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regional development LV

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Līga Baltiņa

on 22 May 2010

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Transcript of regional development LV

Regional development in Latvia - previous experience and current initiatives my current experience:
-work at the State Regional Development Agency
-PhD studies (management studies) starting with basic information...

Latvia in EU:
territory– 1.6% of EU (64 t.km2)
Inhabitants – 0.5% of EU (2,3mill)
Līga Baltiņa Latvia produces:
~ 0.23% of total EU GDP
-GDP per capita is 54,2% from EU avarage (in 2008)
44,1% of whole territory covered with forests

> 45% electricity produced from renewable resources
also some positive numbers... EU - 27 countries have 461,5 millions inhabitants
Inhabitants in Latvia – 0,5% of EU total
GDP per capita -24th place
GDP growth (%) – 1st place (plus 12,2%)
Employment level – 13th place
Job seekers proportion -16th place
Latvia between EU 27... in 2006... Latvia between EU 27 in 2009/2010... GDP per capita - 25th place
(better the Bulgaria, Rumania)
GDP growth (%) - 27th place
- (minus) 18% in 2009
expected minus 4% in 2010 (?)
Unemployment level - 27th (21,7%)
Job seekers proportion - 14,7% Small country, but complicated structure... Untill June 2009...
5 planning regions
26 districts
524 local municipalities
it took 10 years from 1999...
to change administrative structure... 5 planning regions
112 local municipalities (9 cities of national importance
and 103 amalgamated territories - counties)

(on free will until elections which where held in June 2009)
Number of inhabitants in planning regions... (2007) population density in planning regions...

factor of Riga... specially supportable territories / lagging behind Territorial development index used for:
- elaboration of state support programmes
- differentiation of EU support
- impact assesment of different policy instruments
- comparisson and ranking of different territorial units Economically the main issue is the high concentration of economic activity in Riga:
Riga produces >50% of GDP
biggest part of all enterprises are located in Riga
(out of biggest TOP 500 enterprises almost 3/4 located in Riga) Riga has opportunities, but it is not metropole at Europe's level
* It is more like Krakow, Turku, Tallin, Vilnus
* It lacks international investments to be centre of Europe's importance
* Riga has challenge to look for specialization - to be industrial city (production) of place of creativity (creative industries)
Economy of Latvia is dependant of Riga:
* bigger distance from Riga -> smaller market potential
* >80% of scientific institutions, high-tech companies are located in Riga
* development of surrounding cities depends on development of Riga
Regional policy planning in LV (main features):
- aimed at reducing regional disparities
- sectoral approcah dominant on territorial priorities
- geographic orientation - coverage of all 5 planning regions
- targeted territories - development centers and functionally related territories,
and lagging behind areas
- economic environment -> international competitiveness of Riga,
balanced development of whole territory Policy instruments:
- only 10% of EU SF goes to the implementation
of territorial priorities
- support to municipalities is not integrated with
support to enterprises and transport infrastructure Main regional development problems:
- low competitiveness in comparisson with other EU regions
- impressive territorial imbalances (with tendency to increase)
- clear monocentric development
- too different local municipalities (size, economic development level,
ability to fullfil functions) Main regional policy problems:
- sectoral policy implementation is not well coordinated
- not ensured complementarity of national and EU support
- lack of resources to implement regional development plans
- week regional and local development programmes ("wish list")
+ uncompetence to assess territorial potential and to propose
common solutions
- lack of regional development assessment tools

Latvia 2030 - policy statements
- balanced development of territory
- raised international competitiveness of Latvia, its regions and cities

- reduce concentration of economic and social activities in Riga
- integration into economic structures and networks at BSR and EU level Long-term goals:
- increase development of lagging behind areas
- promote polycentric development
- limit the proportion od number of inhabitants in Riga planning region (?)
Medium term:
- link between territorial and sectoral approaches
- urban-rural interaction
- development of specific target areas like coastal
and border regions In 2010 Latvia...to count on.. Unemployment rate... tendency that people are leaving rural areas Welcome to Latvia! Challenge of polycentric development - decentralization of functions
- development of one stop agencies
- development of e-services implementing EU Structural funds ( 1 of 8 implementing bodies in LV national support instruments Norwegian and Swiss financial instruments analyses of data first level control for territorial cooperation projects developing e-services (www.latvija.lv) e-procurement IT system supervised by Ministry of Regional Development and Local Goverment can be compared also in innovation...within EU27... place depends on what
side we are looking at... :) political discussions
difficulty to reduce number of chairmen
changes are always difficult Economic crises in LV - one of the sharpest downturns in the world In 2004 after joinin EU:
- widespread optimistic expectations -> exploision in long-term borrowing
- increase in demand for the construction of new housing + migration of unskilled labor to Ireland and the UK.
- rapid growth in both real estate prices and wages in the construction sector putting preasure on other industries -> raise in wages, raise in prices, borrowing, raise in wages, raise in prices, borrowing
-> even called "Latvian ecoborronomy" - wage and price level was too good to be true How? Steps taken and to be taken to overcome crises (hard discussions):
- Budget expenditure cuts (~up to 30-50% in salaries for public administration, 30% of total budget for each institution, including staff cuts) -> closing part of schools and hospitals
- the international loan (IMF, WB)
- use of the EU funds (part of the funds stopped because of lack of cofinancing)
- raise of taxes (not planned incomes) - > e.g.VAT from 18% to 21%
- reduction of social benfits (no health insurance for workers at poublic administration, lower social support for young mothers, reduced unemployment benefits, even lowered pensions etc.)

CRITICS on having no real action on creating new workplaces, no real action on reforming public administration

no important decisions untill Parliament elections in October 2010 Latvia achieved something many thought impossible: an internal devaluation -> regaining competitiveness not by currency depreciation but by deep cuts in wages and public spending EU Funds - main source of funding
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