My impressions from World Latvian Economic and Innovation Forum

On 3rd July I had the possibility to participate at the first World Latvian Economic and Innovation Forum in Riga. This forum was organized by Latvian Ministry of Foreign Affairs, Latvian Chamber of Commerce and Industry and Latvian Freedom Foundation.

Intention of this blog post is to give a brief summary of the forum itself and to compare it with the World Lithuanian Economic Forum I had participated in Vilnius on 2nd June this year.

I don’t want to criticize any of these events, as both have been great events. But I believe my insights could be valuable for further improvement.

Not international enough, or not for press?

Being both an economist and blogger has its own advantage: free access to many conferences either as economist or as blogger. This time, I came as representative of the media side. For my astonishment, I was the only Lithuanian representative of the media (I didn’t find anybody representing Lithuania in participants’ list, but I think I’ve heard somebody speaking Lithuanian). Well registration was easy, just signing in. But here came the problem: conference materials for the press were only in Latvian language. I asked for the participants map in hope that one would be in English as many of the participants were from USA, Australia, and there were even some Germans at the conference, so it had to be in English? But as “media” I wasn’t allowed to get one. Ouch- that’s not international enough!

Respect for the President of Latvia

While working on establishing Wifi – someone announced the President of Latvia and suddenly everybody was standing. My first thought was – everybody is going to sing the national anthem of Latvia? No! Mr. President was entering the conference room.  Though I’m not sure, whether this respect would be shown for the Prime Minister as well, but due to my experience in Lithuania (World Lithuanian Economic Forum 2011 in Vilnius), nobody stood up, when President Dalia Grybauskaitė entered the hall. I like the Latvian attitude towards their President.

I won’t summarize each speakers speeches or specific ideas they have spread – I just don’t do many notes during conferences, instead I would like to describe what where the main ideas spread and discussed and give some brief comments.

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The Discussion I: Latvia’s place in a globalized world: what is Latvia’s niche and smart area of specialization?

The first discussion can be summarized by the phrase from the welcome speech of Mr. President hoping that this conference will give answers and insights “HOW WE CAN DO IT”…

Latvians like Lithuanians are facing similar problems and challenges. Emigration, low wages, European price levels.  So in the first part, the main focus was on pharmacy, chemistry and ICT sectors as the most value adding promising sectors in Latvian economy. “Creative” sector was mentioned as well – like music and film industry.  It has been made clear, that in order to catch up with EU (‘s average) Latvian economy has to transform to high value added production – as production and exports of higher value added products leads to higher wages, higher tax revenues and a higher living standard.  There has been no doubt, Latvia itself, cannot achieve this. The only way  to achieve this is with the help of foreign investors, fostering the transformation development towards higher quality products’ manufacturing. Problems of high school education were addressed as well.  Yet, Latvian labour pool seems to cope with the labour demand in these sectors, and the situation seems not to be yet “tragic”, but in the near future – it could.

Latvia’s Ministry of Foreign Affairs is also working on ideas to engage diaspora Latvians in future economic development projects, but the first problem they have to solve is to make clear who is where… At this moment my first thought was: GLL (Global Lithuanian Leaders)  is a bit further.

The president of Bank of Latvia gave an interesting point to the discussion whether adoption of the common European currency will aggravate inflation? – his answer was, that if companies had want to increase the prices, they could do it as well today and not wait for the 1st of January 2014. So in total inflation increase of only 0.2-0.3% is expected (also due to some tax policy changes).

Well, I still remember the price of salad in Germany in the first morning with the Euro: day before 1 DM (=0,5€) and next morning: 0.99€…. None the less, I assume the risk of price increase in Latvia and Lithuania is lower than it was in Germany, as the currencies are much longer pegged. Anyway, antitrust divisions should start supervising the price developments in order to assure that there won’t be any cartel agreements.

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After filling up with coffee the discussion II: Latvia’s business environment – among the six most competitive in the world! What can Latvia learn from the leading business environments around the world? – started:

Briefly: ease of doing business index results were presented where Latvia was compared with USA and Singapore. Problems were identified and possible solutions or even already initiated projects in Latvian Seima were mentioned in order to improve Latvian competitiveness (especially dealing with construction permissions, protecting investors, and infrastructure problems).

I have never heard anything like that from a Lithuanian clerks. At least not up to now at any conference I had attended.

Some other points of the panel were: low percentage of foreign students in Latvia, as foreign students bring not only more “globalization” in to the universities, but they bring money as well! One calculates that if Latvia attracted as many foreign students as UK does (round 17% are foreign students) and assuming they spend round 15.000 USD per year, this would total to 250 mln USD equalling to round 1% of Latvian annual GDP.

Minister of economy, who actually has studied at Harvard University, has once again made clear and drew a clear picture / vision of how important it is for Latvia to become high value products’ exporter and made clear as well, how the government intends to support this long term transformation. I specifically liked the idea spread by the Minister – Government’s role: to support business and to avoid crowding out effects on investment (investing where private business does it already).

The view of government complementing and co-working with private sector in order to achieve best possible results – something I’m missing on the Lithuanian side for a long time now.

Siew Thiam Low, Chairman of the Global Leadership Forum from Singapore was participating at the panel as well. He explained how Singapore managed to become number one in ranking of ease of doing business.  Not everything Singapore did can be copied and adopted in Latvia, but some advices were really useful: he encouraged to focus on attracting foreign “elephant size” companies to come to Latvia, as then SMEs would follow or build up around.

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After the lunch break I went to 3b Part: Latvian services with export potential. How can Latvia address and attract foreign target audiences? International brand management of Latvian services.

Where topics like competitiveness of Latvian logistic companies, ICT, reforms in high school education and problems with Branding Latvia were discussed.

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The fourth (a) panel: A Innovation and Investments in Technology: Brought some insights: how important it is to have M.Sc and PhD in country, if trying to attract foreign investors. Toby Moore, from Imprimatur Capital Fund Management drafted, that at the end of 2014, only round 32% of employees will have “JUST” the bachelor degree, the others are or will be PhDs, M.Sc or M.A.

This is very relevant issue for Lithuania as well. I’ve heard opinions, that in the time factories are build (up to two years), universities can “prepare” the specialists needed.  Sure, but not M.Scs and not PhDs! And with the tendency of emigration – lack of highly skilled labour pool is at danger to decrease.

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The last panel of the day: Discussion – V: View from the side – Latvia in the eyes of foreign investors – was far too short (just 30 min) and didn’t give the needed insight, but the attempt to invite and to hear to real life “problems” – as they are senn by foreign investors – was definitely a great idea.

The day was closed by boy-chorus singing few songs. And as “thanks” to participants, round 5 of them picked out from the pool of gathered business cards, received presents from the sponsors of the conference.  That’s an awesome idea!!!

So all in all:

I liked this conference very much. And after it I tried to talk to some participants at the World Lithuanian Economic Forum participants, telling them, how it was and what I did like and what not. So all in all, I liked very much the clear focus on economic issues in Latvia. The focus was set on: “we need value added production – therefore we need investment – investment needs infrastructure (physical and law) and labour pool capable to do the work. And the whole conference dealt with these issues and the problems accompanying them.

I missed this clear focus by the Lithuanian forum. Where many great people gave their speeches like: Antanas Mockus, Ilja Laurs…. But my feeling and the feeling of many others who have been at PLEF13 was – the missing focus on current economic problems and missing proposals how to solve it.  PLEF evolved to something like “social – economic – how great we are” which in my view wasn’t so productive.

I have to mention few more things:

  1. I don’t know why Lithuanian government was so under-represented at PLEF, but at PLIEF (Latvian abbreviation for Pasaules latviešu ekonomikas un inovāciju forums) there were: Prime Minister of Latvia participating at the speakers diner day before the conference, President of Latvia giving his speech at the beginning of the conference, Minister of Foreign Affairs and the Minister of Economics participating at panels as well as the President of the Bank of Latvia.  Maybe it was because this forum was the first of its kind in Latvia, maybe Lithuanian government simply didn’t see the need or maybe there was just a miscommunication – but I hope, next Lithuanian PLEF will be with more government support.
  2. The PLIEF – had a clear purpose: to attract foreign investors interest as well. The 3rd day of the forum, potential foreign investors had the possibility to individual meetings and visits to Latvian companies, research and education institutions. There had been different events for local businesses interested in doing business abroad in USA or UK as well….

 

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2 comments

  1. Jurga says:

    Etiketas reikalauja, kad įeinant Prezidentui, esantys salėje atsistotų.

  2. Skirmante says:

    Great insights, Justas! Thank you.

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