Expected structural changes in selected industries and sectors of the national economy of Latvia in the context of their long-term development
2019
Ancans, S., Latvia Univ. of Life Sciences and Technologies, Jelgava (Latvia)
Economically, Latvia considerably lags behind advanced economies. Achieving the economic development and income level of advanced countries is difficult but not impossible. In order for it to occur, substantial changes have to take place in the national economy of Latvia, mostly in the tradable sector. The research aim is to identify the potential structural changes in the national economy of Latvia if, hypothetically, the economic development levels of advanced economies and Latvia converge. In this situation, labour productivity has to considerably increase in agriculture and other primary industries, which means that most of the workforce working in the mentioned industries has to move to other industries and, possibly, change their places of residence – from rural to urban areas. Labour productivity is expected to significantly increase in low value-added manufacturing and in part of (tradable) service industries. In order that it can occur, high value-added manufacturing and (tradable) service industries have to be developing, which consequently will raise the overall income (earnings) level and which, in its turn, will affect also the value-added tradable subsector where labour productivity is going to increase and higher wages could be paid. A significantly smaller increase in labour productivity is expected in the no tradable sector, yet labour costs (earnings) are expected to rise considerably, which will result in an increase in the costs and prices of mostly no tradable services and therefore the overall price level.
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