"How Latvia can get out of the "middle income trap" by Jeļena Buraja

15 March 2024, 12:35

Latvian news websites have published the article "How Latvia can get out of the "middle income trap" by Jeļena Buraja, Chairman of the Board of Rietumu Banka.

In the article, Jeļena Buraja expresses her concern that by maintaining the current economic policy, Latvia risks falling short of the level of the most developed EU countries and suggests how to promote much faster growth.

"I am convinced that Latvia needs a bolder and, in a good sense, more radical approach to the economy, which would ensure a rapid growth in prosperity. For this purpose, we can borrow "recipes" from the experience of other countries of the world, which show that it is realistic and achievable," says the head of Rietumu Banka.

Currently, Latvia is falling into the so-called "middle income trap", having reached a relatively high level of well-being, but practically with no further development. She believes that it is time for the government and political leaders to abandon the "policy of stabilization" and embark on a bold, proactive and unconventional direction of solutions.

These would include the possibility of creating particularly favourable tax regulations for the most promising sectors, such as IT, ecological production, medicine, agriculture; promoting private business and preventing the situation where the public sector dominates the private sector; carrying out public administration reforms to make it more efficient; strengthening the judiciary system, combatting corruption, investing in education.

Jelena Buraja notes that the economy should focus on technology, digitalization, investments in infrastructure and national connectivity – roads, ports, airlines, airports, railways; internet quality. A targeted policy for attracting large foreign investments is also needed.

Read the full article here.

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