ENTREPRENEURSHIP ENVIRONMENT AND REGIONAL POLICY

Abstract

The paper analyses different aspects and problems characteristic to entrepreneurship environment in Latvia after restoring of independence. The entrepreneurship in Latvia develops under conditions of market economy in a rather complicated inner and outer environment influenced by different circumstances causing rapid changes. At the beginning of transition period to market economy, the entrepreneurship environment in Latvia was affected heavily by decrease of production after the 1990, when during the period 1990-1993 the GDP decreased more than twice, but the formation of fixed assets six times. Such fall in production is to be related in some respects to the general economic crisis characteristic to transition period to market economy in all Central and East European countries. Common features of this crisis were the decline in production and lowering of the standard of living. Internal resources of our country were limited and insufficient, and Latvia was not attractive to foreign investors. The production level of 1990 remains unachieved up to now. The recovering process of production is very slow in agriculture. The allocation of production factors in Latvian regions has developed in an unbalanced way. Two thirds of non-financial investments obtain Riga and Pierīga. Lasting up to now, this unbalanced development leads to unequal production conditions, impeding negatively the activities of entrepreneurship, especially in rural areas, where a certain part of agriculture area remains still unused at all. The unused land grows over and its qualitative indicators of landscapes and biotopes become worse, but the ameliorative systems decline. The yield of crops is changing and it is lower in comparison with other countries. The decline in agriculture has led to diminishing of the role such characteristic and historically developed sphere as milk industry. To help the entrepreneur to cope with conditions affecting his activities, especially in rural areas, it is necessary to provide him with a certain support from the government, regional and local institutions. Presently, there is a growing need in such business support structures as business consultation centres, business parks, industrial parks and others. However, most of the support institutions are concentrated in Riga and it does not comply with the interests of today and future entrepreneurs. Lack of support may be a cause of giving up of entrepreneurship by a number of entrepreneurs. As an important problem in rural areas may turn out the choice of a most suitable form of a production enterprise, being in capacity to provide a successful process, especially in the initial period. In this context, as favourable and supporting to entrepreneurs may be recommended such forms of enterprise and institutions as franchise and monitoring, providing together with financial support also the moral support. Development of entrepreneurship environment in Latvia is a step-by-step process, using advantages and overcoming of disadvantages.