In 2006, twenty-six of the world’s most powerful leaders held a business meeting in Riga, Latvia to talk about the future. In addition to the presidents and prime ministers that led the official country delegations, NATO’s Riga Summit brought over 3,000 foreign policy, defense and political experts to the Olympic Center in Rīga on November 28th.

Just six months earlier, across the street from the Olympic Center at the newly completed Arena Riga, over 300,000 fans watched the world’s top hockey teams play in the 2006 World Hockey Championship.

Both of these events were historic, not only for Latvia’s capital of Rīga, but for the entire Baltic Sea region. The huge scope, professional organization and stunning success of both large scale events were all a testimony to the economic, political and cultural achievements of Latvia over the last 16 years. They also demonstrated the increasingly important strategic role Latvia and the city of Rīga are playing in the new NATO and European Union.

Although Latvia joined the EU and NATO only in 2004, it quickly proved the wisdom of pro-enlargement supporters. Along with its neighbors Estonia and Lithuania, Latvia has served as a keystone in the growth and renewal of a revitalized and dynamic Baltic Sea region.

According to the International Monetary Fund, Latvia’s  “past decade’s successful structural reforms, economic growth, pace and integration into the EU have made it possible for Latvia to set lower interest rates, acquire EU financing and promote foreign funds influx into the banking sector.”

As a result, Latvia has grown in all sectors such as manufacturing, construction, agriculture, transit, services and tourism, and has doubled its amount of investment in fixed assets over the last years. Latvia has been among EU leaders in the growth of investments and their share in the GDP.

 

During the first half of 2008, Latvia saw continued growth of exports in such sectors as wood and wood products (18.4%), metals and metal products (18.1%), and machinery and electrical products (11.6%). Latvia’s most active trading partners in terms of import and export during this period have been Lithuania, Estonia, Russia, Germany, Sweden, Denmark and the United Kingdom. In the service sector, including shipping, transport, financial services, and advertising and marketing services, Latvia’s key partners have been Lithuania, Switzerland, the United Kingdom and Germany.

With over 20 commercial banks, a full array of e-banking capabilities and the solid backing of foreign investment from Sweden, Germany and Finland, Latvia’s banking system is one of the most modern and convenient in Europe. Internet and mobile banking, and an extensive network of ATM terminals across the country, is helping both business and tourism grow at record rates.  

Major events such as the NATO Summit, World Hockey Championships and the Eurovision Song Contest are emblematic of Latvia’s appeal as an attractive and convenient site for a wide array of international political, business and cultural gatherings. For example, in October 2008, Rīga hosted the International Urban Development Association’s “ INTA32 World Development Congress.” Rīga has been recognized as a true jewel of the Baltic and has become a magnet for a wide range of events and new development projects.

 

The construction of a spectacular UNESCO-backed National Library Building is underway in the heart of Rīga and has won praise from international architects and city planners. A new concert hall and modern art museum are also projected for the Rīga riverfront. Together, these three large facilities dedicated to the arts and knowledge are expected to give Latvia’s capital a bold new look to complement its historical skyline. Business and leisure tourism continues to grow but at lower rates after spectacular growth rates in previous three years.

According to the World Travel and Tourism Council, by the end of 2008 Latvia is expected to reach the 7th highest growth rate of capital investment in travel and tourism. With the addition of RyanAir, Norwegian Air Shuttle other high volume airlines, Riga’s International Airport has become one of the few European hubs handling both full service and low-cost airlines. Passenger turnover increased 77% in 2005, 33% in 2006 and 27% in 2007. According to IATA , by 2018 it is projected to reach 8.2 million passengers per year. To meet this increased demand, the airport runway has been extended by 650 metres, reaching a total length of 320 metres. This allows Riga International Airport to provide unlimited service for intercontinental flights and can accommodate the largest airplanes serving the tourism industry, including the “Airbus A 340” and Boeing 747, 757, 767 and 777 planes.  

 

In 2007, the number of foreign tourists crossing Latvia’s borders reached 5.2 million, which is a 12% increase over 2006. Among the reasons for this growth are an increase in the number of direct flights into Latvia, lower cost airfares and services, and a continuously expanding offering of tourist-class hotels. In the first half of 2008, the number of people using Latvia’s hotels and other housing services increased by 8%, reaching a record level of 683, 900 customers served.

Latvia has been one of the most productive users of EU Structural Funds, and has made EU funding a part of its long term economic strategy. The Latvian National Development Plan for 2007-2013, approved by the Latvian government in 2006, focuses on the development of a knowledge-based economy and targets EU Structural Funds as an essential tool to achieve concrete growth goals during this period. Working within the framework of the ‘Entrepreneurship and Innovation’ program, 27% of the 737 million euro budget is earmarked for innovation-based projects.

The Latvian government continues to take steps to maintain Latvia’s leading role as a magnet for new investment in the EU. The Ministry of the Economy is looking at new ways to ensure an attractive business environment. It is actively promoting the development of small and medium-sized enterprises in Latvia. It seeks to increase export and entry into new markets while consolidating its strong position in current ones. It is working with the EU to achieve a safe, balanced and high-quality supply of energy to consumers. And it is taking measures to ensure consumer protection and confidence.

While a member of the EU and NATO, and a strong supporter of Transatlantic cooperation, Latvia’s foreign and economic policies extend beyond the member countries of these important organizations. No longer just a consumer of security and assistance, Latvia is now contributing to international peacekeeping operations and development assistance programs in many strategically important countries. Latvia has 45 permanent diplomatic representations around the world, including China, Japan, the United States, Turkey and Israel. Honorary consuls in Asia, South America, the Middle East and Africa extend Latvia’s diplomatic reach and help promote business and investment opportunities in every region of the globe. Latvia’s Investment and Development Agency representatives in major European and US cities supplement the work of embassies in promoting trade and investment.

Latvia’s rapid success over the last 17 years is not just based on sound economic, fiscal and social policies, or its strategic geographic location on the leading edge of the Baltic Sea region. Culture too is a keystone of Latvia’s national growth and development. The same qualities that attract tourists to Rīga’s vibrant cultural life or Latvia’s refreshingly natural countryside, are also attracting investors who place a high value on total quality of life.

Latvia meant business when it restored its independence in 1991, and when it set itself on a firm path to join the EU and NATO. Now Latvia means business for all those who recognize the enormous potential of the Baltic Sea region as one of the driving forces of European and Transatlantic economic growth and development.

For those who live in Latvia today, the future is full of promise. Those who are investing in this future are seeing that promise fulfilled.

 

© Text: The Latvian Institute, 2008