DEVELOPMENT OF ENTREPRENEURSHIP AS A COMPONENT OF REGIONAL POLICY IN LATVIA

Abstract

Balanced regional development in Latvia is one of the most important issues on all political levels in terms of development strategy. In Latvia there are five planning regions – Kurzeme, Latgale, Vidzeme, Rīga, Zemgale. The regional development is not balanced. The most powerful region is Rīga, because significant part of economic activity takes place there, also most part of inhabitants live there. Consequently, it is important to have efficient regional policy, to ensure a balanced regional development.

In year 2009 important reform was realized in Latvia – administrative-territorial reform. As a result now there are 118 local governments (before reform – 548) in Latvia with the average population of 19 100 (before reform – 4 300) inhabitants. However, there are differences among the local governments – both in population and economic development. Part of the municipalities is classified as a mixed urban and rural area. Theoretically local municipalities have become more powerful; yet there are still discussions taking place whether this administrative-territorial reform was really necessary.

One of the concepts of sustainable development (which is also a principle of the regional policy) is that big amount of social and environmental problems could be solved by sector of entrepreneurship. Also development of regional economy is related to the local governments and its ability to use resources, create working places and promote and strengthen business activities. Entrepreneurship, its development is seen as basics of country’s progress, because business creates work places, provide tax revenue and the output is goods and services. Business can be considered as one of the driving forces of society. Consequently development of entrepreneurship, its support should also be a component of regional policy. In the article authors are analyzing both the role of entrepreneurship in regional policy in Latvia and identifying differences of business development on regional level. Researchers in recent years have a lot of discussions, what kind of activities are necessary and what kind of regional policy is appropriated to balance entrepreneurial activity in different regions.

In Latvia regional policy is developing since recovery of independence in 1990^th. Resuming planning document hierarchy in Latvia, it is possible to divide regulation of planning system in three levels: national level, regional level and local level. After the administrative territorial reform, controversies about necessity to strengthen the regional level in administrative way have intensified. In regulations there are also mentioned needs of business.

There exist significant economic differences between regions of Latvia. Coherence between region development and activity of entrepreneurship is also noted. It demonstrates that supporting development of entrepreneurship and motivating people to start their own business, also providing suitable business environment and successful realization of support activities could also be a useful instrument of regional policy.

DOI: http://dx.doi.org/10.5755/j01.eis.0.5.1095