Innovation and Innovation Policy in Latvia
Innovation and Innovation Policy in Latvia 
Overview of Innovation Policy
Over the course of the last 15 years Latvia had managed to shift from centrally planned socialist economy to liberal market economy achieving a stable macroeconomic situation characterised by rapid growth rates though simultaneously featuring high inflation, low labour productivity as well as marked regional disparities. However, as of 2008, the socioeconomic situation has been witnessing a considerable turbulence due to the evolving financial crisis of the country having a profound impact on the national economy as a whole. The substantial reduction of all public expenditures in 2009 has considerably endangered implementation of a range of R&D and innovation support measures and further advancement of innovation policy as a whole. While according to the European Innovation Scoreboard 2008 Latvia is enlisted among the catching-up countries in terms of its innovation performance, it is still well below the EU27 average (c.f.EIS_2008_Final_report.pdf, p.36).
So far the national innovation strengths of Latvia have been based on its strong tradition and R&D potential in a range of research fields, well-educated people, its recent move towards wider awareness and promotion of innovation as a crucial source of economic development and dedication to implementation of the Lisbon strategy. Nevertheless, the desirable progress has been hampered by weak industry, underdeveloped system of small and medium-enterprises (SMEs) featuring low innovative capacity, limited transfer competence of R&D institutions as well as lack of needs-orientation of innovation-service suppliers and limited number of appropriate financial instruments to support innovation-based growth.
Main innovation challenges and policy responses
The major innovation challenges for Latvia that are crucial for securing innovative development of the country are related to the need of enhancing the innovative capacities of the enterprise sector; ensuring sufficient supply of science and engineering workforce; and facilitating innovative activities in the regions. An overarching challenge that these former ones sum up to is related to increasing both public and private R&D expenditure since gross domestic R&D expenditure was only 0.59% of GDP in 2007. While a gradual increase in the public R&D funding, at least in 2006 and 2007, seemed to be more or less secured for the coming years through the provision stipulated by the Law on Research Activity (2005) and funding from the EU Structural Funds (SF) for 2004-2006, at the level of it is still far below the average EU-25 level. The situation is even more challenging with regard to the business share, since it currently represents only the minor part (36.4% in 2007) of gross R&D expenditure in Latvia.
As for concrete policy measures, one should mention the schemes implemented in 2004-2006 for the promotion of new product development and commercialisation, encouragement to risk-taking in the start-up of innovative businesses, development of research and business infrastructure as well as promotion of technology transfer. Other measures include support for market-oriented research, SME venture capital, international R&D collaboration and innovation centres and business incubators. A range of support measures addressing the identified challenges have also been launched in the new planning period of the EU SFs for 2007–2013. Those include such state aid schemes as ‘Investments in development of micro, small and medium-sized companies in specially supported territories’, ‘Liaison offices for technology transfer’, ‘Attraction of highly qualified workforce in companies’ and ‘Development of new products and technologies’. Several awareness raising activities have been undertaken to promote innovation outside the capital. A new nationally funded pre-seed support instrument for innovative business ideas has also been launched. A range of other state aid programmes crucial for the promotion of innovation have been elaborated, yet these are currently on halt due to the budgetary restrictions.
Innovation governance and policy trends
Key innovation policy documentscurrently are represented bythe National Lisbon Programme of Latvia for 2005–2008, the National Development Plan for 2007–2013, the Programme for Promotion of Business Competitiveness and Innovation for 2007–2013 as well as the National Strategic Reference Framework for 2007-2013.
The responsibility for developing and promoting R&D and innovation policy in Latvia is divided between several main institutions. R&D-related issues are mainly dealt with at the Department of Science, Technology and Innovation of the Ministry of Education and Science, while the Ministry of Economics with its Innovation division holds the overall responsibility for elaboration and implementation of innovation policy. On an operational level, the Latvian Investment and Development Agency is administrating a range of state aid programmes for entrepreneurship and innovation promotion. The Latvian Guarantee Agency and the Mortgage Bank of Latvia are two additional state institutions operational in this field.
While over the last years one could trace an increased awareness, coordination and implementation of innovation policy in Latvia, the overall innovation governance system is still experiencing a range of inefficiencies not least in terms of policy coordination on a national level. The planned high-level council of science and technological development strategy envisaged by the draft Guidelines for Development of Science and Technology for 2009-2013 has not been established so far due to the recurrently postponed adoption of the Guidelines by the Cabinet of Ministers.
Future actions
Notwithstanding the current economic downturn of Latvia, work on the development of the national innovation system is being carried on. Promotion of innovation and exports is put forward as a basis for overcoming the crisis. Some of the potential measures identified for implementation in the nearest future include (c.f. Sustainable Development Strategy of Latvia until 2030, revised draft): implementation of a cluster development programme; introduction of an open innovation practice; application of innovation vouchers; elaboration of an innovation procurement programme; establishment of an innovative research development fund; utilisation of the material and technical basis of research in entrepreneurship; enhancing motivation of scientists for engaging in business activities; strengthening the international competitiveness of research institutions; and promotion of mass innovation culture.
| Annual Country Reports |
 Country report 2009 for Latvia
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| Country report 2008 for Latvia
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| Country report 2007 for Latvia
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| Country Report 2006 for Latvia
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| Country Report 2005 for Latvia
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| Country Report Latvia September 2004
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| Latvia - Trend Chart Country Report, September 2003
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| Latvia - Trend Chart Country Report, March 2003
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| Latvia - Trend Chart Country Report, October 2002
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| Latvia - Trend Chart Theme-specific Country Report, May 2002
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| Latvia-Trend Chart Country Report, November 2001
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| Latvia Trend Chart Country report June 2001
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| Latvia Trend Chart Country Report Dec 2000
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| Latvia Trend Chart Country Report May 2000
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| Latest TrendChart Deliverables |
| Workshop Briefing Latvia 13_2006 |
| Workshop Briefing Latvia 11_2006 |
| Workshop Briefing Latvia 10_2006 |
| Workshop Briefing Latvia 9_2005 |
| Workshop Briefing Latvia 7_2005 |
| New Support Measures |
 LV 124 High value added investments |
| LV 113 Investments in development of micro, small and medium-sized companies in specially supported territories |
| LV 122 Enhancing motivation for innovation and business start-up |
| LV 99 Support to the implementation of doctoral programmes and postdoctoral research |
| LV 116 Attraction of Human Resources to Science |
Who Is Who
Senior Official(s) for Latvia
Una Vanaga
Correspondents for Latvia
Anda Adamsone-Fiskovica
Janis Kristapsons
Aija Lulle
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Innovation Performance
Performance in Innovation Scoreboard 2008Find Out More
List of relevant websites
