Latvian National Development Plan 2007-2013

1.1. Qualitative and accessible primary and basic education, compulsory secondary and competitive higher education 14 V 1.2. Preparing the labour force to meet the demands of the labour market 15

1.3. Life-long learning for increasing a person’s creative potential and the quality of life 16 E

1.4. Modernization of the educational infrastructure 17 D 2. Technological excellence and flexibility of companies 18

2.1. Commercialisation of the results of applied science, innovation and technology transfer 18 L 2.2. Application of knowledge in boosting the competitiveness of companies 19

2.3. Creation of new competitive companies 20 A

2.4. Development of creative industries 20 N 2.5. Sustainable and efficient use of natural and energy resources 21 O 3. Development of the science and research 23 I 3.1. Excellence in basic science 23

3.2. Renewal and development of basic and applied science research potential 24 T 3.3. Modernisation of scientific infrastructure in scientific institutions 24 A V PREREQUISITES FOR SURE AND SUSTAINED DEVELOPMENT 26 N 4. Development of the country and society 26

4.1. Good governance as a warrant for a sustainable development policy 26 5

4.1.1. Implementation of a macroeconomic policy oriented toward stable and balanced growth 26

4.1.2. Improvement of the planning and forecasting system 27 N

4.1.3. Functional local governments and regions 27

4.1.4. Strengthening the capacity of public administration 28 A

4.2. A secure, unified and civil society 28 L

4.2.1. Cooperation of the public, non-governmental and private sector 29

4.2.2. Creation of a common culture space 29 P

4.2.3. Ensuring internal security 30

4.3. International dimension of Latvia’s development 31 5. Favourable environment for business and living 32 T

5.1. Regional development 32 5.1.1. Polycentric development – an opportunity for regions 33 N 5.1.2. Riga – a metropolis of business, science and culture in the Baltic Sea region 33 E

5.1.3. Mutual, trans-boundary and trans-national co-operation of regions to increase competitiveness in the European Union 34 M

5.2. Modern infrastructure and services 35

5.2.1. Energy supply which facilitates development 35 O 5.2.2. Development of ICT infrastructure and services and their accessibility in public networks 36 L 5.2.3. Multimodal, integrated, accessible for public and safe transportation system 36

5.2.4. Development of public utilities (water and waste management, heating, etc.) 37 E

5.2.5. Infrastructure and services provided to people engaged in different activities and having different life-styles 38 V 6. Improvement of welfare 39 E

6.1. Healthy people in a sustainable society 39

6.1.1. Human health as a value 39 D

6.1.2. Sustainable social security system 40 6.1.3. Support to families with children and encouraging an increase in the birth rate 41

6.2. Inclusive and steady labour market 42 L

6.2.1. Access to jobs and job variety in regions 42 A

6.2.2. Support for increasing the employment rate 43

6.3. Accessible housing and a civilized living area 43 N

6.3.1. Diverse supply of types of housing 44

6.3.2. Forming socially integrated neighbourhoods 44 O 6.3.3. A well-developed and accessible cultural environment and cultural-historical heritage 45 I

6.3.4. Reasonably used and well-preserved natural environment 46 T VI IMPLEMENTATION AND MONITORING OF THE NATIONAL DEVELOPMENT PLAN 48 A Explanation of terms 50 N Abbreviations and acronyms 55 Drafting process 56 6 I WHAT IS THE NATIONAL DEVELOPMENT PLAN? N OBJECTIVE AND TASKS A The National Development Plan (NDP) has been developed in accordance with the L Regional Development Law of the Republic of Latvia and is a medium-term planning document for the period from 2007 until 2013. The objective of the P plan is to facilitate a balanced and sustainable development of the country, as well as to ensure an increase in Latvia’s competitiveness. It is our contribution to the common strategy of the EU member states and to the implementation of the Lisbon programme. By coordinating opinions and shaping a common understanding about the T country’s development in the near and distant future, the NDP presents the strategic goal of Latvia’s development and sets forth the main activities that will be able to ensure stable growth of the country and society. N The NDP’s task is to focus society’s attention on an agreed upon goal, thus E ensuring coordination and balance of activities and purposeful channelling of financial resources into attainment of the state’s development goals, as well as M into creating the necessary preconditions. Therefore, it is very important to incorporate NDP’s principles and suggested proposals into other planning documents, to co-ordinate them and to provide funding for them. O L IMPORTANCE OF THE NATIONAL DEVELOPMENT PLAN E The NDP is a document which marks a turning point in the development of the V country and offers answers to the following questions: E
What will our Latvia look like after seven and more years?
How can an increase in the country’s competitiveness be ensured? D
What qualities should a person – a shaper of Latvia’s future – possess? The Constitution of the Republic of Latvia states that the Saeima and the L government of the Republic of Latvia are the main institutions in charge of the development process, and they should be able to develop and implement a policy A that will ensure the country’s growth and will increase the people’s welfare. The government has an important role in involving all of the participants – public, private and non-governmental sector – in implementing a unified national N growth scenario. Moreover, each person has to share part of the responsibility for his/her choices, for the development of his/her creative potential and for an active O lifestyle. I The NDP is not an action or financial plan but a strategic document which T
proposes a medium-term goal and priorities; A
facilitates formation of a common understanding and involvement of the entire society; N
focuses attention and financial resources for ensuring the country’s and society’s sustainable development;
sets forth guidelines for drafting planning documents at all levels and sectors. 7 The status of the strategic document determines the structure of the NDP, defining the strategic objective and setting the priorities to achieve this objective. There are described the areas of activities, main tasks to be solved. The chapter “Prerequisites for sure and sustained development” presents the most important N areas for the achievement of the strategic objective. NDP's strategic goal cannot be reached within the next seven years, but it is A important to make the right decision now so that the state works in a coordinated and purposeful manner to ensure welfare and a high standard of L living in the future. The national development strategy outlined in this plan must be presented to and approved by the Latvian people because only people who P are convinced about the results of this strategy will be able to understand and support various decisions, act purposefully for their own and their children's welfare, as well as take pride in being useful to Latvia. T N E M O L E V E D L A N O I T A N 8 II NATIONAL GROWTH MODEL – “PEOPLE FIRST” N DEVELOPMENT SCENARIOS FOR LATVIA A Much has been achieved since the renewal of the independence of the Republic L of Latvia – a stable democratic system and a fully functioning, liberal and open market economy have been established. Latvia has also become successfully P integrated into international structures. However, its achievements have been focused on the most immediate needs of the country while overall development has been insufficiently consistent and coordinated. When drafting of the NDP began, it was clear that a political agreement concerning the country’s long-term development was required. T In studying country’s development opportunities, a group of Latvian scholars concluded that there are three possible scenarios: N
The backwardness scenario – the development process remains E uncoordinated: as the base level increases, the tempo of development starts to decline rapidly; tension in society increases; it becomes difficult to M realize future goals; Latvia becomes a second-class EU member state.
The stagnation scenario – the development process adapts to those O progressing the most slowly; the present generation fails to achieve parity with the average standard of living in EU member states, and people lose L motivation to become involved in long-term investments and activities; education becomes a lower priority. E
The growth scenario – steady, rapid and balanced development at all levels V by using our comparative advantages and by setting a common goal for the long-term development of our country that is in conformity with the E resources at our disposal. On 26 October 2005, the Saeima of the Republic of Latvia approved the D conceptual document drafted by the group of scholars “A Growth Model for Latvia: People First”, that is based on a human-centred approach and on the growth scenario. Raising the quality of human life is announced to be the goal of L the country's growth. A A RESOURCE FOR GROWTH – KNOWLEDGE N In the long term, neither Latvia’s natural resources nor its cheap labour force can O serve as the basic resource for the country’s growth. Our chief resources that can enable the whole society and each individual to reach the standard of living that I developed countries have attained are the people’s knowledge and wisdom, as well as their ability to use them efficiently and purposefully. T In such a growth model, knowledge determines the quality of the labour force, the use of capital and the development of technologies. An educated and A knowledgeable society becomes a guarantee of the country’s domestic and external security. Knowledge management, as well as a coordinated and targeted N creation, accumulation, dissemination and utilization of knowledge, is a complex process which serves as the basis of economic and social life and which involves the whole country and society. Unlike many other countries that can choose from 9 among several paths of development or to combine them, Latvia has no alternative options for movement towards a knowledge-based economy. This document emphasizes that the knowledge potential of Latvia’s inhabitants is sufficient to fulfil this task; however, immediate coordinated action is required to N increase and utilize this potential. Any delay could lead to irreversible consequences. The fundamental principle of the development process and of activities is this: the creation of equal opportunities for all and each individual’s A responsibility to take advantage of these opportunities. L P THE GOAL OF GROWTH – AN INCREASE IN THE QUALITY OF HUMAN LIFE The goal of the country’s growth should be understandable and stimulating to every inhabitant of Latvia. Establishing knowledge as the key resource for the T country’s development means that people as the creators and disseminators of knowledge become the main driving force and the beneficiaries of this N development. The most important desires of every human being are connected with welfare, E their own security and the security of their relatives, health issues and security in old age, as well as with clean air and fresh water, educational opportunities, the M opportunity to express oneself creatively, to travel, etc. Each person’s interests, scale of values, as well as his or her concept of what is a good and happy life are O very diverse, subjective and deeply personal. As years and experience accumulate, each person’s scale of values also changes. The various aspects of these values and their totality create the quality of a human life. L The choice of such a goal ensures a close unity between the resources necessary E for growth and the goals of this growth; thus, this unity becomes an important precondition for growth. The deeply human desire to want a better life and to V improve one's quality of life is a priority for every individual and thus for society as a whole. E The individual’s quality of life merges with that of the entire nation, thus creating D the totality of our country’s national interests. L A N O I T A N 10 N A L P III QUALITY OF LIFE – WHAT DOES IT MEAN? T Quality of life is a complex social, economic and political foundation and that even slight external or internal economic concept which encompasses a broad spectrum of living tremors may cause prolonged stagnation of the nation’s N conditions of the country’s inhabitants. It is characterized by the economic development and may deprive inhabitants of consumer goods available to an individual, the range and quality opportunities to increase their welfare. E of social services, opportunities for getting an education and living a long and healthy life; participating in the country’s A person’s welfare is directly influenced by a steady job and political life, as well as by eliminating any kind of discrimination adequate remuneration. A low employment level (particularly M in parts of the country that have a weakly developed economy), based on gender, ethnic origin, race, religion, physical disability, sexual orientation and age, thereby enabling an individual to long-term unemployment (even among youth), the risk of social O realize his/her potential while helping to create society’s welfare. exclusion, and undeclared work alarm society. Social Thus, it can be said that the quality of life is determined by the segregation and the increasing income gap between rural and L country’s natural, economic, social and political environment, urban populations as well as between population in central which can be characterized by various indicators. parts of our country and them in peripheral territories are E considered the main social problems. Latvia has the lowest According to an analysis of the present situation made during salaries, the lowest minimum wages and the lowest pensions V the drafting of the NDP, some aspects characterizing the quality among the EU member states, and due to that the labour force of life are the following. is migrating to Western European or Scandinavian countries. E Material welfare is a topical issue for every inhabitant of Latvia. Latvian entrepreneurship is based on small and medium-sized D It is connected to the whole country’s economic development. enterprises (SMEs) with a relatively low productivity level, and After creating the fundamentals of a market economy in the the creation of new enterprises does not always mean the beginning of the 1990s, Latvia managed to quickly and efficiently creation of new, well-paying jobs. However, the main establish a stable macroeconomic environment, which for several advantage of small enterprises is their ability to respond quickly L years served as the basis for a stable development of the national to changes in the market; therefore, as trends shift in the economy and the transition from a planned to a market economy. international market and as demand in some particular sector A Rapid economic growth, a functioning market economy, as well increases, diverse opportunities for specialization – for instance, as an advantageous geographical location and a high quality in biological farming, ecotourism, information technology and N natural environment are Latvia’s main strong points. Accession to in other knowledge-based spheres – open up. In general, the the European Union has facilitated entry into new markets and low level of entrepreneurial activity and self-employment is O alignment of legislation regulating entrepreneurship. related to the lack of initiative in society, as well as to administrative obstacles within the business environment. I At the same time, analysis shows that several factors facilitating development also have some negative features. For instance, Although Latvia’s economy has several sectors which have T the rapid growth that has taken place during recent years scientific and innovation potential, as well as the potential for increasingly facilitates the formation of disproportion in the knowledge-intensive manufacturing, their proportion in the A national economy. That is evidenced by the increase in inflation economy is small. The drive towards a knowledge-based and the high current account deficit in the balance of payments. economy is hampered by the insufficient transfer of N More and more economic indicators show that the supply of the technologies and lack of innovation. Latvia lacks not only national economy cannot satisfy the increasing domestic innovative enterprises but also state and private investments demand. It means that the present rapid growth has a fragile into research and development of science. 11 With regard to human resources, Latvia’s strength is the The task of regional policy is to facilitate a balanced and comparatively high level of formal education of the polycentric development of the entire country so that Latvia is employed. As the proportion of employees with higher an attractive environment for working, living and education increases, the quality and professionalism of the recreation not only for the present but also for future labour force as a whole increases. However, both entrepreneurs generations. The dynamics of the development of Riga N and graduates of vocational schools and universities admit that agglomeration shows that the capital of Latvia may justifiably they are not satisfied with the quality of education. It is become a metropolis of the Baltic Sea states. However, A necessary to modernize the study equipment and infrastructure development of other regions is uneven; the pace of territorial of educational and scientific institutions, as well as to improve administrative reform is slow, and the functional capacity of L co-operation with entrepreneurs by facilitating mastery of small local governments is limited. The development programs practical skills and co-operation between the sectors of science P and strategies drafted by the planning regions and support for and entrepreneurship. The prestige of schools offering their implementation can attract investments and can promote vocational education is low; the number of young people who planned growth of Kurzeme, Zemgale, Vidzeme, Latgale and have not graduated from primary school is increasing. An Riga regions, thus providing people with new opportunities for efficient system of life-long learning for increasing people’s work and recreation and facilitating co-operation and exchange competitiveness and development of one’s personality has not of experience with other regions. T been established. The quality of the environment is the basis for human life N Moreover, the quality of human resources is also endangered by and economic activity. It is one of the most important factors people’s poor health and insufficient availability of primary affecting the quality of life. In comparison with other European E health care services, by the low birth-rate and relatively high countries, Latvia has a higher quality of natural environment, infant mortality rate; the number of cases of alcoholism and characterized by greater biological diversity, higher percentage M other dependancies is increasing. These are important aspects of of territory only insignificantly touched by economic activities, the country’s development and every person’s quality of life. more balanced ecosystems, less environmental pollution. The O quality of Latvia’s natural environment is a national value and a An individual’s health and well-being are affected by the quality significant resource for developing the country and its regions. L of housing. Unfortunately, the rate of renovating the housing Coastal wetlands, wet forests, pristine bogs, as well as the fund is slow; every fifth house is in an extremely bad or natural habitats of animals, can be regarded as values of E dilapidated condition; almost half of all buildings are large-scale national and international importance. However, the pristine panel buildings which require heat insulation. The physical V environment also testifies to a low level of economic activity condition of dwellings and heating networks affects the cost of (particularly industrial and agricultural activity) and low maintaining an apartment. An increase in these expenses affects E population density in most of the country. mostly socially vulnerable inhabitants, retired persons and families with children. The state has insufficient number of A preserved, accessible and well-maintained cultural D housing for lease, especially housing for lease at a price environment and a cultural-historical heritage are also affordable by the income of the majority of citizens. integral parts of the quality of life. Culture is an integral priority of a prosperous society, and it has a vital role in preserving Infrastructure created during the course of time – roads and L national identity. At the same time, cultural diversity also has a streets, energy, water and other utility networks and housing – is special place in Latvia’s multi-national society. both a resource and a factor determining the quality of life. The A low energy-efficiency of many devices and buildings and their The importance of the security aspect is historically outdatedness and physical deterioration does not always meet determined by both Latvia’s geopolitical situation and various N the expectations of users and may endanger or hamper internal processes. The country’s location in the economically sustainable development. At the same time, it should be noted active and politically significant Baltic Sea region creates not O that per capita costs of building, modernizing and maintaining only advantages but also risks for both Latvia as a state and for the infrastructure are relatively high in Latvia because of the low each of its citizens; this situation makes it necessary to I population density. Latvia’s own energy resources are not continuously identify the possible sources of risk that could sufficient for its needs. Dependence on external energy supplies hinder the stable growth of the country and to minimize their T in critical situations may seriously threaten the ability of Latvia’s influence. economy and society to function. Although in recent years A various sectors of public utilities have developed significantly, this In general, Latvia has enough opportunities and ability so that, development has been uneven throughout the whole country. by efficiently using its strengths, it can approach and N For instance, one inhabitant out of four has to walk 2-5 km to eventually attain the quality of life prevalent in the developed the nearest shop and school; one out of five, to the bus stop. countries. 12 IV STRATEGY OF THE NATIONAL DEVELOPMENT PLAN National reforms carried out in the country and integration into international N organisations (EU, NATO, etc.) have in general had a positive impact upon the country’s development by opening up opportunities for continued growth. Latvia A has achieved one of the highest rates of economic growth in the European Union. It is important to continue this development and to rapidly bring the inhabitants’ L level of welfare and quality of life up to the level of the developed countries. Latvia has to create such conditions for the economy that would provide a P 1 Innovation – a process in possibility to take advantage of the new political reality and the favourable geographic location for the increase of the level of welfare for Latvia itself as well which new scientific, technical, as for its partners, undertaking the role of efficient gates on the road of social and cultural ideas or ideas transactions between West and East. related to other spheres, as well as developments and T Which path of development to choose in order to make the country’s technologies, are implemented in economy competitive? the marketplace in a competitive N product or service which is in The NDP’s challenge is to create within seven years the preconditions for a transition from the present-day economic model characterized by use of a demand. E semiskilled labour force and manufacture of products with low added value to the innovative (knowledge-based) development model. M In a knowledge-based economy, innovation1 is one of the main factors of O competitiveness. Innovative development both on the entrepreneurial and national level is a deliberately planned and organized continuous process aimed L at increasing productivity and the return from the resources used within the manufacturing, while decreasing costs of manufacturing products or rendering E services. Research becomes an important part of the production cycle. The expenses for research, experimentation, marketing and other non-material CO-ORDINATED AND elements significantly increase the total cost of the product. STREAMLINED KNOWLEDGE V CIRCULATION – COMPETITIVE This process can be characterized as the intellectualization of the economy, by ECONOMY E which is meant both a higher level of education, knowledge and practical skills of the labour force, as well as the “intellectualization” of machines as they perform D an increasing number of functions previously done by human beings. Income Investments In order to ensure a successful transition to innovative development, it is necessary to provide more support to Latvian enterprises that are seeking to National Economy L modernize their technology, by transferring and absorbing (in co-operation with academicians and researchers) innovations from other countries or other local A enterprises. In the near future, support for introducing innovations and medium and high technologies must become the main source of growth and added value even in traditional, relatively low-technology sectors, such as agriculture, food N processing industry, transport, building, forestry or wood-processing. Innovation, Education, science, The future challenge is to pull ahead of competitors by at least one technological entrepreneurship research O cycle for a new product or by an economically cheaper but technologically equal I product. Such technological excellence requires not only a high innovative level of T products but also a high level of innovative thinking by individuals or, in other words, an innovative culture. This, in turn, imposes new and higher demands on Knowledge A the whole system of education, particularly with regard to life-long learning. Previous investments in the development of human capital have not been N sufficient for Latvia to be able to compete with developed countries in developing Use and Creation, and introducing new technologies. The disparity between what education application mastering produces and what the labour market requires may account for the slow 13 restructuring of the national economy and for endangering the growth rate in the near future. The strategic goal and priorities of the National Development Plan are the following: N EDUCATION AND KNOWLEDGE FOR THE GROWTH OF THE NATIONAL ECONOMY AND TECHNOLOGICAL EXCELLENCE A
An educated and creative individual L
Technological excellence and flexibility of companies
Development of science and research P The strategic goal and priorities have been chosen by taking into consideration the fact that the full return from investments made under the NDP into education and research will be gained only after seven years and that achieving and maintaining technological excellence is an ongoing task. The goals have been chosen with the awareness that the plan has to be implemented with the limited T resources available to us; thus efforts are concentrated in several areas of priority. The choice of priorities was determined by the need to achieve changes in N education, science and manufacturing structure, in order to create a stable material and intellectual basis for a gradual increase in the quality of human life E in Latvia. M O L Goal of national growth E V Quality of life E Education and D Strategic objective of NDP knowledge for the growth of the national economy and technological excellence L Priorities of NDP A Technological An educated excellence Development N and creative and flexibility of science and individual of companies research O Growth in regions Prerequisites of national growth Inclusive and stable labour market I A healthy human being in a sustainable society T A safe, united civil society Modern infrastructure and services A International dimension of Latvia’s growth Access to housing and a well-maintained living environment N Good governance as a guarantee of a sustainable growth policy 14 1. AN EDUCATED AND CREATIVE INDIVIDUAL FURTHER EDUCATION OF PUPILS HAVING GRADUATED PRIMARY AND For the country’s uninterrupted and balanced development at all levels, it is SECONDARY SCHOOLS IN 2004, % necessary to shape an educated and knowledgeable society by providing a coordinated and planned creation, accumulation, dissemination and application of N knowledge. Graduates of primary schools A In such a context, Latvia’s education system plays the main role in developing creative continues to study in and determined individuals by providing opportunities to acquire knowledge and skills vocational educational does not continue establishments during one’s whole life. The quality of education has to meet the increasing demands 5% L of modern society and the national economy. The country’s task is to give every 29.6% individual the opportunity to acquire a general primary and secondary education, as P well as a good quality higher and vocational education possibilities, as well as access to the primary education in all the regions of Latvia. 66.4% The study process is oriented towards the individual’s ability to acquire knowledge continues to study in independently and to widely use it in every sphere of human activities. As secondary schools knowledge becomes the country’s strategic wealth and the main resource for T economic growth, an individual can become an active employer or a highly qualified specialist - an employee who can achieve a high labour productivity. Graduates of secondary schools N continues to study in vocational

1.1. QUALITATIVE AND ACCESSIBLE PRIMARY AND BASIC educational E does not continue EDUCATION, COMPULSORY SECONDARY AND establishments COMPETITIVE HIGHER EDUCATION 7.5% 22.5% M In a knowledge-based society, qualitative basic and secondary – general or vocational – education is the minimum starting capital without which a person’s full 70% O and successful inclusion in the labour market and the everyday life is not possible. Since higher education is the foundation of a knowledge-based society, it is L important to ensure opportunities for acquiring qualitative higher education for continue to study in high schools and colleges everybody who wants it. Particular attention should be paid to increasing E significantly the proportion of students studying natural sciences, medicine and Source: Statistical Yearbook of Latvia 2005 engineering, as well as the number of specialists with the highest qualification V (master’s degree and doctoral degree). The quality of education and the desire to study is closely related to the role of the NUMBER OF PUPILS AND STUDENTS, E IN THOUS. education within the consciousness of the population and that of each individual, to the ability to appreciate the importance of the education. A lasting interest in D learning, as well as academic success, is facilitated by the skilful work of number pedagogues. The renewal of the prestige of this profession requires significant 600 salary increases, improved teaching methods and the entry of new and motivated 510 specialists into the education system from the primary schools up to the high 500 492 465 L schools, able to attract the pupils and students and enhance the creative potential 437 of each individual trainee. 400 352 348 360 A 316 Comprehensive information about the range of professions and education 300 programmes offered by secondary vocational and higher education institutions, as N well as choosing a profession on the basis of one’s suitability for the chosen job or 200 study programme, is another important aspect of a high-quality education. 131 101 O 100 67 47 Tasks: 0 46 42 49 45 I (1) to achieve a qualitative mastery of general knowledge and skills, including 1990/91 1995/96 2000/01 2004/05 courses in the natural sciences, environmental sciences and mathematics, by T improving the school’s curriculum, teaching methods and evaluation system of School year pupils’ achievements in primary and secondary school; in total in educational establishments A (2) to achieve the situation when the basic education is mandatory and gradually in comprehensive schools to make a transition to compulsory secondary education (secondary general in vocational educational establishments N and secondary vocational education). To initiate the preventive activities with in high schools and colleges backward pupils and their parents on the level of basic education and secondary education; Source: Statistical Yearbook of Latvia 2005 15 INTELLECTUAL POTENTIAL (3) to upgrade the research and professional qualifications of pedagogues and OF PEOPLE academic personnel to a level of competence that ensures competitiveness not only on the European but also on the global level, thus facilitating an improvement of the prestige and a gradual substantial increase of % remuneration of pedagogues and other persons employed in the education N 100 85.6 88.7 sector; 80.2 76.2 80 76 (4) to improve the quality of vocational education and its attractiveness, to A improve the contents of vocational education programmes and standards for 60 71.2 64.2 63 professions, as well as to update the qualification system for students and L 58.9 graduates by ensuring opportunities for practical training and internship that 40 47.9 meet qualification requirements according to the requirements of the today’s P national economy; 20 (5) to more actively involve social partners in drafting qualitative education 0.3 0.2 0.3 0.3 0.4 programmes and their evaluation to ensure their conformity with the 0 2000 2001 2001 2003 2004 contemporary requirements and latest discoveries, and to ensure their co- relation with the contents of the higher level education; T graduates with secondary education, % from 18 years old citizens (6) to strengthen the capacity of the management of educational institutions, universities and other institutions of higher education, as well as of institutions N graduates with higher education, % involved in drafting and assessing education policy; from 23 years old citizens (7) to modernize studies at higher educational establishments by paying a E people with scientific degree, % from particular attention to increasing the attractiveness of education programmes all graduates of higher educational in engineering and natural sciences, as well as by expanding the range of M establishments vocational study programmes and providing internships for students; Source: LATVIA. Report on national development. (8) to provide state support for master’s and doctoral studies, particularly for O Capability in regions, 2004-2005 programmes in engineering and the natural sciences; (9) to increase the quality and availability of higher education; to integrate it into L the unified European (global) space for higher education; E (10) to improve and extend the use of e-resources; to improve information NUMBER OF HIGH SCHOOL STUDENTS technology skills in all levels of education; V BY THEMATICAL GROUPS IN HIGH SCHOOLS AND NUMBER OF STATE (11) to ensure the availability of education in all of its forms and at all levels to BUDGET FINANCED STUDY PLACES persons with special needs. E D Number 1.2. PREPARING THE LABOUR FORCE TO MEET THE DEMANDS OF 100000 THE LABOUR MARKET 80000 60000 If the knowledge and skills offered by programmes in basic, secondary vocational L 40000 and higher educational establishments are tailored to meet the needs of the national economy, it will be markedly easier for young people to enter the labour A 20000 market, and the return on resources invested in education will increase. The task of 0 00./01 01./02 02./03 03./04 04./05 the education system is to foster an educated individual’s competitiveness in the N Academic year labour market, as well as to develop his or her initiative and an enterprising and creative approach. students of humanitarian and social sciences O number of state budget financed students in The limited availability of human resources can be compensated by increasing the humanitarian and social sciences availability and quality of education at all levels, by increasing the number of I students who pursue higher education and by sharply decreasing the drop-out rate. students of natural sciences and technologies T number of state budget financed The demand of the labour market changes along with the development of the students in natural sciences and national economy – companies introduce new technologies and decrease the technologies number of employees. New companies emerge which offer other kind of work. The A ability to adapt and retrain for another occupation ensures employment to an Source: Report of Ministry of Education and Science on higher education in Latvia in 2005 (numbers, individual throughout his/her life. Because of the limited human resources, the state N data, trends) is interested in involving more able-bodied people in the labour market, and thus it promotes a professionally oriented adult education system. 16 N A L P Tasks: (9) to ensure support for groups who are exposed to the risk of social exclusion so as to facilitate their inclusion in the labour (1) to create a system for analyzing the labour market and market. issuing medium-term and long-term forecasts; to regularly T research and monitor factors, both of the scale of Europe and of a global scale, influencing the labour market so as to 1.3. LIFE-LONG LEARNING FOR INCREASING A N ensure a balance between what the national economy PERSON’S CREATIVE POTENTIAL AND THE demands and what the education sector supplies; to improve QUALITY OF LIFE E the systems for financing vocational and higher education establishments and for motivating students; When developing a knowledge-based society in Latvia also, it is necessary to recognize and accept life-long learning as means to M (2) to involve the social partners and to develop state and stimulate peoples’ spirit of enterprise, to make them more private partnership initiatives in education as an efficient co- employable and adaptable, more active in shaping a civil society, operation instrument for ensuring a balance between the more integrated into society; life-long learning is also a stimulus O demands of the labour market and the supply of the to self-improvement. An educated and cultured person is able education sector (for instance, involving undertakers and/or and willing to find out something more, to learn new things and L their representatives in the development of professional to express one’s unique personality throughout one’s whole life. standards, as lectors in the training process and as mentors Familiarity with the values of art, folklore, traditions and E of practical training and internships in vocational architecture helps people to have a positive attitude towards life education). To create in companies the practical training and encourages them to participate in social processes. V possibilities; Uneven socio-economic development creates unequal (3) to enhance the understanding/willingness to get involved in opportunities for rural and urban populations, as well as for E entrepreneurship, and to achieve a balance in the number of members of various social groups in the sphere of education. In students in vocational and higher education who choose order to increase the availability of life-long learning, it is necessary D programmes in engineering, the natural sciences, to involve education, culture and sports centres, health and social mathematics, information technology, health care, and care institutions, churches, non-governmental organisations and environmental science; other institutions in providing formal and informal education L (4) to improve the relevance of higher education to the labour programmes, thus developing a multifaceted co-operation market by developing inter-disciplinary and inter-university between those who need education and those who supply it. study programs; A Tasks: (5) to modernize the system of vocational education in order to ensure the quality of education programmes and their (1) to strengthen society’s understanding of life-long learning as N the basic condition for developing a knowledge-based applicability to the needs of the labour market; society and to create in all regions a comprehensive system of O (6) to improve the support system for a person’s career a qualitative life-long learning for adults as a stimulus to gain development by ensuring professional orientation and a necessary job skills, to participate in the process of social I career-related consultations to people at educational inclusion, and to seek self-improvement; establishments and places of residence; T (2) to expand the opportunities for obtaining formal and informal (7) to create a state-supported professionally oriented offer of education (including basic skills and vocational education) for life-long learning and to introduce the system of recognition people with a low level of education, for social groups with A of the results of informal education; limited opportunities to obtain education and for those who (8) to support the training of the employed to increase their do not appreciate and take advantage of learning N qualifications, as well as their re-training in house or at opportunities; at places of residence (including rehabilitation sectoral employers’ organisations; institutions, prisons, army, etc.) and places of work to provide a flexible and qualitative “second chance” to obtain a 17 N A L P comprehensive and vocational education (e.g., by means of e- All institutions of higher education need renovation of buildings studies, evening (shift) secondary schools or part-time studies); and utility networks, a material and technical base, equipment in laboratories and institutes, as well as scientific equipment and (3) to introduce a strategy for life-long learning by developing a other infrastructure necessary for research. The infrastructure and system of life-long learning; particular attention should be paid T instructional equipment of vocational education establishments to qualitative and flexible programmes for life-long learning; are inadequate for producing the well-educated labour force that (4) to take advantage of the potential of education and culture is necessary for the development of the national economy, nor do N in facilitating a person’s harmonious growth throughout they provide an opportunity for students to acquire the his/her life, and with the aid of modern technologies and knowledge and skills that the labour market demands, particularly E solutions to extend the availability of cultural resources for with regard to engineering, as well as manufacturing and developing a person’s creative skills and talents and processing. M deepening his/her knowledge; Tasks: (5) to create a system that provides culture information and O services that meet the needs of a knowledge-based society and (1) to renovate the buildings of universities, other higher that is accessible to its members; to develop various creative education establishments and colleges and to construct L and interactive e-content products that meet the needs of new buildings (premises for studies and scientific work); to life-long learning programmes and various social groups; provide access for persons with functional disabilities; E (6) to increase the capacity of existing children’s/youth and adult (2) to purchase, modernize and install equipment, facilities, education centres in regions, towns and rural municipalities furnishings and technologies in higher education V and to support the development of new centres; establishments, including equipment that enables persons with functional disabilities to complete the education E (7) to provide state support for those who offer education for programmes; adults (human resources, teaching aids, requests for prog- rammes) and for institutions that support informal education D (3) to renovate the education buildings of all level state and local for adults. governments offering primary, secondary general and secondary vocational education; to update instructional

1.4. MODERNIZATION OF THE EDUCATIONAL equipment and facilities; to modernize the material and L INFRASTRUCTURE technical base; to provide access for persons with functional disabilities; In the educational establishments of any level of education in A the creating of conditions for a qualitative education process, it (4) to ensure the material basis necessary for a qualitative is necessary to modernize the material basis of all educational mastery of the natural sciences at state and local N establishments and to optimize their network by ensuring that government establishments of secondary education; all groups of inhabitants have an equal opportunity to acquire primary, basic, comprehensive and secondary vocational (5) to ensure the necessary modern ICT infrastructure at all O education, as well as by updating instructional (training) levels and types of education establishments; materials that are necessary for a qualitative education. (6) to update and enlarge the holdings of school libraries, the I Investments in education, as in any other sector of the national collection of study videos, record library, as well as T economy, should be economically justified. The end result has to electronic instructional programmes; be achieved at the lowest cost by wisely choosing the necessary (7) to improve the sports infrastructure at education A investments. Modernization and development of the establishments and/or to ensure access to it; educational infrastructure is closely related to increasing cost effectiveness in the education system. It is necessary to decrease (8) to ensure physical access to education establishments to N maintenance costs of buildings and to use premises and human children and young people with motoric disabilities; to resources efficiently. improve the infrastructure of special education. 18 2. TECHNOLOGICAL EXCELLENCE AND FLEXIBILITY OF GDP PER CAPITA, COMPANIES % FROM EU-25 LEVEL BY PURCHASE POWER PARITY The backbone of the country’s economy is a successfully developed N entrepreneurship based on free-market principles. Today the majority the Latvian % companies are SMEs most of which work in low added value and natural- 50 46,5 A resource intensive sectors which use cheap labour, comparatively labour-intensive 43,1 production processes and "low" technologies. That is also reflected in the 40,5 40 38,4 L investment and export structure of the country. 35,1 36,9 In order to ensure the economy’s competitiveness in global markets it has to be 30 P based on technologically excellent large, medium and small companies that are able to flexibly respond to changes in the global or local economy. Therefore, an impetus 20 to create new high-added-value manufacturers is needed, and transition to producing new high added value products in existing companies should be promoted. 10 T Along with a rapid transfer of effective technologies from abroad it is necessary 0 to create favourable conditions for innovative development directed at employing 2000 2001 2002 2003 2004 2005* internal intellectual resources (endogenous). Greater use should be made in the N Year economy of intellectual property (inventions, technologies, products) created in Latvia and its creation in Latvian companies should be supported; this would E Source: Report on Development of Latvia's Economy, increase the number of patents developed in Latvia (especially in the field of high 2005, Ministry of Economy of Republic of Latvia technology), develop the science and technology commercialisation structure and *projection M create closer ties between the research and scientific institutions, companies, and the ties of these institutions with the real market situation. O STRUCTURE OF ECONOMY BY Involvement of Latvian companies in the global markets should be stimulated, VALUE ADDED, % first of all, by gaining the competence necessary to ensure successful export L deals. Particular attention should be paid to economical consumption of energy resources and raw materials by manufacturing companies, implementation of E sector 0 10 15 20 25 % "cleaner technology" principles and the best available technologies in order to reduce the adverse impact of production processes and products on the primary V environment and human health. sectors E processing

2.1. COMMERCIALISATION OF THE RESULTS OF APPLIED industry D SCIENCE, INNOVATION AND TECHNOLOGY TRANSFER electric power, gas Applied research and innovation in modern technologies promote the development and water supply of the national economy; therefore, support of science and innovation is an L important tool in boosting the competitiveness of the Latvian economy. Besides construction that, the competitiveness of each company is directly linked to its ability to rapidly absorb new knowledge and to provide new products for the market. trade, hotels and A restaurants New ideas, discoveries, approaches, publications, patents and new teaching N methods are created when resources and existing skills are invested in science. transport and However, only in cooperation with manufacturing industries can they be turned communications O into new products – in the form of services or processes and technologies. other Commercialisation of the created knowledge is an important task in achieving commercial I practical applications of science-intensive ideas and turning them into products services with high-added-value. public utilities T The primary task of the state is to support a full cycle of new product creation and development and to foster development of the research and innovation A 2004 2005 system based on studies of market development. It comprises science, technology and enterprises, and, most importantly, an environment conductive to N transferring of knowledge and technology to the market, as well as commissions Source: Report on Development of Latvia's from private companies to research centres. The innovation system should be Economy, 2005, Ministry of Economy of Republic dynamic and its directions of activities (commercialisation of knowledge, transfer of Latvia 19 NUMBER OF INNOVATIVE of technologies, promotion of innovations etc.) have to be in closely interrelated UNDERTAKINGS IN 2004, uniform dynamic system. Development of this system will create necessary % FROM ALL UNDERTAKINGS requirements for better potential returns in the form of economic, social and environmental gains from investments in research and innovations. % N National policies (on taxation, the economy, state support, manufacturing 50 industries, education, etc.) should stimulate innovative activities, for example, by 45 A introducing tax deductions, providing other support for research projects and 40 investments of company capital in new products, and encouraging establishment of new innovative companies; in other words, a support system for technology L 30 transfer should be created. 22 P 20 18,6 Tasks: 15 10 (1) to promote the implementation of the results of research carried out by institutions of higher education and science institutions in the commercial 0 companies, e.g., by promoting the creation of competence centres; services processing in average in average T industry in Latvia in EU-25 (2) to create a support system (infrastructure) for knowledge transfer and commercialisation to ensure the realisation of Latvia’s scientific potential in new N Source: Statistical Yearbook of Latvia 2005; Eurostat products, to improve access of Latvian companies to new technologies, and to promote the sale to foreign countries of technologies created in Latvia; E INNOVATIONS IN UNDERTAKINGS OF VARIOUS SIZES (3) to increase support to applied science and to motivate scientists to get involved in solution of business problems; M Services (4) to stimulate Latvian companies to use and transfer new technologies from O abroad, thus stimulating attraction of foreign investments in technology- 14% intensive sectors. L 55% 31% E

2.2. APPLICATION OF KNOWLEDGE IN BOOSTING THE COMPETITIVENESS OF COMPANIES V The competitiveness of companies is determined by their own ability to introduce in small undertakings (10-49 employees) E knowledge management within their company. In this regard, significant in medium undertakings (50-249 employees) deficiencies can be found in most companies, including those that are traditional, exporting and well established in the national economy. More extensive state D in medium undertakings (> 50-249 employees) support might be needed at crucial points in innovation management, such as development of new business and technology development ideas and products, restructuring of internal business processes as dictated by new tasks, introduction of quality management systems and standards, restructuring of sales processes L and sales markets, more extensive outsourcing of competence services, and Processing industry division of labour. A 17% In order to overcome these deficiencies, more extensive state interference is 48% N necessary by using innovation promotion activities to improve knowledge 35% absorption, to increase exporting capacity and to accelerate industry and business restructuring and technology modernisation. O Tasks: I in small undertakings (10-49 employees) (1) to improve the technological competence and knowledge management skills T in companies by supporting measures that boost productivity and the in medium undertakings (50-249 employees) introduction of innovations in manufacturing and service industries; A in medium undertakings (> 50-249 employees) (2) to develop new forms of cooperatives and cooperation among manufacturing, supplying and service companies by facilitating creation of N industrial clusters and development of competitiveness in export-capable Source: Statistical Yearbook of Latvia 2005 traditional and new manufacturing and service industries (ICT, wood 20 processing, machine building, electronics, food, creative industries, pharmaceutics, biomedicine and biotechnologies, as well as finance, transport and logistics, medicine and tourism etc.); N (3) to ensure Latvia’s presence and direct representation of its interests in foreign markets by promoting entry into new markets and by strengthening the international competitiveness of Latvian companies; 1 A Mentor’s consultations – advice of an (4) to ensure a regular dialogue with the governments of countries that are most expert or a practitioner, consultations, L significant for the Latvia’s economy in order to effectively represent the support or recommendations to a less interests of Latvian entrepreneurs in the global market; experienced person, organisation or a P novice in entrepreneurship. (5) to reach average EU productivity indicators in the traditional sectors, to improve the ability of Latvian companies to capture external markets, and to 2 Pre-seed grants – funding to a scientific promote the integration of Latvian exporters in global supply chains. institution or an inventor as a private person to prove or improve feasibility of a new T technological idea as a basis for the set up

2.3. CREATION OF NEW COMPETITIVE COMPANIES of a new company. N Creation of new competitive companies not only will boost domestic 3 competitiveness and develop sectors, but also will stimulate more rapid Business angels – prosperous private E application of knowledge by companies and will significantly contribute to export persons that support realisation of new growth. It is necessary, with the help of various motivational and support technological ideas by participating as mechanisms, to create a favourable public attitude towards entrepreneurs, an private investors in the set up of a company M understanding of the role of entrepreneurship in the country’s development, and 4 to encourage people’s economic activity and creation of new companies. It is Seed or starting capital – funding allocated O particularly important to facilitate creation of new innovative companies in to study, evaluate and develop the original Latvia’s regions. business idea. Seed capital is a risk funding L in its early stage usually significant to Tasks: technologically intensive projects, enabling E (1) to encourage people, particularly young people, to be entrepreneurs and set them to develop, study and improve original up their own business thereby increasing the prestige and reputation of product prototypes that later will form the V entrepreneurship, as well as implementing a business setting up motivation basis of the future business. program, training and consultations; E 5 Resource centres – organisational structure (2) to ensure unified and effective support in setting up a business (mentor’s for consultative, informative and technical D consultations1, financial support mechanisms – pre-seed grants2, support to assistance, to promote the involvement of networks of “business angels”3, seed funds4, micro-loans, investment guarantees, risk capital funds, resource centres5 etc.); citizens in entrepreneurship. 6 L (3) to develop a support infrastructure for new companies in their early stages of Creative industries – activities that originate development business incubators etc.); in an individual’s creative work, skills and A talents and that, in constituting and using (4) to increase availability of financial resources (starting capital, loans), to reduce intellectual property, have the potential to administrative obstacles at the national and municipality level for business increase welfare and create jobs. These N novices; activities include architecture, advertising, (5) to particularly encourage creation of companies, including new innovative art and culture industries, design (e.g., O companies in traditional sectors, in Latvia’s regions. fashion, graphic design and applied arts), I film, computer games and interactive software, music, new media, publishing, T 2.4. DEVELOPMENT OF CREATIVE INDUSTRIES radio, and television). Manufacturing the products of creative industries is a In order to effectively employ Latvia’s creative and cultural environment A complicated process in which, with the resources, to increase the work efficiency of existing creative sectors, to expand and diversify the economic activities of creative individuals, thus turning their cooperation of the public, private and NGO N creative potential into economic gain, the creative industry sector6, as one of the sector, there is an interaction among most promising, should be integrated into the economy of Latvia. In order for this conceiving, realising and disseminating sector in Latvia to reach growth rates equal to those of other countries, special ideas. 21 attention should be paid to the specific needs of the creative industries, their innovative potential should be developed, and the experience of creative industries should be systematically expanded. Tasks: N (1) to develop a creative entrepreneurship culture in society and to promote understanding about the nature, structure and potential of Latvia’s creative A industries; L (2) to create a favourable environment and institutional support for young creative professionals who wish to set up a business and for development of P a competitive creative industry that is recognised as an equal to other already established sectors of the economy; (3) to develop an active Public Private Partnership for commercialisation of creative potential; T (4) to encourage timely inclusion of future technologies in product development of creative industries and their cooperation with other sectors in Latvia that N NUMBER OF ECONOMICALLY ACTIVE have proved their competitiveness; COMPANIES AND ENTERPRISES PER 1000 INHABITANTS (5) to facilitate two-way intersector co-operation exchange between Latvia and E foreign countries; 0 5 10 15 20 25 30 35 M (6) to form a creative industry cluster that includes a number of SMEs which ensure continuous activity and to involve educational institutions and universities, suppliers and public institutions in developing the industry’s O Riga region long-term strategy. L E

2.5. SUSTAINABLE AND EFFICIENT USE OF NATURAL AND ENERGY RESOURCES V Vidzeme region Use of the soil as one of the main natural resources has become extensive, the E rate of production has decreased, the natural transformation of agricultural land – overgrowing and bogging-up – has increased. At the same time, agricultural land and forests are the basis for several traditional sectors in Latvia (forestry, D Kurzeme wood processing, agriculture, etc.) that provide a great number of jobs in rural region areas. The main operators in these sectors are small companies that use natural and energy resources with low efficiency. Production of innovative, higher added- L value products should be encouraged also in such rural companies, thus capturing new market niches, boosting productivity and incomes of employees. Zemgale A region Timber is not only the main export product of Latvia, but alongside with other available in Latvia alternative energy resources (biomass, geothermal energy, N wind and sun energy, etc.), it is also an important resource for energy production. There are opportunities to use mineral waters and oil resources, develop new O products by using peat and sapropel, stimulating construction material Kurzeme region manufacturing. I The territory of Latvia is rich in water resources, both underground and T aboveground. Underground water resources provide drinking water of good quality, and efficient usage of surface water resources can ensure development A 1999 2000 2001 of fishery and increase people’s welfare not only in coastal but also inland 2002 2003 2004 regions. The natural, cultural and historical heritage offers an opportunity to N develop tourism more rapidly and to create new jobs in rural areas, because the Source: Central Statistical Bureu, 2005 tourism resources are available throughout the country. 22 Better public awareness can facilitate rational and sustainable use and recovery of natural resources, as well as decrease the burden on nature. Tasks: N (1) to develop creation of higher added value, particularly in the forestry and agricultural sectors by efficient and sustainable use of available natural A resources; L (2) to stimulate development of innovative types of business that do not require intensive use of natural and energy resources and to reduce pollution of the P environment by promoting implementation of the best technical solutions and the latest technologies in manufacturing; (3) to promote use of renewable natural resources and alternative energy sources for heating and energy production, for example, by promoting the use of biomass in cogeneration; T (4) to maintain agricultural land for the production of agricultural products, as N well as to increase the contribution of the agricultural sector in the production of the raw materials for heating fuel and transport fuel; E (5) to introduce eco-design principles in manufacturing and consumer education; M (6) to ensure rational, environmentally friendly and sustainable use of deposits in the earth for developing the economy; O (7) to encourage recycling or repeated use of resources, as well as utilisation and L recycling of waste products, including food-processing byproducts; E (8) to support implementation of environmental management systems and other voluntary and environment-protection tools in companies and V institutions, as well as to continue integrating environmental aspects into sectoral policies. E D L A N O I T A N 23 3. DEVELOPMENT OF THE SCIENCE AND RESEARCH Innovation is a process in which the potential of accumulated knowledge in fundamental and applied scientific research is implemented in entrepreneurship. N Successful development of a knowledge-based economy is unthinkable without the potential created by science and research. The number of people involved in science and research and their qualifications play a crucial role in the creation of A such knowledge potential. Currently, the number of persons employed in science, including those with doctorates, in Latvia is significantly lower that in L other EU member states. P During the recent decade, several serious threats to a development of a 1 knowledge-based economy in Latvia have arisen. The total amount of funding In 2003 – 0,38% from GDP, in 2004 – 0,42%; in average in the EU allocated to the research and development has been insufficient1. One of the 1,93% from GDP. In Latvia the private most significant consequences of insufficient funding is a decrease in the number sector is financing 20% from the of scientists involved in scientific work. The renewal process of academic and scientific personnel is not being ensured; the average age of the teaching staff in T costs for the science, in the EU – more universities and of scientists is on the increase, particularly in comparison with than 50%. other EU countries. N Higher education institutions and other science and research institutions should E be as open as possible. Purposeful use and renewal of scientific potential, active involvement in the research and economic activities of Europe’s, especially the Nordic region’s, science and technology area is one way how Latvia can benefit M from expertise gathered there and can accelerate the development of its own scientific potential. Exchange programmes for persons with doctorates and for O researchers, joint project development, sharing of research results, etc. should be taken advantage of. L E

3.1. EXCELLENCE IN BASIC SCIENCE RESOURCES AVAILABLE FOR V SCIENCE AND RESEARCH High-level basic science is the basis for developing a competitive applied science E and innovation process in Latvia. In the future, the main development centres of 3,5 basic science will be the universities that will prepare doctoral students in the 2,9 traditional scientific spirit and at the same time will improve the quality of a D 3 university education. For the doctoral studies, higher education institutions 2,5 2,3 2,3 2,3 2,1 should also involve all the intellectual and material potential that is outside the universities. 2 L 1,5 It is important to create conditions for scientific research in sectors in which Latvia already has the requisite industry potential and development prospects by A 1 strengthening the intellectual potential of science and by developing applied 0,45 0,41 0,42 0,38 0,42 research in relevant innovative technology fields. N 0,5 0 Tasks: O 2000 2001 2002 2003 2004 (1) to increase science funding for improving quality of basic research; Year I (2) to concentrate academic resources and basic science in universities capable scientists and technical staff per of competing in the international academic environment as a guarantee for T 1000 inhabitants the development of Latvia, as well as in the science excellence centres of regional higher education institutions; A attexpenses in total for research and development (R&D), % (3) to foster scientific excellence in priority areas; from GDP N (4) to facilitate the integration of Latvia’s science into the European and global Source: Central Statistical Bureu, 2005 science area. 24

3.2. RENEWAL AND DEVELOPMENT OF BASIC AND APPLIED AGE STRUCTURE OF SCIENTISTS SCIENCE RESEARCH POTENTIAL IN SCIENTIFIC INSTITUTES OF HIGH SCHOOLS IN 2004 N Attaining scientific and research excellence requires appropriate human resources. In order to attract young scientists to scientific institutions and to 22% 28% motivate young people to choose a career in science, reform of the remuneration 45-54 y. 55-64 y. A structure for scientific personnel should be carried out. Remuneration for scientists should be based on the results of their work. The remuneration of the L whole scientific staff should be competitive not only in Latvia but also in the international labour market. P Various measures should be devised in order to motivate young people to choose science; for example, assistance should be provided to new doctoral students. In order to ensure a competitive level of training of new students and scientists, it is necessary to develop state support programs to ensure the top level T professional studies in the specialities of prime importance for the state at the best foreign universities, as well as to attract to Latvian universities high-quality N foreign professors to deliver specialised training courses in the higher educational 15% 28% establishments of Latvia. 35-44 65 y. and more E y. 7% Tasks: 25-34 y. M (1) to institute measures to increase the remuneration of scientific personnel (reform of the remuneration system); Source: Report of Ministry of Education and O Science on higher education in Latvia in 2005 (2) to use all possibilities provided by the international student and scientists (numbers, data, trends) L exchange programs available to Latvia; E (3) to improve the grant and scholarship system for doctoral studies and to develop a state support program to ensure the top level vocational studies in V Latvia and abroad, to create a research support system for young postdoctoral scientists; E (4) to foster research in higher education institutions by popularising scientific achievements in society and stimulating young people’s interest in science D studies; (5) to ensure the unity of studies and research at the higher education institutions; L (6) to develop a system for protecting, using and funding of intellectual property A (e.g. in form of patents); (7) to attract visiting professors and foreign scientists for work in Latvia’s higher N education and scientific institutions; O (8) to motivate emigrated Latvian scientists and young experts to return and work in Latvian scientific institutions. I T

3.3. MODERNISATION OF SCIENTIFIC INFRASTRUCTURE IN SCIENTIFIC INSTITUTIONS A A significant prerequisite for the development of the scientific work is providing N modern scientific infrastructure and modern scientific equipment. Investments are needed for new, modern buildings in which it is possible to carry out experimental research and ensure commercialisation of research results. The 25 availability of modern, convenient and suitable premises and equipment for scientific work helps to attract young people to science and provides opportunities to establish contacts with foreign partners, thereby increasing the competitiveness of Latvia’s science. Investments in buildings and other infrastructure necessary for scientific institutions should stimulate their focusing N around excellence and competence centres, thus promoting synergy between different scientific institutions, universities and private sector research centres and A ensuring not only efficient use of the infrastructure but also accelerated development of Latvia’s knowledge potential. L Tasks: P (1) to modernise the scientific infrastructure in higher education and scientific institutions in all regions; (2) to promote development of innovative entrepreneurship and of applied research on all the territory of the country; T (3) to support company investments in science (creation of research centres, N purchase of equipment etc.) ensuring various (financial, administrative) support instruments; E (4) to ensure maintenance and development of scientific collections, libraries, archives and other information media as a part of the science infrastructure. M O L E V E D L A N O I T A N 26 N A L P V PREREQUISITES FOR SURE AND SUSTAINED DEVELOPMENT T 4. DEVELOPMENT OF THE COUNTRY 4.1.1. Implementation of a macroeconomic policy N AND SOCIETY oriented toward stable and balanced growth E A sound macroeconomic environment is a precondition for

4.1. GOOD GOVERNANCE AS A WARRANT FOR A balanced and sustainable economic growth. The national M SUSTAINABLE DEVELOPMENT POLICY economic policy should be worked out in a way that does not compound inequalities as short-term growth goals are achieved; O By good governance we mean the ability of national and local this, in turn, could create obstacles for successful medium-term government institutions to act and organise their work in a and long-term economic development. The creators of the L modern way and to provide access to high-quality services of national macroeconomic policy, by preventing the potential public and municipal bodies. Currently, national and local rapid formation of cyclic fluctuations in economic growth, E government institutions provide more than 900 various services should ensure an efficient balance between resources allocated to inhabitants. At the same time, society is increasingly for increasing the capacity of the national economy and demanding quality, better attitude of employees and decreased ensuring an internal and external economic balance. V Concurrently, increased flexibility of the national economy in bureaucratic and administrative burdens that restrict entrepreneurship and lower the quality of services. Each both the labour market and product market should be E facilitated, thus enabling the economy to adjust rapidly to individual expects and has a right to be treated courteously and to receive exhaustive information at any public institution. internal and external shocks. D Extensive communication between the state, local governments It is essential to make further use of the opportunities of and society, as well as active involvement of NGOs and social economic integration that are available after Latvia’s accession partners in dealing with problems to be solved by the state, local to the European Union. An important aspect in this context is L governments and society, is a sign of good governance. the creation of a goal-oriented and credible national policy for timely and smooth introduction of the euro in Latvia. Latvia’s A It is also characterised by long-term planning, solving of short- accession to the Economic and Monetary Union will significantly term tasks in accordance with long-term goals, protection of increase economic stability and will open wide opportunities for resources, monitoring of implementation of short-term and further economic growth because the trust of investors in N long-term goals, as well as supervision of the development Latvia’s economy will increase, capital costs and costs for process. activities will decrease, and there will be better opportunities for O international economic cooperation. In order to have governance which can more purposefully and I actively facilitate the transition of the state towards sustainable Tasks: development and ensure well-balanced development of the T whole territory, it should be based on local governments and (1) to ensure stability of prices and reduction of the current regions that have the requisite capability. account deficit in the balance of payments; A The capacity of public institutions and the trust of individuals in (2) to ensure a growth in productivity balanced with salary public institutions should be increased by minimising and increases; N preventing corruption and promoting cooperation between (3) to increase the flexibility of the labour market; political and administrative structures, as well as by increasing the efficiency of the state administration. (4) to promote competitiveness in the product markets. 27 N A L P

4.1.2. Improvement of the planning and 4.1.3. Functional local governments and regions forecasting system The research carried out on administrative territories of local T A national development planning system is an instrument for governments, as well as projects and studies on the sustainable economic development, elaboration of a medium- consolidation of local governments, supports the need to create N term budget, as well as cooperation and coordination of actions larger local governments (based on the number of inhabitants). on all administrative levels. Coordination of policies of actions, Small local governments cannot ensure a separation between E decisions and measures should be carried out on the national, legislative and executive powers; they have comparatively high sectoral, regional and local level. proportion of administrative expenses but low administrative capacity. Inadequate services rendered by local governments M An efficient system will increase the general competitiveness of and insufficient financial capacity do not ensure development. the state. In order to ensure mutually coordinated drafting of O policy planning documents, particularly in defining priorities, The aim of regional reform is to significantly extend the assessing impact and planning the allocation of funds, it is functions of regional governments (in comparison to functions L essential to develop planning and forecasting skills on all fulfilled by the existing districts) and to set a more stable basis administrative levels. It is necessary to regularly carry out an for financial revenues; this would ensure a higher degree of E independent qualitative analysis of trends in the development of autonomy of local governments. the national economy and of the social-economic development V At the moment, the regional reform and the local government of territories, to assess the impact of policies and measures, to administrative territorial reform is particularly essential in the examine the efficiency of national support instruments, and to E context of regional development and planning. draft recommendations for national, regional and local governments, as well as public institutions, in cooperation with Tasks: D social partners. (1) to finalise the local government administrative territorial Tasks: reform by creating local governments which are capable of (1) to introduce drafting of a medium-term budget and finance acting – namely, towns and counties; L management; (2) to improve the financing system of local governments; A (2) to improve the development planning system; (3) to implement regional reform by creating regions and regional N (3) to proceed with long-term national development planning by local governments capable of economic development; taking into consideration the planning of social and economic processes, territorial development planning and financing of (4) to apply the personnel management principles of state O the planned actions; administration to the employees of local governments; I (4) to determine and support priority sectors which ensure the (5) to use strategic management and business principles potential for sustainable growth; (methods) in local governments; T (5) to introduce strategic planning on the regional and local A (6) to promote involvement of local governments and regions in administrative level by ensuring its link with national and social dialogue. sectoral strategies and programmes; N (6) to strengthen the knowledge and skills of planning, research and forecasting in public administration. 28 N A L P

4.1.4. Strengthening the capacity of public administration (6) to create a modern system of personnel management, salary increase and in-service training for public administration T In the process of state administration reform, the process of employees; drafting and implementing of policy is improved, the transparency of the legal framework and simplification of (7) to introduce a quality management system in all public N administration institutions; administrative procedures is ensured, the capacity of administrative institutions is strengthened, the interaction E between state institutions and society is improved, and (8) to prevent corruption in public administration institutions cooperation among public administration institutions and M coordination of actions are fostered. Streamlining of the 4.2. A SECURE, UNIFIED AND CIVIL SOCIETY institutional system is continuing. O The national security of Latvia is the protectability and security In order to increase the capacity of public administration, to of its values and core interests – independence, territorial strengthen the national legal system, to ensure that the inseparability, the democratic system determined by the L administration is able to actively and convincingly protect Constitution, human rights, market economy, language and national interests and to participate in drafting EU policies and national identity, the protectability and security of the co- E other international processes, there is a need for high quality operation and interests of the citizens. professionalism. Frequent personnel turnover in public V institutions indicates that there is a need for human resource Society’s civic maturity is characterised by a high sense of planning, improvement of educational and management responsibility and obligation to the country and individuals, E methods, as well as reform of the payment system for those active participation in various social processes, free expression of employed in the public sector. one’s views and ideas, as well as tolerance of the views and D ideas of others, and respect for decisions made by the majority, Transparency of the activities of public administration even if they run counter to the individual’s views. institutions and openness to dialogue with citizens can increase public confidence and support for changes needed in achieving The unity of society is characterised by people of different L these goals. genders, nationalities, cultures, education levels and welfare levels, all of whom participate in activities that increase the A Tasks: common good and retard social stratification. (1) to improve the quality of policy planning and of regulatory One of the aspects characteristic of the development of a civil N acts in accordance with principles of good governance; society is the ability of all nationalities to preserve their language (2) to involve more NGOs and social partners in policy drafting in a multi-cultural environment. The functions of the state O and decision-making processes; language can be fulfilled only by a target – oriented, developed, cultivated and enriched language. The aim of the official I (3) to improve the accessibility and quality of public language policy is to ensure the sustainability, linguistic quality administration services, as well as related information and competitiveness of the Latvian language – the official T exchange, by developing e-governance solutions; language of the Republic of Latvia and one of the official languages of the European Union. A (4) to minimise administrative burdens for entrepreneurs and individuals; Society is in security if its development is based on the principle of sustainability and common values and if its members are N (5) to ensure efficient management of EU funds and other certain about their social and physical security because they trust financial resources; public institutions. 29 N A L P The aim of a policy for forming a civil society is to ensure an (4) to create a sustainable model for public development of EU environment in which individuals have no obstacles in dealing policies and protection of national interests. By drafting with individual and public issues. Involvement of nationals living national positions and developing EU policies, the maximum T abroad in discussions of topical issues should be particularly involvement of society, including social partners and NGOs, facilitated. should be ensured; N (5) to promote the equal spread-out of the location and capacity of an NGO network throughout Latvia; E

4.2.1. Cooperation of the public, non-governmental and private sector (6) to provide regular and independent financial means M A significant requirement for successful and democratic (including, community funds) for support of initiatives of development of the country is cooperation between the public local social groups; O sector – state, local governments, NGOs and social partners – (7) to promote delegation of public administrative tasks to the and the private sector. A continuous dialogue between both L NGOs, to develop co-operation among the public and groups, as well as their ability and desire to respect each other, private sector, to ensure that the partnership becomes an to complement not conflict with each other, facilitates the E important mechanism for the provision of public services formation, maintenance and security of a civil and united and infrastructure. society, its stability and security. V In Latvia only a small part of its inhabitants are involved in social activities; charitable activities and voluntary work are not 4.2.2. Creation of a common culture space E widespread. A large number of Latvia’s inhabitants still think that they do not receive sufficient information about the D Latvia’s geopolitical situation and history have created a multi- activities of NGOs and that they cannot influence either their cultural society in Latvia, which can become even more diverse own life or society; therefore, they become alienated from the due to globalisation. The population of Latvia has to develop aims set forth by public administration. In reality, no major legal respect and tolerance towards otherness. L or institutional obstacles keep individuals from participating in social activities. Latvian civil society is based on a common cultural space which A is characterised by cultural diversity united by common values. A Tasks: common cultural space is a prerequisite for a unified society consisting of various socially, ethnically and religiously diverse N (1) to ensure efficient participation of NGOs in decision making and legislation by increasing the activities of NGOs and their groups. The national cultural values of each group, based on participation in discussions on draft laws; cultural institutions and historical heritage, have a significant O role in forming a single national culture, as well as in preserving (2) to strengthen the role of trade unions and employers’ and expressing national identity. National cultural values, which I organisations and their unions by assigning them more are characterised by excellence and uniqueness, have become a functions, e.g., forecasting market needs in a given sector brand for popularising Latvia’s image and raising national self- T and involving them in drafting long-term national economy esteem. plans; A A unified civil society participates in forming Latvia’s cultural life (3) to support children and youth NGOs, thus facilitating a and preserving, expressing and creating national cultural values. decrease in the number of wandering children and helping Cultural diversity and differences contribute to mutual N young people to form an active and wholesome life-style; enrichment and self-improvement of individuals. 30 N A L P Tasks: public support, and preventive measures against crimes should be undertaken. T (1) to facilitate the involvement and active participation of society in diverse cultural processes and to increase the use To protect the citizens of Latvia against the consequences N of cultural resources for ensuring equal opportunities to caused by natural calamities there is a need to improve the socially vulnerable groups; operations of civil defence systems, thus ensuring the timely and E effective reaction of the state to the calamities caused by nature (2) to preserve and develop the richness of the Latvian language and men. M and the diversity of its expressions and to ensure the use, legal protection, linguistic quality and competitiveness of the Tasks: Latvian language as the official language of the Republic of O Latvia and as one of the official languages of the European (1) to promote more efficient co-operation between different Union; structures, including cooperation with international L institutions dealing with combating crime; (3) to facilitate intercultural dialogue and understanding among E different ethnic, religious and social groups which form (2) to improve the civil defence system and to promote Latvia’s society; interinstitutional co-operation in this sphere; V (4) to maintain and provide support for unique national cultural (3) to improve mutual cooperation of institutions dealing with E values; the fight against terrorism; D (5) to improve the preservation, protection, research and (4) to improve and modernise the system for fighting against accessibility of Latvia’s cultural heritage, particularly by the illegal spread of narcotic drugs and psychotropic educating society about the role of its cultural heritage in substances, human trafficking and economic crimes; sustainable national development. L (5) to improve interinstitutional cooperation in the sphere of

4.2.3. Ensuring internal security asylum; A In order to have a secure and stable Latvia’s society, the capacity (6) to improve the material and technical base of law of the internal security system and cooperation with foreign enforcement institutions and to modernise IT and N communication technologies; counterparts should be improved; particular attention should be paid to monitoring and assessment of international criminal O networks and criminal situations in other countries. Sustainable (7) to develop the preparation of personnel involved in threat prevention; security is based on forecasting the trends that might influence I Latvia in the future. More attention should also be devoted to (8) to promote cooperation between institutions dealing with the activities of international criminal structures in Latvia. T protection of copyrights, neighbouring rights and intellectual property by improving the system that is used to fight against In order to ensure greater internal security in Latvia, it is A offences in this sphere; necessary to take specific steps in the fight against crime; it is increasingly difficult to do that because Latvia’s law N (9) to build the capacity of law enforcement institutions and to enforcement institutions need the more and more updated and establish relations with society. appropriate material and technical basis necessary for rapid response to global events. The security system should have 31 N A L P

4.3. INTERNATIONAL DIMENSION OF LATVIA’S using all available EU instruments – common policies, DEVELOPMENT legislation, financial support; T The development of Latvia as a small and open country cannot (2) to continue active dialogue with EU member states and be considered apart from the global context. However, other partner countries, ensuring regular exchange of visits N globalisation and the increasing interaction and influence of and developing a network of diplomatic representation various international processes should not be regarded as a offices; E threat to Latvia’s national sovereignty and identity. On the contrary, these processes should be regarded as Latvia’s (3) to promote the role of NATO as a collective security M opportunity. By fully integrating into international processes and organisation which increases security in Latvia and the by respecting such internationally respected values as world, as well as to contribute to the development of the O democracy, the rule of law, human rights, peaceful coexistence European Security and Defence Policy; and solidarity of countries, Latvia will be able to ensure both L national security and sovereignty, and economic growth. In (4) to actively promote development of bilateral economic order to facilitate Latvia’s development and growth in an relations and to represent Latvia’s interests in international E international context, it has to represent its national interests economic organisations; effectively in the European Union, facilitate deeper integration V of the Baltic Sea region, cooperate with non-EU countries (in (5) to elaborate and actively implement the European particular with Eastern neighbouring countries), participate Neighbourhood Policy, as well as to involve Latvia as a new E actively in collective security initiatives, protect its interests in the donor country in development cooperation; global market, promote the unity of the Latvian diaspora, D develop Latvian identity, and create a positive image of Latvia in (6) to protect, maintain and develop the ethnic, linguistic and the world. cultural identity of Latvians living abroad, as well as to strengthen their sense of belonging to their ethnic native Tasks: country; L (1) to take full advantage of Latvia’s membership in the EU by (7) to develop and project a single concept of its national image A effectively representing Latvia’s national interests and by in order to facilitate Latvia’s recognition abroad. N O I T A N 32 5. FAVOURABLE ENVIRONMENT FOR BUSINESS AND LIVING NON-FINANCIAL INVESTMENTS PER 1 INHABITANT, LVL

5.1. REGIONAL DEVELOPMENT LVL The aim of regional development is to promote and ensure a balanced and 1200 N sustainable national development by taking into consideration the characteristics 1000 A and potential of the country as a whole and its separate parts and by minimising negative differences between these parts, as well as by preserving and developing 800 L the distinctive features and potential for development characteristic of the natural and cultural environment of each separate territory. For different territories, it is 600 P possible to choose between different ways of development by taking into 400 account the characteristics and comparative advantages of the given place. 200 Latvia is characterised by a monocentric distribution of the population – there is one powerful centre, Riga, and a wide and evenly distributed network of towns. 0 LATVIA For a long time such a distribution of population was regarded as an obstacle for T regional development; however, it has a significant growth potential that can be LVL 1200 developed by implementing the concept of polycentric development. In the existing network of towns, in addition to the development of one major centre – 1000 N Riga, the development of which is essential to ensure the national competitiveness of the international scale, other centres have to be purposefully 800 E developed until they become strong enough to facilitate regional growth. By 600 channelling the limited available resources to selected development centres, by M developing of co-operation networks, by support of the attraction of highly 400 qualified human resources to regions it will be possible to ensure more efficient O development, to increase the competitiveness of regions and the state as a whole 200 more rapidly. The creation of a high quality living space in conformity with the 0 L population structure will foster the establishment of the conscience of regional Riga region and national identity. E V E D L Vidzeme region A Riga region N Kurzeme region O Zemgale region I Latgale region T Density of population, pers. per km2 A > 100 20-30 10-20 N 33 LVL

5.1.1. Polycentric development – an opportunity for regions 1200 Polycentric development with a network of towns provides the necessary 1000 preconditions for the development of a well-balanced state. The towns have to become an important development driving force of each region and of all the 800 country, whose potential and the perspective development direction is N determined within the spatial planning process of the region, in co-operation of 600 A public institutions, local governments, NGO’s and public. The creation of the 400 network of towns and their strengthening increase the mutual complimenting abilities of them and it is an effective instrument for a balanced development to L 200 apply the needed synergies. P 0 Tasks: Vidzeme region (1) to ensure the development of a common national development planning LVL 1200 system to achieve the vertical and horizontal co-operation on all the planning levels, based on a regular national development analysis and providing the 1000 possibility in case of need to adjust the plans of sectorial development T according to the needs of a balanced development of the regions; 800 (2) to develop and implement territorially differentiated regional development N 600 support instruments, to ensure their mutual compensation, by this creating 400 beneficiary preconditions (well organised infrastructure, the existence of E specific measures and services promoting entrepreneurship and its 200 commencement etc.) for the development of national economy; M 0 (3) to strengthen the regional capacity in planning, ensuring both the material Kurzeme region and technical base, as well as human resources for the said purpose; O LVL (4) to facilitate the development of towns – rural co-operation thus creating new L 1200 and strengthening the existing functional relations between the urban and 1000 rural territories; E 800 (5) to stress and take into account the distinctive features and quality of regional and local cultural environments in territorial planning as a precondition for V 600 sustainable territorial development and competitiveness. To diversify and strengthen the social and economic impact of cultural heritage and E 400 contemporary cultural environment; 200 D (6) to use the public and private partnership principle in renewing the regional 0 development centres. Zemgale region

5.1.2. Riga – a metropolis of business, science and culture in L LVL 1200 the Baltic Sea region 1000 Riga is the capital of Latvia and the centre of a large region whose influence reaches A beyond its administrative and national borders. Facilitation of development of Riga 800 as an excellence centre of business, science and culture in the Baltic Sea region is N 600 essential for strengthening Latvia’s competitiveness on a global scale. O 400 Polycentric distribution of population throughout the country is one of the preconditions for successful transfer of Riga’s excellence, potential and resources I 200 to other regions in Latvia and vice versa. This interaction would facilitate not only 0 balanced regional development in Latvia but also ensure the competitiveness of T Latgale region Riga region within the Baltic sea region and beyond it, as well as Latvia’s integration into the international economic environment since Latvia is a link between Eastern and Western markets and a country with a knowledge-based A 1999 2000 2001 and globally competitive economy. 2002 2003 2004 N Harmonised and balanced development of Riga and other regions in Latvia can Source: Statistical Yearbook of Latvia 2005 ensure the highest possible living standards, offer employment, education, 34 recreation and entertainment opportunities to all people living, working, investing PROPORTION OF RIGA GDP FROM or just visiting Latvia. LATVIA GDP, % Tasks: % N (1) to ensure qualitative and functioning spatial structure of Riga region, that 70 would guarantee high quality and accessible transportation services to the A inhabitants and visitors of Riga and all the country by efficiently incorporating Riga in the Pan-European transportation network; L 60 57.7 (2) to facilitate the growth of Riga as an economically competitive metropolis in 55.7 55.4 P the Baltic Sea region by developing cooperation between entrepreneurs and 52.9 56.1 science institutions, as well as by creating a flexibly responsive business 54.5 49.3 50 environment, manufacturing and services based on innovative technologies and by offering services in the sphere of logistics and tourism; 47.3 (3) to facilitate the development of Riga as a centre of education, science and 40 T excellence in Latvia by improving cooperation between relevant national and 1996 1997 1998 1999 2000 2001 2002 2003 local institutions, entrepreneurs and NGOs, by promoting activities of Year N students, teachers and scientists, and by promoting international cooperation and exchange between NGOs; E Source: Central Statistical Bureau, 2005 (4) to ensure the evolvement of diverse and qualitative life and culture environment in Riga region by developing services, supporting various large-scale events, M concurrently developing the needed infrastructure, as well as preserving and augmenting Riga’s cultural heritage. O

5.1.3. Mutual, trans-boundary and trans-national co-operation of regions L to increase competitiveness in the European Union RIGA IN 2004 E The aim of any regional cooperation is to develop a common synergy, finding Citizens – 735241 or 31% from all the common solutions for those tasks where the individual solutions would have been population of Latvia V ineffective or economically non-substantiated. Regions in Latvia cooperate relatively broadly on all levels, but usually cooperation is limited to the exchange of Active business companies – 38080 or E experience in the spheres of cultural, social and environment infrastructure services, 37% from all the active business as well as in organising the local government work; little attention is paid to D opportunities to learn new production methods and services, to study market companies of Latvia demand and to implement joint economic projects. Regional co-operation with the neighbouring regions of the country and across its borders is significant – it is from them needed in order to minimise the influence of actual regional borders, to facilitate L solving of specific development problems characteristic of borderland territories and micro-sized – 31246 to study the development potential on the both sides of the border. All of that is small – 5544 A necessary to prevent the formation of „empty” areas and to strengthen joint medium – 1079 responsibility for timely prevention and resolution of potential conflicts. large – 211 business companies N Tasks: or O (1) to continue Latvia’s and its specific territories in the networks of international co-operation and to enhance the development of polycentric competitive 35% from economically active I network of system of towns in the Baltic Sea region by concurrently supporting creation of a common Northern European identity; micro-sized business companies of T Latvia, (2) to strengthen internal and international cooperation of local governments and 55% from small ones regions in dealing with regional and Pan-European development policy issues, A 54% from medium ones, as well as to improve links (logistical, actual) among international, national, 63% from large business companies regional and local transportation networks; N (3) to strengthen cooperation in implementing development strategies and in spatial planning by taking advantage of opportunities for cooperation offered Source: Statistical Yearbook of Latvia 2005 35 by neighbourhood policy, as well as by cross-border and international opportunities for cooperation; (4) to facilitate approximation of the environmental monitoring system in neighbouring countries to EU requirements for preservation of the quality of N the environment, including a reduction in the amount of trans-boundary emissions. A

5.2. MODERN INFRASTRUCTURE AND SERVICES L One of the most essential preconditions for sustainable economic growth and P competitiveness in the global market today is national, regional and local infrastructure that meets ever higher quality requirements. Modern and qualitative infrastructure consists of transportation, public utilities, communal and social infrastructure, as well as different services which ensure accessibility of this infrastructure. T A precondition for sustained and sure national development is a sufficiency of energy, as well as a reliable energy supply for the national economy and N inhabitants. It is possible to achieve significant economic growth and to increase E competitiveness if information and communication technologies (ICTs) are used in public administration, enterprises and households. Opportunities provided by M ICTs should be used efficiently and innovatively in the spheres of education, science, employment, health care, social security, culture, tourism, etc., in order O to simplify access to employment and education, as well as to the services and information offered by the public and private sector. L

5.2.1. Energy supply which facilitates development E The sufficiency of energy ensures growth of the national economy, higher living V standards and national security. The security of Latvia’s energy supply can be increased by facilitating the use of local energy resources, abolishing isolation of E Latvia’s energy market, as well as by diversifying the supply of primary energy resources. Therefore, particular attention should be paid to the development of D the energy sector in Latvia, the Baltic Sea region and Europe by studying possible ways to diversify the supply of energy resources and by participating in various projects which are oriented towards a reliable supply of power, oil and gas. L While improving the infrastructure of energy supply and implementing energy efficiency measures, the accessibility and sufficiency of energy to consumers A should be improved, and the impact on the environment should be mitigated. The level of self-sufficiency of power, as well as use of primary and renewable energy resources, should be gradually increased. N Tasks: O (1) to facilitate creation of links between Baltic and European energy systems I which are oriented towards integration of the Baltic energy supply system into the European system; T (2) to diversify the supply of primary energy resources and to increase energy A independence; (3) to support investments in producing energy from renewable sources; N (4) to facilitate competitive production and greater use of bio fuel. 36

5.2.2. Development of ICT infrastructure and services and their NUMBER OF INHABITANTS USING accessibility in public networks COMPUTER/INTERNET ON REGULAR BASIS IN 2004 Development of ICT infrastructure and efficient use of opportunities ensured by N ICTs facilitate social and economic growth of the country and competitiveness of its regions, as well as raise living standards of the population. Modernising of ICT % from the total number of the A respective inhabitant group infrastructure in public administration institutions should be oriented towards improving services to inhabitants. The development of electronic services should L be promoted by ensuring diversified channels for service provision, improving 100 accessibility and security of services, as well as minimising the administrative P burden for inhabitants and entrepreneurs. The infrastructure of information systems should be developed by ensuring the compatibility and security of information system, as well as by increasing accessibility of information. 80 Proficiency of inhabitants in using ICTs should be increased, and special e- governance application software should be developed. Digitalisation should be T developed, improved and used in all sectors of public governance. Broadband network should be created, and its accessibility should be ensured in all regions; 60 Internet accessibility should also be improved. N E Tasks: 40 (1) to facilitate digitalisation and development of services provided on the M national and local government level; O (2) to ensure compatibility of national and local information systems and to facilitate development of national and local information systems; 20 L (3) to ensure digitalisation of the education system and to improve the proficiency of education institution employees in using the new ICTs; E 0 (4) to provide national and local government institutions, including health care, students other types of working persons self employed unemployed males in total females V employment, social and cultural institutions, etc., with the needed ICT infrastructure and Internet connections, as well as to improve the proficiency E of employees in using new ICTs; persons D (5) to provide access to the broadband data transfer network and develop access inactive persons to the public Internet, thus facilitating balanced regional development; use computer (6) to facilitate the use of ICTs in enterprises and households in order to ensure L wider accessibility of services and information. use internet A Source: Statistical Yearbook of Latvia 2005 N

5.2.3. Multimodal, integrated, accessible for public and safe O transportation system I An efficient, flexible and safe transportation infrastructure is mandatory for economic growth because it facilitates productivity and ensures free movement of people and goods. Development of an international transportation In 2004 T infrastructure by involvement in implementation of cross-border projects is 75% of the companies of Latvia and A essential for integrating the national markets, especially as to the context of the 15% of households had access to market of the enlarged European Union. Internet. N A modern transportation system is a prerequisite for creating a qualitative business and living environment. The efficiency of the transportation system and the quality of services will be increased by integrating different modes of 37 transportation and diversifying their services. That ensures inhabitants, entrepreneurs and tourists with comfortable transportation and qualitative TURNOVER OF PASSENGERS transportation services. Tasks: N mill. (1) to ensure improvement and development of the international transportation passengerkilometres A infrastructure, including modernisation of all major national motorways, 3000 railroad infrastructure, ports and airports, thereby ensuring compatibility of L 2500 Latvia’s and EU air traffic control system, thus guaranteeing full integration into the Pan-European transportation network and connection with networks P 2000 used by Eastern neighbouring countries; 1500 (2) to improve the quality of the regional and local transportation infrastructure by 1000 allocating sufficient funding for maintenance of motorways and local roads; 500 T (3) to increase and maintain traffic safety in order to reduce the number of road 0 casualties by at least a half; N 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 (4) to facilitate cooperation between the state and local governments in E Year developing a balanced and integrated transportation system in the country; aviation (5) to diversify transportation and logistics services by creating an integrated and M railway multimodal national transportation system which is competitive in the coaches of regular traffic European and global service market; O (6) to establish Latvia as a transportation and logistics centre for Asian and L TURNOVER OF FREIGHTS European trade; E (7) to improve the public transportation system: increase the accessibility of V mill. public transportation services on national, regional and local level, to improve tonnkilometres the quality of regional and local services by optimisation of route network, E 50000 determining priority modes of transportation, and retaining rail transportation 45000 of passengers and ensuring its accessibility for all the social groups of D 40000 population; 35000 30000 * (8) to develop environmentally friendly means of transport and to minimise risks 25000 associated with transporting hazardous cargoes; L 20000 15000 (9) to develop the infrastructure of bicycles, especially in the towns of Latvia, and A 10000 5000 to promote the use of bicycles as an alternative means of transportation. 0 N 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 5.2.4. Development of public utilities (water and waste management, O heating, etc.) Year I in total Public utilities include water management, waste management, heating and railway other similar services and their infrastructure. These services improve the quality T * of living environment, and they can increase the economic activity, as well as water transport after 1998 the freight transfers by water increase efficient and sustainable use of energy resources. A with the vessels are not cars Tasks: N (1) to develop a water management infrastructure in accordance with Source: Statistical Yearbook of Latvia 2005 environmental requirements; 38 (2) to improve the quality of public utilities infrastructure by avoiding inefficient use of energy resources; (3) to develop a uniform support policy for increasing energy efficiency in systems N of heating providers and to increase the efficiency of energy in buildings; (4) to create a sustainable waste management system, including a supporting A infrastructure for management of household waste, hazardous waste and radioactive waste on the national, regional and local level; L (5) to provide equal public utilities to all inhabitants of the country, taking into P consideration the population distribution.

5.2.5. Infrastructure and services provided to people engaged in different activities and having different life-styles T An integral part of a full value living environment is the opportunity for different N social groups to receive the services they need and are interested in. People need services related to education, health care and social care, recreation (culture) and E entertainment (sports), as well as consultations from experts and contacts with authorities, security and legal institutions and public organisations. Disregarding M the fact that not all of these services are needed daily, the public utilities sector has to work profitably; therefore, these services should be brought closer to individuals by creating conditions that make it possible to receive these services O at development centres. The orientation of certain centres, existing demand and the presence of a functioning infrastructure – buildings, personnel, connection to L public services networks – should be taken into account. E Tasks: V (1) to ensure a „minimum basket” of all types of services according to the needs of each individual centre and to create preconditions for receiving these E services, and to specify the institution responsible for providing each specific type of service; D (2) to decrease disparities between Latvia’s regions with regard to the quality and accessibility of services; L (3) to diversify services related to recreation and an active life-style by using local cultural and historical and natural resources; A (4) to develop the possibilities for population to be engaged in various type and N level physical activities, thus developing the mental and physical potential of each individual. O I T A N 39 6. IMPROVEMENT OF WELFARE

6.1. HEALTHY PEOPLE IN A SUSTAINABLE SOCIETY Health is a basic human value; it is the foundation for the quality of life, as well as for personal and family well-being. N AVERAGE PROJECTED LIFE BIRTH Health care is an essential part of public health. It includes both medical and A pharmaceutical care and is aimed at maintaining and restoring good health. There are not enough general practitioners in Latvia; therefore, people do not L always receive health care services in a timely fashion. The availability of health age care services has to be improved by modernising the infrastructure, developing P 0 10 20 30 30 50 60 70 80 the use of information technologies, introducing e-Health services, as well as ensuring adequate human resources for health care. The social service sector encompasses services by social workers, social care males services, and social and occupational rehabilitation; these services are provided both by the state and local government institutions. country T In order to protect the population in social risk situations, there are social security and state social benefit systems functioning in Latvia. Within this framework, N pensions, social benefits and compensations are paid in accordance with social females insurance contributions, and financial aid is provided in the form of general E benefits to members of specific population groups. Social assistance provided by local governments offers social protection to M persons who live in poverty or who are in any other social risk situations..

6.1.1. Human health as a value O males An individual’s health is influenced by biological, social, economic, L environmental factors, as well as by lifestyle habits. These factors also influence cities general public health, which is a significant indicator of a sustainable society. In E order to create conditions for lifelong health, it is necessary to promote and females develop preventive measures, to persuade the public opinion that a healthy V lifestyle is a value, and to continue to improve the health care system. The prevalence of various health risks contributes to an increase in the number E of persons who are at risk of poverty and social exclusion. In order to raise public awareness about health as a value, it is essential to D males promote cooperation between the state and NGOs so that people, starting at rural territory an early age, are better informed and involved in preserving their health by engaging in physical activities and eating wholesome food. L Tasks: (1) to improve the accessibility of health care services to the population by A females developing the health care infrastructure, paying special attention to the primary health care and emergency services; N (2) to provide long-term development of human resources in the health care sector; O 1995 (3) to create a balance between the state’s and an individual’s responsibility I for preserving and improving health and to create public awareness about 1998 a healthy lifestyle and wholesome food, as well as to involve public in T combating the deseases of dependency (alcohol, drugs, psychotropic, 2001 toxic substances, gambling or dependency from computer games); A 2004 (4) to promote the integration of mental health care into the society (to develop public-based mental health services and the co-operation of N institutions involved in matters of mental health of population, to educate Source: Statistical Yearbook of Latvia 2005 the society on mental health and psychic diseases); 40 (5) to stress the importance of preventive measures; NUMBER OF RECIPIENTS OF STATE SOCIAL BENEFITS (6) to increase gradually the amount of financial resources for health care and to improve the public awareness about the possibilities to receive state paid N health care services; (7) to encourage the introduction of new, research-based medical treatment Number of recipients of pension A methods; thous.pers. L (8) to develop e-Health solutions and to increase the use of information 25 technologies; P 21,05 21 20,1 20,7 (9) to reduce new-born and infant death rates; 19,6 20 (10) to encourage people, especially children and youth, to participate in sports 15,2 15,8 activities; 15 14,2 T (11) to promote cooperation in the field of health care between the state and NGOs which are working with families, children, youth, groups at risk of 10 N social exclusion, including HIV-positive persons. E 5

6.1.2. Sustainable social security system M 0 In view of demographic development trends (aging population and low birth 1995 2000 2003 2004 O rate) and their impact on the development of the national economy, long-term Year stability of the social security system plays an important role. The sizeable shadow state social security benefit L economy, a relatively high unemployment rate, low average salary, as well as regional differences result in inadequate pensions (size of pension depends on child birth benefit E social insurance contributions); therefore, measures should be taken to improve the quality of life for retired persons. Average amount of state social V Although, on the whole, positive development trends can be observed regarding benefits, per month state social benefits (an increase in the amount of existing benefits, provision of E L VL new types of state social benefits), the amounts received from a part of state social benefits are still too small to provide efficient state aid to certain population 250 D groups. 204,17 The opportunity to receive social assistance and social services is one of the 200 182,13 184,6 indicators which characterises the quality of life of persons vulnerable to social L exclusion and which encourages their reintegration into society. In order to 150 ensure high-quality services, to expand the range of these services and to bring A them closer to each person’s place of residence, it is necessary to develop and modernise the infrastructure which provides social services, as well as to support 100 N local government institutions in developing alternative health care services 73,37 43,92 O Tasks: 50 35,38 32,09 19,65 I (1) to maintain the financial stability of the social security system and to promote its development; 0 1995 2000 2003 2004 T (2) to encourage movement towards providing adequate pensions; Year A (3) to raise public awareness about the importance of the social security child birth benefit system; state social security benefit per N month (4) to provide state aid for persons at social risk; (5) to develop a system for providing social assistance and services by the state Source: Statistical Yearbook of Latvia 2005 41 SEGMENTATION OF NUMBER OF and local governments, the social and day-care centres included, to raise the PENSION RECIPIENTS BY AVERAGE quality of state and local government social services by modernising the AMOUNT OF MONTHLY PENSION, LVL infrastructure of service providers; (6) to facilitate the accessibility of social services by bringing them closer to each N person’s place of residence and to develop new types of social services; 1% 1% (7) to improve social dialogue between the state and socially vulnerable A 4% 4% 6% 2% population groups. 4% L 16% 19% P

6.1.3. Support to families with children and encouraging an increase in the birth rate 43% The family is the basic unit of society; it is the place where the physical renewal of society and the passing on of moral values are ensured. Beneficiaries of support to families are not only themselves the benefit receivers but also the T 30-40 80-90 whole society. 40-50 90-100 N The state’s policy for improving the demographic situation has two chief aims: 50-60 100-150 protection of children’s rights/children’s and family rights and state aid to families E 60-70 150-200 with children; both are provided by the social security system. A large part of state 70-80 200-300 social benefits are intended specifically for families with children; however, the M small amount of certain state social benefits (for example, the family state benefit) does not provide sufficient support. Support to families can also be O provided by creating a living and working environment that enables parents to work without risking their family’s safety, providing the parents with a possibility L Source: Statistical Yearbook of Latvia 2005 to integrate work with the care about their family – flexible type of work and the possibility for family members in need of care to access the necessary services of E social care. Integration of children and young people from families at risk of BIRTH-RATE, DEATH-RATE AND social exclusion (children and young people with incomplete basic education or V NATURAL GROWTH, PER 1000 INH. with low motivation who are from disadvantaged families, orphans, as well as children and young people with special needs) in the educational system and E labour market is insufficient. It is necessary to create basic conditions for number successful social integration of the youngest members of society by developing a D 18 social rehabilitation system and by placing in families orphans and children 17 without parental care. 16 15 Tasks: L 14 (1) to increase state aid to families during the child-rearing period in conformity A 13 with the needs and the age of the children; 12 11 (2) to encourage development of a network of pre-school educational institutions N 10 and alternative child-care services; 9 O 8 (3) to create a family-friendly working environment and in this area to promote co-operation with social partners – the employers; 7 I 6 (4) to develop support and social service systems for families with children and to 1990 1991 1992 1993 1994 1995 T ensure a suitable infrastructure; 1996 1997 1998 1999 2000 2001 2002 2003 2004 Year (5) to develop a family-type care system for orphans and children without A Born Deceased parental care (foster families, adoption, promotion of guardianship); N (6) to create a state support system for promoting accessible housing to families Source: Statistical Yearbook of Latvia 2005 with children. 42

6.2. INCLUSIVE AND STEADY LABOUR MARKET PROPORTION OF EMPLOYED PERSONS FROM TOTAL NUMBER Work is one of the most important values in human life: it not only provides OF INHABITANTS IN 2004 means of subsistence but also lays a foundation for creative thinking, self- N realisation and social contacts. In cities and especially in rural regions, favourable conditions must be created for locating new jobs as close as possible to A employees’ places of residence because this reduces migration and promotes % regional development. Adequate mechanisms should be created for encouraging 0 20 40 60 80 100 L the economically active part of the population to join the labour market, as well as for encouraging the return of Latvians residing and working abroad. In total P In order to reduce undeclared work and to promote employment, strengthening employment partnerships at the local level plays an important role. Attention should also be paid to involving in the labour market population groups that are 15-19 at risk of social exclusion. T 6.2.1. Access to jobs and job variety in regions 20-24 The main reasons for the high unemployment rate in regions are the following: N insufficiently developed entrepreneurship, a low number of self-employed persons and poorly developed infrastructure. Self-employed persons form a 25-29 E rather small portion of the total number of employed persons in Latvia. M Insufficient public awareness about the administrative procedures for starting a 30-34 business or being self-employed does not favour the creation of new jobs. O At the same time, emigration of the labour force is continuing and increasing. In 35-39 L several sectors, employers lack workers. The great difference between Riga and the rest of Latvia with respect to E economic activity and GDP per capita hinders the formation of a uniform national 40-44 tax and benefit system that promotes employment. V Tasks: 45-49 E (1) to encourage the creation of a variety of jobs and accessibility to them by D supporting self-employment and entrepreneurship in all regions; 50-54 (2) to promote higher salaries, especially for lower-paid categories of employees, by raising the minimum wage and, at the same time, also raising the non- L 55-59 taxable minimum and increasing the personal income tax relieves for persons to be supported; A (3) to facilitate internal geographical and professional mobility of the labour 60-64 N force; O (4) to promote access to jobs for economically inactive working-age persons and 65-74 especially for youngsters and for population groups at risk of social exclusion – I parents after child-care leave, persons of pre-retirement age, persons with Age dependable persons, persons with special needs, persons who have been T In total unemployed for a long time, etc.; males A (5) to ensure wider access to information about vacancies, training and retraining females opportunities in conformity with the labour market demands; N (6) to improve working conditions by facilitating the implementation of laws on labour relations, labour safety and occupational health; Source: Statistical Yearbook of Latvia 2005 43 REAL REMUNERATION'S (7) to foster the growth of labour productivity; DYNAMICS OF EMPLOYED PERSONS (8) to support the return to the Latvian labour market of workers who have emigrated. N

6.2.2. Support for increasing the employment rate A % against The goal of the employment policy is to raise the employment rate and to reduce previous year unemployment by efficient economic growth. The unemployment rate among L 0 20 40 60 80 100 120 140 160 the population with low educational and skill levels is comparatively high. The reason for that is a lack of professional training, a disparity between knowledge P and skills obtained and modern labour market demands. Such a situation is not conducive to developing a knowledge-based society (information technology, 1994 communication skills, basic entrepreneurial knowledge, knowledge of foreign languages and the state language). T Tasks: 1995 (1) to develop more efficient measures for averting possible unemployment N (preventive measures for reducing unemployment), especially for young people and for persons after child-care leave and persons of pre-retirement E age; 2000 M (2) to improve and diversify active and preventive employment measures, ensuring an individual approach aimed at facilitating people’s O competitiveness in the labour market (especially by providing training and consultations to the unemployed to meet their particular needs in conformity L with the causes of unemployment); 2001 E (3) to reduce undeclared work; (4) to reduce long-term unemployment and to ensure involvement in the labour V market of population groups at risk of social exclusion (motivation 2002 programmes, internships and creation of specifically accommodated working E places as well as other measures); D (5) to institute flexible working hours and forms; 2003 (6) to develop initiatives promoting local employment and partnerships favouring employment, especially by encouraging employers to hire persons from L population groups at risk of social exclusion. A 2004 6.3. ACCESSIBLE HOUSING AND A CIVILIZED LIVING AREA N One of the most significant welfare (quality of life) indicators for every human Year being is provision of housing in a civilised and comfortable environment. At the O same time, a clean and comfortable living space is a prerequisite for preserving average net monthly remuneration of employed persons health and leading an active life. I consumer price index In a market economy, housing accessibility is generally determined by average T real remuneration of employed persons living standards in the country; therefore, from the macroeconomic point of view, the state’s participation in housing development has to be evaluated as an A essential contribution to human development. The choice of housing is determined by the material welfare and consumption priorities of a home owner N or tenant – that is, how high housing is on his/her priority list and how much is Source: Statistical Yearbook of Latvia 2005 he/she willing to pay for it. 44 The idea of “living space” includes not only an individual’s property or his/her NUMBER OF APPARTMENTS BUILT dwelling but also the private and public areas around the dwelling, including the natural and cultural environment, which are an integral part of a high-quality living environment. number N 0 500 1000 1500 2000 2500 3000

6.3.1. Diverse supply of types of housing 1776 A 581 In Latvia, after denationalization, over 80% of the housing is privately owned. 1995 L Funding sources and social objectives for housing construction have changed. Now 1068 construction is funded mainly by private capital, which finances construction in 127 P economically active areas where is the highest level of housing demand and sales prices. State and local government support is currently provided only for solving 1351 housing problems of low-income residents and people who are in crisis situations. 97 The gap between the average income of the population and the relatively high 1998 1251 T cost of housing hinders efficient maintenance and renewal of the current housing 3 fund. At the same time, this gap leads to segregation because the wealthiest households choose higher quality housing. N 889 Taking into consideration the diverse purchasing ability of the population, it is E 59 necessary to provide a range of choices for housing, including development of 2000 the social rent sector, cooperative construction projects of population, promotion 836 M of public and private partnership projects, as well as new construction projects in 4 regions. O 2821 Tasks: 2004 1664 L (1) to facilitate efficient use of existing housing (including progressive 1137 E management, renovation and modernisation); Year V (2) to create conditions for diverse types of housing available to increase the in total accessibility of diverse types of housing for population groups with diverse funded by statute companies E income levels; and NGOs D (3) to launch a comprehensive assistance system in the housing sector whereby funded by inhabitants obligations and responsibility are shared by the state, local governments and funded by state and local individuals themselves; government companies and organisations L (4) to establish a system for monitoring the quality of new housing; Source: Statistical Yearbook of Latvia 2005 A (5) to introduce financial assistance instruments for making housing more available to specific target groups (families with children, young specialists). N

6.3.2. Forming socially integrated neighbourhoods O Spatial planning plays an important role in planning and developing residential I neighbourhoods. By using spatial planning proposals to decide about the future of existing residential neighbourhoods or about the creation of new T neighbourhoods, it is possible to get an overview of the development of the entire municipality and to choose the most advantageous development option in A a rational way. The housing fund should be created by taking into account the location of enterprises engaged in manufacturing and providing services. This N would allow local governments to reduce the costs of providing the necessary infrastructure and would increase people’s comfort level by ensuring convenient access to public transport, service-providing companies, etc. 45 Parallel to the development of a diverse supply of housing it is necessary to enhance the development of functionally diverse and socially integrated residential neighbourhood. That would reduce such negative trends as stratification of towns’ residential areas by the income level of their population. The functional diversity of residential neighbourhoods will bring the necessary N services closer to the people and will improve the quality of life as a whole. A Tasks: L (1) to use the principle of public and private partnerships for creating a functional and diversified living space; P (2) to encourage an improvement in the quality of life for all population groups, especially for socially vulnerable groups (pensioners, children and people with disabilities); (3) to foster identification with one’s place of residence and to promote T development of local communities with the aim to enhance active participation of people in day-to-day activities. N E

6.3.3. A well-developed and accessible cultural environment and Memorials and monuments M cultural-historical heritage of culture – 8441 from them A high-quality cultural environment, which is formed by a well-preserved and O accessible cultural heritage and diverse cultural traditions as well as creative 3375 – of architecture expressions, is one of the prerequisites for sustainable and balanced territorial L 2413 – of art development. Each inhabitant of Latvia has both the right to live in a high-quality environment and the duty to care for ensuring its sustainability. Participation of all E 44 – of urban buildings population groups in creating the cultural environment and taking care of the 114 – of history cultural-historical heritage is one of the factors which forms and unites a civil V society. 2495 – of archaeology E Tasks: They include: D (1) to foster a balanced development of cultural processes and to make culture castle mounds – 474 available throughout Latvia, paying special attention to the accessibility of professional art; ancient cemeteries and L burial places – 1233 (2) to preserve and strengthen the originality and identity of cultural and places of medieval castles or historical counties and local cultures by preserving and developing county and A their ruins – 76 local cultural traditions, social practices, rituals, oral folklore, local language dialects and vernaculars, etc.; N manor houses – 136 Lutheran churches – 134 (3) to foster and develop the study of local history; to develop local tourism by creating tourism sites where one can learn about Latvia’s history, culture and O Catholic churches – 48 nature; I Orthodoxy churches –33 (4) to create a high-quality urban and rural cultural landscape by harmoniously T dwelling places of combining cultural and historical objects, nature sites and newly created outstanding persons – 29 contemporary values; A (5) to create ongoing co-operation and dialogue among territorial planners, architects, environmental planners and the local population. N Source: State Inspectorate of Protection of Monuments and Memorials of History 46

6.3.4. Reasonably used and well-preserved natural environment In Latvia, there is a great diversity of ecosystems with their natural structures, as well as a diversity of local wild species, agricultural crops and breeding stock. N Diverse and high quality nature environment is very valuable, and it has to be respected in the development of the country as a whole. Preservation of this A diversity is needed in order to ensure a healthy living space and sustainable development in Latvia, as well as to fulfil international obligations, and as the L characteristic feature of Latvia’s identity. In order to preserve biological diversity and to ensure favourable protection status for protected species and biotopes, it P is especially important to seek a balance between potential economic activity and territorial management. In the formation of a civil society, public awareness and increased public SPECIALLY PROTECTED NATURE involvement in resolving environmental issues play a decisive role, thus increasing TERRITORIES OF LATVIA public awareness about the values of nature environment and the necessity to T ensure high quality living space for next generations also. Nature reserves – 4 N Tasks: Moricsala (1912), E Grini (1936), (1) to facilitate the preservation and reasonable use of biological diversity and protected areas; Krustkalns (1977), M Teici (1982) (2) to promote the inclusion of the protected areas in the economic development O determining different prohibited zones of economic activities and substantiating the socio-economic decisions in their determination, as well as National parks – 3 L to attract financial resources for their management; Gauja National Park (1973), E (3) to encourage public participation in environmental protection and Kemeri National Park (1997), preservation by providing timely and true information to the population about Slitere National Park (1999) V environmental quality and natural resources; E (4) to facilitate the development of environmental education, as well as to foster Biosphere reserves – education for sustainable development and to raise environmental awareness North Vidzeme Biosphere Reserves (1997) D among the population; (5) to support sustainable development of the natural environment for recreation Nature parks – 43 purposes and to promote ecotourism; The most popular ones are L Engure Lake Nature Park, (6) to facilitate evaluation, mitigation and monitoring of the risks to nature, A including climate change and industrial risks; Tervetes Nature Park, "Daugavas loki" (“Daugava Swings”) N (7) to encourage rehabilitation and recovery of brownfield areas (including polluted areas); O Nature memorials – 295 (8) to raise public awareness about economical use of water and energy from them geological and I resources and sorting of household waste. geomorphologice – 206, T dendrologic plantations – 89 A Restricted areas of nature – 278 N Regions of protected landscapes – 9 47 N A L P T N E M O L E V E D L A N Source: Data of Central Statistical Board, 2005 O I T A N 48 N A L P VI IMPLEMENTATION AND MONITORING T OF THE NATIONAL DEVELOPMENT PLAN N By approval of the conceptual document “The National Growth their competency and ability. The parties concerned are Model of Latvia: People First” the Saeima of the Republic of government and state administration institutions, local E Latvia has outlined the long-term objective of the national government and regional councils, non-governmental development – gradually in 20 – 30 years to insure a substantial organisations and the private sector. M improvement of the life quality of people. The NDP as the main medium-term planning document is an agreement between The Cabinet of Ministers of the Republic of Latvia is society and politicians about the main national goals and most responsible for the implementation of NDP, ensuring the O significant tasks to be carried out during the next years to get conformity of the policy planning documents with NDP, co- L closer to this objective. ordinating activities and appointing the responsible persons. The objective of the document is to focus the attention of To ensure the function of the development forecasting and E politicians, civil servants and the entire society on the common research, a highly professional research base is to be objective, the main directions of actions and the tasks to be solved. developed. The research activities of it will strengthen the V It is essential for the implementation of the plan to interrelate the national, as well as sectoral development planning capacity, E NDP with other planning documents and to the detailed skills to analyse and forecast the development in breakdowns by development, mutual balance and implementation of other territories and branches, as well as ensure the macroeconomic measures, programmes and activities favouring national growth. analysis. The results of the research activities have the function D of “public commodity”. The following must be ensured in order to reach the NDP The Ministry of Regional Development and Local goal: L Governments co-ordinates and monitors the implementation of the NDP, the development of the determined tasks and
coordinated action; A activities. On regular basis the Ministry informs the Cabinet of
concentration of financial means; Ministers about the NDP implementation as well as ensures the
efficient use of assistance instruments; wide involvement and awareness of the society in the process of N
public participation and awareness; NDP implementation.
monitoring of the implementation process; O
flexibility during the implementation of the plan (learning The State Chancellery and the Ministry of Regional from experience). Development and Local Governments provides for the I conformity of the branch/sector strategies and programs The implementation of sectoral and regional development developed by ministries and secretariats with the long term and T priorities of the NDP is financed by the state budget and that of medium term goals and objectives of the national development local governments, by foreign financial aid, attracting private and their relation with the planning documents of regions and A financial capital, as well as via the application of the instruments local governments, promoting the decentralization of public of the European Union policies. institutions, the accessibility of services to people and co- N operation with regions. In order to implement the NDP strategy, each of the parties concerned has to carry out specific measures that are within Regional councils and local governments are the main 49 N A L P driving force in urban and rural development. With the support
capacity of local and regional governments and their T of the state and private sectors, they foster economic growth increasing role in planning the development of their territory; and entrepreneurship, promote education, the availability of N housing and the accessibility and quality of public services,
activity and participation of the population, as well as state transportation and other services. They also encourage people in and local government support to local initiatives and E a given territory to become involved in civic activities and to leaders; improve their quality of life. M
NGOs’ activities to facilitate better communication between Social partners and non-governmental organisations are a the state and society; O significant component and driving force in a civil society. Active involvement in problem solving, maintaining social dialogue and
a balance on the national, regional and local level between L participation in local activities are only some of the possibilities the objectives defined for social and economic development characterising the ways in which these partners can help to E and for territorial spatial planning and the means chosen for implement the NDP and involve the wider community. their implementation. V Entrepreneurs and scientists are invited to actively support The monitoring of the NDP has to be based on criteria that are the objectives for reaching the national strategic goal and to E comparable and measurable by quantity and quality to ensure seek not only creative solutions for implementing innovations, the possibility to monitor the national development processes new technologies and competitive products but also practical and the achievement of the goals and objectives set by the D ways of cooperating with educational institutions at all levels National Development Plan. The criteria system of the NDP and with local governments. results shall be based on the life quality index developed by the Each individual with his creativity, openness and positive Strategic Analysis Commission’s working group. It will provide the possibility to evaluate the changes of the main important L attitude towards the country’s future can contribute significantly to improving his and his family’s well-being. factors having impact on the people’s life quality during longer periods of time by use of complex quantitative (numerical) data. A Prerequisites for successful implementation of the NDP are the following: To ensure the monitoring of the NDP implementation in N conformity with its strategy and the determined objectives and
strong support by the government for implementing the goals, the components constituting the life quality index and the O evaluation indicators will be complimented by various other NDP, including budget planning; criteria. I T A N 50 N A L P EXPLANATION OF TERMS T N added value – value that is added to the intermediate capacity – in this document: power; capability of accumulating; E consumption (the purchased raw materials, materials, semi- capability of acting. finished products) during the production of goods or rendering M of services. civil society – a system of self-organization of the society which appears and functions outside state institutions, although not applied science – deals with problems that arise when always independent of them. O implementing conclusions derived from theoretical research or when solving issues presented by the real-life situation. The commercialization of science – financial return on values L results of applied scientific research can rapidly be used for created by research institutes; in this document: an instrument E commercial purposes. with the help of which new intellectual values created by universities and research institutions can be transformed into V basic sciences – research, analyse and explain general laws in commercial benefits. It means submitting the results of research nature and society irrespective of their practical use. In the short to manufacturing companies on the basis of mutual agreement E term, they usually have no commercial use, but they facilitate and for definite compensation. the competitiveness of Latvian scientists in the global science D arena and increase the quality of higher education in the competency centre – a nationally and/or internationally country, thereby also increasing opportunities for attracting competitive centre created through cooperation of one or finances for scientific research. several companies and laboratories of higher education institutions or applied research institutions. Its research serves to L biological diversity – the variety of living organisms in the create new sought-after knowledge and intellectual values that A environment, including land, sea and other water ecosystems and can be commercialised. ecological assemblages whose part they are; it involves diversity within a species, between species and between ecosystems. culture – in widest expression it means summary of all those N specific mental, material, intellectual and emotional brownfield areas – abandoned construction sites or areas characteristic features that are typical for a society or a social O polluted as a result of economic activities which influence or group, and parallel to art and literature include the living and I could affect human health and safety, as well as the landscape co-existence types, value systems, traditions and believes. The and the cultural and natural heritage. role of culture in the growth of an individual, of society and T state can be expressed in 3 ways: as a kind of living and co- business incubator – a structure that supports and fosters existence, the strengthening of the community’s identity, as a A activity of any business form in any sector of the economy. Its development tool and resources, as well as a value in itself, and basic function is to foster creation of new companies, to provide the goal of development. N them with premises, infrastructure services, and consultations on the basics of business during their “incubation period”, development – benefiting for public process of improving the which usually lasts 3 to 5 years. natural, cultural, social and economic environment. 51 N A L P T N diaspora – the part of a national, ethnic or religious group that created in 1957 with the aim of promoting the economic lives outside its country of origin. integration of its member states. E eco-design – integration of environmental aspects in the design foreign investments – investments made by non-residents. M of a product with the aim of improving the ecological Foreign investments made with the aim to ensure long-term charracteristics of the product during its whole life cycle. attractiveness and efficient control of the company’s O management are called foreign direct investments. economic growth – the increase in goods and services produced in the national economy. It is usually measured by the L formal education – a system including primary education, increase in real GDP. secondary education and higher education. The completion of E programs at the afore-mentioned levels of education is certified economically active population – employed and unemployed by an educational or professional qualification diploma V people who are actively looking for a job. Involves both recognized on the state or international level. economically active civilian population, as well as persons who E are enlisted in the military service. gender equality – the role of men and women in the development of the society is recognised as equal, they are D e-governance – provision of public services and conduct of granted equal rights and responsibilities, equal access to public administration, by using opportunities provided by resources and to use them. Gender equality means to ensure information and communication technologies. equal rights and possibilities for both genders. L e-Health – modern use of information and communication globalisation – changes in society and the global economy technologies in processes related to health care aimed at A brought about by increased international economic cooperation meeting the needs of the population, patients, health care and the mingling of cultures. specialists, health care providers, as well as health policy N developers. gross domestic product (GDP) – market value of the products produced and services provided during one year. (GDP can be O employment rate – the proportion of unemployed working- calculated by adding up 1) all of an economy’s revenues – age persons (from 15 years of age up to retirement age) of the I wages, interest, profits and lease; 2) all of an economy’s total population. expenditures – consumption, investment, government T e-services – services provided remotely to public by using expenditure and net exports (export revenues minus import information and communication technologies. costs); 3) added value from different sectors of economy plus A commodity taxes minus subsidies). European Union – an international regional organisation N comprising 25 European countries. In 1992 it was established groups at risk of social exclusion – population groups that on the basis of the European Economic Community which was have either no opportunities or limited opportunities to earn 52 N A L P T N E sufficient income, receive various services and goods which are structure formed by transport, communication, power, water M essential for a wholesome life in society. management and other systems of networks and facilities, as well as by housing and education, health care, culture, sports housing fund – a house, an apartment or a totality of one or and other institutions providing services to inhabitants, and their O several rooms and auxiliary premises (for instance, corridors and location in a territory. lobbies) in a building intended for permanent living, regardless L of whether they are or are not inhabited at a given time. This is innovative development – process of improvement E used as a generalized measurement for statistical or other benefiting for society by using new ideas, developments and accounting purposes. technologies; public acceptance of developments in the realm V of ideas, technologies or other spheres. human capital – people’s ability to carry out productive E economically dynamic activity, as well as their knowledge, skills intellectual property – property that includes copy rights, and experience. Investments in human capital include health inventions, new technologies and products and that are owned D care, education, professional preparedness and other activities by a person or a company. which make people economically more productive. investments – expenditures of individuals, companies, or human resources – quality and quantity of people’s abilities to governments with the aim of increasing their capital. From the L manufacture goods and provide services. Physical capacity and viewpoint of individual economic subjects, the purchase of intellectual faculties. ownership rights to already existing capital is also considered an A investment. However, from the viewpoint of the country at large, informal education – education that is obtained outside the only investments in the creation of new capital are considered N framework of formal education and that meets peoples’ needs investments. Investments are a necessary prerequisite for the and ensures new knowledge, skills and experience. growth of an economy. O information and communication technology (ICT) – a range knowledge-based economy – economy whose development I of technologies for rapid gathering, processing, storing, and is based upon the use of peoples’ knowledge/intellectual transmitting information. T potential. information society – a society whose individuals know how A to, can and have the possibilities to obtain information, to knowledge potential – accumulated knowledge that is not correlate it with the existing knowledge and to use the newly being used. N obtained knowledge for increase of welfare. knowledge society - a society where economic process is infrastructure – a part of the national economy’s territorial driven by information and knowledge. Its development is led by 53 N A L P T N E access to information and skills to manage it, by timely and once removed, e.g., coal, peat, oil, etc. gradual transfer of investment flow towards non-material values M - the social capital of the society, recognising its vital role in patent – a document that acknowledges and testifies that the process flow in economy. relevant technological idea or a project is an invention or an industrial sample; it indicates who has been the first to declare O knowledge transmitter – any person who has gradually it (i.e., who has priority), who is the author, and who owns the L accumulated knowledge and has created his own knowledge exclusive rights to the invention. potential. E person with special needs – a person who has acquired land transformation – transformation of land used for functional disturbance and who has become a person potential V agriculture into a land impossible to be used for agriculture. for disablement or an already disabled person. E life-long education – acquiring new knowledge, skills and planning region – a territorial unit in Latvia which, upon profession during all the life. mutual agreement, is created for planning and coordinating the D regional development of the local government, as well as for monitoring – observation of processes. ensuring co-operation of local governments. monocentric – derived from or pertaining to a single centre; polycentric – having a number of centres; population is L inhabited territory with one domineering centre. distributed among several equal or complementary centres. A multicultural society – a society in which each minority group pre-retirement age population – persons whom not more is an integral part of it and in which mutual relations are based than 5 years are left till reaching the necessary age for being N on mutual tolerance. granted state old age pension. O multi-modal – the linkage of various modes of transport in a preventive measures – measures for averting the cause of a unified system. potential inconsistency or an undesirable situation. I natural resources – parts of the environment, including earth, public administration – national (central), regional or local T soil, deposits in the earth, air, water, flora and fauna which have public institutions. economic, social or cultural value. There are renewable and non- A renewable natural resources. reconstruction – rebuilding of an existent building complex for the needs of an already existing or a new function. N non-renewable resources – resources, such as minerals and fossils fuels, which are not rapidly renewable or replaceable recovery – cleaning-up and rehabilitation of a polluted area at 54 N A L P T N E least to such an extent that in the future there are no threats determined by their income level or the level of consumption of posed to human health or the environment and that the various units of goods and services (for instance, number of cars M respective area can be used for certain economic activities. per 1,000 inhabitants; number of TV sets per capita). region – a territorial unit demarcated according to sustainable development – an integrated and balanced O geographical, economic, political, cultural or other development of society’s welfare, as well as of the environment L characteristics. and economy, which satisfies inhabitants’ current social and economic needs and also ensures observance of environmental E renewable resources – natural resources replenished through requirements (without depriving future generations of the natural processes or by human activities. ability to satisfy their needs) and preservation of biological V diversity. social dialogue – a mechanism for cooperation and E consultations among the state, employers and employees aimed synergy – creative energy brought about by interaction of at coordinating mutual interests regarding economic and social several involved parties, e.g., ideas, solutions, inspiration. D policy issues. Social dialogue is ensured at national (bilaterally and trilaterally), regional, sectoral and enterprise levels. technological park (science and technology park) – a complex of human resources, knowledge and infrastructure in social inclusion – a process whose aim is to provide L which favourable conditions for mutually supplementing the opportunities, services and resources needed for efficient development of higher education, research activities and participation in the economic, social and cultural life of society A productions of knowledge-intensive products are provided. It to persons who are at risk of poverty and social exclusion, as comprises scientific research institutions, universities or their well as to give to them greater opportunities for participating in N institutions, one or several technological centres, business decision-making and access to their basic rights. incubators or industrial zone, and consultation offices or centres O appropriate to the field of activity. The basic task – to ensure social integration – cooperation between individuals and commercialisation of scientific institutions by creating a link groups, as well as mutual understanding within a single country. I between research laboratories and companies that produce The aim of integration is to create a democratic, united civil technological products. T society based on common values. transfer of technologies (knowledge) – transfer of a A social partners – organisations and associations of employers concrete technology (knowledge, production skills or and employees that engage in social dialogue and conclude technology) to another user. The use of a technology developed N agreements. in one country in some other country with the aim of creating standard of living – the level of people’s material welfare new products, processes or services. 55 N A L P T N unemployed – person who is able and willing to work for the E domineering remuneration at the labour market, yet is unable to find a paying job. M unemployment rate – the proportion of unemployed persons of the total number of the economically active population (per O cent). L urbanisation – concentration of inhabitants and production in E towns, an increase in the size and population of towns, expansion of the urban lifestyle. V E D Abbreviations and acronyms CSB – Central Statistical Bureau L EU – European Union A ICT – information and communication technology N GDP – gross domestic product NATO – North Atlantic Treaty Organisation O NDP – National Development Plan I NGOs – non-governmental organisations T PPP – public and private partnership A SME – small and medium-sized enterprises N TEN– Trans-European Transport Networks 56 DRAFTING PROCESS The drafting of NDP commenced in the middle of 2004, when the N Cabinet of Ministers approved “The Procedure for Developing, Implementing, Monitoring and Public Discussing of the NDP”. The A drafting process was co-ordinated by the Ministry of Regional Development and Local Governments and the National Council for L Regional Development. P Experts from line ministries and public authorities, scientists and representatives of higher educational establishments, representatives from planning regions and local governments, as well as social partners, non-governmental organisations and entrepreneurs – a wide range of specialists from all over Latvia T participated in drafting the NDP. N During the initial stage of drafting the plan the activities undertaken were an analysis of the present situation regarding the E country’s socio-economic development and a SWOT analysis (assessment of strengths, weaknesses, opportunities and threats) M were made in order to discover the country’s comparative advantages and unused opportunities. O On the basis of the results of the analysis and the conceptual document approved by the Saeima of the Republic of Latvia L “National Growth Model: People First”, three working groups developed the strategy, and their attention was focused on three E main aspects: human resources, economy, living environment. The V determination of the NDP priorities and tasks to be solved was a very intense process. E On February 28, 2006 the 1st edition of the NDP was published in the newspaper “Latvijas Vestnesis”, and then two-months long D public discussions commenced. To ensure access to the information and to involve wide range of public in open dialogue about the national development, in co-operation with regional L higher education establishments, local governments and development agencies there were organised 10 regional A conferences. The specialists and interested persons had discussions on the website www.politika.lv about the education and N implementation of the plan. The first exhibition “Regionall development in Latvia, 2006” in Kipsala was emotionally and by O content very saturated final event of the NDP’s public discussion. I In general the public discussions were successful and confirmed the high interest and support of public to the goals and objectives T set by the NDP. The received recommendations and comments were aggregated and evaluated in working groups during the A finalization of the final edition of NDP. On July 4, 2006 the Cabinet of Ministers of the Republic of Latvia N approved the National Development Plan of Latvia for 2007 – 2013, issuing Regulations No. 564.