High Ambition, Strategic Investment: Pursuing a €10 Billion Economic Upsurge in Latvia

Latvia Unveils Ambitious Investment Attraction Strategy

Latvia has announced a comprehensive investment attraction strategy, aiming to boost foreign direct investment (FDI) by nearly €10 billion over the next decade. The goal is to transform the country from a small peripheral economy into a dynamic investment hub, as stated by Minister of Economics Andris Ozols.

The strategy hinges on 15 strategic initiatives, including pension fund reform, export credit guarantees, and streamlined bureaucracy. One of the key objectives is to raise total FDI from €22.5B to €32B by 2035, creating 30,000 new jobs, mostly in high-skill sectors.

Early signals are promising, with interest from Nordic pension funds and German manufacturing firms reported by the Latvian Investment and Development Agency (LIAA). Global investors are attracted to Latvia due to EU Single Market access without the high costs of Western hubs, a multilingual workforce with strong digital literacy, and a strategic location bridging Scandinavia, Central Europe, and Eastern markets.

The strategy targets high-growth sectors such as renewable energy, smart manufacturing, fintech, biotech, and logistics, particularly those linked to Rail Baltica and other trans-European corridors. Latvia is enhancing logistics infrastructure to attract manufacturing and R&D facilities serving wider EU and EEA markets.

To support innovative businesses, the plan includes expanding capital access and creating investor-friendly policies. The government is also committed to reducing business registration times by 50% and digitizing more than 70% of licensing processes by 2027.

However, global competition is a challenge, as other small economies like Ireland or Singapore are also aggressively courting the same investors. Talent retention is another challenge for Latvia as it competes with higher-wage economies for skilled labor.

The first measurable outcomes are expected by mid-2026, with a review scheduled in 2028 to adjust targets and incentives if necessary. If successful, the initiative could position Latvia as the Baltic's most investor-friendly economy.

Latvia plans to mobilize part of its €12B pension fund assets into domestic and regional investments. The government is leveraging EU and global market connections for sustainable growth. Moreover, the government will expand export guarantees through the state agency ALTUM to make it easier for Latvian firms to compete in high-value markets abroad.

Latvia's policymakers are determined to close the gap with Baltic neighbors Estonia and Lithuania in terms of foreign direct investment inflows. The success of this goal can be verified by tracking investment inflows, increases in employment rates in relevant sectors, GDP growth, and qualitative assessments of industrial upgrading.

However, it's important to note that the implementation pace may be affected by political shifts in the future. Nonetheless, the ambition and strategic approach of Latvia's investment attraction strategy are clear, and it promises to bring significant benefits to the country's economy and its integration into global markets.

High Ambition, Strategic Investment: Pursuing a €10 Billion Economic Upsurge in Latvia