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Friday 23.03.2018 | Name days: Mirdza, Žanete, Žanna

Latvian regions 2004-2012. Part V

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The topic of regional development seems to be significant all the time, says Bank of Latvia economist Agnese Bicevska. The economist uses children’s rhymes to convey the analysis of the development of Latvia’s regions during the 2004-2012.

In the period of 2007-2009, the highest Gini index was noted in Pieriga, which is not surprising given that this region is not consistent – it fits Jurmala and Marupe, and Kandava and Ainazi. Also, the Gini index grew during the ‘fat years’, and decreased during the crisis. The highest coefficient was noted in Kurzeme (2010 data), the lowest – in Riga, exceeding that of Pieriga for the first time since 2006. The situation in Zemgale seems utterly unclear, because Gini index changes there are almost completely opposite to those noted in other regions.

Similar to Gini index, the level of poverty risk was reduced during the years of rapid economic growth. Opposite to the Gini index’s ‘rough turns’, poverty risk index reflects relatively clear tendencies within the region, confirming the index’s worsening during the ‘fat years’ and improvement during the crisis.

Zemgale has larger families and a lower proportion of one person households. Zemgale has 2.3% of such families, Latgale – 1.8%, Kurzeme – 1.5%, Pieriga – 1.3%, Riga – 0.9%, Vidzeme – 0.8%. Kurzeme has the largest proportion of incomplete families – 5.3% (Vidzeme – 4.6%, Zemgale – 4.5%, Latgale – 4.1%, Riga 3.8%, Pieriga – 3.0%).

Families with children have the lowest income in Latgale and Vidzeme. The fact that the proportion of incomplete families is not big, the general index does not show a worse kind of situation in Kurzeme and Zemgale – indexes of these regions are average among negative leaders – Latgale and Vidzeme and positive leaders – Riga and Pieriga.

One, two, three, four, and you’re free to go!

“Latvia still has a large gap in terms of residents’ advantages, employment opportunities, and productivity within Latvia’s central market part (Riga and Pieriga) and the remaining territory, especially Latgale. Latgale already has historically lowest average wages, but these wages were mostly set by another lowest income level – pensions, unemployment and other benefits. The region has a very high level of unemployment, employers lack high profile specialists. This prevents other businessmen to develop their business in the region. This creates an unfortunate loop. Analyses, however, show that, along with specific and general problems alike in the entire country, each region has specific weaknesses that prevent the regions from realizing development plans,” – explains Bicevska.

“A similar situation is noted in Pieriga. Residents’ relatively good income does not guarantee a life without problems. Widely used macro-economic indexes – unemployment, GDP, investments and commercial activity – show good results in Pieriga. An average Pieriga resident has good education, relatively high income, and a place to call home. The data, however, does not reveal anything regarding the difficulties of such households to cover credit payments (because of house maintenance and transport price and tax increase, and decreasing income). Those are important aspects in the development of political plans, because the risk of immigration could be higher for Pieriga residents than other Latvian regions. In addition, when assessing the purchasing power of Pieriga residents, it is important to remember the inconsistency of high income in the region, which could remain unnoticed in general indexes,” – the economist comments.

She adds that the situation in Vidzeme is also something to be desired. Also, a number of different resident survey results note the general worsening of the situation. The area of newly-built residential homes in Zemgale per capita is the third in comparison with other regions.

The situation in Kurzeme does not look too good as well – the region has a high proportion of economically inactive residents. Also, employment rates in the region have been showing a rather stagnating dynamic lately, the economist says.

“Riga also has an interesting situation. Real-estate tax grows and will grow in the future. We can hope for a rapid recovery of the country’s economy to improve the situation – employment will go up, and so will salaries. There are, however, future threats for economic growth – the level of demographic burden has increased over the years, as did the proportion of senior citizens. This tendency makes us question whether the set social support tone, which directly increased the demographic burden, is sustainable,” – the economist concludes.


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