IT Market Research
Report on Latvia
Tatiana Rikure
Inga Bakane
General information
Capital: Riga (population 788,283) Population: 2.6 Million Total area: 64 100 sq. Km Languages: Latvian (official) Russian, English widely spoken Independence: 1991 Borders with: Estonia to the north, Russia and Belarus to the east and Lithuania to the south, and a maritime border with Sweden to the west Ethnic composition: Latvian 58.2%, Russian 29.19%, Belarusian 3.99%, Ukrainian 2.63%, Polish 2.49%, Lithuanian 1.39%, other 2.11% Major religion: Christianity Main exports: Timber and wood products, fish and fish products President: Vaira Vike-Freiberga
Key facts & figures
Membership in official organizations: European Union, NATO, UN, Council of Europe, WTO, OSCE, Council of the Baltic Sea States, Euro-Atlantic Partnership Council.
Economy*: GDP: 11.0 billions EUR (2004) GDP growth in 2004: 8.5% (average over 5 years: 6.2%) FDI inflow: 434 mil. EUR (2004)
* Central Statistical Bureau of Latvia, www.csb.lv
Business environment
Latvia is one of the more advanced, fast growing 'transition' economies and has well-developed services, transportation network and logistics. There is a welldeveloped banking system, stable political and monetary conditions, and a favourable taxation regime (From 1 January 2002, the Latvian corporate income tax was reduced from a flat rate of 25% to a flat rate of 22%. The rate was 19% in 2003 and dropped to 15% from 2004).
Latvia boasts one of the best international credit ratings in Central and Eastern Europe. Standard & Poor's has given Latvia an "A-minus/stable" rating, while Fitch-IBCA has rated the economy "A-minus/positive".
Latvian promising business sectors:
Manufacturing (growth in 2003): 9.1%
Food & Beverage (24.9%) Forest & Wood (20.4%) Machinery & Electronics (14.6%) Metal processing (9.7%) Textiles (9.6%) Paper, Publishing & printing (7.6%) Chemicals & pharmaceuticals (4.4%) Other (8.8%)
Services(growth in 2003): 6.8%
Trade (11.3%) Transport & Communications (8.9%) Real Estate & Business Services (2.3%) Financial Operations (10.4%)
Source: Central Statistical Bureau of Latvia, 2004
Services: IT & Telecommunications
The IT&T industry is Latvia's fastest growing economic sector with a yearly growth by 20 - 30 % during the last decade. Exports of the sector are rapidly rising in the last years, annually growing by approximately 15%. The industry's main asset is highly qualified human resources with more than 8 000 graduate IT specialists and an additional 6 000 in universities and colleges. Key advantages of the sector: internationally competitive human resources at all levels of expertise at very competitive costs, highly developed telecom and data transmission infrastructure.
Infrastructure
Penetration of ICT PCs/100 Internet/100 Mobile Cell Phone/100 Enterprises which have at least one computer Enterprises with Internet connections 2002 2005 19 33 6 25 34,2 59 51 36 75 >50
Production
THE STRUCTURE OF INFORMATION TECHNOLOGY BRANCH IN LATVIA
IS maintenance 15,3% Consulting 3,2%
Hardware maintenance and repair 15,3% Hardware marketing 10,5% Hardware manufacturing 9,7%
Telecommunications 13,8% Software development 24,2% Software marketing 4%
Internet and E-commerce services 4%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0%
5%
Computer and equipment manufacturing Operators of telecommunication networks Software development
Telecommunication services
INTENET, ecommerce services
Maintenance of information systems
Consultations
Maintenance and repair of equipment
Hardware marketing
DISTRIBUTION OF QUALIFICATION LEVELS IN IT SECTORS
Software marketing
fifth level of qualification
first level of qualification
third level of qualification
fourth level of qualification
second level of qualification
STATE FINANCING OF RESEARCH
Molecular biology, microbiology, biotechnology, virusology 7,15% Medicine 10,60% Biology, environment and land 9,95% Technology (material, chemical, pharmacy) 4,76% Chemistry 10,42%
Physics, mathematics, astronomy 11,44% Mechanics, mechanical engineering, energetics 7,61%
Agriculture 11,14%
History 3,10% Linguistics, history of literature, study of folklore 4,02%
Philosophy, sociology, psychology, pedagogy 6,27%
Informatics 5,71% Forestry Economics, law 1,85% 5,98%
NUMBER OF STUDENTS IN STUDY YEAR 2004/2005
Total number – 130693 Computer science and IT students 10% Number of graduates 1000 Number of PhD thesis in mathematics and IT – 22
DISTRIBUTION OF STUDENTS ACCORDING TO STUDY PROGRAMMES 2003/2004
Humanities and arts 7% Natural sciences and art 5% Engineering and technologies 11% Agriculture 2% Health and health care 3%
Teacher training and education sciences 15% Services 3%
Social sciences 54%
Despite the existing barriers to the Internet penetration in Latvia (insufficiently developed telecom infrastructure, high Internet access costs, etc.) its popularity increases each year.
Number of Internet users in Latvia is growing
In Latvia the household’s access to the Internet (7%) is lower than NAS10 average (11%), strongly lower than EU-15 average (44%) and far behind the level of leading country Netherlands (72%). The worse figure has only Romania (4%).
e-Work
Seven percent of the EU-15 and nearly three percent of NAS-10 working population are presently teleworking from home, at least part of their working time