In the World Economic Forum’s published Global Competitiveness Index Report 2015-2016, Latvia is on the 44th place among 130 surveyed world economies. Compared with last year, Latvia’s position has worsened.
Lithuania is on the 36th place in the Global Competitiveness Index (41st in 2014). Estonia, which was on the 29th place last year, is now on the 30th place.
Similar to 2014, Switzerland remains in the lead, followed by Singapore and USA. Germany is on the 4th place. Finland, which remained on the 4th place in 2014-2015 index, is now on the 8th place. The Top 10 consists of Netherlands, Japan, Hong Kong, Sweden and UK.
Global Competitiveness Index is based on a comparative analysis of countries in accordance with 12 groups of criteria: institutions, infrastructure, macroeconomic environment, health and primary education, higher education and training, product market efficiency, labor market efficiency, financial market development, technological readiness, market size, business environment quality and innovation.
Dr. Arnis Sauka, Director of SSE Riga Sustainable Business Centre, says «Latvia has made progress in areas like labour market efficiency (in which Latvia now holds 25th place) in comparison with the previous year. This index’s ‘wage flexibility’ component is on the 2nd place worldwide. Components like ‘proportion of men and women on the labour market’ and ‘wage and productivity proportion’ are on the 21st and 23rd place respectively».
Sauka says that, unfortunately, a number of labour efficiency indexes have gotten worse. «For example, ‘state’s ability to attract talents’ is on the 110th place; ’state’s ability to retain talents’ – on the 104th place; ‘tax system’s ability to motivate workers’ – on the 107th place worldwide. Even if we say that the applied methodology does not guarantee an objective reflection of how things are, it is clear these are very problematic matters for Latvia. They should be addressed on the highest level,» – explains the expert.
Similar to last year’s results, Latvia’s accomplishments have been noticed in areas like ‘market size’ (94th place), ‘innovations’ (62nd place) and ‘business environment’ (61st place). According to Sauka, Latvia’s traditional problem lies with the ‘innovations’ pillar: the global report states the country’s main problems lie in ‘availability of engineers and scientists’ (101st place), ‘procurement of high technologies by the state’ (100th place), ‘enterprises’ investments in research and development’ (81st) and ‘cooperation of universities and businesses in research’ (63rd place). ‘Quality of scientific research institutions’ is rated relatively low (50th place). ‘Number of patents per million residents’ is on the 32nd place in Latvia, which is fairly good.
In addition to 12 main pillars, experts also evaluated factors that create the most serious problems for doing business in Latvia. According to Sauka, the main problematic factors in Latvia include: tax rates, inefficient government bureaucracy, access to financing, tax regulatory complexity, inadequately educated workforce and unstable policy-making practice.