Regional trail blazer sets the pace
ECONOMY IN THE LAST 10 YEARS THE LATVIAN ECONOMY HAS UNDERGONE A COMPLETE OVERHAUL, SUCCESSFULLY ADAPTING TO MARKET NEEDS AS THEY AROSE. ONCE AGAIN INDUSTRY IS PROSPERING-IT IN PARTICULAR

LIKE ALL THREE Baltic states, Latvia has undergone dramatic change since independence, while EU and NATO membership are priorities, regional relations are also key

In recent years, Latvia has experienced the fastest economic growth in the northern hemisphere, consistently tripling average European growth–a fact made even more impressive if one considers the changes the Latvian economy has undergone in the last 10 years. As an industrial giant under the former Soviet Union, 90% of the country's income was generated from production. When the Soviet Union collapsed, many of the factories, which were full of outdated machinery, were closed. As well as switching to a free-market economy and undergoing massive privatizations, Latvia was also forced to rethink its industry. After restructuring and reestablishing trade relationships with Russia, the country's economic scenario changed once again with the 1998 Russian crisis.

Companies were suddenly forced to look west for new markets and adjust their production processes to meet European standards. This was accomplished in record time. By 2000, 60% of Latvia's trade was with EU countries and its economy was flourishing. Minister of Economy Aigars Kalvitis explains, "Today the Latvian economy is really healthy and we lead the candidate countries to the EU in all macroeconomic figures. Before 1998, we were oriented towards the Russian and former Soviet Union economies. and after the crisis, the economy was reoriented towards EU countries. Now, however, the Russian, Ukrainian and Kazakhstanian economies are much better and we increased trade to the east again last year, which has helped us keep up a high speed of development. In the year 2000, we finished with a GDP growth of 6.6%. In 2001, it will be at least 7.5% and inflation is lower than 3%."

Although timber is Latvia's largest export and largest source of national income, its richest resource is its highly educated workforce. The country has a long history of excellent educational standards; as far back as the 17th century, Latvia was educating its peasants– something done in very few European countries at the time. Today, the government hopes to employ its laborforce's high level of education in the development of a strong knowledge-based society. In fact, 50% of the country's university graduates are educated in the field of information technologies. Moreover, in order to attract foreign investment in these sectors, the government has introduced reductions for hi-tech investment. Finance Minister Gundars Berzins has chosen unusual methods for demonstrating Latvia's IT capacity, including setting up Internet camera access in his own office, as well as running his cabinet with real time electronic portfolios. He explains, "There is no computer on my desk.

Instead, I have a portfolio that contains all the cabinet programs and agendas. It is interactive in the sense that I can add notes or comments on works in progress. At yesterday's cabinet meeting, we worked without paper for the first time." According to Mr. Berzins, there are now plans to set up a new higher educational institution for IT specialists in the country. In addition, Roberts Zile, Minister of Special Assignments for Cooperation with International Financial Agencies, reports that one of the last World Bank projects in Latvia will be an upgrading in university level sciences and research, a project expected to begin in 2004.