Danish

“A critical evaluation of

Latvian economic development;

past, present and future

by a foreign-born long-term resident”

Arrived in December 1993

Was meant to stay for one semester

Idea

It has been 25 years since independence

Can we be satisfied or should more have been done?

Time to take stock of what has happened

Mostly economic dataI am an economist after all……

A serious – but also light-hearted – look at

the data

GDP per capita, PPS, 2015, EU28 = 100Luxembourg excluded

EU28

Ireland

Netherlands

Austria

Germany

Denmark

Sweden

Belgium

United Kingdom

Finland

France Ita

lySp

ainMalta

Czech

Republic

Slove

nia

Cyprus

Portugal

Slova

kia

Estonia

Lithuan

ia

Greece

Poland

HungaryLat

via

Croatia

Romania

Bulgaria

0

20

40

60

80

100

120

140

160

GDP per capita, Nordics and Baltics, 2016

Norway Sweden Iceland Denmark Finland Estonia Latvia Lithuania0.00

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

The Baltics still significantly behind.

Can we be satisfied with the partial catch-up that has taken place???

GDP per capita, PPS, 1992 – 2015Denmark – Estonia – Latvia – Lithuania

19921994

19961998

20002002

20042006

20082010

20122014

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

40,000.00

45,000.00

50,000.00

DenmarkEstoniaLatviaLithuania

Latvia’s GDP per capita as a share of Denmark’s

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

0

10

20

30

40

50

60

GDP per capita, USD, 2015, PPS, former USSR republics

Estonia

Lithuania

Russia

Latvia

Kazakh

stan

Azerbaija

n

Belarus

Turkm

enistan

Georgia

Armenia

Ukraine

Uzbekis

tan

Moldova

Kyrgyz R

epublic

Tajik

istan

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00

GDP per capita, Baltics and Russia, 2016

Estonia Latvia Lithuania Russia0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

35,000.00… but this is just not satisfactory!!!

USD

GDP per capita, Latvia and Ukraine, USD at PPS1992: Similar, 2014: 2.9 : 1

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20140.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

LatviaUkraine

LatviaEconomic growth 1991 – 2015

19911992

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

20132014

2015

-40

-30

-20

-10

0

10

20

Russian crisis

Transition

Banka Baltija

The ‘fat years’

Financial crisis

Recovery

Slowdown:• Russia• Eurozone• Banking

Economic growth, China and Latvia, 1993 – 2015

19931994

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

20112012

20132014

2015

-20

-15

-10

-5

0

5

10

15

20

ChinaLatvia

GDP per capita, USD, PPS, China and Latvia

19921993

19941995

19961997

19981999

20002001

20022003

20042005

20062007

20082009

20102011

20122013

20142015

0.00

5,000.00

10,000.00

15,000.00

20,000.00

25,000.00

30,000.00

ChinaLatvia

Relentless Western orientation“Western” organizations as anchors for development

• International Monetary Fund• World Bank• World Trade Organization

• European Union• Eurozone• OECD

Unemployment rates, 2014Latvia and its regions

Latvia Riga region

Pierīga region

Vidzeme region

Kurzeme region

Zemgale region

Latgale region

Urban Rural0

2

4

6

8

10

12

14

16

18 Too high, too much structural unemployment

Too uneven – and always has been

Latvia: Labour force and employment2002, Q1 – 2016 Q2, 1000s

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015600

700

800

900

1000

1100

1200

Labour forceEmployed persons

Today: Just 999,000 in the labour force

2007 Q4: 1,080,000 persons employed

Inequality:Gini coefficient, 2015 EU28 + Iceland and Norway

Iceland

Norway

Czech

Republic

Sweden

Netherlands

Denmark

Hungary

France

Croatia

Ireland

United Kingdom

Portugal

Spain

Latvia

Romania

20.0

22.0

24.0

26.0

28.0

30.0

32.0

34.0

36.0

38.0

40.0

Nordics

Baltics

Catching-up scenarios2015: Latvia at 64% of the EU average income per person

20142016

20182020

20222024

20262028

20302032

20342036

20382040

20422044

50

70

90

110

130

150

170

EU28LV 5.5%LV 7.5%LV 10%

Catching-up scenarios2015: Latvia at 64% of the EU average income per person

20142016

20182020

20222024

20262028

20302032

20342036

20382040

20422044

50

70

90

110

130

150

170

EU28LV 3%LV 5.5%LV 7.5%LV 10%

Personal reflection on Latvian politics- very much seen through the eyes of a foreigner….

…..thus perhaps finish like this????

Thank you for your attention!Questions and comments are welcome

Stockholm School of Economics in Riga

Founded 1994