Latvia  

Latvian domestic savings are equivalent to only 17% of GDP, which ranks the country 70th on this variable. Household spending is also only 23% of GDP, which is in the lowest third of all countries and suggests an underdeveloped domestic market. Inflation was 10% in 2007, which is one of the 15 highest rates, and unemployment was a moderate 6%, ranking the country 40th on this measure. Workers’ access to physical capital is also moderate, suggesting average levels of investment in business infrastructure. Latvia attracts the 25th highest level of foreign direct investment, equal to 8% of GDP, and largely avoids dependence upon raw material exports. The ratio of export revenues relative to the cost of imported goods is the 41st highest worldwide, suggesting reasonably competitive trading performance or terms of trade. Latvia’s banking sector has the fourth lowest level of non-performing loans in the world. However, net interest margins between lending and borrowing are over three percentage points, which is 39th, globally, and suggests only average levels of banking competition and efficiency.

With just five procedures required to start a business in Latvia, the country has one of the lowest barriers to entry, globally. Over 11,000 new businesses were started in 2007, which ranks the country 44th, internationally, suggesting very favourable levels of entrepreneurship. Latvia also has one of the 10 largest service sectors in the world, relative to the size of its economy, adding value equivalent to 75% of GDP. The country ranks 48th for average internet bandwidth, and 33rd for the availability of secure internet servers. There are 33 personal computers per 100 Latvians, the 27th highest rate of all countries. ICT exports constitute 3.4% of total exports, which is the 40th highest rate, globally. R&D expenditure is equivalent to less than 1% of GDP, suggesting relatively little commercial innovation, and royalty receipts from patents and other intellectual property rank only 49th, globally.

Latvia has an open and competitive democracy. Its citizens enjoy high levels of civil rights and unconstrained freedom to take part in political processes. Rival political parties compete fully in both the legislative and executive branches. ‘Checks and balances’, including a fully independent judiciary, help to prevent arbitrary action by the executive. However, electoral processes for the executive are not fully open and well regulated. In addition, the current political regime has existed for less than 20 years, suggesting political instability.

Latvia spends an average of $3,700 per pupil in primary and secondary education annually, ranking the country 36th, internationally, on this variable. Although the primary school enrolment rate is only 90%, placing the country 68th, globally, secondary school participation rises to 99%, and tertiary enrolment to 74%, ranking the country in the top 25 on both variables. Girls and boys participate in education in equal numbers and primary school class sizes are close to the top 10, with just 12 pupils per teacher. The average Latvian worker has 5.5 years of secondary education and 4.7 years of tertiary education, ranking the country 29th and eighth, respectively, on these variables.

Latvia’s well-developed health infrastructure ranks among the top 10 nations for the availability of hospital beds, and 24th for the numbers of doctors and nurses per capita, at 77 and 30 per 10,000 people, respectively. Malnourishment levels are very low, and infant mortality rates are close to the wealthiest nations, at 36th overall. However, only 65% of Latvians are happy with their water quality, ranking the country 73rd on this variable,* and over one in five Latvians lack access to adequate sanitation, one of the lowest rates in the European Union. Health-adjusted life expectancy is 63 years, ranking the country 46th overall. Although only one in five Latvians reports being in pain, ranking the country 21st, other variables of personal satisfaction do not fare as well.* Just 64% of people are happy with their health, ranking the country 100th globally. Latvia ranks in the bottom 15 nations for the prevalence of health problems, and for the low proportion of people who report feeling well rested.*

Latvia faces significant problems related to human flight and more limited security challenges related to the presence of refugees and groups with social grievances. There were no casualties in 2008 from civil war. However, homicide rates are among the 40 highest, worldwide, with approximately 10 deaths per 100,000 capita. Other levels of reported crime are somewhat better: 14% reported having been victims of theft in 2008, 51st in the world, and only 4% had been assaulted, the 28th lowest rate on this variable.* However, only 52% of Latvians feel safe walking the streets alone at night, ranking the country 70th on this variable.*

Latvians have wideranging freedoms to choose and replace their elected officials. This contributes to a reasonable level of government effectiveness: Latvia ranks 36th for the efficiency of its bureaucracy, 34th for enforcement of the rule of law, and 23rd for its quality of regulation of investment and competition. However, Latvians’ confidence in government institutions is low: more than nine in 10 Latvians believe that their government and local businesses are corrupt, ranking the country in the bottom 20 on both variables.* In addition, only 35% are confident that elections are fair, and only 37% have faith in their judiciary, ranking the country in the bottom third, globally.* Latvians’ confidence in the military is a relatively low 67%, placing the country 64th on this measure.*

Latvians’ freedoms of movement, religion, and speech are only average by global standards. Just two-thirds of people are satisfied with their freedom to choose in life, ranking the country 70th worldwide.* Latvians report low levels of tolerance towards diversity.* Just over two-thirds of people feel that their area welcomes ethnic minorities, ranking the country 48th on this variable, and barely one in two people believe that their country is a good place for immigrants to live, ranking the country 83rd, worldwide, on this measure.*

Latvia ranks poorly across nearly all measures of social capital. Very few Latvians feel that friends are important to them, and levels of club membership are very low: less than one in 10 people participate in sports or art clubs, and only 2% take part in environmental clubs.* Overall, 86% of people report that they rely on family and friends in times of need, ranking the country 54th, globally.* The majority of Latvians do not consider religion an important part of their lives and just 13% attend a place of worship, suggesting limited access to religious support networks.* Levels of general social capital are extremely low, with only 25% of Latvians believing that others can be trusted. Additionally, only 19% of Latvians volunteered in 2008, ranking the country 55th, according to this measure, only 15% of people have donated to charity, and just 28% have helped strangers, ranking the country 92nd and 100th on these variables.*

* Data taken from the Gallup World Poll

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