About Lativia
Latvia is a country that is found within the Baltic region. This is also found in Northern Europe. There are over two million people living there. In addition, the country had its independence restored in 1991. It is also part of several foreign relations; majorly the United Nations, European Union, NATO, among others. In terms of human rights, the country has an above average rating among the countries that are sovereign in freedom of the media, democracy as well as privacy. The point of interest is in its economy. It has membership with the World Trade Organization as well as the European Union.
Central Issue
Since the start of the new millennium, Latvia lies among the countries with the highest GDP growth rates in the European continent. The only problem with this economy is that it is driven by consumption, majorly. It is one of the monster reasons as to what led to the GDP of Latvia collapsing. This took place in the late days of 2008 and the start of 2009. This was made worse by the economic crisis that was a worldwide occurrence. In addition to that, the country was short on credit and huge amounts of money were needed to be paid to the Parex Bank. Within the first quarter of 2009, the economy of Latvia had shot low by 18%. This happens to be the biggest fall to have taken place in the European Union. This Latvian economic crisis had been forecasted; the country was depending so much on consumption domestically, the main driving force of growth. The country also got its finances from private debtors, as well as getting a bad reputation in the foreign trade averages, (Koyama, 2010).
Country’s Goals
One major goal is joining the Organization of Economic Cooperation and Development, OECD in short. This is ranked topmost among the government goals of Latvia. The major reason for joining this organization is to boost the environment within which business is conducted as well as attracting investment from other governments and private sectors. The aim here is to give the country accompaniment in its endeavor to shape local agenda for reforms. This will occur through the country following the example of the OECD’s standards and the experiences that other countries belonging to OECD have gone through, (Jurdzs, 2013).
Another goal that Latvia is dedicated to achieving is defining the position of Latvia in the centre of the cooperation of the European Union. In addition to that, there are other conditions vital to the interests of the nation that need defining; for instance the European’s Union financial framework which cuts across six years (from 2014 to 2020). The third goal here is to establish economic relations with external countries. Lastly, the country aims at strengthening the security level externally as well as enhancing decisions that would favor the country in the summit of NATO, Chicago, (Managing Ed, 2013).
Constraints of the Problem
One of the restrictions of the problem is the production of low quality goods as well as raw materials. This is because the prices of real estate were on a higher level in the economy. The breakdown in the economy also meant that the country was low on credit. Payment of debts would thus prove a task as well as feeding the people and sustaining the economy. In addition to low credit, there is the problem of unemployment. This is estimated to be at 14% currently. It is hard for a country to create job opportunities for its people when it has problems paying debts and staying in the comfort zone of the economy. Another point to add on that is emigration. Since the start of 2000, Latvia has lost over 300000 people. The population which stood well over 2.3 million is now just over 2 million. This can be attributed to the fact that a lot of these people left their country to seek better opportunities in the other countries of the European Union.
Relevant Alternatives
Devaluing its currency is one of the alternatives that Latvia sort and stuck to and this has been for a good course. In addition, it has a high export ratio for its economy. These exports form up to 50% of the GDP. If there are improvements in the country’s competitive nature, there will be good effects on the imports and the exports that in turn reflect on the GDP.
Best Alternative
The best alternative form the above choices is having a high export economy. The higher the exports the huge market there is to exploit internationally, that is. As long as there are exports there will always be returns to the Latvian economy. Employment opportunities cannot miss because people will be working on producing goods and services needed for export, (Adomanis, 2013).
Implementation Plan
Implementation involves privatization of the government owned businesses and sectors. This will give the government an easier time managing other resources and strategizing on the next step to take; for instance, dealing with the issue of unemployment.
References
Adomanis, M. (2013). Latvia is the best example of an economic disaster somehow defined as a success. Retrieved from http://qz.com/64717/latvia-is-the-best-example-of-an-economic-disaster-now-defined-as-success/ on 3 February 2014.
Jurdzs, J. (2013). Real work starts now for Latvia’s OECD goal. Baltic News Ltd.
Koyama, Y. (2010). Economic crisis in the Baltic States: focusing on Latvia. Economic Annals, Volume LV, No. 186 UDC: 3.33 ISSN: 0013-3264
Managing Ed. (2013). Latvia’s foreign policy goals and objectives. Retrieved from http://www.lithuaniatribune.com/27839/latvias-foreign-policy-goals-and-objectives-201327839/ on 3 February 2014.
