Modelling Long-Term Competitiveness of Latvia


The paper aims to measure competitiveness of exports and, hence, also competitiveness of Latvia as a state using foreign trade data. To find out whether Latvia's export capacity and the potential of competitiveness have improved after the country regained independence, a particular focus is on the respective recent dynamics. The theoretical model presented in the paper is a version of the assessment of current export dynamics. The model treats processes of the last decade as a more profound specialisation. Latvia is producing almost the same output as in the early-1990s, without much extra value added embedded in it. The EU accession undeniably boosts the export market share providing competitive advantages vis-à-vis other low-cost economies. Nonetheless, even in the presence of a positive short-term effect, it may adversely affect human capital over longer horizons. This implies that on behalf of the state a more active involvement in the build-up of industrial basis is desirable.

Key words: competitiveness, comparative advantage, real convergence

JEL classification codes: F14, F19, O33, O47

APA: Dāvidsons, G. (2020, 20. sep.). Modelling Long-Term Competitiveness of Latvia. Taken from https://www.macroeconomics.lv/node/2624
MLA: Dāvidsons, Gundars. "Modelling Long-Term Competitiveness of Latvia" www.macroeconomics.lv. Tīmeklis. 20.09.2020. <https://www.macroeconomics.lv/node/2624>.
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