Fiscal policy as an instrument for reducing income inequality: case of Latvia

With the help of fiscal policy, government may influence both overall demand and the disposable income of the population, as well as solve social equality challenges in the society by allocating income among different groups of population. Income inequality in Latvia, which is expressed by the Gini index of disposable income, is the third highest in the European Union, so the question about the most effective instruments for reducing income inequality is pressing. Inequality results in reduced efficiency of social capital and economic distribution, worsening of population health indicators, rising social tension, increased crime and rising poverty, which can have a negative impact on long-term economic growth. The objective of the research is to evaluate how fiscal policy has influenced income inequality in Latvia by using the Gini index based on disposable income and the Gini index based on market income. Results of the research indicate that the Basic Guidelines of the State Tax policy 2018-2021 have not been an effective instrument of fiscal policy to reduce income inequality; according to actual data income inequality in Latvia in 2018 has increased by 3.2% compared to 2017. Thus, to reduce income inequality the use of benefits policy is required, including Means-Tested benefits, which are only granted to people with the lowest income

Productivity dynamics and the productivity trap: problems and solutions in Latvia

By analysing changes in productivity and labour costs in Latvia from 2013 till 2017, we can see that growth of labour costs exceeds the growth of productivity by more than 2 times in both, tradable sector and total economy. Slow growth in productivity compared with the labour and other production expenses lead to an increase in the price of final goods and services, which negatively corresponds with producers’ competitiveness in both internal and external market. Furthermore, this leads to a drop-in consumption of domestic production and inefficient production facility usage, resulting in declining economic growth rates. The rapid growth in labour costs is mainly associated with the tight situation in the labour market. Even though the unemployment rate is still quite high, especially in the region of Latgale, the absence of working hands is perceptible more and more around Latvia, which also maintains the pressure on the salaries. The upward trend for salaries is also influenced by the convergence process, which is inescapable in EU opened labour markets. Comparatively, high labour emigration reflects Latvia’s weak competitiveness in those markets, especially due to the low wage, which in turn is related to the low productivity of internal producers. Therefore, increasing the productivity level and slowing down the gap of productivity with highly developed countries is the most important precondition for Latvia’s competitiveness to strengthen and economy to grow. The goal of the research is to appreciate the dynamics of labour productivity and the level of productivity between Latvia and EU average, as well as, to find the main factors which influence the productivity convergence rates to drop, making productivity trap. The research tasks, to determine possible solutions for labour productivity increases, are to detect the factors which have influenced the labour productivity in last 10 years in Latvia, to compare the productivity in Latvia with EU, as well as, to detect the factors which influenced the productivity convergence rates to decrease. In the analysis, there are used different high quality and quantity research methods, for example, analysis of scientific literature, calculation of average and relative sizes, grouping, comparison, decomposition etc. The results of research conclude, that in the last years productivity growth rates in Latvia before the crisis (2000-2007) were one of the sharpest in EU, which contributed with convergence process, decreasing gap with EU average by 2 pp. annually. However, in after crisis period (from 2011) growth rates of productivity have significantly dropped and the convergence process became more moderate - only 0.8 percent points at average a year, which shows that Latvia is close to or already is into productivity trap. To avoid the trap, it is important to detect separate industry problems (the stud of barriers at individual company and sector level) and to promote the structural changes in the national economy (moving towards high technology industries)

Analysis of affordability of meat, chicken, fish or vegetarian equivalent every second day in households in Latvia

In recent years, there are growing research and policy discussions on assessment and analysis of poverty and measurement of material conditions. Researchers and policy makers develop different set of indicators that describes material deprivation. Material deprivation that is usually defined as the extent of functioning failures in the dimension of material well-being is based on set of different items that refer to affordability of basic needs. Affordability of meat, chicken, fish or vegetarian equivalent every second day is one of main indicators that characterizes meeting the basic needs of the households. In case of Latvia, macroeconomic indicators show that through recent years country is going on economic recovery path, however there are discussions on growing income inequality and poverty in regions. Taking into account before mentioned, the aim of the paper is to analyse the material deprivation and food poverty by assessing the affordability of meat, chicken, fish or vegetarian equivalent every second day in households in Latvia. The tasks are formulated as follows: 1) To review theoretical background on measuring the material deprivation and food poverty in households; 2) To assess empirical research on measuring the material deprivation and food poverty in households; 3) To analyse statistical data on households’ affordability in Latvia. In order to achieve the aim, following research methods have been used: scientific literature studies, statistical data analysis. Main results and conclusions of the paper: there is wide range of indicators and indexes that measure food poverty and material deprivation. Based on these measures policy makers develop framework for social inclusion and inclusive society. In case of Latvia, analysis of affordability of on measuring the material deprivation and food poverty in households showed that there is positive trend over the years in regards to the share of people that cannot afford to meet their basic needs. However, the situation is rather critical in some regions of Latvia.The paper was supported by the project “INTERFRAME-LV” (Project No.VPP-IZM-2018/1-0005

Evaluation of labor skills in Latvia

Skills are a decisive factor for the country's economic development and social-well-being. The OECD emphasizes that strips can help countries integrate into global markets and specialize in technological advanced industries, and countries need to invest in fields not only to help people enter the labour market and protect from the risk of job losses and low quality of work, but also to increase international competitiveness and economic progress in an interlinked world. The aim of the research is to evaluate the most demanded labour skills in Latvia within the framework of certain groups of professions, as well as trends in the demand changes according to the skills of employees in order to better identify the specialists and their activities required for the national economy in accordance with the needs of the national economy. A matrix of skill set was developed within the framework of the study, which summarizes the skills characteristic of each occupation group according to their importance, as well as the list of the most bonded strips in the Latvian market (Top 10). By analyzing the scraps groups corresponding to the occupational groups, it concluded that in all major occupational groups among the most important skills mentioned to comply with the requirements of the regulatory enactments and other regulatory documents, to plan and organize the work to be done, to work in the team/group, to communicate and cooperate, and to self-educate, to new knowledge and skills

THE MANAGEMENT OF THE ACCOMPANYING ADMINISTRATIVE TERRITORIES OF THE METROPOLITAN: CASE OF LATVIA

An accompanying administrative territory or satellite/ new town is a concept in urban planning that usually is applied to the territories that surrounds large cities. In many cases, the population of these territories is increasing as well as economic growth – for the municipalities these factors are challenging in terms of management. In addition, the level of citizens’ engagement in decision-making process in municipality often is relatively low. This aspect also should be taken into account to improve the management of these municipalities. The aim of the paper is to present a possible management model for the accompanying administrative territories of Riga based on the case study provided in one of the accompanying administrative territory of Riga (Salaspils). Main results and conclusions of the paper: during the study, 25 accompanying administrative territories of Riga were identified. Based on case study of one of the accompanying administrative territory of Riga – Salaspils municipality – recommendations regarding successful management of accompanying administrative territories of the metropolitan were provided. These recommendations refer to engagement of citizens in decision-making processes in municipality that is crucial in order to ensure the well-being of society

Productivity and its impact on the competitiveness of Latvia

Productivity is the main key factor for Latvia to increased prosperity, ensuring efficient use of resources. Due to limited availability of resources and the increasing competition in the global markets, it is important for Latvia to support its economic growth through increased productivity. Since 2010 the productivity of Latvia’s economy has been at the level of 40-45% of the EU average (Eurostat Database, 2017). A further increase in labour costs is inevitable in the open labour market conditions, therefore, strengthening the competitiveness of Latvian is largely determined by the ability to reduce the productivity gap with the advanced economies. One of the main challenges for Latvia is the creation of new competitive advantages that are associated with investments in the latest technologies, innovation, research, human capital, efficient allocation of resources and redistribution that comes with the behavioural changes of economic subjects. Economic structural transformation process is largely dependent on the quality of the institutional framework, which provides goods and resources market efficiency, minimizing the redistribution process costs and risks, thereby strengthening the country's competitive benefits. The aim of the research is to assess the potential for productivity growth to improve competitiveness of Latvia to identify the main obstacles that limit the attraction of resources and redistribution of higher value-added products and prepare recommendations for policies on the micro, sectoral and macro level. Research has high practical value that is related to OECD recommendation to monitor productivity in Latvia.peer-reviewe

Preterm birth due to cervical insufficiency complicated by placenta accreta and postpartum haemorrhage managed by uterine artery embolisation

In this report, we present the case of a young woman undergoing her second pregnancy, with early detected shortened cervix resulting in cervical cerclage procedure. At gestational week 24/25, she presented at a hospital with signs of intra-amniotic infection and spontaneous rupture of membranes. This resulted in pathological preterm delivery with massive postpartum bleeding, which was managed by bilateral uterine artery embolization. Reasons for preterm birth and management options are discussed

Income Differences in Regions of Latvia – Problems and Challenges

Income differences in regions of Latvia is becoming a greater problem for families as there are made decisions for emigration, for municipalities as there are significant reductions in tax (income and property) payers and for entrepreneurs as there are less customers for their products and services: those aspects are on great importance but not enough researched and discussed in academic research. Purpose of the study is to analyse income differences in the regions of Latvia. The tasks of the study: 1 to review theoretical background of income differences in context of regional development; 2 to review existing research of income differences in the regions in EU; 3 to analyse problems of income indifferences in the regions of Latvia. Research methods used in preparation of the paper: scientific publication and previous conducted research results analysis, analysis of EU-SILC results (in 2014-2017) and European Central Bank conducted survey on Household income and expenses survey results, results are compared with the results of other Eurozone countries. Survey results are analysed using indicators of descriptive statistics (indicators of central tendency or location - arithmetic mean, mode, median), indicators of variability (indicators of dispersion - range, standard deviation and standard error of mean), cross-tabulations for regions in Latvia, for household members, for urban – rural living and analysis of variance - ANOVA are used. The results of analysis have indicated different challenges for decision makers on different levels.The paper was supported by the project “INTERFRAME-LV” (Project No.VPP-IZM-2018/1-0005

INVESTMENTS IN LATVIA

The effective attraction of investments to the national economy is a key factor, which provides favourable conditions to perform structural changes in the national economy, regional development as well as promotes technical progress. Therefore, investments in the public and the private sectors conduce development of the national economy and provide conditions to increase the overall competitiveness of a country. The purpose of research is to evaluate investment processes in Latvia before and after the global financial crisis, revealing investment-related problems. Also, to calculate the level of the desired investment, which would ensure the Latvia’s average GDP growth of 5% per year, according to the target set by the NDP. The analysis employs different qualitative and quantitative analysis methods, such as: scientific literature and empirical research analysis, modelling tables, charts and schemes, calculations of average and relative values, grouping, comparison and other. Publications on investment and research by Latvian and international scholars are analysed seeking to define the investment role on the economic growth process. The authors use the data available in the Central Statistical Bureau of the Republic of Latvia and Eurostat data bases, reports by the Ministry of Economics of the Republic of Latvia, the World Bank, the OECD and other studies of international organizations, as well as information provided in the Internet. As a result of research there have been defined the investment policy directions and essential obstacles that delay investment attraction in Latvia.KEYWORDS: investments, investment gap, “optimal” level of capital, investment policy.JEL CODES: E01, E22, E32, E60.DOI: http://dx.doi.org/10.15181/rfds.v23i1.168

Production and Foreign Trade of Mineral Products in Latvia and Belarus

Latvia and Belarus are small countries with limited scope of natural resources. However, the available mineral resources play important role in production of mineral products for domestic and foreign consumption. Main goal of the paper is to characterize the role of extraction industry in national economy and mineral products trade in two neighboring countries - Latvia and Belarus. To achieve the goal, the role of mining and quarrying industry in Latvia and Belarus was identified; trade of mineral resources in Latvia was analyzed. The main trends in the development of its own mineral resources of the Republic of Belarus were identified, the role of mineral resources in the commodity structure of foreign trade of the Republic of Belarus was shown, ways to increase the level of security of the country's own organic and mineral resources were determined, including the improvement of the legal framework. The research was performed in 2012; the following methods were used in the paper: comparative analysis and synthesis, statistical analysis and monographic methods