Modelling Long-Term Competitiveness of Latvia

Gundars Davidsons
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Gundars Davidsons: Bank of Latvia

No 2005/02, Working Papers from Latvijas Banka

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

Keywords: competitiveness; comparative advantage; real convergence (search for similar items in EconPapers)
JEL-codes: F14 F19 O33 O47 (search for similar items in EconPapers)
Date: 2005-11-05
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:ltv:wpaper:200502

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