Academic CentreThe spread of COVID-19 requires immediate policy response and future-oriented actions to reduce devastating socioeconomic impact of crisis and to preserve growth. The concept of the reCOVery-LV builds on a multidisciplinary assessment of the vulnerability and resilience of Latvian economy to the external shocks.
In the global political landscape with protectionism elements and COVID-19 affected global supply chains, the space of manoeuvre for a small open economy like Latvia is limited. Self-sufficiency is possible only in a few sectors. For instance, we analysed how to improve the resilience of food producers and food supply chains during the crisis, thus strengthening Latvia’s food self-sufficiency. However, sustainable solutions relate to international competitiveness and increased participation in the global and less risky regional supply chains.
Over a longer term, the key factor of competitiveness is a productivity renaissance. The research findings and policy recommendations build a comprehensive "Latvian Productivity Report-2020", presented to and approved by the stakeholders, Ministry of Economics and the European Commission.
As public resources within fiscal sustainability constraints should be invested effectively, the research team elaborated on the state aid criteria promoting productivity growth and efficiency of the infrastructure projects.
The research team has worked out "trend" and "accelerated growth" scenarios. The underlying assumptions provide that it is crucial for Latvia to invest in economic stabilisation in the short term and in economic transformation in the medium and long term. Investment in new technologies, wider use of digital solutions, e-commerce, telework, new climate initiatives (including less paper use), and development of innovation ecosystem will have a significant impact on productivity, competitiveness and faster growth.
Accelerated growth scenario require the institutional sustainability and effectiveness of the Government of Latvia.
Therefore, the research team has elaborated on constitutional and administrative framework for effective management of external shocks. Intensive use of videoconferences and remote sittings of the Parliament during the pandemic provided a background for implementing a universal e-platform for the government communication in post-pandemic period, substituting in-person visits and elaborated a roadmap for implementing an e-platform.