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Latvia is a state with small open economy and to increase its prosperity level to Europe's average it is necessary to implement efficient policy of economic development. To control the process of Latvia's integration into the European economic space it is necessary to follow the statistical data, identify the areas, where Latvia is behind the European standards, analyze the reasons of discrepancy, work out recommendations for the improvement of the situation and carry out necessary activities. Global Competitiveness Report defines the factors influencing the competitiveness of a state and the analysis of correlations of GCI correlation with defined pillars gives the possibility to identify which factors have the strongest influence on the country's competitiveness. The systemic approach to innovation and its diffusion is based on the core assumption that innovation and innovative business are related to interaction and close cooperation between different actors involved: business structures, universities, governmental and public institutions.
JEL Classification: O31 - Innovation and Invention: Processes and Incentives; R11 - Regional Economic Activity: Growth, Development, and Change
1. Tendencies of Latvia's regional economic development
Latvia's progress towards its economic development goal - the achievement of the European average welfare level - is quite contradictious. On the one hand, the average indicators of Latvia's welfare are approaching the respective European indicators: the gross domestic product per capita has increased from 33% of European average in 2002 to 62% in 2013. On the other hand, the internal processes in Latvia are developing in the opposite direction and the disparities between Latvia's most advanced regions and most underdeveloped regions are increasing, not decreasing.
In order to overcome the negative consequences of the uneven regional economic development, it is required to work out and implement a more effective regional economic development programme, and the basis for such a programme should be found in the analysis of the factors influencing the development of the regions. The question concerning the factors that are crucial for the regional economic development is complicated, but one of the approaches to identify such factors can be related to the analysis of a country's competitiveness index.
Global Competitiveness Index (Global Competitiveness Report - GCI 2012-2013 *) covers 144 countries and includes 12 "pillars" to measure a country's competitiveness: 1) Institutional environment;...