Evaluation of state competitiveness and development of sustainable competitiveness monitoring system

The Stockholm School of Economics in Riga has been commissioned by the State Chancellery of Republic of Latvia to implement the project “Evaluation of state competitiveness and development of sustainable competitiveness monitoring system” together with its partners – Baltic International Centre for Economic Policy Studies, Ernst & Young, and experts from the Bank of Latvia.

The purpose of this note is to provide a short project description as background material for the seminar organized on August 3 2011 for stakeholders in the private sector.

Aim of the project

The aim of the project is to:  i) produce an initial Latvian Competitiveness Report (LCR) based on good international practice and ii) design and propose a replicable structure and institutional framework  within which such reports might be produced in the future. The project is motivated by the desire to support fact-driven policy making in Latvia. Whether better data and decision-oriented analysis would have enabled the country to avoid the recent crisis will never be known. But such support will definitely enable more effective choices as the country aims to find a more sustainable growth strategy for the future.

The initial Report will provide an independent documentation and assessment of Latvia’s competitiveness. While different policy makers may draw their own conclusions, discussions about the right way forward can be located in a common view of the current situation. While not a policy document itself the LCR can inform and provide input to specific policy documents that the Latvian government has domestic or international commitments to deliver. In particular, the LCR can inform the Latvian participation in the policy process of the European semester – the new EU policy making cycle introduced in 2010.  The LCR can over time also be used to track the impact of economic policies, through the impact on economic outcomes, through changes in competitiveness fundamentals, and through their influence on the perceptions of business leaders.

Project plan

Taking into account the technical specifications the project is made up of two modules and a number of sub-modules.  Module A covers the conceptual or research oriented activities of the project and Module B focuses on activities aimed at institutional development.
Module A represents the activities that go into the creation of a template for a Latvian Competitiveness Report together with an initial Report. Thus Module A consists of the following tasks:

• Methodology development
• Preparation of an initial report based on the developed methodology
• Review of the report and revision of methodology

The sequence of sub modules represent a cycle of activities that starts with the development of a conceptual framework for an initial Latvian Competitiveness Report, followed by implementation of the methodology to prepare an initial report and completed by an evaluation of the report using a peer review approach and accordingly adjusting the template that sums up the conceptual framework.

Module A also includes two in depth studies of factors affecting competitiveness. These studies represent part of the overall template for competitiveness evaluation which is envisaged as consisting of two components: i) a periodic Competitiveness Report complemented by ii) in depth studies which are different over time. 

The in depth studies represent an innovation in the LCR as compared with similar reports developed in other countries.

Module B consists of the activities aimed at developing an institutional model for ensuring the on-going monitoring and evaluation of competitiveness based on the methodological approach identified in Module A. Module B is made up of two main tasks:

• Framework for an institutional model
• Capacity building and outreach

The first task here is aimed at investigating international institutional good practice and adapting it to the Latvian context while the second task represents activities aimed at consultations and informative actions with stakeholders as well as practical proposals for ensuring the capability for a sustainable competitiveness evaluation capacity. 

Time plan

The duration of the project is 18 months with the most intensive work concentrated between March and November 2011. March – May has been devoted to the development of methodology for the report, based on international experience and involvement of local experts. May and June consisted of intensive data gathering, followed by analysis and writing by a large team of researchers. The first draft of the report along with the first drafts of the in-depth studies is scheduled to be finished by September 1. In the first half of September a seminar will be organized to discuss the findings and receive the feedback. The Latvian Competitiveness Report 2011 is due to be finalized by November 25, incorporating the feedback from the stakeholders, experts, and peer review comments. Parallel to the development of the LCR 2011, proposals an institutional model are being developed and are scheduled to be finalized by November 25.

Presentations introduced on the Seminar on August 3:

Prof. Christian Ketels


Mārtiņš Bitāns

Vyacheslav Dombrovsky