A Growth Model for Latvia: People First

On 20 October 2005, the Saeima of the Republic of Latvia approved the conceptual document drafted by the group of scholars "A Growth Model for Latvia: People First".

This document presents a people-centred development model for Latvia. The main resource for development is knowledge and skills of people, their ability to use them efficiently; immediate investments are needed for development, increase and modernization of these resources. The goal of development is to improve different aspects of the quality of life for every person and this can be achieved by putting to use the accumulated intellectual potential of the inhabitants of the country. In order to achieve this goal, all aspects of the life quality must be coordinated and balanced by taking into consideration both the unity of the projected tasks and by going beyond the formal frameworks and boundaries of various sectors, institutions and the State, as well as by coordinating Latvia’s processes with those of partner countries. Long-term tasks must be fulfilled in a priority that requests a united activity of many sectors, and the fulfilment of which is necessary for implementation of the development scenario. Specific criteria, measures and instruments must be provided for in the detailed development programmes of the various sectors and development directions, in order to achieve the set goal.

Much has been accomplished since renewal of Latvia’s independence in 1990 – a stable democratic system is in place, a liberal and open market economy is functioning and Latvia has successfully integrated into international structures.

However only the most urgent issues are settled, overall the country’s development has not been sufficiently consistent and coordinated. Frequent changes of government have delayed the setting, inheritance and implementation of the long-term strategic goals. Because of measures provided for in programmes or concepts of various sectors are not mutually related, balanced and coordinated their implementation has not been sufficiently effective. In many classifications of the EU Member States Latvia ranks near the bottom.

Several scenarios are possible in Latvia’s further development as an EU Member State:

backwardness scenario – the current uncoordinated process continues; as the base level increases, the rate of development starts to decline rapidly while tension in society increases; implementation of the future goals becomes problematic; Latvia becomes a second-class EU Member State;
stagnation scenario – the development process adjusts to those moving ahead the slowest; in the span of one generation Latvia fails to achieve parity with the average standard of living in the EU Member States; society loses the incentive to become involved in long-term investments and activities, as well as education;
growth scenario – steady, rapid and balanced development on all levels by using our comparative advantages and by realizing the harmonized priorities and activities, emphasizing development goals united across the country.

The foundation of the development model – a people-centred approach

Only the growth scenario guarantees a rapid and stable movement toward the average standard of living of the EU Member states, one that meets the natural desires and interests of all strata of society and of each individual and thereby also meets our national interests. It can be attained by setting for the state’s long-term development a unified goal that takes advantage of our existing resources and by coordinating all strategic economic, political and society activities. This document sets forth in the context of global development, an integrated development model for Latvia for the next 20 -30 years.

Implementation of the growth scenario is possible achieving motivation, unity and cooperation of all the inhabitants of the country for achieving the set goal, by strengthening the public persuasion on the development possibilities and prospects. Thus, for this growth scenario, the individual – Latvia’s inhabitants, is in the forefront; his or her interest, desires and activities are a priority by establishing a people-centred approach.

Resource for growth – knowledge, wisdom and the skill to use them

Latvia’s natural resources can not serve as the State’s long-term basis for development, even timber logging can not serve this purpose. An emphasis on the development of many mutually connected sectors is characteristic of large economies. Often-mentioned cheap labour is definitely not to be regarded as a fundamental resource for raising the quality of life. Extreme development paths, such as the formation of a nationwide off-shore paradise, are also not permissible for EU Member States.

Our main resource for enabling each individual and society as a whole to attain a standard of living that is characteristic of developed nations is the inhabitant’s knowledge and skills and their purposeful utilization. In such growth model, knowledge determines the quality of the labour force, the utilization of capital and development of technologies and thus ensures the effectiveness of the model and promotes development. An educated and knowledgeable society becomes the guarantor of the State’s internal and external security. Management of knowledge, its coordinated and guided creation, accumulation, distribution and utilization as a complex process becomes the basis for economic and social life, encompassing the State and all society.

The knowledge potential of Latvia’s inhabitants is able to fulfil these functions, but immediate coordinated action is necessary for using and increasing this potential. Unlike many other countries that have several paths for development from which to choose or which to combine, our country has no alternative path. Further delay can cause irreversible consequences.

The goal of the growth process - to raise people’s standard of living

Selecting knowledge as the determining resource means that this growth resource is dispersed among the minds of the inhabitants, that each inhabitant is a co-owner of this intellectual resource, and that people as creators and disseminators of knowledge already are the chief value of the State, and in the future they will be even more valuable. People become the main growth engines that will determine all economic, political and social activities. Foundations to all subsequent developmental processes and activities are the creation of equal opportunities for all and each person’s responsibility to take advantage of these opportunities.

In order to use the knowledge resource effectively, it is essential for every person, every disseminator of knowledge, to have a personal incentive to use his or her knowledge potential. That means that every inhabitant of Latvia should have a meaningful goal for growth that is keeping with the individual’s interests.

By concentrating the deepest desires of the people, the goal for growth is set the increase of the living standards of people in the broadest sense of the term – a higher level of welfare, security for oneself and one's relatives, a better future for one's children and grandchildren. Although interests, values and definitions of a good and happy life are diverse, subjective and deeply personal and although they can change over the course of one’s life, every person is vitally concerned about his or her welfare, security and sustainability.

The choice of such goal ensures a close correspondence between the goal and resources for growth that becomes a cardinal precondition for growth by making the knowledge the resource choice. If raising the standard of living is set as the goal of development, everyone is motivated and stimulated to work energetically toward achieving this goal. The desire to live better, to raise one’s standard of living is deeply embedded in every person and thus in society as a whole. The quality of life for an individual merges with the quality of life of the entire nation. Our national interest in the aggregate are formed when internal and external aspects are taken into account.

The Quality of Life – Multidimensional Aspects

Welfare is a pending matter for the Latvian people. Material welfare is related to other aspects that determine the general level of welfare of people today. National policies that support raising the standard of living for society as a whole and for each individual dovetail with every person’s desire to live better and his or her knowledge as to how to do so.

The sense of security problems has been historically determined by Latvia’s strategic geopolitical position and by various internal processes. Its location in the economically active and politically significant Baltic Sea region is an advantage, but at the same time it poses risks for Latvia as a nation and for every inhabitant. Both internal and external risks attract resources and cause obstacles for development, to which a sustainable process is important. That determines the necessity to constantly be aware of the sources of potential risks to minimize their effects.

Sustainability, the lifestyle of this generation that makes it possible for future generations throughout Latvia to exist and develop in a balanced way is an obligatory part of the national development model. The accelerated economic development we have achieved has merely stabilized the situation but many problems still remain to be solved before long-term development is guarantees. Only a sustainable development can ensure that backwardness between the average standard of living in Latvia and other EU countries decreases also in absolute numbers.

Obviously that in Latvia’s inhabitants’ quest to attain the desired level of welfare and security in the future and to achieve long-term growth and thereby a high quality of life as a multidimensional concept, as array of mutually interrelated factors are involved, including:

public awareness;
education;
creative work, science and research, innovations, ability to create and use new ideas;
employment;
material welfare;
environmental protection;
material and energy resource use;
infrastructure services – electricity, gas, heat and water supply, electronic communication, postal, transport and waste treatment services;
balanced regional development;
human resources;
health;
social security;
housing;
family;
social cohesion;
increase of democracy level;
increasing level of rule of law;
physical security;
privacy;
public administration modernization, people-friendly State administration services;
external relations;
openness;
participation in processes, significance of individuality;
stability of growth;
preservation of the identity of Latvia;
culture;
Latvian language development and functional improvement;
leisure time use and opportunities.

Basic Principle of the Growth Strategy – Unity of Actions

In implementing the model for increasing the quality of life of an individual all the abovementioned aspects must be improved; total level critically depends on insufficiently developed aspects. The principles of unity, coordination and commensuration of all activities must be strictly observed. Only when all aspects are improved in a uniform and balanced manner, the quality of life improves optimally. Non aspects may be left without attention even in separate development stages. Investments of resources in accelerated development of only one aspect gives little significance in improving the overall quality of life.

All activities to be carried out and their usefulness must be evaluated not only by their influence on direct goal aspect; they must have a positive effect also on other aspects achieving the synergistic effect. Harmonious and supportive actions must be taken also in related aspects, preventing contradictions. No aspect should be developed at the expense of other aspects or even by detracting from them.

The model of Latvia’s development must be implemented in a unified global network. As an isolated country Latvia can not achieve much; a small country hardly influences objective global processes. The main principle of Latvia in cooperation with the partner countries must be considered use of our strong points and opportunities at the same time minimizing threats and risks. Every individual activity must be evaluated in a global context, achieving harmonization with related activities in the partner countries.

On the whole, the development of the country becomes part of an explicit networking model: unity of all aspects and activities and mutual relation inside the country, integration of Latvia as a country into the global network, relation of each activity with similar activities in other countries.

In order to achieve success in this regard, it is not permissible to assume an isolation within own sectors and country. We should broaden each activity also outside the framework of the respective life quality aspect, beyond own sector and field framework, beyond formal boundary of the country. The networking model includes the strategic principle of expanding boundaries and use of supporting instruments, such as disseminating knowledge beyond an institution, sector, the state’s framework and boundaries, as well as intersectoral cooperation and coordination and informal partnership mechanisms.

In general it means unity of all activities, implementation of the active cooperation principle changing the essence of frameworks and boundaries, making them softer, transparent and porous and increasing the intensity of activities in border regions. Activities in various environments, various strata of society, various systems, cultures and languages acquire a decisive significance in stimulating growth.

Implementation of the Development Model – Cooperation and Priorities

According to the strategic basic principals and taking into account all the aspects of the unified future goal, the ministries and other State institutions in cooperation with professional associations and non-governmental organizations must prepare and update the detailed development strategic concepts, programmes and plans of different sectors and development fields that must provide for the specific criteria, measures and instruments for the achievement of the goal set forth in this document.

All programmes and concepts must have a unified strategy and they must mutually complement each other in order to facilitate the implementation of the development model set forth in this document and increase of the life quality of the inhabitants. Networking cooperation principle of all activities and partners must be strictly observed, as well as partnership equality ensuing from it, absence of conflicts and respect for the interests of the minority while acknowledging the supremacy of the will of the majority. In development of each aspect it must be taken into account that some restrictions of individual freedom are unavoidable.

In preparing and implementing any development program and concept, such boundary extension principle aspects ensuing form this document as wide development process area, active and proactive measures, linkage of all strategic activities and coordination, openness, decentralized governance, responsible and independent fulfilment of own functions and innovative approach must be taken into account.

In order to implement the development model, a range of priority long-term tasks that require a unified activity of many sectors, must be immediately settled:

· because of limited material and human resources, taking into consideration comparative advantages of Latvia , unified knowledge priorities must be set for the economy, education, scientific research and innovative activities by implementing respective normative, financial, institutional and other support instruments for concentration of the resources;

· for use of comparative opportunities range of improvements must made in the educational system decreasing the existing disparity among people: everyone should have a chance to obtain a secondary education and everybody should have a change to obtain a high quality higher and professional education, preparation of high qualification specialists (with master’s and doctor’s degree) must be significantly increased, as well as increase of proportion of students enrolled in the technical sciences and natural sciences must be increased at all levels of the educational system;

· for the purpose of the increase of human resources number of measures must be taken in the related directions: health maintenance and medical treatment, prolonging of physical and active life spam, birth rate increase, optimization of social programmes and reduction of social tensions;

· in order to increase each individual’s economic, political and social activities, opportunities for receiving general information should be increased and the initiative of lower-level employees should be encouraged facilitating the participation of people in economic, social, cultural and political processes by motivating the, to be active, raising an individual’s psychological significance and the cohesiveness of all the members of society in dealing with their own problems;

· external relations should be conducted as the continuation of domestic policy, combining them with the State’s unified development model, linking political aspects with economic, security, scientific, cultural, social, ecological and other aspects, widely using the active public diplomacy.

There should be active and coordinated work, harmonized and concerned public administration, entrepreneur and public cooperation, common action of all social strata in order to achieve the goal so that a stable conviction would develop in public on the future development possibilities so that public would support politicians and civil harmony and cooperation would develop in the country. The Cabinet of Ministers must implement coordination and balance of all strategic concepts, programmes and activities by ensuring their compliance with the guidelines of this document.

Implementation of the Development Model – Cooperation and Priorities

In order to implement the development model, a range of priority long-term tasks that require a unified activity of many sectors, must be immediately settled:

Group of authors of the Latvian Development Model

Name, Surname	Institution, position
Edvins Karnitis	Leading researcher of the University of Latvia
Zaneta Ozolina	Chairperson of the Presidents Commission of Strategic Analysis
Juris Ekmanis	President of the Latvian Academy of Sciences
Baiba Rivza	Chairperson of the Council of Higher Education of the Republic of Latvia
Ojars Kalnins	Director of the Latvian Institute
Uldis Osis	Chairman of the Council of SIA “Konsorts”, professor of economics (“Economists Association 2010”)
Dzintars Zakis	Chairperson of the Saeima Subcommittee on the Future Development of Latvia