Implementation of special support measures and resolving its main problems with effective methods in medium-run may allow to maintain the dairy sector as a significant traditional element of the Latvian economy. It is important to know the gross economic effect of the Latvian dairy sector in order to take informed and rational support decisions. Authors have developed and approbated methods and by applying these have obtained new, unpublished data that characterize economic effect of the sector. The data have been analysed in Latvian and the Baltic States context. It is concluded that the dairy sector is significant to the Latvian economy mainly due to gross value added and especially because of its role in providing work opportunity. Authors call attention to reserves in gross value added growth per full time equivalent unit in the secondary production in all Baltic States. The data of the primary dairy sector level in turn indicate lower potential of growth that is evidenced by even a slight decrease in indicators of the comparatively more effective Estonian producer structure. Therefore, it can be expected that the weight of dairy sector secondary level in the dairy sector gross value added will increase. Authors point out certain possible solutions of the Latvian dairy sector's problems such as promotion of joint ownership structure. Main analysed indicators are gross value added at factor cost, use of labour in full time equivalent units and labour use effectiveness.

The paper deals with the evaluation of the impact of capital investments on the value added in Latvian dairy specialization farms on the basis of FADN data. The evaluation is carried out through analysing the current level of capital investments in Latvia and the link between capital and the net value added and its main components, based on the comparison with the EU leading milk producing countries. The analysis shows that the current level of capital investments is low in Latvia, especially in buildings and fixed equipment. Insufficient capital investments result in high intermediate costs, lower labour productivity due to large labour contribution in the total output, and also in considerably lower level of the value added, especially per AWU in Latvia.

The paper deals with the evaluation of resource price preferences and resource utilization efficiency in Latvian dairy sector that shows Latvian relative competitive position both in terms of producing competitive products for the market, as well as ensuring competitive salaries and a general rise in living standard for the employees. The evaluation is carried out through analyzing price levels of the main production resources and the utilization efficiency of these resources, based on the comparison with other EU countries. The efficiency indicators in Latvian primary milk production sector are considerably lower and despite resource price preferences the cost level per production value in Latvia is higher than in other countries. The analyzed resource utilization efficiency is low in Latvia also at the processing industry level, though the current price level of the main production resources helps to ensure competitive positions of Latvian dairy products. But considering large differences in compensation levels for labour force between Latvia and other EU countries, without increase in productivity, the situation is not sustainable in long-term.

To forecast how different indices describing Latvian forest industry will develop in the future, the decision support program which is based on the research of supply chains and production processes as well as on systematic analysis of the whole industry should be developed. One of the most common types of analysis is modelling of processes. In this paper processes of forestry and wood processing in Latvia are modelled by using general approach for system modelling, and each process is described as an abstract system where only its input and output values were identified. Correlations of input and output value time series with a simple and multiple regression analysis method were analyzed. Regression analysis was created for 77 pairs of indices which theoretically could have significant correlations. Input and output factor linear regression analysis for set of processes Forestry and Wood processing shows that not always there is significant correlation between time series of chosen model factors. Some of correlations between time series of input and output data in the model of forest sector even showed controversial results. The amount of information about processes and their quantitative indicators in Latvian wood processing industry is not sufficient for development of precise simulation models. There is need to develop a list of criteria for missing information and carry out its collection process.

The productivity and its performance is one of the core topics of economics studies. The growth of productivity is an indicator of competitiveness, as well as a possible way to achieve economic growth and wellbeing. After joining the EU, the agriculture of the Baltic countries faced increasing competition of the EU Single Market, while having relatively lower productivity indicators. Since 2004, significant structural changes have taken place in the agriculture of the Baltic countries, and it is a topical question whether these changes and overall trends in the agricultural sectors of the Baltic countries have facilitated to increase productivity. Therefore, the objective of the study is to evaluate the productivity growth of the main production factors and the total factor productivity growth in the agriculture of the Baltic countries between 2004 and 2015, in relation to the changes in the use of the production factors. The paper focuses on the value added as output, and land, labour and capital as individual inputs to obtain partial productivity measures. The evaluation of TFP is based on the Index number approach, where TFP growth is a ratio of the Output index to the Input index. The calculations and analyses show that since 2004 both the agricultural output and value added have increased in the agriculture of the Baltic countries, and also productivity performance has improved.

The processes of globalization in the world economy have a significant impact on different processes and development in all national economy sectors. Innovations and technological development have also increased the competition between economic operators. Faster growth is also observed in service industries. The global economic downturn affected the Baltic States whose development suffered a sharp decline at the end of 2008 and in 2009. A sudden drop in the demand in export markets, as well as the decline in the demand in the domestic markets due to low purchasing power contributed to the deterioration of the economic situation in the Baltic States, particularly in the manufacturing and construction sectors. Starting from 2011, the economic indicators in the Baltic States have been growing and here the export of goods and services can be mentioned as the main contributor to the development of the economy in the Baltic States. Significant changes in the development of economic sectors started in 2013 due to Russia’s economic problems. During the period 2005 – 2015, most of the value added to the overall structure of the national economy in all three Baltic States was brought by trade and manufacturing. The aim of the research is to analyse the national economy sectors in the Baltic States during the period 2005 – 2015 in order to determine processes that affected the development of economy sectors in each of the countries, or the opposite – the recession, thus finding the most competitive sector of the national economy of the Baltic States.

Competitiveness is the key factor in order to reach the economic transformation, smart growth, governance and legal framework for the state and society for sustainable development that are stated as the major goals in the current planning period in Latvia. High-technology industries are the main drivers of economic activity in developed economies. To ensure data comparability, the official definition of the high-technology industries by Eurostat is applied in this research including two industries: manufacture of basic pharmaceutical products and pharmaceutical preparations and manufacture of computer, electronic and optical products. The research aims to analyse high-technology industries in Latvia taking into account the competitiveness and the regional allocation using a set of several indicators. According to NUTS 3, Latvia is subdivided into 6 regions; however, the high-technology industries are regionally allocated mainly in two regions, Riga and Pieriga regions. Manufacture of basic pharmaceutical products etc. employs 99% of employees in these two regions, manufacture of computer etc. products – 81% despite the fact that only 54% of employees reside in these two regions. The research confirms that the high-technology regional allocation depends on available labour resources and also education and professional training facilities in the region. We conclude that the high-technology industries are competitive in the global market as the share of the high-tech products in total exports is several times higher than the share of these industries in the manufacturing sector or in total economy. The global competitiveness of Latvia’s high-tech industries is stable and gradually rising.

The development of rural territories in the European Union (EU) plays an essential role, and agricultural development can largely contribute to this process. To project agricultural trends, a number of models have been developed in the EU, while in Latvia the LASAM model was developed in 2016 to generate projections for agricultural sector development in Latvia until 2050. In 2017, LASAM was extended by a module for socio-economic assessment that allows projecting productivity for various types of farming. The research aim is to develop a model for productivity simulation for various specialisation types of farms in order to project their development in Latvia. To achieve the aim, two specific research tasks were set: 1) to develop a model for productivity simulation for various specialisation types of farms in Latvia; 2) to identify the key results of the simulation of productivity for various specialisation types of farms in Latvia. The research found that in the period 2005 – 2016 the value added of agriculture tended to slightly increase in Latvia, whereas an opposite trend was observed for the number of persons employed in agriculture, which tended to decrease in the period of analysis. Both trends determine the agricultural productivity trend as well. A projection of productivity measured as value added per AWU for various farming types in Latvia by means of the LASAM model has revealed that it is different, and the highest level of productivity in 2030 and 2050 is projected for granivores as well as field crop farms.