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Latvia is a small EU member state, whose economy has returned to positive growth since 2011 after having contracted between 2008 and 2010. It has undergone changes in many policy areas in recent years. It has several STI priorities.
Hot Issues are major national STI policy priorities, as self-reported by countries in their responses to the OECD STIO 2014 policy questionnaire.
Improving overall human resources, skills and capacity building
Latvia has a reasonably good human resource base in terms of the tertiary-educated adult population, and its expenditure on tertiary education is at the OECD median (Panel 1v, t). However, brain drain and the ageing of the STI workforce are important challenges. Improvements in human resources and capacity building are top priorities in Latvia’s Guidelines for Science, Technology Development and Innovation (2014-20). They are also priorities in Latvia’s Smart Specialisation Strategy. The EU Structural Funds have programmes for the improvement of human resources and capacity building in science. The EU-funded Attracting Human Resources to Science (2007-13) addressed researcher brain drain and sought to attract young scientists to PRIs. To deal with the ageing of the STI workforce, employment quotas for young scientists have been introduced in government programmes and projects. Major reforms of HEIs have been carried out to introduce a new model of accreditation, new funding models and the internationalisation of HEIs, and education programmes have been revised to meet needs and trends in the job market.
Encouraging innovation in firms and supporting entrepreneurship and SMEs
The Guidelines on National Industrial Policy (NIP) for 2014-20, approved in June 2013, identify innovation as a key pillar for improving competitiveness, productivity and exports. Initiatives include support for co-operation between industry and academia and commercialisation of research results, new product and technology development and the expansion of innovative and technology-oriented companies as well as new financial instruments (e.g. seed and venture capital) for innovative companies, especially SMEs at their different stages of growth. To improve Latvian industry’s ability to innovate, the EU Structural Funds have supported programmes, including the innovation voucher programme launched in 2012, to attract private investment in R&D for new products and technologies and their commercialisation. Competence centres seek to increase the competitiveness of businesses and to facilitate research-industry co-operation on industrial R&D for new products and technology.
Reforming and improving public research system (including university research)
Government expenditure on R&D, at 0.51% of GDP, is at the bottom of the OECD mid-range (Panel 1a). No Latvian universities rank among the world’s leaders (Panel 1b). Large-scale reforms of HEIs and PRIs are under way to improve the quality and relevance of public R&D. As part of this process, research institutions and science and innovation system have been assessed by international experts, in co-operation with the Nordic Council of Ministers and NordForsk. EU Structural Funds have been allocated to strengthen the research infrastructure and human resources for public research. The Baltic inter-ministerial expert group on research infrastructure and the Baltic-Nordic co-operation on research infrastructure are regional platforms for co-operation and assistance.
Commercialisation of research results and technology transfer are considered to improve the returns and impact of science. To this end, six competence centres and nine state research centres foster industry-science co-operation, and technology transfer contact points have been established for the commercialisation of public research. The Law on Scientific Activity has been amended to ensure more efficient legal protection of public research results, their commercialisation and the transfer of knowledge.
Latvia has no high-level national council for STI policy. The Ministry of Education and Science and the Ministry of Economics share responsibility for innovation policy. A lack of human resources in the state administration and bureaucracy are considered barriers to policy co-ordination. Latvia participates in the joint Baltic political co-ordination expert group established in 2013. Research programmes are evaluated on completion of each programming period. Fundamental and applied research grants are evaluated regularly. Market-oriented projects whose aim is innovative commercial products are assessed following the project’s completion. According to the Law on Scientific Activity, PRIs are to be evaluated every six years. The latest research assessment exercise was performed by international experts in co-operation with the Nordic Council of Ministers and NordForsk in 2013. In order to facilitate the commercialisation of public research, a recent amendment to the Law on Scientific Activity assigns IPR on inventions from publicly funded research to the relevant scientific institutions.
TheWorld Bank’s Ease of Doing Business Index suggests that Latvia has a conducive business environment. Seed money, grants, loans and venture capital are available to help finance technology start-ups and fast-growing companies. In 2012, the Baltic Innovation Fund (BIF) was launched by the European Investment Fund in close co-operation with the Governments of Latvia, Lithuania and Estonia to boost equity investments in Baltic SMEs with high growth potential.
Latvia has participated in the EU effort to develop a Smart Specialisation Strategy and has involved several government ministries in partnership with industry, research institutions and trades unions. Since 2009 the industry-driven cluster initiatives have received support in order to promote collaboration between unrelated companies, research, educational and other institutions and to improve the competitiveness of enterprises, increase export volumes and promote innovation and development of new products.
Relative to its income level, Latvia has advanced ICT infrastructures.Wireless broadband subscriptions are just below the OECD median, and the fixed broadband subscriptions and e-government development indexes are in the mid-range of OECD countries (Panel 1m, l, n).
Recent developments in STI expenditures
GERD accounted for only 0.7% of GDP in 2011 and 0.66% in 2012 and has been declining in recent years. Publicly funded GERD has decreased even more dramatically, with the government budget for R&D down from approximately USD 120 million (LVL 36 million) in 2008 to USD 58.3 million (LVL 17.5 million) in 2011-13. The National Reform Programme for implementation of the EU Europe 2020 strategy sets a target for GERD of 1.5% of GDP by 2020.