is high

Foreign highly-skilled personnel are attracted to your country's business environment

Remuneration in services professions

OVERALL PERFORMANCE (63 countries)

IMD World Talent Ranking 2020

LATVIA

30

35 35 34 33

9

1311 12

15

46

52 52

4851

4138

4340 40

2016 2017 2018 2019 2020

Overall

Investment &Development

Appeal

Readiness

15

5133

40

Investment & Development

Appeal

Readiness

The direction of the triangle indicates the performance change from the last year: improved or stabledeclined

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IMD WORLDTALENTRANKING 2020

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