Role of support payments in the development of territories in Latvia

Territorial competitiveness and sustainable development may be assessed in a number of dimensions, and they are affected by various factors. Regional economies are complex, dynamic systems arising from the interactions of housing, labour, business and other market systems with characteristics of a place, all enabled and shaped by the government and civic-sector activity. Agriculture continues to have an important influence on the economy of most rural regions, and agriculture continues to be the main land use in rural regions. For these reasons, support payments play a large role in the development of rural territories in Latvia, particularly after the accession to the European Union (EU) in 2004. The research aim is to identify the role of support payments in the development of municipalities in Latvia. To achieve the aim, the following specific research tasks were set: 1) to analyse the amounts of support payments received by municipalities of Latvia; 2) to assess associations between the amounts of support payments and other socio-economic indicators for municipalities of Latvia. The present research found that support payments played an essential role in the development of territories in Latvia, as Latvia received EUR 4.610 billion through various support payment schemes in the period 2002-2015, and its municipalities attracted 90 % of the total or EUR 4.126 billion. The EU Common Agricultural Policy (CAP) area-based payments represented the most significant amount of support payments for municipalities, and most of the payments were received by the municipalities having a large agricultural area and a small population. In the period 2009-2013, the funding of European Agricultural Fund for Rural Development (EAFRD) and European Fisheries Fund (EFF) projects received by municipalities of Latvia amounted to, on average, EUR 2501 per capita, and there were strong associations between the amounts of support funding per capita and the size of subsidies from the Local Government Equalisation Fund, the managed utilised agricultural area (UAA) and the turnover of enterprises engaged in primary production.