Development of Regions in Latvia 2011 by VRAA Agentura

Development of Regions in Latvia 2011

Ministry of Environmental Protection and Regional Development State Regional Development Agency Riga 2012

Development of Regions in Latvia 2011 Ministry of Environmental Protection and Regional Development State Regional Development Agency

The State Regional Development Agency wishes to thank the following individuals for their contribution in preparing this report: Ilona Raugze, Jevgenija Butnicka, Indra Ciuksa, Laura Anteina, Laura Viksere, Irena Kotelnikova, Ilze Sniega-Sniedzina, Maija Brunava, Ilze Aigare, Alda Nikodemusa, Dace Granta, Janis Glazkovs, Sigita Sulca, Inita Henilane, Sarmite Klavina, Julija Jakovleva (Ministry of Environmental Protection and Regional Development) Anna Vitola-Helviga, Janis Valgis (Rural Support Service) Jolanta Minkevica (Central Statistical Bureau)

Produced by: Inga Vilka Armands Puzulis Anita Beikule Jurijs Kondratenko Zintis Hermansons Janis Brunenieks

Editorial board: Solvita Zvidrina Ivita Peipina Valentina Locane Girts Pule

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Scientific editor: Biruta Sloka Editor: Ronalds Krumins

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The technical production (layout, translation and design) and printing of the annual report Development of Regions in Latvia 2011 is financed from the European Union funds technical assistance project No VSID/TP/ CFLA/11/21 "Support to ensuring the achievement of the horizontal priority objectives managed by the Ministry of Environmental Protection and Regional Development". © State Regional Development Agency, 2012 Reference must be provided to Development of Regions in Latvia 2011 when reproducing or citing material

TABLE OF CONTENTS INTRODUCTION.................................................................................................................................... 6 I CURRENT SITUATION IN TERRITORIAL DEVELOPMENT PLANNING................................................... 8 II ADMINISTRATIVE TERRITORIAL DIVISION OF LATVIA................................................................... 12 III POPULATION IN LATVIA................................................................................................................ 18 IV DESCRIPTION OF THE DEVELOPMENT OF PLANNING REGIONS..................................................... 22 V DESCRIPTION OF THE DEVELOPMENT OF CITY AND MUNICIPAL SELF-GOVERNMENT TERRITORIES.......................................................................... 41 Description of Cities.............................................................................................................. 41 Description of Municipalities................................................................................................ 46 VI ASSESSMENT OF TERRITORIAL DEVELOPMENT............................................................................. 61 Assessment Methodology...................................................................................................... 61 Territorial Development Level Index...................................................................................... 63 Territorial Development Level Change Index........................................................................ 68 Opportunities for Improving the Assessment of Territorial Development.............................. 71 VII DESCRIPTION OF THE DEVELOPMENT OF GROUPS OF SELF-GOVERNMENT TERRITORIES........... 72 Development Centres and Their Areas of Influence............................................................... 72 Riga and Riga Metropolitan Area........................................................................................ 75 National Development Centres and Their Areas of Influence................................................ 77 Border Areas.......................................................................................................................... 83 Baltic Coast........................................................................................................................ 84 Borderland......................................................................................................................... 88 Urban and Rural Territories.................................................................................................... 92 VIII ANALYSIS OF SELF-GOVERNMENT FINANCES.............................................................................. 98 Total Volume of Self-government Budgets............................................................................ 98 Self-government Budget Revenue....................................................................................... 100 Self-government Financial Equalisation................................................................................ 103 Budget Expenditure of Self-governments............................................................................ 106 Education Expenditure......................................................................................................... 108 Social Services and Social Assistance Expenditure................................................................ 111 IX INVESTMENT OF THE EU FUNDS IN THE REGIONS OF LATVIA..................................................... 113 Investment of the EU Funds in the Regions as Part of Implementation of the NSRF............. 113 Programmes Managed by the Ministry of Agriculture......................................................... 119 X REGIONAL DEVELOPMENT SUPPORT INSTRUMENTS MANAGED BY MEPRD AND SRDA............. 125 National Support Measures for Regional Development....................................................... 125 EU Support for European Territorial Cooperation................................................................. 127 Other Support Instruments................................................................................................. 131 XI DEVELOPMENT OF PUBLIC SERVICES........................................................................................... 136 Electronic Services............................................................................................................... 136 Project for the Improvement of the Public Services System.................................................. 143 Implementation of the One-stop Agency Principle.............................................................. 144 Development of Public Services within the Context of the Draft Regional Policy Guidelines....... 146 DEVELOPMENT TRENDS, CONCLUSIONS AND PROPOSALS.............................................................. 149 Abbreviations Used........................................................................................................................................... 153 Bibliography...................................................................................................................................................... 154 ANNEX 1. Main Development Indicators of Planning Regions, Cities and Municipalities �� 155 ANNEX 2. Territorial Development Indices of Planning Regions, Cities and Municipalities �� 159 ANNEX 3. Self-government Budget Revenue in 2011 �� 161 ANNEX 4. Indicators of Self-government Financial Equalisation in 2011 �� 164 ANNEX 5. Self-government Budget Expenditure by Economic Classification in 2011 �� 165 ANNEX 6. Self-government Budget Expenditure by Functional Classification in 2011 �� 168 ANNEX 7. Self-government Principal Budget Expenditure on Education in 2011 �� 171 ANNEX 8. Self-government Principal Budget Expenditure on Social Security and Social Benefits 2011 �� 172 ANNEX 9. Population According to Census and OCMA Data �� 174

DEAR READER OF DEVELOPMENT OF REGIONS IN LATVIA 2011, The State Regional Development Agency has produced the annual report evelopment of Regions in Latvia 2011, and now this abundant compilation of data D and analysis of the development of territories in Latvia is available for your review. In drawing up the report this year, we have introduced a number of new features for a more efficient, flexible and detailed retrieval of information. First of all, knowing that some of the data – such as an account of the census results – were expected already before the release of the report, sections on the population of Latvia, the description of self-government finances, the assessment of territorial development level and the key socio-economic indicators of municipalities, cities and planning regions were made available to interested parties as early as in the spring of this year. Secondly, data on the contribution of the EU funds to the development of our country are even more complete and plentiful: thanks to successful collaboration with the Ministry of Agriculture and the Rural Support Service, information has been compiled for the first time about payments to projects financed from the EU funds that are managed by these authorities, in breakdown by planning region and local government. Thirdly, for the first time in the nine-year history of publication of the report, it has also been released as an e-book. We have paid particular attention to the assessment of the level of territorial development. The report briefly discusses the Regional Development Indicators Module (RDIM), which the State Regional Development Agency will be able to provide in the autumn of 2012. I am convinced that the data and information available in the report provide an overall impression of regional development in Latvia and that it will serve as a valuable source of reference.

Yours truly, Solvita Zvidriņa, Director State Regional Development Agency

INTRODUCTION This report, Development of Regions in Latvia 2011, is an annual publication by the State Regional Development Agency (SRDA), now in its ninth consecutive edition. The main objective of the report is to compile various basic indicators describing socio-economic development and provide an analysis of these across territories of different scale: nationally, including a comparison of Latvia with other European Union Member States, and by planning region, by city and by municipality (novads) – which can then be used by readers for their own purposes, which may include decision-making, planning of territorial development, assessment of implementation of such plans, various studies and surveys or simply as a reference. Alongside the latest data on territories and the analysis of such data, the report also covers other issues that were relevant in 2011 and pertained to territorial development. The Ministry of Environmental Protection and Regional Development (MEPRD) commenced operations on January 1, 2011, formed after annexing the Ministry of Regional Development and Local Government to the Ministry of Environment. Important changes were effected in the system of development planning in 2011. In 2011, a census and extraordinary parliamentary election were held in Latvia. These events expanded the contents of the report. Besides traditional themes that have been covered over the years, this report contains a new, more detailed analysis of education expenditure by self-governments as part of the selfgovernment budget analysis; breakdown of payments for projects financed from the European Union Funds across territories within the programmes managed by the Ministry of Agriculture and a many-sided overview of the development of public services. Development of Regions in Latvia 2011 comprises eleven chapters, a conclusion and data appendixes. As the year 2011 brought changes in the development planning system – amendments were ratified to the Development Planning System Law and a new Territorial Development Planning Law was adopted – Chapter I provides an overview of the current development planning system, which is an integral element in managing development of the country as a whole and of its territories. Before the analysis of the development indicators of territories of various scale, Chapter II explains the administrative territorial division of Latvia. Chapter III is dedicated to the results of the census that took place in 2011. It reviews the population in the country and its territories and compares the data obtained in the census with those of the Population Register maintained by the Office of Citizenship and Migration Affairs. Chapters IV and V describe the main demographic and socio-economic indicators at the level of the five planning regions and self-governments (cities and municipalities), respectively. Territories have been compared in terms of population and population change, age dependency ratio and age structure, gross domestic product, extent of non-financial investment, number of businesses, employment and unemployment data, size of revenue from personal income tax, etc. The data provided in these chapters are the latest available at the time of drafting of the report, yet one should note that the availability rate of different indicators may differ. Chapter VI describes planning regions and self-governments using universal indicators: the territorial development level index and the territorial development level change index. A reminder of the methodology for calculating the indices is provided in the introduction of the chapter. The conclusion of the chapter also renders a brief overview of the Regional Development Indicators Module (RDIM), which the State Regional Development Agency expects to launch in the autumn of 2012. In Chapter VII, analysis has been performed within various groups of self-governments: within the Riga metropolitan area, the areas of influence of the other national development centres, the Baltic Sea coastal area and the borderland area. Almost all of these territories have been identified as spaces of national interest in the Sustainable Development Strategy of Latvia until 2030. Alongside this, groups of rural municipalities (lauku novads) and town municipalities (pilsētnovads) have been covered, with a group of small municipalities identified on the basis of population. The subsequent three chapters of the report relate to financial resources. In Chapter VIII an analysis of self-government finances has been performed based predominantly on data by the Treasury: it covers the budget revenues of self-governments, results of the financial equalisation of self-governments and self-government budget expenditure, with greater focus given to expenditure on education and social security.

Chapter IX reviews payments made as part of projects co-financed from the EU funds in breakdown by region, from the beginning of 2007 to the end of 2011. One section is based on MEPRDâ&#x20AC;&#x2122;s annual report on the implementation of the horizontal priorities of the National Strategic Reference Framework relating to regional development. The other section covers payments to the projects co-financed from the EU funds in the programmes managed by the Ministry of Agriculture in breakdown by planning regions and self-governments â&#x20AC;&#x201C; for the first time in this publication. Chapter X reviews the regional development instruments managed by MEPRD and SRDA. The chapter includes not only the instruments covered in the preceding reports, i.e., national support measures for regional development, EU support measures for European territorial cooperation, the European Economic Area Financial Mechanism, the Norwegian Financial Mechanism, the Latvian-Swiss Cooperation Programme and measures under the Social Safety Network Strategy, but also, for the first time, the climate change financial instrument, which until the formation of the Ministry of Environmental Protection and Regional Development was managed by the Ministry of Environment. In the last yearâ&#x20AC;&#x2122;s report, the subject of the development and accessibility of electronic services in Latvia was introduced. This report expands on the topic of services, and Chapter XI reflects the various directions in which the responsible state institutions, MEPRD and SRDA, operate throughout the country in connection with the development of services. In the beginning of the chapter, a description of the level of development of the information society has been provided. Individual sections focus on public internet access points, the www.latvia.lv web portal as the central point of access for public electronic services and the rapidly expanding Electronic Procurement System. The Project for the Improvement of the Public Services System, taken over from the State Chancellery by MEPRD in 2011, is related to the improvement of services, and the chapter also provides brief details regarding it. As the government approved the Concept on the introduction of the principle of a one-stop agency in 2011, drawn up by MEPRD, the chapter on the development of services also looks at this area. At the conclusion of the chapter, an overview is provided regarding the treatment of public services and the planned development thereof in the new Regional Policy Guidelines currently under preparation, which MEPRD expects to submit to the government in the autumn of 2012 for discussion and approval. The final part summarises the main conclusions drawn from the information included in the report. The report has been supplemented with maps, diagrams and tables. The annexes to the survey contain detailed data about the Latvian planning regions and self-governments, used in the preparation of the chapters, and may serve as sources of reference for individual territories. The report was produced between March and July 2012. The chapters involving statistical analysis use data by the Central Statistical Bureau, the Office of Citizenship and Migration Affairs and other state institutions available in March to May 2012. Some of the data are provisional, which may later be clarified or adjusted by the responsible bodies. In chapters associated more with qualitative information, this was updated in June and July. The report on the development of regions and territories has been released for a broad audience: such as policy-makers and implementers and observers of such policy at the regional and local level. The report is intended for experienced professionals and beginners in the field alike, for students and pupils as well. The report serves as a reference for other studies related to territorial development and an aid in the drafting of territorial development documents.

I CURRENT SITUATION IN TERRITORIAL DEVELOPMENT PLANNING Planning is an integral element of any targeted development management activity. The development planning system involves a regulatory framework, institutions, the planning documents themselves, as well as the way in which such documents are developed and implemented – that is, the planning process as such. The participants in planning and anyone affected by the process play a significant role in this undertaking. Despite the relatively long-lasting practice of the drafting of planning documents in Latvia, the system is undergoing improvements that envisage greater flexibility in the planning regulations, trust, initiative and continuity of planning. As part of the improvement process, a number of changes were performed in the legal framework of territorial development planning in 2011: • amendments to the Development Planning System Law were approved; • a new Territorial Development Planning Law was adopted; • the Regional Development Law was amended in accordance with the new law. The Development Planning System Law being in effect since 2009 aims to determine the development planning system and to facilitate a sustainable and stable development of the country and improvement of the quality of life of the inhabitants. The law defines development planning as the development of principles and objectives and such actions necessary to achieve these, in order to implement politically specified priorities and to ensure the societal and territorial development. The 2011 amendments have supplemented the main principles of development planning defined in the Development Planning System Law – those of sustainable development, coordination of interests, participation, cooperation, financial capacity, transparency, monitoring and assessment, subsidiarity, coherence in development planning and drawing up of regulatory enactments and balanced development – with two new principles: the principle of relevance and the principle of harmonisation of documents. The Law provides for three types of development planning documents: • policy planning documents; • institutional management documents; • territorial development planning documents. According to the regulatory framework, policy planning documents (guidelines, plans and concepts) set forth the objectives, tasks and action for facilitating the development in one or several fields, sectors or subsectors of policy. Institutional management documents (operational strategies of institutions and annual

operational plans) determine the mutual coherence of the development planning and budget planning in accordance with the competence of the respective institution and ensure uninterrupted implementation of the development planning documents. Long-term territorial development planning documents (sustainable development strategies, spatial plans) define the long-term development priorities and the spatial perspective of the respective territory, while medium-term territorial development planning documents (development programmes) set out the medium-term priorities and the set of measures required to implement them. Development planning documents are also developed in order to adopt a conceptual decision or to formulate a national position*. Development planning documents are developed at the national, regional and local level. Development is planned in the long term (up to 25 years), medium term (up to seven years) and short term (up to three years). The Development Planning System Law prescribes the hierarchy of planning documents of various levels and terms. When development planning documents are drawn up, they are coordinated among themselves, and the long-term conceptual document, The Model for Growth of Latvia: Human Being in the First Place, is observed**. In terms of hierarchy, the highest level long-term planning document is the Sustainable Development Strategy of Latvia until 2030 (Latvia 2030, SDSL). The Sustainable Development Strategy of Latvia defines the country’s long-term development priorities and the perspectives of spatial development. This document, prepared under the leadership of the Ministry of Regional Development and Local Government, was approved by the Saeima on June 10, 2010. In terms of hierarchy, the highest level mediumterm development planning document is the National Development Plan (NDP). The Latvian National Development Plan for 2007–2013 is binding for the present period, approved on July 4, 2006 by the Cabinet by passing Regulation No 564 “Regulations on the Latvian National Development Plan for 2007–2013” – implemented since 2010 in accordance with the Latvian Strategic Development Plan for 2010–2013 (LSDP), approved pursuant to Cabinet Order No 203 of April 4, 2010. The development of the Latvian National Development Plan for 2007–2013 was organised by the Ministry of Regional Development and Local Government. With a view to the next programming period, active efforts are taking place to produce the new National Development Plan for 2014–2020. The development of the NDP for 2014–2020 is managed by the Cross-sectoral Coordination Centre (CSCC), an institution * Development Planning System Law, in effect as of January 1, 2009. ** Approved by the Saeima on October 26, 2005.

subordinated to the Prime Minister. The creation and operation of such an institution was provided for in the 2011 amendments to the Development Planning System Law. In October 2011, the Cabinet approved the CSCC by-laws and in 2012 the activities of CSCC commenced. The new revision of the Law provides that the National Development Plan for 2014–2020 will be ratified by the Saeima. Medium-term development planning documents are hierarchically subordinate to the long-term development planning documents, while short-term development planning documents are hierarchically subordinate to the medium-term ones. Local level development planning documents are hierarchically subordinate to the regional and national level development planning documents, whereas regional level documents are subordinate to the national level development planning documents*. Development planning documents that have been initiated internationally are included in the national hierarchy of planning documents by selecting the most suitable type of development planning document. The supplement to the Development Planning System Law approved in 2011 provides that the content to be included in the development planning documents governing European Union policy instruments and foreign financial assistance will primarily be based on the provisions of the National Development Plan. The mutual correspondence of national level develop ment planning documents and their conformity to the requirements of legal acts is assessed by the Cross-sectoral Coordination Centre. The mutual correspondence of local and regional level development planning documents and their conformity to development planning documents of higher hierarchical rank, and their compliance with the regulatory enactments governing the system of development planning documents are ensured by the planning regions*.

The objective of the new Territorial Development Planning Law, adopted on October 13, 2011,** is to ensure that the development of territories is planned in a way that enhances the quality of the living environment, uses the territory and other resources in a sustainable, effective and ration manner, and develops the economy in a targeted and balanced way. This Law – contrary to the previous situation – brings together in one place requirements for both programming documents (development programmes) that were previously defined in the Regional Development Law and for documents of spatial nature (spatial plans) previously governed by the Spatial Planning Law. The Spatial Planning Law has ceased to be effective with the Territorial Development Planning Law coming into force, and a number of provisions have been excluded from the Regional Development Law.

* Development Planning System Law, in effect as of January 1, 2009. ** Before the completion of this report, the new Law has already been subject to two amendments, approved by the Saeima on December 15, 2011 and May 24, 2012.

The Territorial Development Planning Law provides that the development of a territory is planned by developing the following mutually coordinated territorial development planning documents: •a t the national level: a sustainable development strategy of Latvia, a national development plan and a marine spatial plan; • at the regional level: a sustainable development strategy and a development programme for the planning region; • a t the local level: a sustainable development stra tegy, development programme, spatial plan, local plan and detailed plan of a local self-government. The Law also provides for the possibility of thematic plans to be drawn up at various planning levels. In accordance with the new Law: • a sustainable development strategy is a long-term territorial development planning document that defines the long-term development vision, objec tives, priorities and spatial development perspective of a planning region or a local self-government; • a development programme is a medium-term territorial development planning document that defines the medium-term priorities and the set of measures to implement the long-term strategic tasks put forward in the development strategy of the planning region or local self-government; • the spatial plan of a local self-government is a longterm territorial development planning document of a local self-government that specifies the requirements for the use and development of the territory, including functional zoning, public infrastructure, regulations for the use and development of the territory and other conditions for the use of the territory; it is developed for the administrative territory or a part thereof; • a local plan is a territorial development planning document of a local self-government that the local self-government develops for a part of its administrative territory (e.g., for a town, village or a part of the rural territory) to address a planning challenge or to detail or modify the spatial plan; • a detailed plan is a detailed plan of a part of the territory of a local self-government, developed in order to lay down requirements for the use of specific units of land and construction parameters and to clarify the boundaries and restrictions of land units; •a thematic plan is a territorial development planning document which, in accordance with the planning level, addresses specific issues relating to the development of individual sectors (e.g., transport infrastructure, distribution of healthcare or educational institutions) or a specific theme (e.g., arrangement of utility networks, areas of scenic value and risky areas); • a marine spatial plan is a national level, long-term territorial development planning document that defines the use of marine territories with consideration of the mainland areas functionally associated with the sea.

Until the Territorial Development Planning Law was adopted, there was no requirement for a sustainable development strategy of planning regions and local self-governments as a separate document. A number of self-governments and planning regions incorporated the development strategy into the development programme or spatial plan as a section – or drew it up and adopted it as a separate document at their own initiative. According to information by MEPRD, the following territorial development planning documents are currently valid for the planning regions (not including sectoral planning documents of the planning regions): • for the Kurzeme planning region: Development Strategy of the Kurzeme Planning Region for 2004–2013 (conceptually approved in 2004), Action Plan of the Kurzeme Planning Region for 2010–2013, Spatial Plan of the Kurzeme Planning Region for 2006–2026; • for the Latgale planning region: Development Stra tegy of the Latgale Planning Region for 2010–2030, Development Programme of the Latgale Planning Region for 2010–2017, Spatial Plan of the Latgale Planning Region for 2006–2026; • f or the Riga planning region: Development Stra tegy of the Riga Planning Region for 2000–2020 (updated in 2008), Development Programme of the Riga Planning Region for 2009–2013 (updated in 2012), Spatial Plan of the Riga Planning Region for 2005–2025; • f or the Vidzeme planning region: Development Programme of the Vidzeme Planning Region for 2007–2013, Spatial Plan of the Vidzeme Planning Region for 2007–2027; • f or the Zemgale planning region: Development Programme of the Zemgale Planning Region for 2008–2014, Spatial Plan of the Zemgale Planning Region for 2006–2026. Because only the Latgale and Riga planning regions currently have an approved development strategy, and only the development programme of the Latgale planning region defines the regional development priorities for the period until 2017, while for the other regions these have been set until 2013 or 2014 only, drawing up a sustainable development strategy and producing or updating a development programme is relevant for the majority of the planning regions. Considering the fact that the spatial plans of the planning regions are strategic documents by nature, the new Law no longer provides for spatial plans of planning regions to be deve loped. The existing spatial plans of the planning regions will remain in effect until regional development strategies are approved. The information available to MEPRD indicates that, as of July 2012, 59 self-governments had effective development programmes, while 73 self-governments are currently working on new development programmes. Self-governments and planning regions must ensure that a sustainable development strategy and development programmes are produced (or updated) in accordance with the new legal framework by December 31, 2013.

The spatial planning stage already concluded in 2009, during which spatial plans for all self-governments were developed. Because of the constantly changing nature of the situation and needs, and due to new municipalities forming as a result of several selfgovernments merging, the development of new spatial plans or updating of the existing plans is taking place. Those self-governments that commenced the drafting or updating of the spatial plan before the new Law was adopted may complete the process in accordance with the previous law, with a corresponding decision of the council. With the new Law coming into effect, the range of territorial development planning documents has been supplemented with new ones: thematic plans at the local and regional level and local plans, which are developed as necessary. With the growing number of planning documents to be produced, there is more need for current and multi-faceted information and knowledge as well as for skills to apply such information. The Territorial Development Planning Law provides that the Cabinet has to: •e nsure the development of the National Develop ment Plan and specify the procedures for the implementation and monitoring thereof; • a pprove national level thematic plans; •d etermine the content of regional level territorial development planning documents and the procedures for the development, implementation and monitoring thereof; •d etermine the contents and procedures for the development and public discussion of local level territorial development planning documents and the terms to be included in the contracts for the development and financing of local plans or detailed plans; •p rescribe the requirements for the entities working out territorial development planning documents; • l ay down the general requirements for local level territorial development planning and the use and development of territories; •d etermine the classification of the forms of territorial use; •d etermine the procedures for the creation and operation of the territorial development planning information system and the retrieval, processing and distribution of information required for the system, and the content of the data of the territorial development planning information system and the procedures by which data exchange is to take place with other state information systems; • designate the ministry responsible for territorial development planning; • determine the procedures for the development, implementation and monitoring of the marine spatial plan and approves the marine planning; • determines, establishes and approves objects of national interest and the conditions for their use, unless provided otherwise in other laws.

The regulation on the NDP was adopted in 2011 and, additionally, in accordance with the Development Planning System Law and the Regional Development Law: Cabinet Regulation No 816 of October 19, 2011 “Procedures for the Development, Implementation, Monitoring and Public Discussion of the National Development Plan for 2014–2020”. In turn, the preparation and approval of the remaining draft Cabinet Regulations is on the government’s agenda. Territorial development planning is the responsibility of the Ministry of Environmental Protection and Regional Development, whose area of responsibility also relates to the development of the marine spatial plan and national thematic plans, the methodological guidance of planning, ensuring the mutual correspondence of the planning documents and maintaining the territorial development planning information system. In 2011, as part of the methodological guidance for planning regions and self-governments, MEPRD collaborated with sectoral ministries on organising a series of seminars on the coordination of the priorities of sectors and terri tories, which resulted in improved methodological recommendations for the drafting of self-government development programmes, which were supplemented with sectoral policy guidelines to be taken into account when developing and implementing self-government development programmes. Since coming into effect of the Territorial Development Planning Law, the scope of responsibility of the planning regions has been altered: regions no longer assess the compliance of local spatial plans with the requirements of the regulatory enactments but are rather tasked

with coordinating and overseeing the development of the sustainable development strategies, development programmes, spatial plans and local plans of the local selfgovernments. This means that the planning regions will be more actively involved in the process of developing the planning documents of local self-governments. The Law provides that the planning regions issue an opinion regarding the correspondence of the draft sustainable development strategies and development programmes of self-governments to the territorial development planning documents of the planning region and the requirements of the regulatory enactments. The Territorial Development Planning Law has also resolved the issue of appealing spatial plans and local plans by specifying both a period in which and the procedures by which binding regulations approving a spatial plan or local plan can be disputed. MEPRD has been designated as the pre-trial authority in this process. An integral and possibly the main element of the development planning process is participation by the general public in deciding the future of each territory. In order to facilitate public participation in the develop ment planning process of self-governments, MEPRD released a methodological material entitled Coordination of the Interests of Self-Governments, Residents and Businesses: Public Discussion as an Instrument in 2011. During the regional forum Tavā varā [In your power] organised by MEPRD in November and December 2011, information was provided on modern forms of public participation (Future City game, social networks, Idea Academy, etc.) so as to promote the interest of young people in implementing development planning documents.

II ADMINISTRATIVE TERRITORIAL DIVISION OF LATVIA At the beginning of 2012, the administrative territorial division of Latvia consisted of 119 administrative territories in which self-governments implement administration within the scope of their authority. The administrative territorial division of the country is determined by the Saeima, which lists territories in the Law on Administrative Territories and Populated Areas* (see Figure 3). From the mid-1990s until the completion of the local self-government reform in 2009, the number of admini strative territories in Latvia shrank slightly every year, as a number of town and parish (pagasts) self-governments merged to form municipalities (novads). The year 2010 was the first full year after the administrative territorial reform when, instead of more than five hundred two-tiered self-governments, local administration was realised by a single tier of self-governments: initially 118, and 119 since 2011**. Within the context of the State Administration Structure Law***, a self-government is a derived public person. There are two types of self-governments in Latvia at this time: cities and municipalities. Each selfgovernment oversees a very broad range of issues that affect the population and the businesses and organisations active within the territories in their everyday lives and operations. The self-government arranges utility services, provides improvements and sanitation within its territory, caters for the education of its residents, provides for cultural life and facilitates the preservation of traditional cultural treasures and the development of popular creativity, and provides the population with social assistance and care, access to healthcare, promotes a healthy lifestyle and sport among the population, assists residents in addressing housing issues, facilitates economic activity within the administrative territory, deals with unemployment and performs a series of other functions. The Law on Administrative Territories and Populated Areas provides that a city is distinguished by well de veloped commercial activity, transport and utilities, social infrastructure, a significant network of cultural institutions and no fewer than 25 000 permanent residents; however, the Saeima may award the status of a city to a selfgovernment with a smaller population, provided the other criteria are met. There are nine national cities in Latvia: Riga, Daugavpils, Jekabpils, Jelgava, Jurmala, Liepaja, Rezekne, Valmiera and Ventspils. * Took effect on December 31, 2008. ** There have been 119 administrative territories since January 3, 2011, when pursuant to the amended Law on Administrative Territories and Populated Areas Roja municipality was split into two self-government territories Roja – municipality and Mersrags municipality. * ** Took effect on January 1, 2003.

There are 110 municipality self-governments in Latvia, which differ greatly in terms of area, population, settle ment structure, economic characteristics and level of development. The Law on Administrative Territories and Populated Areas provides that municipality self-governments ensure the performance of the functions prescribed by law, that the territory of a municipality shall be geographically unified, and that municipalities shall have rural territories and populated settlements. A municipality shall have no fewer than 4 000 permanent residents, a village of no fewer than 2 000 permanent residents or a town. The distance between any populated settlement to the administrative centre of the municipality shall not exceed 50 kilometres, and the road infrastructure shall be suitable for reaching it. In addition, the territory of a municipality shall be formed in an optimal manner, taking into account the interests of adjacent self-governments and historical ties. In reality, these requirements are not met by all municipalities in existence: many municipalities are smaller than prescribed in terms of population. The Law on Administrative Territories and Populated Areas also envisages regions (apriņķis) as state administrative territories, but no decision has been taken yet regarding regions as regional-level self-governments. The Saeima must decide regarding their formation.

Five planning regions (Riga, Vidzeme, Kurzeme, Zemgale and Latgale) serve as coordination and liaison bodies between self-governments and state institutions in Latvia (see Figure 1). Planning regions are derived public persons. The decision-making body and provider for the development policy of a planning region is the development council, elected by an assembly of council chairs of all the selfgovernments of the region from among the deputies of all local self-governments forming the region. The e xecutive body of a planning region is the planning region administration, which is an institution financed from the state budget. In order to ensure that coordination and cooperation takes place between national level institutions and the planning regions in implementing regional development support measures, a coordination commission has been formed in each planning region, composed of representatives of the planning region development council and members appointed by the ministries. Initially, in the second half of the 1990s, planning regions emerged as an initiative by local self-governments for the purpose of coordinating planning tasks. The planning regions obtained a new, state-defined status in 2002, when the Regional Development Law was passed, and in 2003, when the Cabinet Regulation on the territories of the planning regions was adopted. Following the conclusion of the administrative territorial reform,

Figure 1. Territories of the planning regions. the territories of the planning regions are defined by a new Cabinet Regulation, adopted in 2009. As governmental institutions, the planning regions perform tasks delegated by the state and, at the same time, as institutions managed by self-governments, they perform the function of coordinating the activities of self-governments: mainly in the field of development planning and elaboration of joint projects. Pursuant to the Regional Development Law, administration tasks may be delegated to the planning regions. The number and volume of functions performed by the planning regions has gradually increased since 2006. The following may be regarded as the main functions: • development planning for the territory of the region, which entails the drafting of planning documents – regional development programmes and spatial plans – and implementation and supervision thereof; •m onitoring of the legality of the territorial development planning documents of local self-governments; • evaluation of the mutual correspondence of develop ment planning documents at the regional and local level, and evaluation of their compliance with the requirements of the regulatory enactments; • c oordination of public transportation services: management and organisation of the regional and local bus networks. The Riga planning region consists of 30 self-governments, followed by Vidzeme (26), Zemgale (22), Latgale (21) and Kurzeme (20) (see Table 1).

For the purposes of recording information, six statistical regions are used in Latvia: Riga, Pieriga, Vidzeme, Kurzeme, Zemgale and Latgale. Within the system of the statistical

regions, the Riga planning region has been divided into two statistical regions: Riga (includes the City of Riga) and Pieriga (includes the remaining territory of the Riga planning region). The territories of the remaining planning and statistical regions fully overlap (see Figure 2). The statistical regions are the smallest territorial units for which statistical information is compiled and analysed in Latvia in accordance with the European Classification of Statistical Territorial Units (NUTS, Level 3)*. The gathering of information for even smaller units (administrative territories) is a matter regulated at the national level.

Figure 2. Territories of the statistical regions. * Pursuant to Cabinet Order No 271 of April 28, 2004 “On the Statistical Regions of the Republic of Latvia and the Administrative Units Included Therein” and to fulfil the requirement of Regulation No 1059/2003 of the European Parliament and the Council of May 26, 2003 on the establishment of a common classification of territorial units for statistics (NUTS) regarding the maximum population threshold at Level 3 of NUTS, 800 000.

FigureÂ 3. The administrative territorial division of Latvia as ofÂ January 1, 2012.

TableÂ 1. Administrative territories forming the planning regions at the beginning of 2012.

FigureÂ 4. Territories of the electoral districts.

Even though the year 2011 was not a regular election year for either the Saeima or self-governments, following a national referendum initiated by the President that took place on July 23, the 10th Saeima was dissolved, and an extraordinary election took place on September 17 for the 11th Saeima. For the purpose of parliamentary elections, Latvia is divided into five electoral districts: Riga, Vidzeme, Latgale, Kurzeme and Zemgale* (see Figure 4). Although the names of the electoral districts and planning regions match, their territories differ. The Riga electoral district only includes the City of Riga. Jurmala and the municipalities of the former Riga, Ogre and Limbazi districts have been attached to Vidzeme. The municipalities of the former Tukums district, which

also belong to the Riga planning region, are located in the Zemgale electoral district, whereas the residents of these municipalities generally identify themselves with Kurzeme. Only the territories of the Kurzeme and Latgale planning regions and electoral districts overlap in their entirety (see Figure 5). At this time, when the matter of tying residents to their declared place of residence as part of the Saeima election procedure (such attachment would apply to electoral slates to be voted on, not the polling station at which a vote can be cast), another matter to address would have to be the harmonisation of the electoral districts and the planning regions as administrative territories.

Figure 5. Affiliation of territories with planning regions and electoral districts.

* Section 7 of the Law on the Election of the Saeima (adopted on May 25, 1995).

III POPULATION IN LATVIA In 2011 a population census was carried out, co mmissioned and monitored by the Central Statistical B ureau (CSB). The previous census in our country took place in 2000, which was the first one since the restoration of Latvia national independence. A census is virtually the only method for obtaining detailed and comprehensive data on residents, their families and households at the smallest possible level of territorial division: for each city and municipality. During the census of 2011, data on the real number of population in Latvia were obtained in three distinct ways: residents themselves could complete census questionnaires online, census pollsters visited people at their places of residence, whereas conclusions were drawn regarding those residents not encountered as part of the census by analysing the data included in the State information systems and administrative registers. According to the final results of the census, the number of population in Latvia as of March 1, 2011 was 2 070 371. In comparison with the previous population figures on January 1, 2011 based on the data of the Population Register, maintained by the Office of Citizenship and Migration Affairs (OCMA), i.e., 2 236 910, the number of Latvian population was lower by 166,500. These differences are due to the fact that a large portion of population, as they move to another country and start to work there, fails to notify the competent authorities in Latvia in charge of recording changes in the residence data of such Latvian nationals outside Latvia. One should also consider that, during the census, people provided their actual place of residence rather than the declared or recorded place of residence appearing in the Population Register. According to the provisional census data, the po pulation of Latvia as of March 1, 2011 was 2 067 887 (difference from the OCMA data as of January 1, 2011: 169 000). Because the final census results by self-government were not available at the time of preparation of this publication, the subsequent data provided in this section are based on provisional census data. A comparison between the provisional data of the census in 2011 and the results of the previous census in 2000 indicates that the population of Latvia has decreased by 309 500, or 13 %, during the past eleven years. The reduction has been a result of both the natural movement of the population (with number of deceased exceeding newborn ones) and international migration. The death rate in the entire period since the previous census has exceeded the birth rate, resulting in a population reduction of 119 000, whereas the population reduction as a result of emigration has been 190 000. Data on the population and changes in it according to the results of both censuses in the territories of the planning regions and self-governments have been provided in Annex 9. Figure 6 depicts the population change between the two censuses within the territories

of the planning regions, while Figure 7 reflects such change within the territories of self-governments (municipalities and cities).

Figure 6. Population changes within the territories of the planning regions in the period between the censuses of March 31, 2000 and March 1, 2011*. Across the planning regions, the greatest population losses in 2011, compared with 2000, were suffered by the Latgale region (by 21.0 %); the loss was less pronounced in the Vidzeme region (17.4 %) and the Kurzeme region (16.0 %), smaller yet in the Zemgale region (13.2 %), and smallest of all in the Riga region (8.4 %). Among the cities, the population in the period in question declined most rapidly in the two largest cities of Latgale: by 19.1 % in Daugavpils and by 17.7 % in Rezekne. The smallest drop was experienced by Jelgava – 6.6 %. Besides Jelgava, population losses below the national average of 13.0 % since 2000 were also seen by Jurmala (9.0 %), Valmiera (9.5 %), Jekabpils (11.7 %) and Ventspils (12.0 %). The population of Riga shrank by 14.0 %. In the period since the previous census, the population has increased in 17 current municipality territories. All of them are located in the vicinity of Riga. The remaining 93 municipalities have seen a population decrease, with the steepest drop, by 30 %, experienced by Baltinava and Vilaka municipalities, followed by Alsunga municipality (29 %), Cibla and Aglona municipalities (28 %) and Karsava and Rundale municipalities (27 %). As mentioned above, the census data and OCMA data regarding the population – used in various calculations – differ. The differences are shown in the table in Annex 9, which in addition to the census data also provides the population figures for the planning regions and self-governments in accordance with the OCMA data as of January 1, 2011 and January 1, 2012. An absolute and relative comparison of the OCMA data as of January 1, 2011 and the census data as of March 1, 2011 has been provided. The differences in the territories of the * Calculations based on census data (CSB).

Figure 7. Population changes within the territories of self-governments in the period between the censuses of March 31, 2000 and March 1, 2011*.

* Calculations based on census data (CSB).

lanning regions and self-governments are also reflected p in Figures 8 and 9, respectively.

Figure 8. Population disparity in the territories of the planning regions according to the provisional census data (March 1, 2011) and OCMA data (January 1, 2011)*.

According to the provisional data of the March 1, 2011 census, the smallest municipalities in Latvia in terms of population are Baltinava (1 178), Alsunga (1 470) and Mersrags (1 638). In turn, the most populous municipalities are Ogre (36 173), Talsi (31 192) and Tukums (30 602). Riga is the largest city (population 657 424), whereas the population of the smallest city, Jekabpils (with 24 608), does not meet one of the criteria prescribed by the Law on Administrative Territories and Populated Areas: a population of 25 000 permanent residents. The minimum statutory criterion for municipalities has been set at 4 000 residents, but one third (36) of the municipalities do not meet the criterion according to the census data. The highest number of such municipalities is in the Vidzeme region (13), followed by the Kurzeme region (eight municipalities), Zemgale and Latgale (six in each) and the Riga region (three municipalities: Jaunpils, Malpils and Seja). Table 2 provides a distribution of the number of self-governments according to population groups, both according to the provisional data of the 2011 census and the OCMA data as of January 1, 2012.

On the basis of the final census data, various economic and social indicators reflecting the incidence of phenomena per capita (or per 1 000 inhabitants, etc.) will be gradually recalculated. Given the reduction in the population, many indicators, such as gross domestic product and employment figures, Table 2. Distribution of the number of self-governments according to population will be higher and show a better groups according to the provisional census data and OCMA data*. performance. Opposite trends will According to the provisional census data (as also come to the fore, e.g., when calculating alcohol of March 1, 2011), the population of Latvia was 7.6 % consumption or crime rates per 1000 inhabitants. smaller than according to the OCMA data (as of JanuIn 2012 and 2013, various census summary tables in ary 1, 2011). The census produced a smaller population breakdown by self-government will be prepared and made figure in all planning regions. Compared with the OCMA available to data users. For example, in September 2012, data, the greatest differences appear in the Latgale redata on the gender/age composition, nationality, ethnicgion (9.3 %) and the Kurzeme region (9.1 %), while the ity, economic activity status, education and type of ecogap is relatively smaller in the Riga region (6.1 %). nomic activity of the populations of self-governments will According to the provisional census data, the populabe published in the databases section of the CSB website. tion of the cities is smaller by an average of 7.2 %, and It is expected that, in June 2013, data will be published on by 7.9 % in the municipalities compared with the OCMA the marital status, language spoken at home, employment data. When contemplating the differences in individual status in the main occupation, professional/crafts, houseself-governments, it emerges that the reverse is true for hold status, type and size, families and housing conditions eight municipalities: the provisional census data produce of the populations of self-governments. Some of the census a higher population figure than those of the OCMA. indicators of the greatest interest to the self-governments These are all municipalities in Pieriga (Garkalne, Marupe, will also be prepared and published in breakdown by terCarnikava, Babite, Stopini, Ikskile, Kekava and Adazi), ritorial units of municipalities: by parish (pagasts) and town. with the highest surplus showing for Garkalne municiGradual recalculation of demographical statistics and indicapality (5.5 %). In the remaining 111 municipalities, the tors in other branches of statistics will also continue, yet the population figure according to the provisional census process is fairly time-consuming and cannot be completed data is smaller than according to the OCMA data, and in a short period. Schedules for the publication of data (rethe differences range from 1.7 % (Burtnieki municipality) calculations) for other statistical headings will be posted in to as much as 13.5 % (Auce municipality). the appropriate sections of the CSB website. As the results of the census are still being finalised, the data analysis in this report uses population figures * Calculations based on provisional census from the Population Register maintained by OCMA. data (CSB) and OCMA data.

FigureÂ 9. Population disparity in the territories of the self-governments according to the provisional census data (March 1,Â 2011) and OCMA data (January 1, 2011)*.

* Calculations based on provisional census data (CSB) and OCMA data.

IV DESCRIPTION OF THE DEVELOPMENT OF PLANNING REGIONS The chapter describing the development of the five planning regions of Latvia – Riga, Vidzeme, Kurzeme, Zemgale and Latgale – has been structured in accordance with the main demographic and socio-economic indicators. Table 3 reflects the range of differences in the main indicators across planning regions.

The division of the Latvian territory into five planning regions is relatively uniform: the largest region (Vidzeme) occupies 23.6 % of the country’s area, while the smallest (Riga) takes up 16.2 % (see Figure 10 and Table 4).

According to the data of the OCMA Population Register, the population of Latvia at the beginning of 2012 was 2.22 million (according to the census data on March 1, 2011: 2.07 million). In terms of population, Latvia is the sixth smallest EU Member State, and its population constitutes 0.44 % of the total EU population. Nearly half of the Latvian population (1.1 million, or 49.2 %) resides in the Riga planning region. At the beginning of 2012, compared with the beginning of 2011, the share of the Riga region in the total population increased. Of the entire population of the country, 31.5 % resides in the city of Riga. The population of the remaining four regions ranges from 329 700 (Latgale) to 228 300 (Vidzeme; see Table 5 and Figure 11).

Table 3. Territorial differences of the planning regions*.

At the beginning of 2012, the average population density in Latvia was 34.3 per sq. km. With the country’s population declining, the population density figure is dropping as well. Compared with the average density in all Member States of the European Union (116 per sq. km), it is considerably lower in Latvia (3.4 times): Latvia has the fourth lowest population density in the EU; only Estonia, Sweden and Finland have a lower density. The highest population density in Latvia is in the Riga region (at the beginning of 2012: 104.6 per sq. km), which exceeds the national

It should be noted that, in 2011, the Ministry of Environmental Protection and Regional Development published the economic profiles of the planning regions that provided a description, analysis and developmental trends of the situation in each region.

rea, Population and Population A Change, Population Density The area of Latvia is 64 600 sq. km, and in terms of area, Latvia is the tenth smallest country among the 27 European Union Member States, occupying 1.5 % of the total area of the European Union.

Figure 10. Proportion of territories of the planning regions in the total area of the country*.

* See sources of data below in the respective sections.

* Calculations based on CSB data.

Table 4. Territories of the planning regions and their proportion in the total area of the country*.

Table 6. Population density in the planning regions at the beginning of 2012, per square kilometre*.

Table 5. Population of the planning regions and its share in the total population of the country at the beginning of 2012**.

Figure 12. Population density in the planning regions at the beginning of 2012*.

Figure 11. Proportion of the population of the planning regions in the total population of the country at the beginning of 2012***.

The population of Latvia is constantly declining. ccording to OCMA data, it shrank by 19 900, or 0.9 %, A in the period between the beginning of 2011 and the beginning of 2012. Within the last five years, the po pulation of Latvia decreased by 67 800, or 3.0 % (see Table 7). EU Member States are experiencing an overall increase in population. Data by Eurostat indicate that in the five-year period from the beginning of 2006 to the beginning of 2011 the EU population swelled from 495.29 million to 502.48 million. The population in 20 countries increased during this period, while in seven countries – Latvia, Lithuania, Estonia, Bulgaria, Germany, Hungary and Romania – it declined. Thus the share of the Latvian population in the total population of the EU states is declining.

a verage nearly three times. The lowest population density is in the Vidzeme region (15.0 per sq. km); in the remaining three regions, it is fairly similar (see Table 6 and Figure 12). When contemplating the territories of the regions with the exclusion of cities, the population density interrelations are similar: the population density in the Riga planning region is approximately double that of the national average. If population density is calculated using census data, the average national figure will be lower, but since the discrepancies between the population figures of OCMA and the census differ – with the smallest evident in the Riga region (6.1 %) and the greatest in the Kurzeme and Latgale regions (9.1 % and 9.3 %, respectively) – the differences across the regions in terms Table 7. Population and change in population in the planning regions from of population density will increase. 2007 to the beginning of 2012, in thousands**. * CSB data, calculations based on these data. ** OCMA data, calculations based on these data. *** Calculations based on OCMA data.

* Calculations based on OCMA and CSB data. ** OCMA data.

A decrease of population is being experienced by all planning regions. The most rapid decline has taken place in the Latgale region, while relatively the least dramatic drop was seen in the Riga region. In the period of the last five years – from the beginning of 2007 to the beginning of 2012 – the population of the Latgale planning region declined by 6.7 %, in the Vidzeme region – by 5.0 %, in the Kurzeme region – by 4.2 %, in the Zemgale region – by 4.0 % and in the Riga region – by 0.7 %. It is evident from the data that, since 2005, the population decline in four regions has been increasingly sharp (Latgale, Vidzeme, Kurzeme and Zemgale), whereas in the Riga region an initially positive population balance has moved into a negative area in the recent years and the population is now declining (see Table 8, Figures 13 and 14). The population decrease is a result of both negative natural movement and negative mechanical movement of the population. According to provisional data by CSB, 18 586 people were born and 28 519 people died in Latvia in 2011, which means the natural increase was negative: minus 9 933 (see Table 9 and Figure 15).

Figure 14. Changes in the population in the planning regions from the beginning of 2007 to the beginning of 2012*.

Table 9. Natural movement of the population in the planning regions in 2007–2011, number of people**.

Table 8. Changes in the population in the planning regions during sliding five-year periods, %*.

Figure 15. Dynamics of the natural movement of the population in the planning regions in 2007–2011**.

Figure 13. Population dynamics in the planning regions from 2007 to the beginning of 2012*. * Calculations based on OCMA data. ** CSB data. For the year 2011: provisional CSB data. *** Par iedzīvotāju migrāciju Latvijā. Posted on www.csb.gov.lv on July 27, 2012.

In the period between 2004 and 2008, annual increases in the birth rate could be observed in Latvia; however, since 2009, the number of births has been declining – failing to reach 10 000 in 2011. The only region where the number of births in 2011 was greater than in 2010 was the Latgale region (see Table 10). A negative mechanical movement of the population is determined by the surplus of residents moving from Latvia to live in other countries over the number of people entering Latvia from other countries. In accordance with an assessment produced by CSB, the population of Latvia decreased by 23 127 in 2011 as a result of long-term migration: 7 253 persons arrived in Latvia to stay permanently or for a period of one year or more, while 30 380 people left for another country***.

Table 10. Birth and death rates and the balance of the natural movement of the population in the planning regions in 2009–2011, number of people*.

According to CSB data, at the beginning of 2010, the average age of Latvian inhabitants was 40.9 years, whereas at the beginning of 2011 it had reached 41.1 years. The average age of the population in the city of Riga at the beginning of 2011 was 42.3 years; in the rest of the Riga region: 39.7 years; in the Latgale region: 41.9 years;

Age Dependency Ratio and Age Structure The age dependency indicator refers to the population below and above working age per 1 000 inhabitants at working age. Since 2009, the age dependency ratio in Latvia has been rising, and at the beginning of 2012 it had reached 529.9. The differences in the age dependency ratio across the planning regions are relatively negligible. The age dependency ratio in the Zemgale, Latgale and Vidzeme regions is below the national average, and higher in the Kurzeme and Riga regions (see Table 11, Figures 16 and 17). Figure 16. Dynamics of the age dependency ratio in the planning regions from 2009 to the beginning of 2012**.

Table 11. Age dependency ratio in the planning regions from 2009 to the beginning of 2012**. The population ratio between the three main age groups enables conclusions to be drawn about the demographic and economic potential of a territory. Table 12 depicts the age structure of the population in the past four years in the country as a whole and individually by planning region. Since 2009, the share of the working age population Figure 17. Age dependency ratio in the planning regions has been declining in Latvia while the proportion of those at the beginning of 2012**. over the working age has been rising. The share of the population below the working age remained constant from 2009 to 2011, whereas at the beginning of 2012 it increased slightly (but dropped in terms of absolute quantities). The change in the ratio between the three population age groups Table 12. Distribution of the population according to age group in the planning indicates that the Latviregions from 2009 to the beginning of 2012, share in the total population, %**. an population is ageing. * CSB data. For the year 2011: provisional CSB data. ** Calculations based on OCMA data.

in the Vidzeme region: 40.9 years; in the Kurzeme region: Following the rapid downturn of the economy in 2008 40.5 years; and in the Zemgale region: 40.2 years. and 2009, changes took place in the way development Life expectancy at birth increases with every year. In progressed. The recession gradually slowed down in the 2009 it was 68.3 years for males and 78.1 years for females first half of the year, and the economy exhibited the first in Latvia, averaging 73.3 years. The average life expecsigns of growth; however, the general volume of the GDP tancy at birth in the European Union was 79.7 years; the in 2010 was smaller than in the preceding year. In 2011, Latvian figure was the second lowest, after Lithuania. In growth became evident: the GDP figure increased com2010, the life expectancy at birth in Latvia was 73.7 years: pared with the year before (see Table 13). According to 68.8 years for men and 78.4 years for women. a quick assessment by CSB, the seasonally unadjusted The number and share of population below the workvolume of the GDP in the first quarter of 2012 grew by ing age, or the number of children and school-age youth, 6.8 % compared to the same quarter of 2011. indicate the future prospects of a territory. At the beginning In 2011, the volume of the actual GDP generated in of 2012, this population group constituted 13.8 % of the toLatvia was LVL 14.16 billion, or LVL 7.14 billion in comtal population in Latvia. The greatest proportion of population below the working age was in the Kurzeme region: 14.5 %, with Zemgale also above the Latvian average (14.2 %). It was close to the average figure in the Riga region (13.9 %), in the Vidzeme region it fell slightly short of the national average (13.3 %), while the Latgale region had the lowest ratio of children and school-age youth Table 13. Gross domestic product of Latvia in 2007–2011*. (12.6 %; see Figure 18).

Figure 18. Proportion of population below the working age in the planning regions at the beginning of 2012*.

Gross Domestic Product

parable prices of 2000. The actual increase over 2010 was 11.2 %, while the comparable increase was 5.5 %. In 2010, Latvia was among the four European Union Member States (Greece, Romania, Ireland, Latvia) that saw a decline in the GDP, while in 2011 Latvia produced the third highest GDP growth figure (after Estonia and Lithuania; see Figure 19). In 2011, the actual GDP per capita in Latvia was LVL 6 862 and LVL 3 457 in comparable prices. When contemplating the movement of the per capita figure, it should be noted that its increase is due to not only a positive tendency – an increase in the volume of the GDP – but also a negative development: a decreasing population in Latvia. Once GDP recalculations are completed in accordance with the population figures according to the census data, the GDP per capita figures will increase further. In comparison with the indicators for other EU Member States, the Latvian per capita GDP by purchasing power parity in 2010 constituted 51 % of the overall EU figure (this was 56 % in 2007 and 2008 and also 51 % in 2009). This is the third lowest figure after Bulgaria (44 %) and Romania (46 %) among all 27 EU Member

The gross domestic product (GDP) can be considered one of the main indicators of the economic development of a territory. The GDP of a country is the sum total of the finished products and services produced within its territory in one year, also including the output produced of the country’s residents abroad. The volume of the GDP is calculated in both actual and comparable prices. The calculation of the GDP in comparable prices does not take into account the effects of price fluctuations, and this enables a more accurate evaluation of GDP change for the purpose of comparing development and a more complete description of economic change. GDP data are calculated in the comTable 14. Gross domestic product in the planning regions parable prices of the year 2000, and these are in 2005–2009, in actual prices, LVL thousand*. approximately half the current actual prices. * Calculations based on OCMA data.

* CSB data.

Figure 19. Change in the gross domestic product in the European Union Member States in 2010 and 2011, compared to the preceding year, in comparable prices of 2000*.

Figure 20. Gross domestic product per capita based on purchasing power parity in the European Union Member States in 2009 and 2010, % vs. the EU average*. States (Luxembourg had the highest GDP per capita in 2010: 271 % vs. the EU average; see Figure 20). The GDP calculation per employee in 2011 in actual prices in Latvia was LVL 14 692 and LVL 7 403 in the comparable prices of 2000. The latest data on the GDP volume by planning region are available for 2009 and in actual prices only.

These GDP figures do not yet reflect the growth but rather point to the 2009 economic downturn. In 2009, the GDP volume declined in all five planning regions compared with the previous year (see Table 14). The breakdown of GDP across the planning regions clearly highlights the obvious domination of the Riga region in the Latvian economy: the 2009 GDP of the

* Eurostat data.

Riga planning region accounted for two thirds, or 66 %, of the total GDP. The share of the other regions in the gross domestic product ranged between 6.9 % (Vidzeme region) to 10.6 % (Kurzeme region; see Figure 21).

Figure 21. Distribution of the gross domestic product across the planning regions in 2009, in actual prices*. The 2009 economic downturn is also demonstrated by the per capita GDP figures in the planning regions: a decline was evident in all five regions (see Table 15, Figures 22 and 23).

Table 15. Per capita gross domestic product in the planning regions in 2005–2009, in actual prices, LVL*.

Figure 22. Dynamics of the per capita gross domestic product in the planning regions in 2005–2009, in actual prices*. * CSB data.

Figure 23. Per capita gross domestic product in the planning regions in 2009, in actual prices*. The ranking of the planning regions in terms of per capita GDP has not changed over the years. The Riga region showed the highest value in 2009, LVL 7 867, which is 135.7 % of the national average and 69.2 % of the EU average. The per capita GDP figures of the other Latvian regions are below the national average. In 2009, the Kurzeme region had the second highest figure, LVL 4 615 (79.6 % of the national average and 40.6 % of the EU average), followed by the Vidzeme region with LVL 3 833 (66.1 % of the national average and 33.7 % of the EU average). In Zemgale GDP per capita was slightly smaller than in Vidzeme: LVL 3 686 in 2009 (or 63.6 % of the national average and 32.4 % of the EU average). Latgale had the lowest per capita GDP figure in 2009, LVL 3 197 (55.1 % of the national average and 28.1 % of the EU average; see Table 16, Figures 24 and 25). Regional disparities in per capita GDP decreased in 2009 compared with the preceding year. In 2008, the variation in Latvia (dispersion) was 45.2 %, whereas in 2009 it was 43.3 %. Although the Latvian figure is not the highest one among the EU Member States, it is nonetheless one of the highest. The regional GDP variation rate in Estonia in 2009 was 43.8 %, and it increased year over year (in 2008: 41.3 %); in Lithuania, the figure in 2009 was 28.1 %, and this too increased compared to the year before (in 2008: 26.8 %). Denmark boasted one of the lowest values among the EU members in 2009: 18.2 %**.

Table 16. Per capita gross domestic product in the planning regions in 2005–2009, in actual prices, % compared to the national average***. * CSB data. ** At the time of production of this report, data were not available on all EU Member States the Eurostat database. *** Calculations based on CSB data.

Figure 24. Dynamics of the per capita gross domestic product in the planning regions in 2005–2009, in actual prices, % of the national average*.

CSB data indicate that the GDP increase in the first quarter of 2012 was affected by increased volumes of industry (by 11 %) and trading (by 10 %), and 20 % more was collected in product taxes. Growth also continued in the construction sector. The latest data on the distribution of the gross value added by planning region only pertain to the year 2009, and Table 18 provides the breakdown of gross value added in terms of type of activity in Latvia and in the planning regions. In 2009, wholesale and retail trade (G) commanded the greatest share nationally (15.3 %), followed by transportation and storage (H) with 11.1 % and manufacturing (C) with 10.9 %. Trade (G) was the sector with the largest share of gross value added in the Riga region, whereas manufacturing (C) had a greater share in the Vidzeme, Kurzeme and Zemgale regions. In the Latgale region, the public administration, defence and social security sector (O) formed the largest share in value added in 2009.

Figure 25. Per capita gross domestic product in the planning regions in 2009, % of the EU average based on purchasing power parity**.

The breakdown of gross value added by sector reflects the role of each industry in GDP formation. Table 17 reflects the breakdown of gross value added by sector in Latvia over the past five years. In 2011, retail trade (G) had the greatest share in value added (16.9 %), followed by manufacturing (C) with 14.1 % and transportation and storage (H) with 13.0 %. The same ranking of the principal sectors applied in 2010, whereas in 2009 transportation and storage was the second largest sector in Latvia, with processing occupying the third spot. Since 2009, the year-overyear volume and share in the gross value added of the three aforementioned sectors increased.

* Calculations based on CSB data. ** Calculations based on CSB and Eurostat data.

Table 17. Breakdown of gross value added by industry in 2007–2011, in actual prices, %*.

* CSB data, NACE 2 classification.

Table 18. Structure of gross value added according to type of activity in the planning regions in 2009, in actual prices, %**. Table 19 shows the relative share of each region in the value added generated in each sector in 2009. The Riga region emerged as dominant in nearly all the sectors in terms of creating value added. A relatively more even distribution among regions appeared in aggregated agriculture, forestry and fishing sectors (A), while in mining and quarrying (B), which accounted for a mere 0.5 % in the gross value added, Zemgale was the region with the largest share.

sharper drop in 2009 and in 2010, too, the value of nonfinancial investment was lower than in the preceding year. In 2010, the greatest amount of non-financial investment occurred in the industry and energy related sectors (B, C, D, E): 23.5 %, in the transportation and storage industry (H): 11.5 % and in construction (F): 8 %. In 2010, 57.7 % of the non-financial investment in Latvia took place in the Riga region: LVL 1 252.2 million. The lowest non-financial investment in terms of value

Table 19. Share of types of activity in the gross value added in breakdown by planning region in 2009, in actual prices, %**.

Non-financial Investment Alongside the indicator of gross value added, the value of non-financial investment and its movement are used as indicators to describe economic growth***. The latest data available are for 2010, when the volume of non-financial investment in Latvia was LVL 2 169.3 million. Until 2007, the volume of non-financial investment in the country increased every year; a drop was evident in 2008, followed by an even * Including output generated by Latvian residents outside Latvia. ** CSB data, NACE 2 classification. *** Non-financial investment comprises long-term intangible investment, residential buildings, other buildings and structures, remaining crops, technological machinery and equipment, other capital assets and equipment, and formation of capital assets and the cost of unfinished construction projects and capital repairs (CSB). **** CSB data.

was undertaken in the Latgale region: LVL 180.2 million. In comparison with the preceding year (2009), the volume of non-financial investment increased in the Vidzeme and Kurzeme regions, remained almost unchanged in the Latgale region, declined slightly in the Zemgale region, and declined considerably in the Riga region (see Table 20).

Table 20. Non-financial investment in the planning regions in 2006–2010, in 2010 comparable prices, LVL million****.

In 2010, the per capita volume of non-financial investment in Latvia was LVL 968.9. When this indicator is viewed regionally, it emerges that it was above the national average in the Riga and Kurzeme regions, while the figure in the Latgale region significantly fell short of the average value. The highest value was nearly double the lowest value, but the gap decreased compared with the year before. The 2010 per capita non-financial investment in the Riga region was 2.5 times lower than in 2007, when the value reached the highest point (see Table 21, Figures 26 and 27).

conomically Active Statistical Units of E the Market Sector, Economically Active Individual Merchants and Commercial Companies An indicator used to describe economic activity within a territory is the number of economically active statistical units of the market sector and the number of individual merchants and commercial companies. According to provisional CSB data for 2010 (latest data available), 135 100 economically active market sector statistical units operated nationally. Compared with the prece ding year, the figure rose by 6 500. Of these units, 48.0 % were commercial companies, 36.3 % were self-employed persons, 9.7 % were farms and fisheries and 6.0 % were individual merchants (see Tables 22 and 23).

Table 21. Per capita non-financial investment in the planning regions in 2006–2010, in 2010 comparable prices, LVL*.

Table 22. Number of economically active market sector statistical units in Latvia in 2006–2010 in breakdown by the form of commercial activity*.

Figure 26. Movement of per capita non-financial investment in the planning regions in 2006–2010, in 2010 comparable prices*.

Figure 27. Per capita non-financial investment in the planning regions in 2010, in actual prices*. * CSB data.

Table 23. Number and share of economically active market sector statistical units in Latvia in 2010 in terms of the form of commercial activity**. The mere fact that the number of economically active statistical units of the market sector has increased does not allow one to conclude that economic activity has increased, as there are numerous cases where employers legally terminate relations with employees without any change in the actual situation – these are re-concluded as contracts with service providers (self-employed persons). In 2010, more than a half (53.6 %) of the economically active market sector statistical units operated in the Riga region. Commercial companies accounted for the largest number of units in this region: there were a total of 47 600 commercial companies in the Riga region, which constitutes 73.4 % of all commercial companies registered nationally. In the other regions, self-employed persons constituted the largest share of economically active market sector statistical units (see Tables 24 and 25). * CSB data. For the year 2010: provisional CSB data. ** Provisional data by CSB.

Table 24. Number of economically active market sector statistical units in the planning regions in 2010 in breakdown by the form of commercial activity*.

Table 25. Distribution of the forms of commercial activity of economically active market sector statistical units in the planning regions in 2010, %**. The calculation of the number of economically active market sector statistical units per 1 000 inhabitants reveals that the figure in the planning regions in 2010 ranged between 50.3 (Zemgale region) to 66.3 (Riga region; see Table 26 and Figure 28). Table 27 shows the distribution of economically active market sector statistical units nationally by size category, according to the number of employees***. In 2010, 91.2 % of the units were classifiable as microunits, 7.1 % – as small units, 1.4 % – as medium units, and 0.3 % could be categorised as large. In the country as a whole in 2010, the largest number of economically active market sector statistical units were engaged in the service sector (46.0 %), followed by agriculture, forestry and fisheries (22.8 %) and trade (18.5 %). In the Riga region, the largest number of economic units operated in the service sector (56.8 %), while in the remaining regions the agriculture, forestry and fisheries sector accounted for the greatest number, leaving the service sector second (see Table 28). In addition to the indicator considered above, economic activity is characterised by the number of economically active individual merchants and commercial companies – or businesses, as we refer to them in everyday speech. The number of individual merchants and commercial companies per 1 000 inhabitants is also included in calculating territorial development indices. * Provisional data by CSB. ** Calculations based on provisional data by CSB. * ** Micro-units: nine or fewer employees, small units: 10 to 49 employees, medium units: 50 to 249 employees, large units: 250 and more employees.

Table 26. Number of economically active market sector statistical units per 1 000 inhabitants in the planning regions in 2006–2010*.

Figure 28. Number of economically active market sector statistical units per 1 000 inhabitants in the planning regions in 2010**.

Table 27. Number and share of economically active market sector statistical units in Latvia in 2009 and 2010 by size group***.

Table 28. Economically active market sector statistical units in breakdown by the main type of activity in the planning regions in 2010**.

* Calculations based on CSB data. For the year 2010: provisional CSB data. ** Calculations based on provisional data by CSB. *** For the year 2009: data by CSB. For the year 2010: provisional CSB data.

Table 29. Number of economically active individual merchants and commercial companies in the planning regions in 2006–2010*.

Table 31. Number of economically active individual merchants and commercial companies per 1 000 inhabitants in the planning regions in 2006–2010*.

Table 30. Number of registered and liquidated commercial companies in the planning regions, 2007 to 2011**. In 2010, 73 000 economically active individual erchants and commercial companies operated in Latvia. m After a decline in 2009, 2010 saw the number of businesses increase both in the country as a whole and in four regions. The number of economically active individual merchants and commercial companies only decreased in the Kurzeme region. It should be noted here that the

decline in the Kurzeme region was by four units only – or 0.06 % – whereas the increase in Latgale was negligible: by 15 units or 0.28 % (see Table 29). Table 30 reveals data on the number of registered and liquidated commercial companies in Latvia as a whole and in each planning region in the period from 2007 to 2011. In 2010, the average number of economically active individual merchants and commercial companies per 1 000 inhabitants in Latvia was 32.6. This figure was higher in the Riga region (46.5) and considerably lower in the other regions, ranging from 15.8 in Latgale to 21.9 in Kurzeme (see Table 31, Figures 29 and 30).

Figure 29. Dynamics of the number of economically active individual merchants and commercial companies per 1 000 inhabitants in the planning regions in 2006–2010***.

Figure 30. Number of economically active individual merchants and commercial companies per 1 000 inhabitants in the planning regions in 2010**.

* CSB data. For the year 2010: provisional CSB data. ** Data by LLC Lursoft. *** Calculations based on CSB data. For the year 2010: provisional CSB data.

* Calculations based on CSB data. For the year 2010: provisional CSB data. ** Calculations based on provisional data by CSB.

Employment and Unemployment According to CSB data, there were 1.15 million economically active persons aged 15 to 74 in Latvia in 2011, of whom 970 500 were employed and 176 400 (or 15.4 %) were job seekers (see Table 32).

there were 18 400 (13.8 %) employed persons fewer than revealed by the non-recalculated statistics; in Kurzeme: 16 500 (13.2 %) fewer; in Zemgale: 15 800 (13.4 %) fewer; and in Vidzeme: 13 300 (13.5 %) fewer employed.

Table 33. Employment in the planning regions in 2007– 2011, thousands of people*. Table 32. Distribution of population aged 15 to 74 by economic activity in the planning regions in 2011, thousands*. In 2011, the number of those employed increased compared with the preceding year – following a drop in 2009 and 2010, a turn for the better took place. Upon reviewing the situation in the planning regions, it does, however, emerge that this positive trend was not ubi quitous: Kurzeme and Latgale also saw a slight decline in the employment numbers in 2011 (see Table 33). At the time of production of this report, recalculations of 2011 employment data by CSB became available based on the results of the census. According to these data, the number of employed persons in Latvia in 2011 was 862 800, which is 107 700 (or 11.1 %) fewer compared with the results of the selective labour survey conducted by CSB. The discrepancy between the previously published data and post-census recalculations in the Riga region was 43 700, or 8.8 %, whereas in the other regions the difference exceeds 13 %. In the Latgale region,

The employment rate reflects share of those employed in the total population, as a percentage. It should be noted that various sources may offer different calculations of the employment rate. CSB provides information on the economic activity of the Latvian public and the state of the labour market for the population aged 15 to 74. Eurostat, in turn, uses a different age cohort in its calculations of the employment rate: the employment rate is calculated as the percentage of those employed in the total population aged 20 to 64. According to calculations by Eurostat, the employment rate in Latvia in 2010 was 65 %, and 67 % in 2011. A comparison of the EU Member States shows that the employment rate in Latvia is slightly lower than the EU average (see Figure 31). CSB calculations of the employment rate in Latvia and in the planning regions are depicted in Table 34 and Figure 32. Data from the selective labour survey by CSB indicate that the employment rate in Latvia in 2011 was 55.3 %. Recalculations conducted based on the census data show that the employment rate in Latvia in 2011 was 54.1 %.

Figure 31. Employment rate in the EU Member States in 2010 and 2011**. * Selective labour survey by CSB. ** Eurostat data. *** CSB recalculations based on census data.

Table 34. Employment rate in the planning regions in 2007–2011, %**. Movements in the employment rate can only be identified based on the data of the CSB labour survey. Figure 32. Employment rate in the planning regions in 2011*. According to them, the employment rate increased in all planning regions in 2011 compared with the preceding year. The highest employment rate was in the Riga region (57.7 %), followed by Vidzeme (54.3 %) and Zemgale (54.2 %). The Kurzeme region occupied the fourth position in terms of the employment rate due to a decline in the number of those employed (53.9 %; in 2010, Kurzeme had the second highest employment Table 35. Distribution of employment according to the main types of economic rate nationally), whereas the lowactivity in 2008–2011, thousands of people**. est employment rate was in the Latgale region (50.4 %). The data in Tables 35 and 36 indicate the population employed in Latvia in various sectors, in absolute numbers and as a relative share, during the past four years. In 2011, compared to the year before, the employment structure changed little, and the rank of the various sectors did not shift overall. The breakdown of employment by sector in the planning regions in 2011 is shown in Table 37. In Table 36. Distribution of employment according to the main types of economic terms of job availability, trade in activity in 2008–2011, % of total employment**. conjunction with accommodation and food services (G, I) was the most significant sector in the Riga region; this sector also occupied the largest share in the Vidzeme region. In the Kurzeme region, the agriculture, forestry and fisheries sector (A) employed the most people, whereas in Zemgale and Latgale, the most jobs were provided by the industry and energy sectors (B-E).

Table 37. Distribution of employment according to the main types of economic activity in the planning regions in 2011, % of total employment**. * C SB recalculations based on census data. ** Selective labour survey by CSB.

* Selective labour survey by CSB. ** Selective labour survey by CSB, NACE 2 classification.

An opposite indicator to employment is the number of job seekers. According to the selective labour survey by CSB, there were 176 400 job seekers in Latvia in 2011, i.e., 15.4 % of the economically active population (aged 15 to 74). The greatest number of job seekers was in the Riga region (88 300), while the greatest relative share of job seekers among the economically active population was in the Latgale region (17.8 %; see Table 38). Table 40. Number of unemployed in the planning regions from 2007 to the end of 2011*.

Table 38. Number of job seekers and their share in the total economically active population in the planning regions in 2011*. In comparison with the preceding year, the number of job seekers in 2011 fell by 18.4 % nationally. The decline in the number of job seekers was observable in all regions: this happened most rapidly in the Riga region (by 24.0 %) and most slowly in the Latgale region (by 4.0 %). The adjusted post-census data reveal that the number of job seekers is lower than that in the previously published statistics. According to the census-based recalculations, there were 166 100 job seekers in Latvia in 2011, of those 51.2 % were in the Riga region (see Table 39).

Figure 33. Number of unemployed from 2007 to the end of 2011 and on March 31, 2012*. The highest number of the unemployed in 2011 was in the far most populous Riga region, followed by Latgale. Zemgale and Kurzeme had a comparatively similar number of unemployed people, while the lowest number was in the Vidzeme region, which is also the least populous (see Figure 34).

Table 39. Number of job seekers aged 15 to 74 in the planning regions in 2007–2011, thousands*.

There were both registered and unregistered unemployed persons among the job seekers. According to the data of the State Employment Agency, there were 130 300 unemployed nationally at the end of 2011. Compared to the preceding year, unemployment decreased by 19.8 %, yet it remained considerably higher than in 2007 or 2008. Data from the first months of 2012 indicate a return of a negative trend of rising unemployment (see Table 40 and Figure 33).

Figure 34. Number of unemployed in the planning regions and their share in the total number of unemployed in the country at the end of 2011*.

* Selective labour survey by CSB. ** CSB recalculations based on census data.

* Data by SEA.

The unemployment rate is an indicator that is better suited to make regional comparisons, calculated as the number of unemployed versus the working-age population. Eurostat data show that, in 2011, Latvia had the fourth highest unemployment rate in the European Union,

Figure 35. Unemployment rate in the EU Member States in 2010 and 2011*. after Spain, Greece and Lithuania (in 2010, Latvia was ranked second after Spain; see Figure 35). According to the calculations conducted based on SEA and OCMA data, the unemployment rate in Latvia at the beginning of 2012 was 9.0 %, or 2.0 percentage points lower than at the beginning of 2011. The Riga region boasted the lowest rate of unemployment, at 6.7 %. In three regions – Kurzeme, Vidzeme and Latgale – the unemployment rate at the beginning of 2012 had dropped below the 10 per cent mark, compared with the situation a year earlier. Although the Latgale region saw a drop in the unemployment rate, it can still be considered high: at the beginning of 2012, it reached 15.2 % (see Table 41 and

Figures 36, 37 and 38). Figure 36 makes it clear that, at the beginning of 2012, Latgale saw the greatest increase in the unemployment rate: contrary to the other four regions, it continued to rise in the following year, whereas at the beginning 2012 it had the smallest decline in the unemployment rate.

Table 41. Unemployment rate in the planning regions, 2008 to the beginning of 2012, %*.

Figure 36. Dynamics of the unemployment rate in the planning regions, 2008 to the beginning of 2012**.

Figure 37. Unemployment rate in the planning regions at the beginning of 2012*.

* Eurostat data. ** Calculations using data by SEA and OCMA.

* Calculations using data by SEA and OCMA.

Figure 38. Changes in the unemployment rate in the planning regions at the beginning of 2012 compared to the beginning of 2011*. At the end of 2011, 57.4 % of the unemployed in Latvia were women. The lowest relative share of female unemployed was in the Latgale region, 52.8 %, while in the Riga region it reached nearly 60 %. In comparison with the previous year, the share of women among the unemployed increased (see Table 42).

Although unemployment remains a topical issue in the country, another trend is gaining prominence: the shortage of qualified labour. This is confirmed by the results of a self-assessment survey of self-governments, which summarise the responses given by heads of selfgovernments in distribution across the planning regions to the questions “Can an overall shortage of labour be felt in the self-government?”; “Can a shortage of qualified labour be felt in the self-government?” and “Can a shortage of unskilled labour be felt in the self-government?” (see Table 43). In the 2011 survey, 78.2 % of the heads of selfgovernments noted that a shortage of qualified labour could be felt in their territory; this response was relatively more frequent in the self-governments of the Vidzeme (88.5 %), Kurzeme (85.0 %) and Zemgale (81.8 %) regions. A shortage of unskilled labour within the territory was also noted by 8.6 % of the self-government leaders: this response appeared most frequently in the Kurzeme (15.0 %) and Latgale (14.3 %) self-governments.

emuneration and Revenue R from Personal Income Tax

The availability of jobs and employment opportunities directly influence the welfare of the population. CSB data on the average monthly pay of the working population indicate that, compared with the preceding year, this saw an increase in Latvia in 2011. In 2011, the average gross monthly salary nationally was LVL 464 (LVL 330 net). However, even though the average net remuneration – which Table 42. Proportion of women in the total number of reflects the disposable income of workers – rose in 2011, it did not yet reach the 2009 level (see Tables 44 and 45). registered unemployed persons in the planning regions, The highest average monthly pay in 2011 was in the 2007 to the end of 2011, %**. Riga region (LVL 512 gross and LVL 363 net), but the figure was lower in the other regions – by as much as 23 % and more. The average monthly salary in the Kurzeme region was LVL 393 gross and LVL 284 net; in the Zemgale region: LVL 384 gross and LVL 278 net; in the Vidzeme region: LVL 364 gross and LVL 264 net; and in the Latgale region: LVL 329 gross and LVL 239 net. The minimum monthly wage in Latvia in 2011 was LVL 200 (previously LVL 180). The average pay was 2.3 higher than the minimum remuneration. The national average pay in the public sector was higher than in the private sector in 2011. The Kurzeme region had the smallest disparities between the average pay in the public and private sectors. Another group of indicators that provides a clear reflection of the welfare of the popuTable 43. Responses to the question “Can a shortage of labour be lation is the data from the household budget felt in the self-government?” in a self-assessment survey of selfsurvey carried out by CSB. They reveal both ingovernments in 2010 and 2011, %***. come and the structure of consumer spending. According to the household budget survey by * Calculations using data by SEA and OCMA. CSB in 2010, the average household income per capita ** Calculations using data by SEA. in Latvia was LVL 178.01. Household income is consti *** Latvijas vietējo pašvaldību darbība to vadītāju vērtējumā. Riga: CSB, 2011. tuted not only by work remuneration but also from the

Table 44. Average gross monthly salary of employees in the planning regions in 2007–2011, LVL*.

Table 45. Average net monthly salary of employees in the planning regions in 2007–2011, LVL*. use of property, benefit payments and other types of income. The average household income only slightly exceeded the per capita minimum subsistence level of consumption, which in 2010 equalled LVL 166.43 (in 2011: LVL 173.33). Data are available in breakdown by territory on the income of household members, and these indicate that a clear disparity exists between the city of Riga and the rest of Latvia (see Table 46).

Table 47. Average monthly household spending per household member in the statistical regions, 2007 to 2010, LVL*.

Table 48. Monthly consumption spending structure of households per household member in the statistical regions in 2009, %*.

Table 49. Monthly consumption spending structure of households per household member in the statistical regions in 2010, %*.

Table 46. Average monthly household income per household member in the statistical regions, 2007 to 2010, LVL**. Household spending exceeds income. The greatest gap between income and spending is evident in the Pieriga region (see Table 47). The data on the expenditure structure of households for 2009 and 2010 have been provided in Tables 48 and 49, respectively. In 2010, residents spent 56.6 % of their income on basic needs: food, housing and transport. Compared with the year before, the share of this expenditure rose.

* CSB data. ** CSB household budget survey.

The employment rate and employee remuneration directly affect the revenue from personal income tax – and, accordingly, the portion of personal income tax that reaches the budgets of the self-governments in which earners have declared their residence. Consequently, this affects the capacity of self-governments to provide residents with everyday services and functions. It should be noted that changes in the personal income tax revenue in the self-government budget are contingent not only on the employment rate and fluctuations in pay, but also on changes in regulations regarding the tax base, the tax rate, the non-taxable income and tax-deductible expenses; changes in this revenue also influences the portion of the * CSB household budget survey.

tax transferred to self-governments. In 2011, compared with the preceding year, the rate of personal income tax was cut from 26 % to 25 %, the non-taxable minimum income rose from LVL 35 to LVL 45, the dependant relief increased from LVL 63 to LVL 70, and since these changes cause tax revenues to diminish, the portion of the tax to be transferred to the self-government budgets was increased from 80 % to 82 %. In 2011, the total revenues of self-governments from personal income tax amounted to LVL 649.45 million. Compared with the year before, both nationally and in four statistical regions, the volume of this revenue grew. Only the Zemgale region saw a slight decrease (see Table 50).

on changes in the population. The negative trend of a declining population has a seemingly positive effect on the dynamics of per capita personal income tax revenues (see Table 51, Figures 39, 40 and 41).

Table 51. Per capita personal income tax revenue in selfgovernment budgets in the planning regions, 2007 to 2011, LVL*.

Table 50. Personal income tax revenue in self-government budgets in the planning regions, 2007 to 2011, LVL million*. The highest per capita revenue from personal income tax in self-government budgets in 2011 was in the Riga region (LVL 362.5). The figure in the other regions was below the national average (LVL 292.9), with the lowest being in the Latgale region (LVL 182.1). We wish to remind that changes in this indicator also depend

Figure 40. Per capita personal income tax revenue in selfgovernment budgets in the planning regions in 2011*.

Figure 41. Increase in per capita personal income tax revenue in self-government budgets in the planning regions in 2011 compared with 2010*.

Figure 39. The dynamics of per capita personal income tax revenue in self-government budgets in the planning regions, 2007 to 2011**. * Data by the Treasury. ** Calculations using data by the Treasury and OCMA.

* Calculations using data by the Treasury and OCMA.

V DESCRIPTION OF THE DEVELOPMENT OF CITY AND MUNICIPAL SELF-GOVERNMENT TERRITORIES The previous chapter offered a review and comparison of the situation in the planning regions of Latvia, whereas the data provided in the present chapter pertain to a smaller territorial scale: the administrative territories of self-governments. In order to characterise the diversity of the situation in self-government territories and the development of these territories, various demographic and socio-economic indicators have been used. Annex 1 to this report contains a summary of the main indicators for all self-government territories in Latvia, whereas Figures 62 to 71 map a comparison of the self-governments based on individual indicators. Table 52 reflects the range of values of the main indicators among

all self-governments, whereas the chapter below contemplates the differences separately for the cities and municipalities as groups. In terms of population, both groups of self-governments are similar, yet in other indicators the disparities are greater (see Figure 42). Each self-government or any other interested party may use the annexes and maps of this report to locate data on the territory subject to enquiry and compare such data both with the situation in other self-governments and within the group of the self-government in question – among cities or municipalities – as well as with the situation in the planning region or the country as a whole.

Table 52. Territorial differences of Latvian self-governments*.

Figure 42. Breakdown in terms of area, population, selfgovernment tax revenue and the number of individual merchants and commercial companies in the groups of national cities and municipalities*.

DESCRIPTION OF CITIES There are nine (national) cities in Latvia: Riga, Daugavpils, Jekabpils, Jelgava, Jurmala, Liepaja, Rezekne, Valmiera and Ventspils. The aggregate area of all cities only occupies 1.1 % of the country’s area, 51 %** of all

inhabitants of Latvia live there, 70.2 %** of the total number of all merchants and commercial companies operate there, and 60.8 %*** of all self-government tax revenues are collected there. Table 53 illustrates the variations of

* See sources of data below in the respective sections. ** At the beginning of 2012.

* Data sources: OCMA (population), CSB (area, number of individual merchants and commercial companies) and the Treasury (tax revenue). ** In 2010. *** In 2011.

the main demographic and socio-economic indicators in the national cities. Compared with the preceding year, the differences in data attributable to 2011 or the beginning of 2012 among cities increased slightly or remained virtually unchanged. All the indicators covered for all cities have been included in Annex 1 to this report.

Table 53. Territorial differences in cities*.

(a ccording to census data as of March 1, 2011 – 1.06 million). The largest city in Latvia – as well as in all three Baltic states – is Riga with a population of 669 200 (OCMA data at the beginning of 2012 (census data as of March 1, 2011 – 657 400). In 2011, for the first time since the late 1960s, the population of Latvia’s capital city fell below the 700 000 mark (according to OCMA data). The population of the smallest national city, Jekabpils (25 900 according to OCMA), is very close to the minimum threshold population prescribed by law, 25 000 (according to the census data, the population of Jekabpils on March 1, 2011 was 24 600; see Table 54 and Annex 9). In terms of area, Riga is the largest city (304 sq. km), while Rezekne and Valmiera are the smallest (both 18 sq. km). Riga is the most densely populated city (at the beginning of 2012: 2 300 people per sq. km), while Jurmala has the lowest density (at the beginning of 2012: 560.8 people/sq. km). The population of national cities is declining. During the five years from 2007 to the beginning of 2012, the total population in all nine cities shrank by 41 300, or 3.5 %*. The population decline in the cities was more rapid than on average in Latvia (-3.0 %); this trend was typical of seven cities, including Riga. Re zekne saw the sharpest drop in the population between 2007 and the beginning of 2012 (-6.2 %), while Jurmala was the only city that could boast a positive population balance (+1.3 %; see Figure 43).

opulation and Population Change, P Area and Population Density According to OCMA data, the total population of cities at the beginning of 2012 was 1.13 million

Figure 43. Population change in cities, from the beginning of 2007 to the beginning of 2012*.

Table 54. Population, area and population density of the cities at the beginning of 2012**. * See sources of data below in the respective sections. ** Data by OCMA (population) and CSB (area).

Over the five-year period, the population of national cities declined both due to negative natural and negative mechanical movement; in Jurmala alone, the population increase was caused by a positive migration rate.

* Calculations based on OCMA data.

Figure 63 maps a comparison of the population change in all Latvian self-governments from the beginning of 2007 to the beginning of 2012.

Age Dependency Ratio and Age Structure The average age dependency ratio in the national cities at the beginning of 2012 was 540.1* – this means that there were 540.1 people below or over the working age for every 1 000 people at working age. Compared to the previous year, the age dependency rate in the cities – in aggregate as well as separately – increased as all cities saw a growing share of populations over the working age and, in the majority of the cities, also in the share of population under the working age (there was no increase in the number of children and youth in absolute terms, however), and the share of the working-age population declined in all cities. The national average of the age dependency ratio at the beginning of 2012 (529.9) was below the aggregate figure for the national cities. At the beginning of 2012, Daugavpils had the lowest age dependency ratio among the national cities (511.5), with the highest figure being in Liepaja (568.1; see Figure 44). This does not, however, mean that the situation in Daugavpils was any more favourable, as Daugavpils had the lowest proportion of children and youth in the total population (12.7 %), while Liepaja and Jekabpils enjoyed the highest ratios (14.9 % in both; see Figure 45). The average share of population below the working age in the cities at the beginning of 2012 was 13.4 %, which is below the national average (13.8 %). In the city group, the proportion of the population below the working age in seven cities was higher than the national average and lower in Riga and Daugavpils. A map depicting the age dependency ratio values in all self-government territories can be viewed in Figure 64, and the values of the population below the working age at the beginning of 2012, in Figure 65.

Figure 45. Share of population below the working age in cities at the beginning of 2012*.

Unemployment Rate The unemployment rate in the group of national cities in 2011 continued to decline and reached 7.4 %** at the beginning of 2012 (at the beginning of 2011: 9.3 %, at the beginning of 2010: 10.7 %); furthermore, a drop in the unemployment rate was evident in all cities (see Figure 46).

Figure 46. Unemployment rate in cities at the beginning of 2010, 2011 and 2012**. Figure 44. Age dependency ratio in cities at the beginning of 2012*. * Calculations based on OCMA data.

* Calculations based on OCMA data. ** Calculations using data by SEA and OCMA.

The average unemployment rate figure of the cities at the beginning of 2012 was slightly more favourable than the national average (9.0 %). The lowest rate of unemployment at the beginning of 2012 was in Riga (6.6 %) and the highest – in Rezekne (15.1 %); and also in the preceding years the two cities occupied a similar position in the city group in terms of the unemployment rate. Figure 66 (map) shows the unemployment rate in all self-government territories at the beginning of 2012, while Figure 67 (map) depicts the change in the unemployment rate at the beginning of 2012 as compared to the beginning of 2011.

Revenue from Personal Income Tax The difference in the revenue from personal income tax in the self-government budgets point towards disparities in the welfare of the population in the territories. In 2009, compared to the year before, there was a sharp drop in revenues from this tax in the budgets of all self-governments, including national cities. Since 2010, revenues from personal income tax have been climbing. In 2011, the revenue from personal income tax in the budgets of city self-governments was LVL 388.05 million*, which constitutes 59.8 % of the total revenue of self-governments from personal income tax. It should be noted that, in 2011, compared to 2010, the share of the tax transferred into the self-government budget increased, from 80 % in 2010 to 82 % in 2011. If the self-government revenue from personal income tax is calculated per capita, in 2011 the figure in cities was LVL 343.1**, which is 117 % compared to the national average (LVL 292.9) and 142 % compared to the average for the self-governments of the municipality group. A comparison among the national cities (see Figure 47) reveals that, in 2011, Ventspils collected the highest per capita revenue from personal income tax (LVL 394.4 or 115 % of the average for the self-government group and 135 % of the national average). In the year preceding that, Riga and Jurmala had been ahead of Ventspils, which in 2011 ranked, respectively, second (LVL 377.3) and third (LVL 368.5) in terms of per capita revenue from personal income tax. Daugavpils had the lowest per capita revenue from personal income tax in 2011, which also trailed behind all other national cities in the years before. In 2011, the per capita revenue from personal income tax in the Daugavpils self-government budget was LVL 220.0, which is 64 % of the average for the city group and 75 % of the national average. Figure 68 maps the per capita personal income tax revenue in the self-government budgets in 2011, whereas Figure 69 is a map illustrating the movements in the value of this indicator in comparison with the preceding year, 2010.

* Data by the Treasury. ** Calculations using data by the Treasury and OCMA.

Figure 47. Per capita revenue from personal income tax in the self-government budgets of cities in 2009, 2010 and 2011, LVL*.

conomically Active Statistical Units E of the Market Sector, Economically Active Individual Merchants and Commercial Companies According to provisional CSB data for 2010, 71 500 economically active market sector statistical units operated in the nine national cities, which is 52.9 % of all such units nationally. Compared with the previous reporting year, the number of units edged up 2.2 % in cities. In the total number of economically active market sector statistical units in the group of national cities, commercial companies occupy clearly the largest share (65.6 % in 2010), followed by self-employed individuals (28.2%), individual merchants (6.0 %) and farms and fisheries (0.2 %; see Table 55). The total proportion of companies and individual merchants (which can be referred to simply as businesses) in 2010 accounted for 71.6 % of the total number of the economically active market sector statistical units in the city group; their total number in cities was 51 200, an increase of 1.3 % over the previous year. When the economically active market sector statistical units are regarded in terms of size (see Figure 48), it becomes evident that in the cities, just as in the country as a whole, micro-enterprises are the most numerous (employing up to nine people): in 2010, they num * Calculations using data by the Treasury and OCMA.

bered 63 200, or 88.3 % of all units in the group of city self-governments. For larger business sizes, their number drops accordingly. The highest share of large and medium enterprises among the economically active market sector statistical units can be found in Riga and Ventspils. In 2010, 72.5 % of all the economically active market sector statistical units in the group of national cities operated in Riga, which translates to 38.4 % of all units nationally. Figure 49 depicts the number of economically active market sector statistical units per 1 000 inhabitants in each city, and Figure 50 shows the number of economically active individual merchants and commercial companies per 1 000 inhabitants in cities. These data

indicate that Riga has the most intense economic activity among cities, followed by Valmiera, while Daugavpils has the lowest economic activity. Compared to 2009, the number of economically active merchants and commercial companies in 2010 increased in Riga, Valmiera, Jelgava, Jekabpils, Jurmala and Daugavpils and declined in Liepaja, Rezekne and Ventspils. Figure 70 maps the number of economically active market sector statistical units per 1 000 inhabitants in all self-governments in 2010, while Figure 71 depicts the number of economically active individual merchants and commercial companies per 1 000 inhabitants in all self-governments in 2010.

Figure 48. Distribution of economically active market sector statistical units in terms of size in cities in 2010*.

Table 55. Breakdown of the number of economically active market sector statistical units according to the form of commercial activity in cities in 2010*.

Figure 49. Number of economically active market sector statistical units per 1 000 inhabitants in cities in 2010*.

Figure 50. Number of economically active individual merchants and commercial companies per 1 000 inhabitants in cities in 2010*.

* Calculations based on provisional data by CSB.

DESCRIPTION OF MUNICIPALITIES There are 110 municipalities in Latvia. Their total area occupies 98.9 % of the area of the country, and 49 %* of the Latvian population resides there. Municipality budgets receive 39.2 %** of the tax revenue among self-governments; 29.8 %*** of all individual merchants and commercial companies operate within municipality territories. Table 56 illustrates the variations of the main demographic and socio-economic indicators in the municipality group. Compared with the year before, the differences in five indicators for 2011 or the beginning of 2012 increased among municipalities, remained constant or nearly constant in three indicators, and decreased only in one indicator. The indicators pertaining to all municipalities have been included in Annex 1 to the report.

Table 56. Territorial differences in municipalities****.

opulation and Population Change, P Area and Population Density According to OCMA data, the total population of municipalities at the beginning of 2012 was 1.09 million (according to census data as of March 1, 2011: 1.01 million). Municipalities vary greatly in terms of population. Fewer than two thousand inhabitants live in the smallest municipalities, while the largest municipality, Ogre

* At the beginning of 2012. ** In 2011. *** In 2010. **** See sources of data below in the respective sections.

unicipality, had a population of 38 400* at the beginm ning of 2012. The average population in municipalities at the beginning of 2012 was 9 900. In 76 municipalities, the population was below the average figure, and in 34 municipalities it was higher. Figure 51 shows the ten most populous and the ten least populous municipalities at the beginning of 2012. The average area of a municipality in Latvia is 580 sq. km. The area of municipalities ranges from 48 sq. km (Saulkrasti municipality) to 2 525 sq. km (Rezekne municipality). The area of 71 municipality falls below the average municipality area, while 39 municipalities exceed the average. Figure 52 lists the ten largest and the ten smallest municipalities in terms of area. The map in Figure 62 shows the differences in the population density in all municipalities at the beginning of 2012. Figure 53 reflects the ten most and least densely populated municipalities. The highest overall population density is in the municipalities surrounding Riga. The difference between the most densely populated municipality (Salaspils, 199.8 per sq. km) and the least densely populated one (Rucava, 4.4 per sq. km) was 45.4-fold at the beginning of 2012. The populations of municipalities are experiencing a general decline. During the five years from 2007 to the beginning of 2012, the total population in the municipality group shrank by 26 500, or 2.4 %**. Compared with the group of national cities (-3.5 %) and the national average (-3.0 %), the decline was less pronounced among municipalities. In the period from the beginning of 2007 to the beginning of 2012, the population declined in 93 municipalities and rose in 17 ones. Figure 54 lists the ten municipalities with the greatest relative population growth and the ten municipalities in which the population declined the most in relative terms over the five-year period. Figure 63 maps the population change in all self-governments from the beginning of 2007 to the beginning of 2012. A positive population trend can only be observed in the municipalities in the vicinity of Riga. From the beginning of 2007 till the beginning of 2012, the largest population increase took place in Marupe municipality (40.1 %) and Garkalne municipality (31.2 %). The most pronounced population decrease regionally was in the municipalities of Latgale, whereas the greatest population decrease (12.5 %) affected Alsunga municipality, which is part of the Kurzeme region.

* OCMA data. ** Calculations based on OCMA data.

Figure 51. The ten most populous and the ten least populous municipalities at the beginning of 2012*.

Figure 53. The highest and lowest population density values in municipalities at the beginning of 2012*.

Figure 52. The largest and smallest municipalities by area**.

Figure 54. The largest relative population change in municipalities from the beginning of 2007 to the beginning of 2012**.

* OCMA data. ** CSB data.

* Calculations based on OCMA and CSB data. ** Calculations based on OCMA data.

Age Dependency Ratio and Age Structure The average age dependency ratio in the self- governments of the municipality group at the beginning of 2012 was 519.4* (i.e., there were 519.4 people below or over the working age for every 1 000 people at working age). In comparison with the preceding year, the overall age dependency ratio in the municipalities increased or, making it more precise, it increased in 77 municipalities and decreased in 33. At the beginning of 2012, the age dependency ratio in the group of national cities (540.1) and the national average were higher than the municipality average. Figure 64 maps the age dependency ratio in all Latvia’s self-governments at the beginning of 2012, whereas Figure 55 lists the ten municipalities with the lowest and ten with the highest age dependency ratio. The difference between the lowest figure (Ropazi municipality, 448.7) and highest one (Vainode municipality, 647.4) at the beginning of 2014 was 1.4 times.

lowest being in the municipalities of the Latgale region. This is clearly demonstrated in Figure 65 (map), which depicts the share of the population below the working age at the beginning of 2012 in all self-government territories. Figure 56 lists the ten municipalities with the highest and the ten municipalities with the lowest share of this age group in the population. The highest figure (Marupe municipality, 22.6 %) exceeded the lowest one (Baltinava municipality, 10.6 %) 2.1 times at the beginning of 2012.

Figure 56. The highest and lowest share of the population below the working age in municipalities at the beginning of 2012*.

Unemployment Rate

Figure 55. The highest and lowest values of the age dependency ratio in municipalities at the beginning of 2012*. The share of the population below the working age, or the number of children and school-age youth, in the total population indicates the future trends of a territory. In the municipality group, this cohort constituted 14.1 % in the entire population at the beginning of 2012, while the national average was lower, 13.8 %. Compared with the previous year (14.2 %), at the beginning of 2012 the share of the population below the working age in municipalities decreased somewhat. The greatest proportion of children and school-age youth can be found in the Pieriga municipalities, with the * Calculations based on OCMA data.

Similar to Latvia as a whole, the unemployment rate in the municipality group declined in 2011 and reached 10.6 %** at the beginning of 2012 (at the beginning of 2011: 12.8 %; at the beginning of 2010: 13.4 %). A decline in the unemployment rate could be observed in 109 municipalities, with a slight increase in Baltinava municipality only (see Figure 67 mapping the change in the unemployment rate at the beginning of 2012, compared to the beginning of 2011). The overall rate of unemployment at the beginning of 2012 in the municipality group was higher than in the city group (7.4 %), yet the situation across municipalities varied greatly. Vilani municipality had the highest unemployment rate at the beginning of 2012 (27.4 %), and Marupe municipality had the lowest (3.9 %). The disparities in the unemployment rate are clearly evident in Figure 57, which shows the ten municipalities with the * Calculations based on OCMA data. ** Calculations using data by SEA and OCMA.

highest and ten municipalities with the lowest unemployment rates, and in Figure 66, where the unemployment rate at the beginning of 2012 has been mapped for all self-government territories.

of the population in various territories. Figure 68 maps the per capita personal income tax revenue in 2011 for all self-governments, whereas Figure 69 is a map depicting the change in this indicator from 2010 to 2011. It should be noted that the change has to do with changes in both tax revenues and the population. It is evident from Figure 58 – which lists the ten municipalities with the highest and the lowest per capita personal income tax revenues in 2011 – that the highest value (Garkalne municipality, LVL 472.6*) exceeds the lowest one (Riebini municipality, LVL 105.4*) 4.5 times.

Figure 57. The highest and lowest values of the unemployment rate in municipalities at the beginning of 2012*. Despite the relatively high unemployment rate, the shortage of skilled labour is a growing problem in Latvia. The results of a self-assessment survey of self-governments conducted by CSB, which asked the questions “Can an overall shortage of labour be felt in the self-government?”; “Can a shortage of qualified labour be felt in the self-government?” and “Can a shortage of unskilled labour be felt in the self-government?”, indicate that the problem of qualified labour in municipalities has acquired enormous dimensions. In 2010, 51.4 % of municipality heads noted that a shortage of qualified labour could be felt, whereas in 2011, this response was given by 80.9 % municipality leaders.

Revenue from Personal Income Tax In 2011, the revenue from personal income tax in the budgets of municipality self-governments was LVL 261.40 million**, which constitutes 40.2 % of the total revenue of self-governments from personal income tax. Compared to the year before, the total revenue from this tax in the budgets of self-governments increased, yet 38 municipality self-governments experienced a drop in personal income tax revenue. The per capita revenue figure from personal income tax to some extent reflects the differences in the welfare * Calculations using data by SEA and OCMA. ** Data by the Treasury.

Figure 58. The highest and lowest values of personal income tax revenue per capita in the budgets of municipality self-governments in 2011*.

conomically Active Statistical Units of E the Market Sector, Economically Active Individual Merchants and Commercial Companies According to provisional CSB data for 2010, 63 600 economically active market sector statistical units operated in the municipalities, which constitutes 47.1 % of all such units nationally. Compared with the previous reporting year, the number of units increased by 8.5 % in municipalities. In the municipality group, self-employed persons have clearly the largest share in the total number of the economically active market sector statistical units: 45.4 % in 2010. Commercial companies occupy the largest share in the national cities (65.6 %), whereas in municipalities companies constituted a mere 28.1 % of the economically active market sector statistical units. The share of farms and fisheries in the municipality group amounted to 20.4 %, * Calculations using data by the Treasury and OCMA.

and that of individual merchants, 6.1 % (see Table 57). The total proportion of companies and individual merchants in 2010 accounted for 34.2 % of the total number of the economically active market sector statistical units in the municipality group; they totalled 21 700, which means an increase of 4.2 % over the previous year.

the number of economically active individual merchants and commercial companies per 1 000 inhabitants in all self-governments in 2010.

Table 57. Breakdown of the number of economically active market sector statistical units according to the form of commercial activity in municipalities in 2010*. In 2010, 94.4 % of all businesses in the municipalities were micro-enterprises, 4.7 % were small enterprises, and medium and large enterprises formed an aggregate share of 1.0 % in the total number of businesses (see Figure 59).

Figure 60. The highest and lowest values of economically active market sector statistical units per 1 000 inhabitants in municipalities in 2010*.

Figure 59. Distributuion of economically active market sector statistical units by size category in municipalities in 2010*. In 2010, an average of 58.0 economically active market sector statistical units operated per 1 000 inhabitants in municipalities, which is fewer than in cities (62.7). Varkava municipality had the highest figure (132.2), but it needs to be added that it has a very high proportion of self-employed persons (54.6 %) and farms (43.1 %) and a very low number of individual merchants and commercial companies (2.2 % total) in the total number of the statistical units of the municipality. The lowest relative value of economically active market sector statistical units in 2010 was in Mersrags municipality (26.8; see Figure 60). When the number of economically active individual merchants and commercial companies per 1 000 inhabitants is viewed separately (see Figure 61), it emerges that this value in 2010 ranged between 3.0 (Varkava municipality) to 63.8 businesses (Marupe municipality). Figure 70 maps the number of economically active market sector statistical units per 1 000 inhabitants in all self-governments in 2010, while Figure 71 depicts

Figure 61. The highest and lowest values of economically active individual merchants and commercial companies per 1 000 inhabitants in municipalities in 2010*.

* Calculations based on provisional data by CSB.

FigureÂ 62. Population density in the self-government territories at the beginning of 2012*.

* Calculations based on OCMA and CSB data.

FigureÂ 63. Population change in self-government territories, from the beginning of 2007 to the beginning of 2012*.

* Calculations based on OCMA data.

FigureÂ 64. Age dependency ratio in the self-government territories at the beginning of 2012*.

* Calculations based on OCMA data.

FigureÂ 65. Share of population below the working age in self-government territories at the beginning of 2012*.

* Calculations based on OCMA data.

FigureÂ 66. Unemployment rate in the self-government territories at the beginning of 2012*.

* Calculations using data by SEA and OCMA.

FigureÂ 67. Changes in the unemployment rate in self-government territories at the beginning of 2012 compared to the beginning of 2011*.

* Calculations using data by SEA and OCMA.

FigureÂ 68. Per capita personal income tax revenue in self-government budgets in 2011*.

* Calculations using data by the Treasury and OCMA.

FigureÂ 69. Change in the per capita personal income tax revenue in self-government budgets in 2011 compared with 2010*.

* Calculations using data by the Treasury and OCMA.

FigureÂ 70. Number of economically active market sector statistical units per 1Â 000 inhabitants in self-government territories in 2010*.

* Calculations based on provisional data by CSB.

FigureÂ 71. Number of economically active individual merchants and commercial companies per 1Â 000 inhabitants in self-government territories in 2010*.

* Calculations based on provisional data by CSB.

VI ASSESSMENT OF TERRITORIAL DEVELOPMENT

ASSESSMENT METHODOLOGY In order to enable comparisons between territories based on aggregate indicators, a synthetic index needs to be used comprising a variety of indicators. A territorial development index has been used in Latvia for the assessment of the level of development of various territorial units for more than a decade, now referred to as the territorial development level index. Its origins and purpose are associated with the earliest methodology for identifying potential regions (territories) subject to special assistance, which was developed in 1997 by the Latvian Statistical Institute. Initially (for the 1998–2000 period), the potential regions requiring special assistance were identified using a rankings method, but in 2000, to determine the territories for special assistance in the new period, the researchers of the Latvian Statistical Institute produced a new methodology that entailed the standardisation of various indicators with a subsequent calculation of a territorial development index. In the course of time, the territorial development index also came to be used for other purposes, not just to identify territories requiring special assistance. The territorial development index is used to address various tasks of state administration that are markedly different from the original purpose: the index is used not only to compare the development of territories, but it is also included in regulatory enactments as a specific criterion for the allocation of state and EU fund financing with respect to Latvian territories. To date, the territorial development index has been used as follows: • to allocate earmarked grants from the state budget, identifying the intensity of state aid in projects implemented by self-governments; • to identify the intensity of state aid for projects implemented by self-governments co-financed from the European Union Structural Funds and the Cohesion Fund; • in some cases – to determine the aid intensity of projects implemented under the European Agricultural Fund for Rural Development; • as a criterion in assessing projects implemented by state administration institutions or the private sector under the EU Structural Funds, the Cohesion Fund, the European Agricultural Fund for Rural Development and the European Fisheries Fund, by awarding a certain score depending on the location where a project is implemented (self-government) or the territorial development index value of the project location (self-government) serves as a tie-breaker criterion in the event of identical project assessment;

• as one of the criteria for identifying the development centres of Latvia (cities/towns, urban municipalities) that qualify for specific assistance from the EU funds; • as an indicators for monitoring various planning documents, e.g., the monitoring of horizontal priority “Balanced territorial development” of the National Strategic Reference Framework for 2007–2013 or the development programmes of local self-governments*. Notwithstanding the considerable expansion of the application of the territorial development index, the constitutive indicators and calculation methodology have remained virtually unchanged. The most significant modifications were introduced in connection with the implementation of the administrative territorial reform in 2009: at the level of local self-governments, the calculation of the territorial development index continues for national cities and municipalities, with indicators now used for the latter that were previously used to calculate the territorial development index of urban areas. At the level of planning regions, the calculation of the index continues to use the indicators used before. A specific feature of the methodology used to calculate the territorial development index is that, irrespective of the increase or decrease in the rate of development, there is a roughly similar distribution of positive and ne gative index values among territories every year (development is only considered within the space of one year). The rapid change in the economic situation after 2008 demonstrated that the rate of development is equally important in the assessment of territorial development. As a result, with small adjustments to the standardisation method previously used in the calculation of the territorial development index, in addition to the annual territorial development index, a chain index of territorial development has been calculated since 2010, which also reflects the rate of development. The traditional territorial development index was relabelled the territorial development level index, whereas the index describing the rate of development became known as the territorial development level change index. The current procedures for calculating the territorial development level index and the territorial development level change index have been laid down by Cabinet Regulation No 482 of May 25, 2010 “Regulations * Hermansons, Z. Teritorijas attīstības indeksa praktiskā pielietojuma analīze un tā pilnveidošanas iespējas. Ekonomika un uzņēmējdarbība Riga: Scientific Papers of the Riga Technical University. Series 3, volume 22. 2012.

on the Procedures for Calculating the Territorial Development Index and Values Thereof”. Standardisation of the main development indicators is at the foundation of the method for calculating the territorial development level index. The standardised indicators are calculated from initial indicators which characterise a territory in various aspects and expressed in real measureable units (number of people, money, interest rates and other measureable units). As a result of standardisation, the initial measurement units of the indicator disappear, rendering the various indicators mutually comparable. The standardised indicators are combined creating the overall development level index. A standardised value is calculated for each main development indicator and for each territory. Here, the specific features of some indicators need to be explained. For example, a low value of the unemployment rate should be assessed positively and a high one – negatively, hence the plus/minus sign is switched to the opposite in the calculations of the development index. A similar process applies to the standardised values of the age dependency ratio. The standardisation of indicators is done by using the formula x – x– t= s , where: t – standardised value of the particular indicator characterising the territory; x – indicator subject to standardisation within the respective territory, expressed in its specific units; – arithmetic mean of the respective indicator in the group of comparable territories (calculated either as a weighted average or as a ratio of two absolute quantities); s – s tandard deviation, a variation indicator calculated using the formula

∑ ( x – x– ) 2 f , ∑f

where f is the statistical weight, usually the population of a territory. In accordance with the administrative territorial division of the country, the territorial development level index is calculated for 110 municipalities and nine cities, as well as for the five planning regions. Eight indicators and their weight in terms of significance are used to calculate the index for the planning regions, whereas four indicators and their weighting are used for the national cities and municipalities (see Table 58). The territorial development level index describes the level of development in specific territories in a particular year, revealing the development of territories with a higher or lower level of socio-economic development as compared to the average figure for that group of territories. Initial data for one year are sufficient for calculating this index, as the rate of development is not evaluated. The territorial development level change index is calculated in order to also reveal the change in the development level, its pace, and an accelerated or lagging rate of development. The most significant difference between both indi-

Table 58. Statistical indicators required for the calculation of the territorial development level index and the weight of their significance. ces is the differing time basis used in the standardisation formula of the main indicators. In the calculation of the territorial development level index, the arithmetic mean value of a main development indicator within the territory group in the reference year is used, whereas for the territorial development level change index, the arithmetic mean and the standard deviation within the territory group in the preceding year. Thus, the territorial development level change index displays changes in the development level compared to the preceding year by revealing a lagging or accelerated development of territories compared to the average development level in the year before. Pursuant to Cabinet Regulation No 482 of May 25, 2010 “Regulations on the Procedures for Calculating the Territorial Development Index and Values Thereof”, SRDA calculates the indices for the previous year by February 15 of each year, whereas the Minister of Environmental Protection and Regional Development submits a draft Cabinet Regulation to the Cabinet by April 1 regarding amendments whereby the index values of all territories are updated in the annex to the Regulation. The Cabinet adopted the amendments confirming the latest calculated territorial development indices with 2011 data on May 29, 2012 (Cabinet Regulation No 371 “Amendments to Cabinet Regulation No 482 of May 25, 2010 “Regulations on the Procedures for Calculating the Territorial Development Index and Values Thereof””). Annex 2 to this report discloses the territorial development level index, the territorial development level change index of the planning regions, cities and municipalities and the three-year rank of each self-government in terms of the indices (in 2009, 2010 and 2011). The question of improving the territorial development index has now gained prominence*, whereby the problem * This refers to improving the index (assessment of territorial development) as such rather than improving the territorial development level index or the territorial development level change index.

of a single universal index for assessing territorial develop ment (the territorial development level index or the terri torial development level change index) being used in all instances has moved into the foreground. It is used both as an administrative criterion in shaping policies and introducing policy instruments and as a tool to address analytical and informational tasks within the context of regional development monitoring and assessment. Accordingly, the Ministry of Environmental Protection and Regional

Development, in cooperation with the sectoral ministries and experts, plans to develop proposals for improving the territorial development index by the end of 2012, including its continued application in the programming and implementation of the EU Structural Funds and the Cohesion Fund and the European Agricultural Fund for Rural Development as well as the European Maritime and Fisheries Fund in the 2014–2020 period, and submit such proposals to the Cabinet for implementation.

TERRITORIAL DEVELOPMENT LEVEL INDEX City Group Just as in 2009 and 2010, there were five cities in the group of national cities in 2011 with a positive value of the territorial development level index (i.e., an index value above the average in this group of self-governments): Riga, Jelgava, Jurmala, Valmiera and Ventspils. The remaining four cities showed negative index values of varying magnitude, i.e., their values were below the average in the city group. If the values of the territorial development level index according to the 2011 data are compared with those of 2010, it emerges that the development index in the range of positive values increased for two cities – Jurmala and Ventspils – whereas in the negative range this was only true for one city, Daugavpils. In turn, the positive index value of Riga, Valmiera and Jelgava decreased, while the negative values declined for Jekabpils, Liepaja and Rezekne. Within the three-year period of 2009 to 2011, Jurmala consistently displayed the highest values of the territorial development level index among cities, and Rezekne had the lowest values; furthermore, the index value for Jurmala increased in 2011 and decreased for Rezekne (see Figure 72). In 2011, all national cities maintained their place within the positive or negative range of index values, and the most significant changes took place in the positive range of values. The development level index for Jurmala rose from 0.505 to 0.736, for Ventspils: from 0.037 to 0.359, while that for Jelgava slipped from 0.213 to nearly zero (0.030). The ranking of the cities in terms of the territorial development level index in 2010 and 2011 changed accordingly. Thanks to the relatively steep rise in development figures, Ventspils climbed from fifth in 2010 to second in 2011, passing Riga, which dropped to the third spot. Correspondingly, Valmiera retreated from third to fourth and Jelgava – from fourth to fifth position. The remaining five cities maintained their ranking relative to the average level among city self-governments. In the formation of the value of the development level index of each territory, one of the main components of the index emerges as the most prominent one and accounts for the greater part of the value of the development level index. If the indicator is above the average in the group of

Figure 72. Territorial development level index of cities according to data for 2009–2011. territories, the corresponding index component is positive which, in turn, points to the field in which the development of that territory most decisively outpaces the development of the other territories in the same group. The inverse is also the case: if an indicator is below average, then the corresponding component of the development level index is negative, it lowers the index value and highlights the area in which the territory lags behind others in its group most manifestly* (see Table 59). In Jurmala, the city with the highest territorial development level index in 2011 (0.736), the main indicator determining the positive value of the index was population change (1.3 %; the average for national cities was -3.5 %), whereas two component indicators of the * By an above-average indicator we understand a more favourable indicator, by a below-average indicator, a more unfavourable one. Higher unemployment rates and age dependency ratios are unfavourable.

index (unemployment rate of 8.0 % and age dependency ratio of 541.6) were less favourable than the average for cities (7.4 % and 540.1, respectively).

For Rezekne, which had the lowest development level index among cities (-1.931), the values of three index components were considerably more unfavourable than the average for cities: the unemployment rate (15.1 %), personal income tax revenue per capita (LVL 247.0) and population change (-6.2 %). However, the age dependency ratio in Rezekne (516.4) was more favourable than the average for national cities. Figure 74 maps the territorial development level index for cities according to data for 2011.

Municipality Group

Table 59. The territorial development level index and main development indicators of cities according to 2011 data (main components with the greatest impact on the formation of the index value have been highlighted. Red indicates a positive impact, blue indicates a negative impact). In the territorial development level index of the cities of Ventspils and Riga (0.359 and 0.281, respectively), the components in 2011 were relatively close to the average figures, except the per capita revenue from personal income tax in the self-government budget, which were above the average for cities (LVL 343.1): LVL 394.4 in Ventspils and LVL 377.3 in Riga. For Valmiera, all components of the development level index (0.126) approximated the average for the city group. For Jelgava, where the territorial development level index in 2011 was closest to zero (0.030), a more favourable age dependency ratio (519.8) is cancelled out by lower personal income tax revenue figures per capita (LVL 318.7). In Daugavpils, three out of the four components of the development level index in 2011 (-0.680) had a negative value; the value of the index was lowered the most by personal income tax revenue per capita (LVL 220.0), which was the lowest figure among cities. However, the best age dependency ratio among cities (511.5) gave Daugavpils the highest rank among the cities in the negative range of index values. For Jekabpils, whose territorial development level index (-0.829) was lower than that of Daugavpils, only two components – the unemployment rate (10.6 %) and the per capita revenue from personal income tax in the self-government budget (LVL 243.8) – were less favourable than the average for the city group, yet the difference was sufficiently large to produce a low value of the index. Liepaja was the only city where all components of the development level index (-1.222) had a negative value. Personal income tax revenue per capita (LVL 250.8) and the age dependency ratio (568.1) had the greatest negative impact on the index value.

In 2011, 46 municipalities boasted a positive territorial development level index, while 64 had a negative value. In 2009 and 2010, the number of municipalities with a positive value of the territorial development level index was one higher. Figure 73 lists the ten municipalities with the highest index values and ten – with the lowest values according to the 2011 data: Garkalne municipality had the highest territorial development level index value, 2.308 (in 2010: 2.500), whereas Karsava municipality had the lowest: -1.789 (in 2010, Baltinava municipality had a value of -1.767). All ten municipalities with the highest index values are located in Pieriga; furthermore, only one municipality (Aizkraukle) in the top 20 positions in the ranking is not located in the Riga planning region. Among the ten lowest scoring municipalities, nine are in the Latgale region and one (Vainode) is in the Kurzeme region.

Figure 73. Municipalities with the highest and lowest values of the territorial development level index according to data for 2011.

FigureÂ 74. Territorial development level index for municipalities and cities according to data for 2011.

The value of the territorial development level index increased in 59 municipalities in 2011 compared to 2010, i.e., positive changes were evident in 2010 in these municipalities relative to the average development level in all municipalities. The opposite was the case in 52 municipalities: the value of the development index declined compared to 2010. In 2011, the age dependency ratio was a determinant indicator with both a positive and a negative impact on the value of the territorial development level index for 40 municipalities (most prominent as a negative influence for Ropazi municipality (448.7) and most prominent as a negative influence for Vainode municipality (647.4), average for the municipality group: 519.4); in the case of 34 municipalities, this was true for the unemployment rate (most positive in Baldone municipality (4.5 %) and most negative in Vilani municipality (27.4 %), average for the municipality group: 10.6 %); and for 33 municipalities, the per capita revenue from personal income tax in the self-government budget had this effect (most pronounced positive effect for Kekava municipality (LVL 451.6), most pronounced negative effect for Riebini municipality (LVL 105.4), average for the municipality group: LVL 240.7). Similar to the year before, in 2011 population change became the determining factor of the value of the territorial development level index for three municipalities (Garkalne, Marupe and Alsunga municipalities). From the beginning of 2007 to the beginning of 2012, the population in Marupe municipality increased by 40.1 %, in Garkalne municipality by 31.2 %, but decreased by 12.5 % in Alsunga municipality. These indicators also diverged most profoundly from the average value in the municipality group (-2.4 %), and based on them, the main component of the development index in Garkalne and Marupe municipalities had a positive value, whereas in Alsunga municipality it was negative. The table in Annex 2 to this report reveals the territorial development level index of municipalities that has been calculated according to data for 2009, 2010 and 2011, and a ranking of municipalities has been compiled based on this; in turn, Figure 74 maps the territorial development level index for municipalities according to data for 2011.

Planning Regions According to the data for 2011, the territorial development level index of the Riga planning region was positive, but the value for the other four regions was negative (see Table 60 and Figure 75). Among the planning regions, only the Riga region has maintained a continuously positive value of the territorial development level index since 1999, while for the other four regions it has been consistently negative. Compared with 2010, in 2011 the value of the territorial development level index for the Riga, Kurzeme and Vidzeme regions increased and decreased for the Zemgale and Latgale regions; moreover, the decline in value for Latgale was more pronounced (from -0.838 to -1.203). The drop in the index value for the Latgale region was due to an increasing gap between several indicators

and the national average, and most significantly due to the low volume of non-financial investment per capita and the persistently high unemployment rate. In 2011, as in 2010, the main constitutive component of the territorial development level index for all five planning regions was the per capita gross domestic product. In the Riga region, this indicator had a positive value and raised the index figure, while in the other regions it was negative and lowered the index score. In 2009 the GDP per capita (the GDP figures for that year were included in the calculation of the territorial development level index for 2011 as the latest available in distribution by region) in the Riga region was 36 % higher than the national average, and in the other regions it was lower by 22 % to 45 %.

Table 60. Territorial development level index of planning regions and ranking based on data for 2009, 2010 and 2011.

Figure 75. Territorial development level index of the planning regions according the data for 2011. The unemployment rate was the second most significant factor determining the 2011 value of the territorial development level index for the Riga and Latgale regions. In the Riga region (6.7 %), this was the lowest among all regions and constituted a positive index component, while the unemployment rate in the Latgale region (15.2 %) was more than 1.5 times the national average (9.0 %) and re presented a negative factor in the index. The second most significant component determining the development level index – also negative – was the per capita volume of personal income tax in self-government budgets: LVL 228.0 compared with the national average of LVL 292.0. The age dependency ratio became the second most significant factor shaping the index for the Kurzeme and Zemgale regions. The figure in Kurzeme (541.0) was higher than the national average (529.9) and lowered the value of the territorial development level index; in Zemgale, it was lower (512.8) and boosted the index value accordingly.

I nterrelation between State Co-financing and the Territorial Development Level Index One of the main applications of the territorial development level index is defining the intensity of state aid to self-governments in the form of grants towards projects co-financed from the EU Structural Funds and the Cohesion Fund and implemented by self-governments. All self-governments can receive a state grant when implementing projects under all activities of the EU Structural Funds and the Cohesion Fund in which the self-government is classified as the beneficiary, except in those activities where aid to commercial activities has been established. Thus a distinguishing feature of awarding state budget grants is that the territorial development level index is not used to assess the precedence of the implementation of a project in any particular territory or EU fund activity. Instead, several degrees of intensity have been defined for state budget grants, which depend on the value of the territorial development level index of the self-government implementing the project (see Table 61).

Table 62. Volume of state budget grants disbursed to selfgovernments in projects co-funded from the EU Structural Funds and the Cohesion Fund in breakdown by planning region, 2007 to 2011*. An overall conclusion can be drawn that the territorial development level index, as a criterion for determining the intensity of state grants, has proved to have worked well: a larger among of grant funding was awarded to self-governments located in regions with a lower level of socio-economic development, funds have been saved up that can be directed towards promoting development. Moreover, such a principle encourages self-governments to apply for the implementation of EU Structural Fund and Cohesion Fund projects and hence raise investment: self-governments with a comparatively lower level of socio-economic development commanding limited financial resources find it difficult to implement projects without state assistance in the form of matching grants (see Figure 76).

Table 61. Ratio of allocation of national public financing between the state budget grant and self-government financing depending on the value of the territorial development level index in projects co-financed from the EU Structural Funds and the Cohesion Fund*. An analysis of the data available in the management information system of the EU Structural Funds and the Cohesion Fund shows that, in the period from 2007 to 2011, the total state budget grant to self-governments was LVL 11.37 million. When reviewing the state grants by region, it emerges that the self-governments of the Latgale region received the largest volume of grant funding, with the Riga region self-governments receiving the least amount. When assessed in relative terms, per 1 000 inhabitants, the volume of state grants that went to the self-governments of the Latgale region was also more significant than the self-governments of the other planning regions (see Table 62).

* In accordance with Cabinet Regulation No 840 of July 28, 2009 “Regulations on the Criteria and Procedures for the Allocation of State Budget Grants to Self-governments and Planning Regions for the Implementation of Projects Co-financed from the European Union Structural Funds and the Cohesion Fund”.

Figure 76. Share of state budget grants to selfgovernments in the funding of projects co-financed from the EU Structural Funds and the Cohesion Fund in breakdown by planning region, 2007 to 2011, and the territorial development level index of the planning regions based on 2011 data*.

* Data of the management information system of the European Union Structural Funds and the Cohesion Fund.

TERRITORIAL DEVELOPMENT LEVEL CHANGE INDEX According to 2011 data, compared to the average figures for 2010, the territorial development level change index was positive in both the city group and the municipality self-government group (0.028 and 0.120, respectively); however, the value of the index was lower than a year earlier, which indicates slowing of the pace of development. According to 2010 data, as compared to the averages for 2009, the territorial development level change index for the city self-government group was 0.133, and for the municipality self-government group 0.141. In 2011, the positive value of the territorial development level change index was mainly shaped by the same indicators that affected both the rise and fall in the value of the index over the past years: the unemployment level and the volume of personal income tax per capita. At the beginning of 2012 the unemployment rate, compared to the beginning of 2011, decreased by 1.8 percentage points in the city group and by 2.3 percentage points – in the municipality group, while the volume of personal income tax per capita in the budgets of self-governments rose by 2.8 % in the city group and by 3.5 % – in the municipality group in 2011 compared to 2010. Annex 2 to this report provides a listing of the territorial development level change index for cities, municipalities and planning regions in accordance with the data for 2009 (vs. the 2008 averages), 2010 (vs. the 2009 averages) and 2011 (vs. the 2010 averages), as well as a ranking of territories based on the values of this index.

City Group The values of the territorial development level change index in 2011, compared with the averages of 2010, were positive for Riga, Jelgava, Jurmala, Valmiera and Ventspils, whereas for Daugavpils, Jekabpils, Liepaja and Rezekne these were negative. Exactly the same was the case the year before. However, contrary to 2010, when in comparison with the average figures of 2009 the index values increased for all cities, the index values in 2011 only rose for Jurmala and Ventspils in the positive range of values and, very slightly, in Rezekne among the negative values. For the other cities in 2011, versus the averages for 2010, the values of the territorial development level change index declined: indeed, the cities in the range of negative values did not fall significantly further behind the development figures for the year before; the most considerable drop in the index value was evident for Jelgava, in the positive range of values of the territorial development level change index (see Figure 77).

Figure 77. The territorial development level change index of cities according to the 2011 data (vs. the averages for 2010), 2010 data (vs. the averages for 2009) and 2009 data (vs. the averages for 2008). Figure 78 maps the territorial development level change index for cities according to the data for 2011, as compared to the average indicators for 2010.

Municipality Group For the group of municipality self-governments, the territorial development level change index based on 2011 data vs. the 2010 averages was positive for 53 municipality territories and negative for 57, which resembles the general situation in the year before (when 56 municipalities had a positive and 54 – a negative index value). According to the 2010 data, as compared to the averages for 2009, the values of the development level change index rose for all municipalities, whereas according to the 2011 data (vs. 2010 averages), the index value increased for 46 municipalities only. The values for 64 municipalities dropped, which indicates a slowingdown of the pace of development. Figure 79 lists the municipalities with the highest and lowest values of the territorial development level change index for 2011, as compared to the average indicators for 2010.

FigureÂ 78. Territorial development level change index of municipalities and cities according to 2011 data, as compared to the averages for 2010.

of the past two years are compared, a negative trend can be observed: according to the 2011 data, as compared to the 2010 averages, the index value only rose slightly for the Vidzeme region, while declining in all the other regions (see Table 63 and Figure 80).

Table 63. The territorial development level change index of the planning regions according to the 2009 data (vs. the averages for 2008), 2010 data (vs. the averages for 2009) and 2011 data (vs. the averages for 2010).

Figure 79. Municipalities with the highest and lowest values of the territorial development level change index according to 2011 data, in comparison with the averages for 2010. The table in Annex 2 lists the territorial development level change index for all municipalities according to the 2009 data (vs. the 2008 averages), the 2010 data (vs. the 2009 averages) and the 2011 data (vs. the 2010 averages), whereas Figure 78 maps the territorial development level change index for municipalities based on the 2011 data vs. the 2010 average figures – this highlights the regional contrasts in the index with particular clarity, and a summary of these can also be seen in Figure 80, in which the planning regions have been compared by their territorial development level change index values.

Planning Regions In the group of planning regions, both in 2011, compared to average indicators of 2010, and in 2010, compared to average indicators of 2009, the values of the territorial development level change index were positive in the Riga region and negative in the other four regions. When the index figures for 2009 and 2010 are compared directly, it becomes evident that the values in 2010 rose in all planning regions, whereas when the values of the territorial development level change index

Figure 80. Territorial development level change index of the planning regions according to the 2011 data, as compared to the average indicators for 2010. One should once again emphasise the meaning of the territorial development level change index: it reveals the relative development level and the rate of development over the past year, yet not for each territory individually but rather for each territory relative to the average indicators in the group of territories (in the case of the planning regions, against the national averages). The negative values of the territorial development level change index for the Vidzeme, Kurzeme, Zemgale and Latgale regions do not imply that no positive development has taken place in these territories during the year but rather the fact that these regions have not reached the average national level of development which, in turn, is considerably pushed up by the relatively more favourable demographic and socio-economic indicators of the Riga region.

OPPORTUNITIES FOR IMPROVING THE ASSESSMENT OF TERRITORIAL DEVELOPMENT In its efforts to advance the methodology for the monitoring and assessment of territorial development, the State Regional Development Agency continues to work on the creation of a regional development indicators module (RDIM)*. This module will simultaneously serve as a repository of socio-economic data on the territories of Latvia and provide a capability of in-depth analysis (data selection, carrying out, comparison and display of calculations in a user-friendly way) with the aid of special software (a business intelligence tool). RDIM will enable the accumulation of uniform and comparable data on territories, creating time series of indicator values, as well as the generation of new monitoring and assessment indicators on the basis of existing data. The main areas of application of RDIM will be the assessment of developmental trends, evaluation and implementation monitoring of regional policy instruments; it will also support an information base for the drafting of development programmes, planning documents and spatial plans of various levels. The information contained within the system will be available to professionals (authorised users, also enabling in-depth analytical capabilities) as well as any interested party through access to territory profiles online; it will also be possible to select and save (in any format convenient for the user) any data in the system. It is expected that RDIM will be made operational in the autumn of 2012. At that time, the system will contain data from 14 sources: the Central Statistical Bureau, the Office of Citizenship and Migration Affairs, the Treasury, the State Revenue Service, the Enterprise Register, the Ministry of Finance, the Rural Support Service, the State Social Insurance Agency, the State Employment Agency, the Ministry of Welfare, the Ministry of Education and Science, the Ministry of the Interior and the State Joint Stock Company Latvijas valsts ceļi, as well as cartographic data provided by the mother system TDPIS. RDIM will not duplicate the data of the above information systems but rather retrieve and accumulate data that are relevant for the monitoring and assessment of territorial development already compiled at the level of territorial units. Of the data holders mentioned above – the information systems managed by them – 35 data sets will be imported into RDIM, comprising 68 separate indicators. These indicators will be selectable by certain features (e.g., population by gender and/or a specific age group). At this level of detail, the number of indicators

will be even greater. The individual indicators will be possible to be recalculated mathematically by combining them (e.g., by expressing the number of businesses in a territory per 1 000 inhabitants) and obtaining meaningful indicators that can be used to compare territories. At this stage of development, the total number of indicators that can be used for analysis (both primary data/indicators and indicators derived from these and envisaged during the development of the system) exceeds 200. Authorised users will be able to generate their own calculated indicators as needed thus expanding this list according to their own purposes. The rather large number of indicators included in the system has been divided into, and will be made available to system users as certain classification groups and subgroups, among which population, territory, economy and welfare are the principal ones. The classification will not merely make it easier for users to navigate the system of indicators, but will also support the use of the three capitals module described in the previous report, Development of Regions in Latvia 2010 in the monitoring and assessment of territorial development. The information system will contain not just information on the outcomes of development but will also allow the volume of EU funds allocated to territorial development (raised within territories) to be viewed and analysed. Information on the EU Structural Funds and the Cohesion Fund will be obtained from the EU funds monitoring information system of the Ministry of Finance and on the support instruments in the agriculture and fisheries sector, from the information system of the Rural Support Service. The data will be available for the period since 2004, i.e., the time of accession of Latvia to the European Union. In order to render the information included in the system accessible and comprehensible to a wider public, an individual profile will be set up for each administrative territorial unit (self-government, planning region, the state), yet the structure of such profiles (at the respective level of administrative territorial division) will be identical. This will enable easy comparisons among territories by certain indicators. With the principal units of information included, a self-government profile will contain 34 elements (description, links, data tables for indicators, diagrams, maps) and a profile of a planning region and the state will contain 42 (slightly different) elements.

* The creation of the regional development indicators module is an activity of stage II of SRDA project Local Government Territorrial Development Planning, Infrastructure and Real Estate Management and Supervision Information System (TDPIS), commenced in October 2011.

VII DESCRIPTION OF THE DEVELOPMENT OF GROUPS OF SELF-GOVERNMENT TERRITORIES The specific trend of the development of self-governments is contingent upon their location, population patterns and territorial ties. The development axes defined as part of priority “Spatial Development Perspective” of the Sustainable Development Strategy of Latvia for 2030 emphasise the significance of development centres as the drivers of regional development, the need for urban and rural interactions, and set apart areas of national interest as unique, distinct territories of importance to the development of the entire country. Groups of territories such as the rural development space, the Baltic coastal area, the Eastern borderland and the Riga metropolitan area have been designated areas of national interest. This chapter analyses groups of self-government territories that to some extent can be considered to be the territories singled out in the Sustainable Development Strategy of Latvia. The analysis of these territories is based on both quantitative data and various qualitative parameters. In terms of their purpose, all territories can be categorised as administrative/statistical, functional and policy

territories. When describing territories, administrative/ statistical units are used most frequently, which either overlap fully with territories of statistical compilation – territorial units, self-governments, statistical regions – or constitute combinations of such territories, or groupings, in accordance with certain parameters which, in turn, are more often associated with functional territories or policy-specific territories. Functional territories are not, however, generally strictly demarcated*. This report picks up on the analysis of the territorial groups covered by the previous edition, Development of Regions in Latvia 2010: •d evelopment centres and their areas of influence: Riga and the Riga metropolitan area, other national development centres and their areas of influence; •b order areas: Baltic coastal area and borderland; •u rban and rural (municipality) territories. Focus is also on the territories of less populated municipalities.

DEVELOPMENT CENTRES AND THEIR AREAS OF INFLUENCE In the Sustainable Development Strategy of Latvia, an agglomeration is understood as a highly urbanised area consisting of a territorial centre, one or more large cities and urban and rural settlements in the surrounding area that interact closely, and whose boundaries are determined by the intensity of mobility, commuter movement and services. SDSL refers to a metropolitan area that reinforces the role of Riga as a globally oriented Baltic Sea metropolis. The Riga metropolitan area is defined with the following centres: Jurmala, Olaine, Jelgava, Baldone, Salaspils, Ogre and Sigulda. A metropolis implies a large city that is accessible and offers a favourable human environment, and represents the economic, political, cultural and international hub of a country or a region. SDSL defines interaction as urban functional networks (Pieriga urban functional network), marked by development centres within the boundaries of the agglomeration: Jurmala, Tukums, Ogre, Sigulda, Olaine, Baldone, Salaspils. The concept of Pieriga is used within the meaning of an urban functional network. The concepts of agglomeration, metropolitan area and urban functional networks are used in the following that generally refer to the same territory without defining boundaries and presenting a differing perspective on all these territories. Pieriga [outlying greater Riga] is the territory surrounding the city of Riga, delimited by a relative

functional space (a functional network) that typifies an agglomeration – or ties. Territories have distinct centres and periphery. The centre is the locus of concentration of functions serving the centre itself and the periphery of the territory. The periphery forms a part of the agglomeration, and is delimited based on certain criteria. Centres define the agglomeration: it is sufficient to identify the centres themselves. In territorial development planning, the term develop ment centre is used in an economic and social sense, and it denotes the concentration of various resources, including potential resources, within a certain area. In order to differentiate policy support, centres are graded, with a meaning ascribed to each gradation. The question of what centres are and what their hierarchical status is an important policy question. Development centres are identified at different levels: internationally, nationally, regionally, at municipality level and local (village) level. Centres of international/national significance form a general national frame, and their existence is determined by various criteria relating to international/national accessibility, the nature and scope of services and the role these play at the international/national level. * Pužulis, A. Robežu loma ģeogrāfiskās telpas organizācijā Latvijā. Doctoral thesis. Riga: University of Latvia, 2012.

Overall, such centres shape the population patterns and economic structure of a country. In accordance with Latvia 2030, all nine cities – Riga, Daugavpils, Jekabpils, Jelgava, Jurmala, Liepaja, Rezekne, Valmiera and Vents pils – are national development centres. The potential of Riga, Daugavpils, Liepaja and Ventspils is sufficient for them to also become established as international development centres. Mid-level and lower level development centres are of special significance for regional development. Regional centres are of greater importance at a lower, local, level as centres of economic concentration, jobs and services, which serve and organise territories at the self-government level. The role of regional centres is determined by the size of the regional centre (in terms of population, number of jobs), traditional services provided, the area of influence covered, which extends beyond the limits of a single self-government, forming areas of direct influence. At this time, as regional centres are assessed within the context of the administrative territorial reform, the latter criterion is relative, and the territory spanning the area of the former administrative district, or a part thereof, should be contemplated. In Latvia, the former district centres and other towns with the population exceeding 7 000 or 8 000 are considered regional centres, or even fewer in certain instances. The category of regional development centres includes 21 towns: Aizkraukle, Aluksne, Balvi, Bauska, Cesis, Dobele, Gulbene, Kraslava, Kuldiga, Limbazi, Livani, Ludza, Madona, Ogre, Preili, Saldus, Sigulda, Smiltene, Talsi, Tukums and Valka (see Figure 81). Local – or municipality-level – development centres serve as municipal/local service centres. Municipalitylevel development centres comprise all other towns and large urbanised rural centres. Development centres at this level are designated by the local self-governments in their territorial development planning documents. The question regarding development centres in Pieriga (the agglomeration of Riga) is debatable, where the populations are similar to those of peripheral centres, while other criteria that define a centre (such as the area served) are considerably less pronounced. Residents of suburban centres often work in the metropolis, which diminishes the functional importance of the centre within the surrounding area and causes a certain set of services to be absent from the centre. At the same time, specialised development centres in Pieriga can be considered regional centres, as they contain some functions of national or regional importance but are not significant service centres. Thus, Salaspils emerged as a centre with several functions and territories (villages) merging, and it acquired the status of a town only as late as 1993. Some of the former functions have been lost as a result of economic restructuring. The town is at a formative stage functionally. Although it has close ties to Riga, Salaspils has not been incorporated into Riga and is expected not to be in the foreseeable future. The same is true for the villages of Adazi, Kekava, Pinki and Marupe, which have not acquired the status of towns. Large populated areas are emerging in Marupe and Kekava municipalities that are an extension of the city of Riga beyond its limits, with a tendency to merge gradually.

New villages and summer home settlements/horticultural societies are special territories in Pieriga, which are gradually transforming into permanent settlements. In both instances, investment is needed to develop infrastructure, whereas their status as centres is questionable – mainly because of their inchoate social and economic infrastructure. In Pieriga, it is often a matter of not so much the status of settlements but rather an administrative territory where certain functions exist irrespective of location, which becomes secondary. A development centre, as a functional territorial entity in the suburbs, has little to do with the settlement status. Marupe municipality is a good example. The village of Marupe, Tiraine and Terini have merged, forming a functional extension of the territory of Riga; moreover, the emergence of new objects and territories is not contained solely in these formal villages but rather spans an extensive area beyond their limits. In this case, the application of traditional criteria of a development centre often becomes meaningless due to the very settlement pattern. As the settlement pattern of the suburbs evolves, this tendency may gain prominence. Urban centres exude various influence – economic, social, political, etc. – over a sufficiently large area, thus forming ties. The area of such influence can be identified to a relative extent only, by employing technical approaches (e.g., distance from the centre, accessibility of the centre determined by the duration of travel, etc.), methods of statistical analysis (using areas for which statistical data are available to identify potential influence) or applying various methods of qualitative assessment. Areas of direct influence form around towns and cities, the extent of which may depend on the size of the urban centre, ties with other urban centres, accessibility and other variables. Commuting for employment and services and rural settlement that is closely associated with the urban centre (suburban developments, summer home settlements) are examples of such influence. At any rate, the size of the direct influence area of an urban centre is to be identified individually using qualitative research data. The rough areas of direct influence of towns and cities, by mapping their relative location, are depicted in Figure 81. As no studies have been conducted at this time regarding areas of direct influence, this report uses administrative territories to describe the influence of urban centres: urban areas of influence (urban regions in last year’s report; see Figure 83). In identifying the areas of influence of development centres, some territories may end up belonging to multiple areas of influence; also, a situation may emerge where some of the country’s territory remains outside them. Therefore, when identifying areas of influence, an approach is possible where every territory is included into a specific area of influence, even though the influence of the centres may vary in its extent and overlap. This report distinguishes and describes the areas of influence of the national development centres. It should be added that Jurmala is one of the self-governments belonging to the Riga area of influence – the internal metropolis of the metropolitan area – and is therefore not considered separately here.

FigureÂ 81. National and regional development centres and their areas of direct influence.

Riga and Riga Metropolitan Area Riga is a Baltic metropolis. It is the focal point of a significant population, economic and social potential which, in the constitution of the metropolitan functional space, considerably exceeds the Latvian scale. The identification of the functional space of Riga is connected with the area of population movement for economic, everyday employment and educational needs. Using the available statistical data, the functional space of Riga could be identified more accurately before the administrative territorial reform than now: many statistical indicators were available at the level of parishes (pagasts) and towns/cities. A study conducted in 2004 by the University of Latvia identified the boundary of the agglomeration of the Riga functional region, based predominantly on the daily commuter migration of the labour force*, whereas in 2006, during the drafting of the spatial plan for the Riga region**, this boundary was adjusted for accuracy: one of the basic criteria used was a calculation (based on SRS data) of the share of personal income tax of the residents working in the city of Riga in the personal income tax revenue of other self-governments. Identifying the functional space of Riga is now rendered more complicated, as the municipalities created having a large area – such as Ogre, Tukums, Limbazi – have an explicitly inconsistent structure of ties, whereas statistical data on the territorial units of the municipalities are generally not compiled, and only information reflecting the indicators for the entire municipality is available. In these municipalities, territories located closest to Riga have clear ties with the capital city (e.g., the town of Ogre and Ogresgals parish in Ogre municipality; the town of Tukums in Tukums municipality; Skulte parish in Limbazi municipality), and the situation is different in the periphery of these municipalities (e.g., Mazozoli and Mengele parishes in Ogre municipality; Zentene and Lestene parishes in Tukums municipality; Pale parish in Limbazi municipality). Thus, in order to assess the territory of the Riga metropolitan area, qualitative indicators need to be used alongside quantitative data. Individual population mobility indicators show that Riga, together with Pieriga, is an important vector of ties for the entire territory of Latvia. Based on the comparatively high intensity of commuting, the metropolis encompasses not only the territories in direct vicinity of Riga but also extends to, for example, Aizkraukle and Koknese and includes Jelgava and a portion of Jelgava municipality, Tukums municipality, Bauska municipality, Vecumnieki municipality and Limbazi municipality. Besides population migration, there exist other indicators that characterise an agglomeration: population concentration, demographic and economic indicators, * Krišjāne, Z. (project leader, LU FGES), Rīgas aglomerācijas robežu noteikšana. Riga: Riga City Council City Development Department, 2004. ** Rīgas plānošanas reģiona telpiskais (teritorijas) plānojums. Riga: Development Council of the Riga planning region, Riga Regional Development Agency, 2007.

the road network, processes of suburbanisation – formation of built developments and settlement, all of which provide clues about the spatial configuration of a metropolis. Identifying the area of an agglomeration for analytical or policy purposes is a planning challenge and is not unambiguous. Since 2004–2006, no special studies have been conducted on the structure of Riga’s area of influence. In this report, the pre-defined territory has been adopted as the basis for isolating the Riga metropolitan area which, using the latest statistics (incl., SRS data on the share of personal income tax revenue of the residents working in Riga in the personal income tax revenue of other self-governments) and assessment, has been adjusted in accordance with the current administrative territorial division. In comparison with last year’s report, Tukums and Plavinas municipalities have been excluded from the Riga metropolitan area, while, for example, Limbazi municipality is not included in it as before. This solution was chosen in order to reduce the effect rural territories situated remotely with respect to Riga have on the description of the Riga metropolitan area: the extensive areas of Tukums and Limbazi municipalities contribute little to characterise the territory subject to analysis, whereas Plavinas municipality is a threshold territory between the areas of influence of Riga and Jekabpils, without obvious attachment to a specific area. Thus, a territory that apart from Riga itself comprises two cities – Jurmala and Jelgava – and 31 municipalities has been designated as the Riga metropolitan area. The area being analysed here includes four regional development centres, Sigulda, Ogre, Aizkraukle and Bauska, as well as a number of smaller municipal towns. Riga and its functional space, in terms of the population and economic volume, is the largest urban area of influence not just in Latvia but also the Baltic states. More than a half of all the population of Latvia, 53 %, lived in the Riga metropolitan area at the beginning of 2012, but the proportion of value added created in it is even larger. The highest concentration of the population and economy, especially service, manufacturing, financial, educational, cultural and scientific establishments, is in Riga itself. The comparative information provided in Table 64 allows an evaluation of some characteristic features of the Riga metropolitan region. The city of Riga has a very pronounced positive impact on the level of commercial activity, representing a considerably higher number of economically active individual merchants and commercial companies per 1 000 inhabitants than in the rest of the country. Within its area, Riga has a positive effect on the relatively higher rate of employment, ensuring the lowest unemployment figures in the country. One of the features characterising the Riga metropolitan area that significantly distinguishes it from the areas of influence of other national development centres in Latvia is the relatively much higher level of personal income; furthermore, and it is more evenly distributed spatially, i.e., there is a smaller disparity in the volume

Table 64. Average demographic and socio-economic indicators of the Riga metropolitan area territories and the changes in them within one year*. of personal income between the principal city and other territories of the area of influence. Three spatial divisions can be isolated within the Riga metropolitan area: Riga itself, the inner metropolis and the outer metropolis. The inner metropolis is located around Riga, it is formed by Jurmala and 11 municipality self-governments. Characteristic of these is a positive population growth (caused not just by a positive migration

Figure 82. Riga metropolitan area. * Calculations using data by OCMA, CSB, SEA and the Treasury.

balance from Riga and the rest of Latvia but, in several municipalities, also a positive natural increase), a high concentration of population for Latvian relations, a high average personal income, and a high number of businesses per 1 000 inhabitants. In the past decade, these self-governments have seen the most intense emergence of new built developments, and by permanently resettling from Riga to the suburban area, Rigans caused the values of demographic indicators for Riga to decline. The outer metropolis forms a circle around the inner metropolis, comprising 20 municipality self-governments and Jelgava. Large internal disparities are characteristic of the area. The unifying factor of the outer metropolis is an elevated level of personal income, a higher concentration of the population and, the most important of all – a greater commuter migration to Riga as compared to the rest of Latvia. The inner metropolis is linked to the city of Riga and forms a tightly integrated functional space that necessitates coordinated policy in the territory. The outer metropolis forms an urban field that communicates with Riga on a daily basis and where the positive economic and social impact of Riga is felt (see Figure 82).

National Development Centres and Their Areas of Influence Seven cities and their surrounding areas have been analysed as development centres of national importance in this report (Riga and Jurmala, which is closely associated with Riga, were described above) – i.e., cities and their areas of influence. The last report, Development of Regions in Latvia 2010, referred to these territories as urban regions, yet, to avoid any misunderstanding regarding the administrative nature of such areas, the term urban areas of influence is used by the present report. Urban areas of influence have been identified in order to gain an overview of the developmental interconnections between cities and their surrounding territories. Urban areas of influence are not administrative territories and do not imply another level of administration. At the same time, the statistical information regarding areas of influence lets one consider using such territories to describe urban influences, which in turn determine the outlines of the functional space. This report uses the urban areas of influence defined in the previous report, except the area of influence of Valmiera, which has been expanded to include the self-government territories of the former Valmiera district located near the national border. Figure 83 depicts the national development centres and their areas of influence, whereas the marked locations of regional development centres offers a justification for the non-inclusion of other territories in the areas of influence of national development centres. The territories of the areas of influence have been defined using the available data, based on expert opinion, taking into account accessibility and the historical ties between the cities and their hinterlands – which is largely affected by the structure of the former administrative districts. The rural territories of the areas of influence that abut cities are diverse in terms of the size and number of selfgovernments and the presence of other urban centres that may affect the indicators for the territories. The varying location of national cities and the role they play in

the Latvian economy also determines the influence of the surrounding territories. Jelgava is a closely integrated part of the Riga metropolis; Liepaja and Daugavpils represent growth poles for population balance, at the same time they are characterised by a peripheral location relative to both Riga and the Kurzeme and Latgale regions, respectively. The role of Valmiera, Jekabpils and Rezekne within the surrounding area is different. Ventspils, as a port city, is peripheral even relative to northern Kurzeme. The distance to a city is a substantial functional characteristic that ensures the accessibility of certain functions from the hinterland. It is assumed that this distance equals 50 km by motor roads – this, depending on the type of transportation, ensures access within 40 minutes to one hour. The 50-kilometre accessibility range most often does not match the areas of influence of cities: in some cases, the areas of influence do not reach as far as the 50 km boundary, while in other cases they extend beyond this. It should be noted that the available statistical data have determined the territories of the urban areas of influence: these have been demarcated using self-government boundaries rather than the limits of their territorial units (parishes). When the areas of influence of the seven cities are compared according to the average values of demographic and socioeconomic indicators, we can see that they are characterised by an overall correspondence to the age dependency ratio for Latvia as a whole, a comparatively more rapid population decline, whereas the unemployment rate and economic activity are close to the average figure for the group of all municipalities. Overall, within the urban areas of influence, the age dependency ratio, for instance, is quite similar for both the cities and the municipalities, while other data – mostly those describing economic development – reveal great disparities between cities and rural territories. The component of the rural territories in the economic indicators of the urban areas of influence – especially in terms of the volume of personal

Table 65. Average demographic and socioeconomic indicators of urban areas of influence and their changes within a year*. * Calculations using data by OCMA, CSB, SEA and the Treasury.

FigureÂ 83. National development centres and their areas of influence.

income tax, unemployment rate and the concentration of economically active merchants and commercial companies – noticeably lag behind not only the principal cities of such areas but also the average performance the Latvian municipalities. Thus the urban areas of influence (excluding the Riga metropolitan area) are marked by greater internal disparities of the level of development than other groups of territories that also suggest the substantial influence exercised by the national cities forming areas of influence on their hinterlands. Yet it should be also emphasised that there exist fairly considerable differences among the urban areas of influence in terms of the nature and extent of these impacts (see Table 65). The role of a city as a driver of development in the surrounding areas can be viewed as positive in those instances where the differences in the demographic and socio-economic indicators between the city and the adjacent municipalities are small and, conversely, as insufficient if these differences are great. Considerable variation in the statistical indicators between a city and the hinterland points to the theoretical possibility of an even greater disparity between territories if there were no mutual influence – it should be noted that at present a portion of rural residents migrate to cities on a daily basis, thus reducing the unemployment figures and increasing transfers of personal income tax to the rural territories. The indicators generally characterising the seven urban areas of influence provide a notion of the level of development of these areas against the backdrop of other territories in Latvia but they do not reveal the role of the cities as development centres. The role of a centre is to be analysed within a functional territory by conducting special research studies involving an analysis of the population, financial flows, cooperation networks and other ties, relying on quantitative as well as qualitative data. In order to

draw conclusions on the impact of cities, data are required at a much lower level than self-governments, i.e., at least at the level of territorial units (parishes, municipality towns). Within this report, comparable statistical information has been used to identify connections between territories: in a comparison of mutually subordinate territories. When describing diverse territories and development centres, the distance to the metropolis of Riga plays a significant role in Latvia. Negative demographic and socio-economic indicators are especially pronounced for territories located further than 200 km from the capital city – which includes nearly all of Latgale and a portion of the Baltic Sea coast of Kurzeme. The distance that may be expressed as access time correlates with many developmental indicators. The large cities of Latvia (national development centres) poorly compensate the influence of the metropolis (see Figure 84).

Liepaja and Its Area of Influence The Liepaja area of influence has been defined based on the territory of the former Liepaja district – including the city of Liepaja and Aizpute, Durbe, Grobina, Nica, Pavilosta, Priekule, Rucava and Vainode municipalities. Over the period of a decade, the rural self-government territories that made up the former Liepaja district consistently produced very low values of the territorial development level index relative to Latvia as a whole. One feature reveals the dominant role of Liepaja within the region: the relatively much higher level of commercial activity compared to the other territories. In the municipality territories of the urban area of influence, a noticeably lower amount of personal income tax per capita is collected than in Liepaja. The internal differences in the area are clearly underlined by the significantly

Figure 84. Distance of territories from Riga by paved motor roads.

Table 66. Average demographic and socioeconomic indicators of the areas of influence of Liepaja and Ventspils and their changes within a year*. higher pace of population decrease in the municipalities, which exceeds the average indicators of both the Kurzeme planning region and the whole of Latvia. This evidences the long-lasting negative socio-economic situation in the municipalities of the Liepaja urban influence area. At the same time, Liepaja is a pronounced centre of employment, and the economic activity of the central city provides employment to the inhabitants of an extensive rural territory – which is reflected by the roughly similar unemployment rate in Liepaja and the average for the municipalities of the area of influence (see Table 66). Overall, the city of Liepaja, as the third largest city in Latvia, noticeably affects the surrounding area. This is confirmed both by the complex indicator – the territorial development level index – and individual indicators. The situation is more favourable in the municipal self-governments nearer to Liepaja: these have seen a less population decline, lower unemployment, a lower age dependency ratio, comparatively more favourable indicators of natural population increase and long-term migration and higher levels of tax revenue. A suburban zone is forming around Liepaja, driven by Grobina and Durbe, as well as a Baltic coastal area that is attractive for construction development. At the same time, on the edges of the urban area of influence, the demographic and socio-economic indicators are noticeably lower. On the one hand, this can be explained by the marginal location of the territory relative to Riga as a development centre; on the other hand, by the inability of Liepaja to compensate this. The internal differences of the area of influence reveal the direct influence of the city of Liepaja, which spans a smaller area than the area of influence.

Ventspils and Its Area of Influence The territory of the area of influence of Ventspils consists of the city of Ventspils and the municipality of Ventspils surrounding it – which coincides with the former Ventspils * Calculations using data by OCMA, CSB, SEA and the Treasury.

district, one of Latvia’s most sparsely populated areas. In the first half of the past decade, similar to the self-governments in the vicinity of Liepaja, those of the former Ventspils district were also characterised by low values of the territorial development level index. However, the situation gradually changed during the last five or six years, when the overall development level of these territories increased relatively fast. This applied especially to the territories of the parishes directly abutting the city of Ventspils. However, it should be stressed here that these territories are characterised by comparatively very small populations, which means that new economic activity could change the indicator values relatively sharply. Yet it is undeniable that the positive influence of Ventspils manifested itself during this period on the development of the territories adjacent to it. Against the backdrop of the areas of influence of other national cities, the area of influence of Ventspils exhibits relatively high levels of commercial activity in the rural territory. This implies positive links between the city and its hinterland, but it should be noted that this indicator might be related to the practice of company registration – and especially given the circumstance that the population of the expansive Ventspils municipality only numbers 13 000. At the same time, the very large disparities in the personal income levels between the urban and municipal territories has to be noted which, on the one hand, suggests that the labour ties within the territories of the urban influence area are rather tenuous, whereas the relatively low rate of unemployment in Ventspils municipality implies the opposite: that the city also provides higher-level employment to those residing in the municipality. A feature of the influence area of Ventspils in 2011 was the steepest growth in personal income tax revenue per capita in the self-government budget among the urban areas of influence of all national cities. The city of Ventspils occupied the leading position in Latvia in terms of this indicator; the figure for Ventspils municipality, too, was among the highest nationally. The areas of influence of both national development centres in the Kurzeme region exhibit the greatest mutual contrast precisely in terms of their personal income tax revenue (see Table 66).

As in the case of Liepaja, the influence of the city of Ventspils is pronounced in the nearby suburban area, yet the data available at the municipal level only prevents more detailed judgments regarding the extent of the direct influence beyond the city. The socio-economic indicators of the municipalities surrounding the Ventspils area of influence are generally lower than those for Ventspils municipality, which lets one assume that the city has considerable influence over the surrounding rural territory.

Daugavpils and Its Area of Influence The urban area of influence of the city encompasses the city of Daugavpils and the territories of Daugavpils and Ilukste municipalities, which form the erstwhile Daugavpils district. The disparity in personal income level and the extremely large differences in the concentration of economically active individual merchants and commercial companies in the territories of the city and the municipalities reveal an internally uneven socio-economic situation within the urban area of influence. Under conditions where commercial activity is very low in the rural areas, the positive influence of the city of Daugavpils on the hinterland is nonetheless evidenced by the relatively low rate of unemployment in the context of Latgale. Though the overall level of socioeconomic activity is lower, the internal differences in the level of territorial development and the nature of the socioeconomic ties of the Daugavpils urban area of influence is quite similar to the urban area of influence of Liepaja. At the same time, the lower level of commercial activity within the municipalities of the area of influence of Daugavpils marks the relatively greater degree of dominance of the city as a provider of jobs (see Table 67). The closure of the large businesses in Daugavpils in the recent decades took place without a simultaneous creation of compensatory jobs, resulting in a situation that differs from the other large cities in Latvia. This, in turn, led to a substantial population decline in the city. As the second largest city in Latvia, a suburban area has formed around

Daugavpils, yet it is difficult to draw a boundary of the direct influence of the city in terms of municipalities.

Rezekne and Its Area of Influence The area of influence of Rezekne comprises both the city of Rezekne and the municipalities of Rezekne, Vilani and Karsava. The transportation and geographical location of Karsava municipality – formerly part of Ludza district – determines its greater ties with Rezekne than with the regional development centre that is Ludza. The socio-economic development indicators of the very expansive Rezekne municipality, which encloses the city of Rezekne, are similar to the indicators of the more remote Vilani and Karsava municipalities; accordingly, the role of Rezekne as a development centre in promoting the development of the surrounding areas, or the direct positive impact of the city on the rural territories of the hinterland, is formally unnoticeable. Both in the city of Rezekne itself and in the municipality territories in particular, the unemployment figures as indicators of the level of economic activity are very unfavourable. At the same time, just as in the area of influence of Daugavpils, there exists a very large disparity in personal income levels between the city and the surrounding territories. However, against the backdrop of the Latgale planning region, the Rezekne area of influence performs favourably in terms of the relatively high number of economically active individual merchants and commercial companies per 1 000 inhabitants – which may either imply the beginning of higher social and economic activity or herald a potential economic growth in the near future (see Table 67). Overall, the situation in Rezekne resembles that in Daugavpils: here, too, the largest employers ceased their operations within the recent decades, and the city of Rezekne is distinguished by the highest percentage of population loss among the large cities in Latvia. The operation of the Rezekne special economic zone – which is also evolving in the suburbs – can be regarded positively as a provider of new jobs.

Table 67. Average demographic and socio-economic indicators of the areas of influence of Daugavpils and Rezekne and their changes within a year*. * Calculations using data by OCMA, CSB, SEA and the Treasury.

Jelgava and Its Area of Influence The city of Jelgava, and to a significant extent also the adjacent municipal territories, belong to the Riga metropolitan area, which renders the analysis of the territorial impact of Jelgava using the available statistical data difficult and may produce an inaccurate picture. The analysis uses an urban area of influence that encompasses Jelgava, Jelgava municipality and Ozolnieki municipality – the latter two form what was once Jelgava district. As a part of the Riga metropolitan area, Jelgava and its hinterland forms the periphery of the Riga area of influence with pronounced commuter migration for work purposes, which is reflected in self-government revenues. This is particularly evident in the city of Jelgava and Ozolnieki municipality. At the same time, as a national centre of development, Jelgava forms its own area of influence. Both influences overlap, and they are difficult to identify relative to individual municipalities. The rural territories of the Jelgava area of influence exhibit a relatively high concentration of commercial activity. The positive role of the city (in terms of ties), compared to other urban areas of influence, is characterised by a relatively smaller disparity in the personal income level between the urban territory and the other territories within the area; however, this is greater than the average disparity between cities and rural territories in the entire Riga metropolitan area. The comparatively small difference in the unemployment rate between Jelgava and its surrounding territories also indicates fairly close and advantageous economic ties within the Jelgava area of influence. The area of influence of Jelgava stands out among other groups of territories with the relatively favourable nature of its population change: the municipality territory within the area is one of the sets of territories in Latvia where the population has increased over the past five years (see Table 68). Against the backdrop of other urban areas of influence, the relatively more favourable demographic and

socio-economic indicators of the Jelgava area of influence can be explained by the location of the territory in the central part of the country, the positive impact of the capital Riga – which is perhaps even more significant than that of Jelgava itself. In order to assess the specific influence of Jelgava on its surroundings, more detailed data and studies are required.

Jekabpils and Its Area of Influence The area of influence of Jekabpils coincides with the territory of the former district. It includes the city of Jekabpils and the municipalities of Akniste, Jekabpils, Krustpils, Sala and Viesite. Jekabpils is the smaller national city in Latvia; it is situated amidst a large territory that does not have an equivalent development centre of this level. The Daugava river also has an important role: it separates the municipalities of Selija from the main national traffic arteries, whereas Jekabpils is the only point along in the segment from Aizkraukle to Daugavpils where the river can be crossed via a bridge. Furthermore, the mobility of Jekabpils has good ties to Riga. All these factors in aggregate shape the city’s special role in consolidating the surrounding rural areas. Within the extensive area, the influence of the centre is weak, and a similar picture emerges to the urban area of influence of Rezekne. Commercial activity is concentrated in Jekabpils; it is significantly lower in the municipalities. There is also a substantial disparity in the personal income level between the city and the municipalities. Among the other territories of this group, the Jekabpils area of influence stands out with its high rate of population decline. The potential explanations could be the less favourable economic conditions, the location of the region that is conducive to mobility and also the conditions characteristic of a periphery in the border area with Lithuania (see Table 68).

Table 68. Average demographic and socioeconomic indicators of the areas of influence of Jelgava and Jekabpils and their changes within a year*. * Calculations using data by OCMA, CSB, SEA and the Treasury.

Features characteristic of an urban area manifest themselves most in Sala municipality. The demographic and socio-economic indicators of the other two municipalities bordering on the city of Jekabpils – Krustpils and Jekabpils municipalities – are lower, yet the area of these municipalities is also very extensive. Accordingly, based on the existing statistical data, the direct influence of Jekabpils on the surrounding territories is difficult to identify.

Valmiera and Its Area of Influence

also characterised by more favourable unemployment and population change indicators, whereas the municipality territories have a relatively lower age dependency ratio. No sharp differences are evident within the Valmiera area of influence between the self-governments closer to the city and those located more remotely; however, overall, the socio-economic indicators of Mazsalaca, Rujiena and Strenci municipalities are lower than those of the three suburban municipalities and Naukseni municipality (see Table 69). Valmiera has preserved manufacturing functions and, contrary to the range of services provided by the city of Jekabpils, it has added higher education opportunities, which creates potential for the development of the urban area of influence. Valmiera possesses a well-defined suburban territory with direct influence in the nearest vicinity. The infrastructure that has evolved adjacent to the city is evidence of this. The broader influence of the city cannot be identified clearly at this time, yet the range of the indicator values and territorial distribution suggest that Valmiera (as well as Rezekne and Jekabpils) should be regarded a national development centre of comparatively low impact for the time being.

Valmiera constitutes the centre of a territory that extends beyond the former district and encompasses the municipalities of Beverina, Burtnieki, Koceni, Mazsalaca, Naukseni, Rujiena and Strenci – i.e., the former Valmiera district and a portion of Valka district. The location of Strenci municipality – the situation of the majority of the area closer to the national city of Valmiera than the former district centre of Valka, which is one of the smallest regional development centres in terms of population – determines its more pronounced ties with Valmiera. The potential functional space of the city of Valmiera is far larger, yet the presence of several regional development centres – especially Cesis – has dictated that the area of influence (primarily along a southward axis) needs to be regarded more narrowly, based on the close economic ties of the city and the historically evolved structure of service ties. Within the area, the city of Valmiera is a pronounced locus of employment. Compared with the sur rounding municipalities, it has a much higher level Table 69. Average demographic and socio-economic indicators of the of commercial activity and area of influence of Valmiera and their changes within a year*. remuneration. Valmiera is

BORDER AREAS The identity of Latvia’s border areas – the coastal area and the borderland – is defined by their unique location and the impact that borders have on the surrounding area and Latvia as a whole. The impact of borders in Latvia is a little-researched subject (there are more data regarding borderlands)*. The Sustainable Development

Strategy of Latvia until 2030 specifies the coastal areas and borderlands as spaces of national interest, and to ensure their development, targeted state policy is required. However, specific territories have not been legally formalised for the purposes of such policy and are currently under discussion.

* Pužulis, A. Robežu loma ģeogrāfiskās telpas organizācijā Latvijā. Doctoral thesis. Riga: University of Latvia, 2012.

* Calculations using data by OCMA, CSB, SEA and the Treasury.

The available statistics and the fact that policy implementation also necessitates administrative authorities at the local level often causes border areas to be contemplated within the limits of administrative boundaries. Such an approach is well-founded, yet it does not grasp the essential meaning of border areas: the impact borders have on the surrounding territory, which can both con-

siderably exceed the administrative boundaries or, quite the contrary, not even reach them. In the former instance, statistics characterise the border area incompletely, while in the latter, they do so in a distorted manner, as they contain data that do not pertain to the border area. This report uses data on administrative territories, which provide an approximate description of the border area.

Baltic Coast Coastal Area The Baltic seacoast is a unique feature of value Latvia possesses. The Baltic coastline of Latvia stretches 496 km. The large and small ports along the coast and the longest sandy beaches of the Baltic Sea represent significant components of the country image and an important resource for development. A coastline that is well arranged and supplied with suitable infrastructure is both a distinctive place of residence for the inhabitants of Latvia, a visiting card of the country and a unique product of Latvia that can be marketed both to Latvian residents and foreign tourists. In order to facilitate this, Guidelines for the Spatial Development of Coastal Areas for 2011–2017* have been approved. From the point of view of development planning and process monitoring, the coastal area includes both a mainland and a marine component. The Guidelines for the Spatial Development of Coastal Areas describe the coastal area as a contact zone between the Baltic Sea and the mainland in which coastal geological processes (erosion and accumulation) take place, which features a unique marine and coastal landscape formed by the beach, bluffs, river mouths, coastal meadows, dunes, lagoon lakes, lighthouses, piers, ports, port towns, villages and farmsteads, where the way of life (fishing in the sea, fish processing, collection of seaweed) and cultural heritage (construction patterns, dialects, traditions, etc.) differ from those of the inland areas. The Guidelines do not define a specific boundary of the area, as the coast is conceived as an open space that affects the surroundings and that is affected by other territories. The coast is usually understood in the terms defined by the regulatory enactments, yet various regulations apply differing approaches. For example, the Protection Zone Law** defines a protection zone of the Baltic Sea and the Gulf of Riga coast, which comprises a marine (up to the 10 m isobaths) and a mainland component of up to 5 km conditionally (an area of restricted economic activity). The protection zone of coastal dunes is also a point of interface of various interests. The width of the protection zone depends on the width of the dune area, yet in towns and villages this is no less than 150 m, and no less than 300 m outside towns and * Approved by the Cabinet on April 20, 2011. ** Took effect on March 11, 1997.

villages, counting from the point where natural land vegetation begins. The coastal area is the site of unique natural systems: dune forests, coastal (randi) meadows and singular plant and animal communities. On the mainland as well as in the sea, a network of special natural protection areas (NATURA 2000) has been established which, alongside the cultural and historical heritage, determines the coordination of economic activity with the preservation of the natural and cultural heritage. An interaction of various interests takes place within this relatively complex balancing process where the use of the intrinsical coastal resources is limited, and cooperation on the part of the state and self-governments and comprehensive solutions are of equal importance. This necessitates that the comparative quantitative indicators used in the assessment of territorial development are considered based on their formal value but, to an equal extent, by the manner of their attribution and the way in which they describe the specific nature of the coastal areas – which essentially can be evaluated according to complex and qualitative features. New possibilities for territorial development emerged along with the designation of the coastal area as an area of national interest within the Sustainable Development Strategy of Latvia. The Guidelines for the Spatial Development of Coastal Areas for 2011–2017 that followed from this define the areas and tools of policy implementation. In 2011, the implementation of the policy commenced: a Coastal Area Cooperation and Coordination Group was set up, the spatial development priorities of the coastal area were defined in collaboration with coastal self-governments, and sites requiring development of infrastructure were identified. To date, comprehensive spatial development planning has taken place on the mainland, yet the economic interests and greater activity on the sea in the recent years has caused the conception of the coastal area to be revised, extending and attributing it to the sea as well. The role of marine spatial planning is increasingly being stressed both in European and Baltic Sea region documents and initiatives, and its implementation has also commenced in Latvia. The sea has a multi-functional significance, and it is an important resource not merely for the socio-economic development and assurance of environmental quality of

Figure 85. Coastal area.

the coast but also of the whole country. The sea supplies fish for food consumption, navigation opportunities, recreation, biodiversity, climate regulation, clean-up of sewage from the mainland and other important processes. As the demand for energy and other resources rises and the requirements for the share of renewable energy resources in overall consumption increase, the question of the possible development of wind farms in the sea has also gained currency – with greater wind potential than on the mainland. The report analyses the mainland portion of the coastal area, i.e., the coastal region, using data on the administrative territories of self-governments – municipalities and cities – that border directly on the sea (see Figure 85).

Coastal Region The coastal region (coastal area) belongs to two planning regions, Riga and Kurzeme. It covers the

administrative territories of 17 self-governments, including four national cities: Riga, Jurmala, Ventspils and Liepaja. The total area of the coastal self-government territories is almost 8 100 sq. km, or 12.5 % of the area of the country. At the beginning of 2012, the total population of coastal self-governments was 972 300, or 43.9 % of the national population. Four national cities accounted for the greatest share of the population, or 90.5 %; the total population of the 13 municipalities at the beginning of 2012 was only 92 400. However, the population of coastal selfgovernments swells substantially during summers: the population of some territories, especially in Pieriga, increases several times. The territories of coastal self-governments vary greatly. Cities (these have been analysed in more detail based on statistics in Chapter V) and municipalities can be distinguished. In their turn, the coastal municipalities vary in terms of their ties to the coast, as well as their size and demographic and socio-economic indicators.

The ties of the municipalities to the sea are characterised by various factors: the length of the coastline within the administrative territory, the portion of the municipality that is located in the proximity of the sea, coastal population patterns, etc. Ventspils municipality boasts the longest coastline; at the same time, it is very large, extends nearly 50 km from the coast, and a significant portion of the municipal area effectively has no direct ties with the coast. Location also demonstrates that, for instance, Limbazi and Grobina municipalities generally have more tenuous ties with the coast: the coastline is only several kilometres long, and the majority of the territory is rather distant from the coast; in contrast, the layout and configuration of Roja, Mersrags, Carnikava and Saulkrasti municipalities renders them explicitly coastal self-governments: the majority of the municipal territories lies within five kilometres of the coast. In terms of area, Ventspils municipality is the largest (2 457 sq. km) and Saulkrasti is the smallest (only 48 sq. km); in terms of the population, Limbazi municipality is the most populous (19 200 inhabitants at the beginning of 2012) and Mersrags – the least populous (1 800 inhabitants at the beginning of 2012). On average, 7 100 people resided in one coastal municipalities at the beginning of 2012, which is below the national average for municipalities (9 900 inhabitants). This is due to both the low population density in the majority of Kurzeme municipalities, as well as due to the fact that there is only one town that qualifies as a regional development centre in all of the coastal municipalities, i.e., Limbazi. The differences among the coastal municipalities are well reflected by the values of the territorial development level index*, as well as the municipality rank that has been derived from these: in 2011, Carnikava municipality (9th) and Saulkrasti municipality (26th) were the highest ranked, while Mersrags municipality (70th) and Rucava municipality (93rd) were ranked the lowest. We wish to remind that there are 110 municipalities in Latvia. The demographic indicators in the coastal municipalities are, overall, lower than the national average for municipalities, whereas the socio-economic indicators are higher. According to comparable indicators characterising demography, among all Latvian municipalities, coastal municipalities are distinguished by a less favourable age composition of the population and, consequently, a higher age dependency ratio; furthermore, the population decline in the coastal area is slightly more rapid than in all municipalities taken together. During the period from the beginning of 2007 to the beginning of 2012, the population increased only in two of the 13 coastal municipalities, Carnikava and Saulkrasti, which are both near Riga. The population of the remaining municipalities shrank – indeed, in ten of the municipalities, the decline was steeper than the average rate for Latvian municipalities. * Cabinet Regulation No 371 of May 29, 2012 “Amendments to Cabinet Regulation No 482 of May 25, 2012 “Regulations on the Procedures for Calculating the Territorial Development Index and Values Thereof””.

In the coastal municipalities, the self-government revenue from personal income tax per capita is slightly higher than the average for all municipalities; in 2011, the rise in this indicator in the coastal self-governments exceeded the average figures for both the municipality group and the country as a whole. The unemployment rate, too, was lower in the coastal municipalities at the beginning of 2012 than the average for all municipalities and the country as a whole: only Limbazi municipality exceeded the average for municipalities and Rucava municipality performed worse than the national average. There exist large disparities in the indicators of economic activity among the coastal municipalities. In a half of the coastal municipalities, the number of economically active individual merchants and commercial companies per 1 000 inhabitants in 2010 was lower than the average for all municipalities in Latvia. In the municipal self-governments of the open Baltic seacoast, the indicators of economic activity are considerably lower than those of the municipalities along the Gulf of Riga (see Table 70).

Table 70. Average demographic and socio-economic indicators of coastal municipalities and their changes within a year*. The mutual divergence of demographic and economic indicators in the coastal municipalities can largely be attributed to their geographical situation: contrary to the large cities and large ports, especially the territories that lie near Riga, the more peripheral municipalities are characterised by relatively limited * Calculations using data by OCMA, CSB, SEA and the Treasury.

economic resources and a less developed infrastructure. It should additionally be noted that, under the Soviet authority, the location of the Kurzeme coast within the Soviet border area also entailed a limited economic activity and civilian mobility. The circumstances just invoked, as well as the transport infrastructure and the ties of municipalities with the seacoast, all heavily influence the economic profile, settlement patterns and inhabitant lifestyles of each municipality. Those coastal municipalities whose territories stretch deeper inland are usually rich in forests, and forestry plays an important role in the municipal economy; in some municipalities, this is also true of agriculture. In the municipalities that border on national cities, recreational services are of greater importance, as is the daily commuting of residents for work in the city, which brings in comparatively higher personal income tax revenues to the self-government treasuries. The coastal factor in the municipalities is at once a prerequisite for development and a limitation. On the one hand, it determines the areas of economic activity typical of the coastal area (fishery, fish processing, operation of ports, provision of services to holidaymakers), while, on the other hand, the development resources of coastal area are spatially limited, whereas attracting other resources or the restructuring of economic activity requires additional expenses. Seven small-scale ports currently operate in the territories of coastal municipalities, and these are emerging as development drivers in the municipalities and the surrounding area (for regional Baltic Sea shipping activity, fishery, ship repairs, yacht-building and tourism). In terms of cargo shipping, the most significant ports are Skulte, Mersrags and Salacgriva, where the volume of cargoes handled exceeds 100 000 tonnes per year, while in three of the small ports no regular cargo transshipment takes place*. There are potential small ports in Kuivizi, Ainazi and Pape, which, given more favourable circumstances, may evolve into yacht ports: a yacht harbour has already been established in Kuivizi. The impact of the small ports on the municipal economy is difficult to assess with the statistical data available; however, those municipalities that have ports typically have lower unemployment and a more intense commercial activity. In the last decade, the economic activity relating to fishery and fish processing has been diminishing in the coastal municipalities, as restructuring is underway towards uses of the coast for tourism, recreation and sport, and the coast is increasingly establishing itself as a regional place of residence. To ensure the development of service industries on the coast, infrastructure needs to be rebuilt or created anew. There is a shortage

of parking facilities, access paths to the sea, including for persons with disabilities, ramps for the purposes of emergency services and for the transportation of bulky sports equipment, bicycle paths, information signs and pointers. At this time, the coastal area does not function as a unified tourism product. It should be added that the planning documentation of the coastal municipalities provide for the creation of boat harbours outside port limits, to be used for fishing, tourism and sport. The driving force behind coastal development is a set of development centres that includes development centres of international, national, regional and municipal importance alike. Riga, Ventspils and Liepaja are comprehensively developed economic centres in which the coastal location has created the possibility of exploiting ports as one of the principal drivers of economic development in these cities. The status of the Free Ports of Riga and Ventspils and the Liepaja Special Economic Zone promotes the growth of the large ports and the development of manufacturing activity within their limits. The impact of the port on the development of the city is especially pronounced in Ventspils, which has been able to take advantage of sectors directly associated with the port and the proximity of the coast to develop other industries in the city. In Liepaja, however, the port has not quite reached the extent of influence that it could potentially have, which is why the functions of the city are currently more associated with the specific nature of the city and less so with its coastal location. Riga occupies a distinct place among the coastal selfgovernments. The scale and role of Riga far exceeds any of the influences arising from the coastal location. The fields of administrative, educational, transit and business organisation linked to the functions of the city as a capital have moved into the foreground. In the life of the large port cities, other aspects associated with the coast – such as managing natural areas sensitive to anthropogenic impact, tourism and recreation – have a supplementary importance only; in contrast, the growth and economic activity of the city of Jurmala is directly related to tourism and recreation, including the development of a resort economy. At this time, however, the touristic and resort resources of Jurmala are not being utilised completely, as the existing infrastructure often fails to meet international standards. The municipal-level development centres, i.e., the small towns (Pavilosta, Saulkrasti, Salacgriva, Ainazi) and villages (Nica, Jurkalne, Kolka, Roja, Mersrags, Engure, etc.) have an immense role in maintaining the permanent population, providing employment and developing tourism in the coastal area.

* Data by the Ministry of Transport.

Borderland Borderland Area The borderland is of dual nature. As an area of national economic and political security, it has been defined by the regulatory enactments ensuring border protection. As an area of influence of the border, it is a development planning territory defined in Latvia 2030, the national development strategy. Similar to the coastal area, it is an area whose boundaries are not clear and may be specified for policy planning and development monitoring purposes. The total length of the national border of Latvia is 1 852 km, of which 1 356 km is a land border. The borderland is the part of the territory adjacent to the line of the land border which, according to the law*, has been defined in the Cabinet Regulations on the borders of administrative territories and territorial units**. Internal and external borders of the European Union are distinguished. With Latvia’s accession to the European Union in 2004, the border protection function has transformed gradually and substantially: with protection diminishing on the internal borders and increasing on the external ones. This process was accelerated by Latvia’s joining the Schengen area in 2007. In 2012, the borderland status was abolished on the internal borders with Estonia and Lithuania. At the same time, the borderland area near the external border of the EU has expanded. In accordance with the amended Law on the State Border of the Republic of Latvia***, the border area shall not be narrower than 30 km and shall only be designated along the external border of the European Union – i.e., the border with Russia and Belarus. The borderland is the area of operation of the State Border Guard, in which the established limitations do not significantly affect economic or other activity. A border area is designated up to two kilometres deep along the external State border, in which partial restrictions apply to the movement of persons, collective events, construction, the development of road infrastructure and economic activity. When the above activities are conducted, an approval must be obtained from the State Border Guard, while a number of activities are prohibited. The most rigorous requirements of border protection apply to the state border zone, which has been designated 12 m wide along the external border, 6 m wide along the Estonian border and 5 m wide along the Lithuanian border. It serves the purposes of border demarcation and protection. The state border zone can become a significant encumbrance in instances of dense

construction development – this applies more to Valka and less to Ainazi. As a space of development and planning, the borderland differs from the defence function. Unlike the area prescribed by regulations, the borderland as an area of development is not linked only to the Eastern borderland or a specified set of self-government territories. As in the case of the coastal area, the spatial impact of the border may fall short of or exceed these. The border protection function forms the foundation of border traversability which, in its own turn, has an impact on the surrounding territory. The internal national borders with Estonia and Lithuania have less impact, as they can be crossed freely: there are no checks, customs control, guards, and they can be equated to any other administrative boundary. Undeniably, a location within the periphery of the country also affects these border territories. The external state border is guarded, there exist controls on the movement of goods and people, certain sites have been designated as border-crossing points through which the border can be crossed. Border-crossing points shape the surrounding space, in which cross-border migration of people and cross-border flows of goods play a significant role, which have been studied little in Latvia. In the case of the internal national border, the marginal location of the territory has a greater impact on the development of the borderland, and socio-economic differences from the territory of the neighbouring country have less effect, whereas with the external border, both factors add up and may have a significant impact – which, however, cannot always be regarded negatively. The state border establishes specific conditions, including limiting ones, which at the same time form a set of facilitating factors for connecting different economic, cultural and social spaces and form a functionally different development situation across a wider range of territories. These are preconditions for taking advantage of the borderland as a source of specific development potential, which, however, can only manifest itself if a targeted state regional policy is in place. An important prerequisite of borderland development is cross-border international cooperation, which increases the possibilities of implementing large-scale development projects, reducing the social cleavages between the border areas of different countries, encouraging the economic and social contacts of borderland residents, thus improving mutual trust and security.

Borderland Region * Law on the State Border of the Republic of Latvia, which took effect on December 16, 2009. ** Cabinet Regulation No 674 of July 27, 2010 “Regulations Regarding the State Border, the Border Zone and the Border Area, as well as Samples of Indication Signs and Information Signs of the Border Area, the Border Zone and the State Border and the Procedure for Their Installation”. *** Took effect on March 21, 2012.

For the purposes of this report, the borderland is regarded as a development planning area. Here, it is possible to speak of a borderland region, i.e., a tentative territory for analysing the peculiar features of the border area, with the borderland region understood as the territory near both the internal and external national borders, based on the existing regulatory framework

Figure 86. Borderland self-governments. regarding the external state border and, for the internal state border, on the former border regulations, maintaining a continuity of the analysis of these territories (see Figure 86). The borderland comprises the territories of 36 municipal self-governments; however, in most instances it only covers a portion of the territorial units belonging to a municipality. The territories of 31 municipalities have a direct interface with the state border, whether external or internal. The population of the 36 borderland municipalities was 356 100 at the beginning of 2012 (i.e., 16.1 % of the total population of the country) and the area was 26 700 sq. km (41.3 % of the total area of the country). The Sustainable Development Strategy of Latvia until 2030 defines the Eastern borderland as a regional policy target territory. The Eastern borderland is both the area of the eastern border of the European Union and also a wider range of territories in the direction from the State border inland, spanning approximately 80 % of the area of the Latgale planning region, and also including Aluksne municipality of the Vidzeme region. The territories of 14 municipalities and two national cities, Daugavpils and Rezekne, make up the Eastern borderland (see Figure 87). This report separately describes the borderland as a set of territories adjacent to the entire land border of the country and the Eastern borderland. Though, as already discussed, only individual territorial units (towns and parishes) of municipalities generally form a part of the borderland, the description and comparison of territories has been made at the level of municipalities, i.e., by including the entire territory of municipalities in the borderland, as most statistical data are only available for municipal territories as undivided entities.

The average indicators describing the development of borderland municipalities are noticeably lower when compared with the averages for Latvia as a whole and for all municipalities. The age dependency ratio is one indicator that is seemingly more favourable for the borderland municipalities, yet in reality a differing age structure of the population – a lower share of children and youth and a higher share of retirement age residents – confirms that the opposite is the case. The population in the borderland has declined much more rapidly than on average in the country and in municipalities as a group. The territories of borderland municipalities are typified by a substandard infrastructure, including poor road quality, insufficient public transportation coverage, which affects the accessibility of the territories and consequently increases the periphery effect and leads to depopulation in the borderland territories. When socio-economic indicators are compared, the per capita revenues from personal income tax in the selfgovernment budgets and the intensity of commercial activity in the borderland municipalities considerably lag behind the averages for all municipalities and Latvia as a whole, whereas the unemployment rate is significantly higher (see Table 71). At the same time, there are some rather large disparities among the borderland territories. The borderland territories near the borders with EU countries do not exhibit the same extent of peripheral effects as is evident in the borderland near the Russian and Belarusian borders. This is partly due to the unequal location of the borderlands relative to Riga. The areas of Bauska and Jelgava municipalities bordering on Lithuania are in the central part of the country, less than 100 km from Riga and effectively constitute the periphery of the Riga agglomeration. The external state border – with Russia

Figure 87. External border of Latvia and the Eastern borderland. and Belarus – is situated some 200 or 300 km from the capital city, and the state border with Lithuania in Rucava municipality is at a similar distance from Riga, i.e., more than 250 km, where the per capita revenue from personal income tax in the self-government budget is the lowest in the Kurzeme planning region and among the lowest nationally. Overall, however, the borderlands near the Lithuanian and Estonian borders have negligible differences: the demographic indicators are slightly better

along the Lithuanian border, while the Estonian borderland boasts better socio-economic indicators. The location of territories within the borderland ought to be compensated by the proximity of national cities. Assuming that cities have a positive impact on the marginal borderland areas, the north-eastern part of Latvia is situated furthest of all from national cities, i.e., Aluksne and Vilaka municipalities, as well as the borderland pa rishes of Saldus municipality – with distances exceeding

Table 71. Average demographic and socio-economic indicators of the borderland municipalities and the Eastern borderland, and their changes over a year*. 100 km. However, more than potential location effects, development is determined more by an aggregation of local conditions: a divergent cultural and historical space, long-standing experience of local residents and differing traditions.

Eastern Borderland The total population of the Eastern borderland – including Daugavpils and Rezekne – at the beginning of 2012 was 299 300 or 13.5 % of the total national population, and the population of the 14 Eastern borderland municipalities only numbered 164 300 or 7.5 %. The total area of the Eastern borderland territories is 13 400 sq. km (20.8 % of the country’s area). The group of Eastern borderland municipalities comprises Aglona, Aluksne, Baltinava, Balvi, Cibla, Dagda, Daugavpils, Karsava, Kraslava, Ludza, Rezekne, Rugaji, Vilaka and Zilupe municipalities. The territories of Aluksne, Rezekne, Aglona and Daugavpils municipalities only partially belong to the borderland defined for border protection purposes. The overall economic and demographic indicators of the borderland are lower than the average for all municipalities, but the average indicators in the Eastern borderland are even lower than in the borderland as a whole. The population density of the Eastern borderland municipalities is lower by one third than the average for all municipalities and two thirds lower than the national * Calculations using data by OCMA, CSB, SEA and the Treasury.

average. The Eastern borderland municipalities constitute a category of territories where, when compared with other territories in Latvia over the period from the beginning of 2007 to the beginning of 2012, the population decline was at its most rapid; furthermore, they have a high proportion of population over the working age and a low proportion of inhabitants below the working age. This situation is typical of the periphery effect, which applies to the territories in this group of municipalities. The volume of per capita personal income tax collected by the Eastern borderland self-governments in 2011 constituted 84 % of the average for all borderland municipalities, 62 % of the average for all municipalities and only 52 % of the average collected nationally. The municipalities of the Eastern borderland provide strikingly few jobs and have high unemployment: the rate of unemployment here is twice the Latvian average, whereas the number of economically active individual merchants and commercial companies per 1 000 inhabitants is three times lower than the national average (see Table 71). The internal disparities of the Eastern borderland are determined by the size of the territories: five of the 14 municipalities are among the largest in Latvia in terms of area and population, while Baltinava municipality is the least populous in all of Latvia (1 300 inhabitants at the beginning of 2012). In five municipalities, the population density does not reach 10 per sq. km, whereas Kraslava municipality has the highest density with 17.9 per sq. km, which is comparable to the national average for municipalities. The demographic and socio-economic indicators of the municipalities are affected favourably by the former district centres (Aluksne, Balvi, Ludza, Kraslava), which at the

same time causes one to assume that the indicators in the municipality territories outside these centres are equal to those of the neighbouring municipalities not containing regional development centres. The two large cities belonging to the Eastern borderland, Daugavpils and Rezekne, are comparatively in a much better economic position than the municipality territories. However, the two large Latgale cities perform poorly as development centres and, in several indicators, considerably lag behind both other national cities and even municipalities that contain regional towns. For example, the personal income tax revenue per capita in the self-government budget of Daugavpils in 2011 equalled only 64 % of the average for cities and 75 % of

the national average. The figure was somewhat higher in Rezekne, but also failed to reach the above averages. In terms of the intensity of economic activity, too, expressed as the number of economically active individual merchants and commercial companies per 1 000 inhabi tants, the large cities of the borderland fall behind the averages for all cities and the country as a whole. The Eastern borderland is largely a territory of the Latgale planning region, which by its overall economic and social indicators differs little from the Eastern borderland area. On May 29, 2012, the Cabinet approved a special policy for the promotion of the development of the Latgale planning region: the Latgale Regional Action Plan for 2012–2013.

URBAN AND RURAL TERRITORIES Grouping of Territories Depending on the purpose, the separation between urban and rural areas may differ. In Latvia, it is customary to regard towns or cities and rural areas based on their formal status, yet there also exists other criteria for delimiting rural and urban territories: population, population density, economic specialisation, role within the spatial organisation, etc. Urban and rural territories may be grouped by their impact on the surrounding area and their role within the organisation of territorial development: • c ities (or national development centres, large urban centres); •u rban municipalities (or municipalities that contain towns); • r ural municipalities (or municipalities that contain no towns). Cities characteristically have a greater potential impact that significantly exceeds their administrative boundaries, forming extensive functional areas, and can be described within the context of areas of influence. However, the identification of the latter two categories is relative, as towns that belong to municipalities do not imply the urban nature of the entire municipality, just as rural areas are not necessarily typified by their agricultural nature. This is determined by the functional differences of the urban centres and rural territories themselves. The self-governments of the rural municipalities of Pieriga in which relatively large settlements are common are much more urban in their nature than municipalities far removed from Riga containing a small town. In order to describe the direct impact of the large urban centres on their hinterlands, a group of suburban municipality self-governments has been isolated, i.e., municipalities that directly adjoin national cities. Without a doubt, this kind of an approach also describes influence, since, as has been noted above, the functional

areas of cities do not coincide with the administrative boundaries of municipalities. Regional development centres play a special part in the settlement structure of Latvia – composed of former district centres (not counting cities), as well as Livani, Sigulda and Smiltene. By isolating the municipalities that contain these towns, it is possible to analyse territories in which, essentially, a higher concentration of development potential is possible. Less populated municipalities with populations not exceeding four or five thousand are to be considered as special territories.

Towns and Cities In terms of territorial status, there are 76 towns and cities in Latvia, in which, according to OCMA data, 1.497 million people, or two thirds of the country’s population, lived at the beginning of 2012. Yet the categorisation of territories as urban and rural is formal, as the size of the urban centres themselves varies, as does their role as economic and social development centres. Several categories of urban centres can be identified in Latvia: small towns with the population under 5 000, medium-sized towns with populations from 5 000 to 25 000 or 27 000, large cities with the population above 25 000, and the metropolis: the capital city of Riga. At the beginning of 2012, the population of three towns did not reach one thousand, whereas in 39 towns it ranged between one and five thousand. The total population of the 42 small towns numbered 94 000, or 6.3 % of the entire urban population and 4.2 % of the country’s population. The small towns play an important role in organising the rural space: they represent local service centres and focal points for employment. The 25 medium-sized towns – of which Ogre was the largest (with a population of 26 500) – had a population of 272 100 at the beginning of 2012, which is 18.2 % of the total urban population and 12.3 % of the population

of Latvia. The majority of the medium-sized towns are the former district centres, and they act as service and employment centres for a comparatively large hinterland – often for several municipalities at a time. With some exceptions, these towns are considered development centres of regional significance. The population in the eight large cities – or national cities – at the beginning of 2012 numbered 431 800 or 28.9 % of the total urban population and 19.5 % of the national population. The large urban centres differ among themselves in terms of size and importance, yet overall they form the backbone of the polycentric development of Latvia, as focal points of functions of regional and national importance. The Sustainable Development Strategy of Latvia until 2030 has ascribed these cities the status of national development centres. There is one metropolis in Latvia: the capital city (and national city) of Riga. At the beginning of 2012, 699 200 people lived in Riga or 46.7 % of the urban population and 31.5 % of the national population. Riga has a national – and a much broader supranational – role, which has already been analysed above. Cities are characterised by a substantially higher rate of economic activity than municipalities: the number of individual merchants and commercial companies per 1 000 inhabitants is more than double the figure for urban and rural municipalities alike. The personal income tax revenue and employment indicators are also noticeably higher among the large urban centres than the average for the other territories. Comparatively more favourable demographic processes are evident in the national cities: a more rapid rate of population decline, a lower proportion of population below working age and a higher proportion of population above working age (see Table 72).

Municipality Groups Urban development is associated with the vitality of the surrounding rural areas, which together form not only a larger workforce but also ensure a greater demand and market for public and commercial services. The ties between urban and rural territories are also important as a factor in the formation of economic/territorial clusters in the food, forestry, tourism industry and other sectors. The differences of the roles urban centres play are contingent on a broad spectrum of territorial development conditions, giving rise to variable areas of urban and rural interaction. A historic network of settlements exists in Latvia in which the settlements are functionally joined by economic and service ties, which are realised in both economic activity and the daily movement of the population. Depending of the population patterns, economic profile and space of population activity (or the layout structure of work/education–home–services) of the rural areas adjoining towns and cities, differences arise among the urban centres themselves, as well as in their rural areas of influence, which can be referred to as urban fields. Each urban centre forms a certain urban field

around it, which often differs from that of other towns or cities. Each of these areas or fields are characterised by commuting workforce and schoolchildren/students and economic and service ties. The extent of the field and the intensity of the ties are affected by the size of the urban centre, the transportation infrastructure, the particularities of the settlement structure, natural obstacles, etc.; however, population mobility plays the most important role. The group of urban municipalities consists of 60 administrative territories of municipalities (63.5 % of the country’s area and 33.6 % of the total population at the beginning of 2012), each of them containing one (55 municipalities) or multiple towns (five municipalities). Talsi municipality contains the greatest number of towns, i.e., four: Talsi, Sabile, Stende and Valdemarpils. Aloja, Ilukste, Salacgriva and Strenci municipalities contain two towns each. Within this group, 18 municipalities can be highlighted as containing towns that were once the administrative centres of districts. Municipalities not containing any urban centres make up the group of rural municipalities: there are 50 of these altogether in Latvia. The total area of the rural municipalities occupies 35.4 % of the country’s total area, and 15.4 % of the national population lived in them at the beginning of 2012 (see Figure 88). The differences between the urban and rural municipalities are generally negligible, particularly in terms of socio-economic indicators, i.e., the unemployment rate, per capita personal income tax revenues of self-governments and the number of businesses per 1 000 inhabitants. The rural municipalities are slightly more favourable in terms of demographic indicators: there is a greater share of children and youth and a lower share of retirement-age people in the popu lation; a slightly higher proportion of the working-age population leads to a relatively lower age dependency ratio. The most significant differences between urban and rural municipalities occur in terms of population change: the rate of population decline in the urban municipalities is much more rapid. At the same time, it should be noted that the group of rural municipalities includes many territories bordering on national cities, including Pieriga municipalities, where the economic situation is largely linked to the economic life of these cities. These are territories in which the former residents of the cities have now permanently resettled, which means that these suburban rural territories exhibit markedly more favourable demographic figures and higher levels of personal income, which raises the indicator values for the entire group of rural municipalities (see Table 72). A comparison of municipalities is important where they are identified according to their ties to cities (suburban municipalities) and former administrative centres of districts. Suburban municipalities – this category contains municipalities that directly border on national cities (except Jurmala) – show the direct influence of large urban centres, yet the territorially expansive municipalities only allow conclusions regarding the effect such influence has on their average statistical indicators but not the influence itself. In other words, depending on the location relative

to the city, the indicators for individual parishes and towns belonging to a municipality may vary dramatically. This is why statistics for the territories bordering on the city of Riga and for self-governments adjacent to other cities are to be interpreted differently. In Pieriga, the suburban municipalities are relatively small in terms of the area and reflect the impact of Riga well, whereas in the case of the large self-governments of Ventspils, Jelgava, Daugavpils or Rezekne municipalities, the urban influence is not so pronounced. The administrative centres of the former districts form the next area of influence, which is reflected in the indicators of the municipalities. Given the variable size and configuration of the former district centres, the different layout of towns within a municipality, the situation of neighbouring municipal territories and other particularities, a diverse picture of territorial data is obtained. For example, TableÂ 72. Average demographic and socio-economic indicators of cities, urban Cesis municipality is small in terms of municipalities and rural municipalities, and their changes within a year*. its area; it encompasses the town of Cesis and only one parish adjacent to the town, Vaive parish, which renders it more urban. In this of area, it comprises the entirety of the former district, instance, the influence of the town beyond the boundaand can be described as more rural. At the same time, the ries of its municipality should be considered. Whereas, favourable impact of the town on the overall indicators for for example, Gulbene municipality is very large in terms the municipality cannot be denied (see FigureÂ 89).

FigureÂ 88. Self-government territories of Latvia according to their affiliation with towns. * Calculations using data by OCMA, CSB, SEA and the Treasury.

Figure 89. Suburban (city-adjacent) municipalities and municipalities of the former district centres. Suburban municipalities are characterised by a more of the unemployment rate and the relative concentration favourable and socio-economic position than the muof businesses the differences between the two municipality nicipalities of the former district centres or medium-sized groups are not as pronounced (see Table 73). towns – not just in an overall assessment but also according to nearly all individual indicators. This situation may be explained by the suburban nature of the suburban municipalities, where the influence of the large cities manifests itself in the hinterland, thus forming a suburban space. Presumably, if territories were isolated at a lower statistical level – as parish territorial units – and if the parishes of the more expansive suburban municipalities that are more remote relative to the national cities were excluded from the comparison, the disparities between the suburban municipalities and the municipalities of the former district centres would prove to be even more pronounced. However, it should be remarked that the municipalities of former district centres most often span across extensive rural territories as well, which lowers the overall indicators in this group of territorial analysis. When individual indicators are contemplated, the change in population stands out as having the most disparate values between the two municipality groups: in the municipalities of the former district centres, the population loss has been more rapid over the past five years than on average in the country as a whole, whereas suburban municipalities form one of the rare possible combinations of municipalities where the population Table 73. Average demographic and socio-economic indicators of has increased – this is thanks to the Pieriga musuburban (city-adjacent) municipalities and municipalities of the nicipalities. In terms of socio-economic indicators, former district centres and their changes within a year*. suburban municipalities are distinguished by a higher level of personal income, while in terms * Calculations using data by OCMA, CSB, SEA and the Treasury.

Altogether, the data indicate significant disparities in the level of development and positive movement between the large urban centres and the remaining towns in Latvia, as well as their impact on the development of the surrounding areas.

Small Municipalities Less populous self-governments occupy a special place among the self-governments of the municipality group. Even though the administrative territorial reform promoted the formation of relatively large self-governments, there remain some self-governments in Latvia with small populations. While it is true that the Law on Administrative Territories and Populated Areas* prescribes a population threshold of 4 000 for a municipal self-government to be established, it is not absolute and allows for exceptions. Therefore, one of the criteria according to which one group of small municipalities has been defined is a population of less than 4 000, and an analysis has been performed accordingly regarding this group of municipalities. Another threshold value – a population of 5 000 – can also be used to identify the group of small municipalities. The Law on Elections of the Republic City Council and Municipality Council** prescribes a different election procedure for self-governments with populations under 5 000: in these self-governments, electoral associations may participate in an election alongside registered political

organisations (parties) or unions thereof. In turn, the Law on Self-governments* authorises a different organisation of the executive branch in self-governments with a population up to 5 000: the duties of an executive director may be performed by the council chairperson. According to data by OCMA, at the beginning of 2012 there were 39 municipalities in Latvia whose population did not exceed 5 000, and of these, the population of 28 municipalities numbered below 4 000 (see Figure 90). It should be added that, if the provisional data of the 2011 census are used, the number of small municipalities is even higher. The small self-governments represent a diverse group of municipalities. They appear in all planning regions, albeit there are only three such municipalities in the Riga region (with populations under 4 000 in all of them), while the count in the Vidzeme region reaches 14 (including ten municipalities with populations below 4 000). The Kurzeme region has nine small municipalities (of those seven with fewer than 4 000 inhabitants), Zemgale has seven (with three under 4 000 inhabitants) and Latgale has six (with five under 4 000 inhabitants). The demographic and socio-economic indicators in the small municipalities are generally less favourable than the average for all municipalities; the most significant differences include a noticeably more rapid rate of population decline, a lower level of personal income and concentration of businesses, yet these have little connection to the small populations of these municipalities. Other factors prevail: first of all,

Figure 90. Small municipalities***. * Took effect on December 31, 2008. ** The current revision of the Law took effect on July 1, 2009. *** According to OCMA population data as of January 1, 2012.

* The current revision of the Law took effect on January 1, 2012.

the geographical location – the majority of the small municipalities are located on the periphery of the country, a large distance from Riga and most often also relatively far from other national development centres (see Table 74). Some of the small municipalities (Seja, Malpils, Skriveri) that belong to the Riga metropolitan area are characterised by relatively high development indicators; at the same time municipalities such as Baltinava, Rugaji, Zilupe, Aglona, Rucava or Cibla – which are manifestly peripheral – occupy the opposite end of the spectrum and predominantly exhibit very unfavourable demographic and socio-economic indicators in comparison with the national averages. When small municipalities with populations up to 4 000 and up to 5 000 are compared among themselves, the differences in the main indicators are negligible, and an overall tendency favouring either watershed population is difficult to establish. The small municipalities may be subject to a different support policy, determined by the particular features mentioned above. However, in order to justify a support policy for small municipalities, the functional capabilities of the small municipalities should be analysed additionally.

Table 74. Average demographic and socio-economic indicators of small municipalities and their changes within a year*.

* Calculations using data by OCMA, CSB, SEA and the Treasury.

VIII ANALYSIS OF SELF-GOVERNMENT FINANCES TOTAL VOLUME OF SELF-GOVERNMENT BUDGETS The volume of self-government budgets is linked to the authority given to self-governments, i.e., the functions, tasks and duties delegated to them. Data by Eurostat indicate that, in 2010, self-government expenditure in the European Union constituted on average 24.1 % of the total public and local authority expenditure. Given the diversity of the scope of authority self-governments have in European countries, the share of self-government spending ranged from just under two per cent in Malta to 64.4 % in Denmark, where the two-tiered local authorities have been entrusted with a very wide range of functions, including healthcare and social services. The share of self-government expenditure in the consolidated general budget of the country was above the EU average* (see Figure 91).

situation that exists, it complicates analysis and evaluation and renders the self-government budget system altogether less transparent. Since 2010, the Riga city self-government no longer uses a special budget and instead incorporates the corresponding revenues and expenditure into the principal budget (only donations and gifts are separate from the principal budget); as of 2011, this practice has also been followed by the selfgovernments of the city of Jurmala and Ikskile municipality. It would be optimal for all self-governments to forgo special self-government budgets altogether and to include all budgetary information in a single budget report. Until 2008, there was a rapid increase in the budget revenue and spending of self-governments. Both the

Figure 91. Share of self-government expenditure in the state public sector spending in the EU Member States in 2010**. The budget indicators of self-governments reflect the financial resources at the disposal of self-governments to implement their functions, obligations, voluntary initiatives and development, and in which areas these are used. The budgets of self-governments in Latvia consist of a principal budget and a special budget; there is also a separate component for donations and gifts. This division has existed since the first half of the 1990s – for some time now it can be considered inadequate for the * It should be noted that the calculations by Eurostat differ from the calculations below, using data by the Treasury. ** Eurostat data.

v olume of budget revenue and expenditure and the share of the consolidated self-government budget in the consolidated general budget of the country increased. With the economic downturn, the volume of self-government budgets in 2009, compared to the year before, dropped considerably; moreover, the rate of decrease of self-government revenue and expenditure was greater than that of the national consolidated general budget. The decline in revenues and expenditure in the self-government budgets continued in 2010, but not as rapidly as in the preceding year. In 2011, compared with the previous year, the revenue and expenditure of both the self-government and central government consolidated general budgets increased. The volume of the self-government budgets

When contemplating and analysing the trends in self-government budgets and changes in their volume, one should consider the fact that the volume of the budget is also affected by the institutional framework selected by the selfgovernments for realising their functions. The revenue and expenditures of self-government capital companies are not included in the budget reports of self governments. The volume of financial resources available to self-governments is one of Table 75. Revenue and expenditure of the consolidated general state the most debated issues of self-governbudget and the consolidated self-government budget, 2007–2011*. ment finances. The self-government sector takes the overall position that the did not yet reach the levels of 2007, yet it was greater than financial resources of the self-governments are insuffithat in 2006. The data on the dynamics of the consolicient for implementing the functions entrusted to them dated self-government budgets in Latvia in the last five and governed by law. It should be stressed at the same years are given in Tables 75 and 76. time that the financial capacity of self-governments varies greatly. Table 77 reflects the assessment by self-governments given during a self-government self-assessment survey* regarding their financial position and the sufficiency of financial resources. As is evident, in the two years of manifest growth (2007 and 2008), one third of selfgovernments rated their financial position as good, and fewer than one tenth of them characterised it as poor or very poor, with the rest considering it satisfactory. Along with the economic downturn and the shrinkage of selfgovernment budgets in 2009, the assessment given by Table 76. Dynamics of the revenue and expenditure of the self-governments regarding their finances deteriorated considerably: more than half (55.6 %) rated them as consolidated general state budget and the consolidated selfpoor or very poor. In 2010, the assessment improved, government budget, 2007–2010, % vs. the previous year**. and in 2011, 17.7 % of all self-governments rated their The revenue of the consolidated self-government financial position as good, 64.7 % as satisfactory and budget in 2011 was LVL 1.354 billion lats, which is 2.6 % 17.8 % – as poor or very poor. more than in 2010***. The share of self-government budget revenue in the consolidated general state budget dropped to 26.6 % in 2011 – in the preceding year, it was 28.7 %. The consolidated budget expenditure of self-governments in 2011 was LVL 1.394 billion or 25.2 % of the consolidated general budget of the state; compared with the year before, the share of self-government expenditure rose. Generally (and this was also true in 2011), the consolidated budget expenditure of self-governments exceeded the revenues; Table 77. Self-assessment of the financial position of selfthe year 2010 was the only exception. governments, %**.

* Sources of data: Annual reports on the implementation of the consolidated general budget. For 2011: official monthly report (January to December) on the net implementation of the consolidated general state budget (including donations and gifts). ** Calculations were made based on the data of the Annual Reports on the implementation of the consolidated general state budget for 2011: official monthly report (January to December) on the net implementation of the consolidated general state budget (including donations and gifts) was used. *** Including donations and gifts.

* Since 2005, CSB has conducted the self-government selfassessment survey, in which all self-governments have participated. ** Latvijas vietējo pašvaldību darbība to vadītāju vērtējumā. Riga: CSB, 2011.

SELF-GOVERNMENT BUDGET REVENUE The volume of the total consolidated budget revenue of self-governments in 2010 was LVL 1351.20 million. The gross revenue of the principal self-government budget was LVL 1415.44 million*, and the net revenue of the principal budget was LVL 1324.92 million, which is more than in 2010. The difference between the gross and the net value is associated with payments among self-governments and the contributions made by self-governments to the self-government financial equalisation fund. The revenue of the special self-government budget in 2011 amounted to LVL 26.59 million gross and LVL 26.29 million net. In 2011, a separate special budget was no longer used by the self-governments of the cities of Riga and Jurmala and Ikskile municipality (see Table 78).

Tax revenue accounted for the largest volume of self-government revenue in 2011, 54.0 %, followed by transfers (36.6 %; compared with the preceding year, the share of transfers in principal budget revenues decreased in 2011). Paid services and other own revenue constituted 6.2 %, and non-tax revenue formed 3.1 % in total self-government revenue. The level of financial autonomy, stability and acting capacity of each self-government is characterised by tax revenue, which forms the largest share of the total volume of the principal budget of self-governments. All taxes in Latvia are state taxes*, and no tax has been designated as a self-government tax. Deductions from personal income tax, real estate tax, lottery and gambling tax and natural resource tax are transferred into the budgets of self-governments. In 2011, the volume of tax revenue in the self-government principal budget was LVL 764.0 million, i.e., 4.8 % more than in 2010 (when it was LVL 729.2 million). Revenue from personal income tax constitutes the largest revenue in the self-government budget by volume, Table 78. Revenue of the principal budget, special budget and consolidated and in 2011 this was higher than the budget of self-governments, 2009 to 2011**. year before: in 2011 the revenue from personal income tax was LVL 649.45 A review of the self-government budget revenue million, while in 2010 the figure was LVL 635.59 million. shows that, in 2011, the city of Riga had the largest It has to be noted that, in 2010, the share of personal principal budget revenue in terms of volume among income tax transferred into the self-government budget all self-governments (LVL 459.70 million), followed by was 80 %, whereas in 2011 it was 82 %. the city of Daugavpils (LVL 59.80 million); among the Revenue from real estate tax also increased in 2011 municipalities, Ogre municipality had the highest re compared to the year before, by 23 %. In 2011, the revvenue (LVL 30.10 million), while Alsunga municipality had enue from real estate tax was LVL 110.19, and in 2010 it was the lowest (LVL 0.91 million). The volume of the special LVL 89.66 million. Since 2010, residential buildings have also budgets in 2011 ranged from LVL 2.41 million (Liepaja) to LVL 15 700 (Mersrags). Annex 3 to this report provides the budget revenue indicators for all 119 self-governments in 2011. In self-government budget reports, according to the budget revenue classification, the principal groups of revenue are tax revenue, non-tax revenue, payments received, paid services and other own income, foreign financial assistance and transfers (state budget and self-government transfers). Table 79 reflects the self-government principal budget revenue in breakdown by principal report groups (without consolidation). * The gross amount also includes transfers by selfgovernments revenue from the self-government Table 79. Self-government principal budget revenues in 2010 financial equalisation fund, in which most and 2011**. contributions come from self-governments. ** Sources of data: Annual reports on the * Law on Taxes and Fees, adopted on February 2, 1995. implementation of the consolidated general state ** Sources of data: Annual report on the implementation budget – implementation of the consolidated of the consolidated general state budget in 2010. For self-government budget in 2009 and 2010 2011: official monthly report (January to December) (including donations and gifts). For 2011: official on the implementation of the self-government monthly report (January to December) on the principal budget (Table 8). Calculations made based implementation of the consolidated self-government on the data in the reports. budget (excluding donations and gifts).

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been subject to this tax. It needs to be pointed out that, from 2008, up to and including 2011, a maximum limit on increases in real estate tax payments on land was in place (25 % over the previous year’s payment, provided the purpose of use of the land has not changed), yet since 2012 the decision of whether to use such a limit on payment increases has been the choice of each self-government. Revenue from lottery and gambling tax forms a Table 80. Total tax revenue in self-government budgets, relatively small amount in the self-government budgets, 2009 to 2011*. and it is more common for town and city self-governments: there is a number of self-governments where there is no revenue from this tax. In 2011, the revenue from lottery and gambling tax was LVL 3.84. Revenues from natural resource tax, too, form a small part of the self-government budgets. Until 2010, natural resource tax was transferred only into the special budget of self-governments, but since 2010 the self-governments that have abolished the special budget transfer it into the principal budget, while all others continue to transfer it into the special budget. Thus, in order to identify the total natural resource tax revenues of all self-governments, one needs to review both the report on special budget revenues and expenditures of self-governments and the report on principal budget revenues and expenditures. The revenue from natural Table 81. Volume of self-government principal budget and resource tax in 2011 amounted to LVL 4.72 million in the tax revenue in breakdown by planning region in 2011**. special budget and LVL 525 600 in the principal budget (see Table 80). The marked disparities in the level of socioeconomic development of self-governments is the cause of extensive differences in self-government tax revenues. In 2011, the share of tax revenue in the principal budget of self-governments ranged between 18.7 % (Aglona municipality) to 84.8 % (Marupe municipality), whereas in terms of per capita revenue, the figures for self-governments varied between LVL 131 (Riebini municipality) and LVL 572 (Marupe municipality). These differences are demonstrated in Figure 92. In 2011, the highest self-government revenue among the planning regions – exceeding that of other regions significantly – was in the Riga region, Table 82. Transfers in the self-government principal budget whereas Latgale had by far the lowest revenue. The revenues in 2010 and 2011***. average per capita self-government revenue in the Riga region was more than double the amount in the Latgale region (see Table 81). The second largest share of revenue after tax revenues * Sources of data: Annual reports on the in self-government budgets in 2011 came from transfers: implementation of the consolidated general 36.6 %, or LVL 518.73 million, but compared with the state budget: reports on the implementation of preceding year this figure declined slightly. Transfers from the principal self-government budget and the the state budget formed the largest share of all transfers special self-government budget. For 2011: official monthly report (January to December) on the (LVL 432.51 million, excluding the self-government implementation of the principal self-government financial equalisation fund), including earmarked grants budget and the special self-government budget. and resources for the implementation of EU Structural ** The calculations were made based on the data of Fund projects (LVL 125.84 million; see Table 82*). the official monthly report (January to December * In the Treasury report Revenue and Expenditure of the Principal Budget of Self-governments, the entirety of SGFEF has been included under the revenue category “state budget transfers” – the majority of which is not essentially a state transfer but rather contributions from self-government budgets. In this table, the SGFEF has been shown separately from state budget transfers.

2011) on the implementation of the principal selfgovernment budget. * ** Sources of data: for 2010: Annual report on the implementation of the consolidated general state budget; for 2011: official monthly report (January to December) on the implementation of the principal self-government budget (Table 8). Calculations made based on the data in the reports.

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FigureÂ 92. Per capita tax revenues in the self-government principal budget in 2011*.

* Calculations based on data by the Treasury and OCMA.

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In 2011, the share of transfers in the principal budget of self-governments ranged between 12.9 % (Marupe municipality) to 77.7 % (Baltinava municipality), but expressed per capita, the size of transfers in the selfgovernment budgets was between LVL 87 (Marupe municipality and Kekava municipality) and LVL 728 (Akniste municipality). Calculations of per capita transfer revenues indicate that, on average, these were lowest in the Riga region and highest in the Latgale and Vidzeme regions (see Figure 93).

Figure 93. Average per capita revenue from transfers in the selfgovernment principal budgets in the planning regions in 2011*.

SELF-GOVERNMENT FINANCIAL EQUALISATION As significant disparities exist in the financial capacity of self-governments, equalisation of self-government finances has been performed since 1995. The Council of Europe recommendations on the financial resources of local authorities state, among other things, that “financial equalisation is a prerequisite for the success of policies geared to economic stability and balanced, sustainable regional development”*. In Latvia, self-government financial equalisation can be justifiably regarded as one of the key instruments of regional development, aimed at reducing unfavourable disparities among self-governments. The equalisation of self-government finances takes into account both the differing tax revenues in the selfgovernment budgets and the various spending needs, dictated by the age structure of the population. The present self-government financial equalisation system is governed by the 1998 Law on Equalisation of Self-government Finances, which was amended in 2009 to adapt financial equalisation to the reformed system of selfgovernments. The equalisation of self-government finances takes place via the self-government financial equalisation fund (SGFEF), whose resources consist of contributions by self-governments and a state budget grant. Although the overall volume of the SGFEF constitutes some 5–6 % of the principal budget revenues of all self-governments, and self-governments are the main contributors to it, for a large portion of self-governments, this is one of the most significant sources of revenue. Since 2010, the Law on Equalisation of Self-government Finances has provided for the possibility of an additional grant from the state budget being allocated by the Ministry of Finance to those self-governments that have the lowest financial revenues per capita after equali * Council of Europe, Recommendation Rec. (2005) 1 of the Committee of Ministers to Member States on the Financial Resources of Local and Regional Authorities, January 19, 2005.

sation. Furthermore, since 2010, the Law provides for a special earmarked grant to self-governments for children in orphanages placed there before 1998 and residents of retirement homes and centres placed there before 1998, because, until the Law was amended in 2009, the maintenance of such people was funded through the selfgovernment financial equalisation system. In the period from 1998 to 2008, the volume of the self-government financial equalisation fund rose from LVL 27.1 million to LVL 93.9 million, reaching the largest amount to date. In 2009, the volume of the fund was LVL 77.5 million, in 2010 LVL 64.9 million, in 2011 LVL 71.2 million. Since 2010, additional state budget funds have been allocated towards the implementation of the Law on Equalisation of Self-government Finances: in 2010, this was LVL 2.7 million (incl. LVL 135 000 to the self-government of the city of Daugavpils as the self-government with the lowest per capita revenue after equalisation), and in 2011, an additional LVL 7.6 million (incl. LVL 5.7 million for four self-governments with the lowest per capita revenue after equalisation; see Table 83). In 2011, the calculations of self-government financial equalisation were included in Cabinet Regulation No 1180 of December 21, 2010 “Regulations on the Revenue of the Self-government Financial Equalisation Fund and Procedures for Allocation Thereof in 2011”, adopted in accordance with law. According to the Regulation, the initially budgeted volume of the SGFEF was LVL 66.8 million: it proposed a state budget grant of LVL 7.9 million and contributions by self-governments in the amount of LVL 58.9 million. As the actual revenues from personal income tax in 2011 exceeded the initially budgeted amount, the volume of the self-government financial equalisation fund was larger than prescribed in the Regulation. It reached LVL 71.2 million, of which LVL 63.3 million was contributed by self-governments. * Calculations based on data by the Treasury and OCMA.

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FigureÂ 94. Contributions of self-governments to the self-government financial equalisation per capita, grants from the fund per capita or self-governments in a neutral position in 2011*.

* Calculations based on data by the Treasury and OCMA.

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Table 83. Funds towards the implementation of the provisions of the Law on Equalisation of Self-government Finances in 2007 to 2012, LVL million*. An additional LVL 5.7 million was allocated from the state budget for grants to four cities with the lowest per capita revenue after equalisation. Previously, in 2010, the opposite was the case: the actual size of the SGFEF was smaller than prescribed in the Cabinet Regulation, as self-governments made their contributions to the fund in accordance with the actual personal income tax revenues collected. Annex 4 to this report lists the self-government financial equalisation figures in breakdown by self-government in 2011. The report on payment transactions between the state budget and self-government budgets by the Treasury was used as the source of data (January to December 2011 and financial equalisation payments made in January 2012 for the year 2011). The calculations include both the SGFEF grant and the additional state budget grant. It needs to be noted that this analysis uses the approach applied by SRDA – to use the latest possible data in the calculation and analysis of various indicators, including the territorial development indices – hence, in performing calculations on the financial equalisation indicators per capita, the latest population data were used, i.e., OCMA data as of January 1, 2012. This means that the data of this analysis on the actual situation differ from the equalisation indicators provided in the Cabinet Regulation, which rely on projected tax revenues and population figures for January 1, 2011. In 2011, contributions to the self-government equalisation fund were made by 18 self-governments; of those five were national cities. There were ten neutral selfgovernments, i.e., ones that were neither donors nor beneficiaries of the grant, while 91 self-governments received a grant from the fund. The financial equalisation figures of self-governments for 2011 are reflected on a map in Figure 94. The main donor to the SGFEF is the self-government of the city of Riga: in 2011, it made a contribution of LVL 48.4 million, which translates to LVL 69 per capita. Among the municipalities, the largest payment was made by Kekava municipality, LVL 1.5 million (LVL 56 per capita). * Source: the Treasury, annual Cabinet Regulations on the equalisation of self-government finances and the annual Law on the State Budget. For 2012: proposed resources pursuant to Cabinet Regulation No 1030 of December 27, 2011 “Regulations on the Revenue of the Self-government Financial Equalisation Fund and Procedures for Allocation Thereof in 2012”.

In turn, if calculated per capita, the largest payment was made by Garkalne municipality: LVL 99 per capita. The largest grant from the fund was received by the city of Daugavpils: LVL 5.6 million (LVL 56 per capita), followed by Rezekne municipality with LVL 4.7 million (LVL 150 per capita), but, if calculated per capita, the largest grant went to Riebini municipality, i.e., LVL 183. Riebini municipality also had the largest share of the SGFEF grant in the selfgovernment revenues, 37 %. An overview of financial equalisation data by planning region indicates that, in aggregate (adding contributions made and grants received), the Riga planning region contributed more to the fund than received back from it in 2011, while the remaining four regions received more in grant funds than they contributed (see Table 84). Not a single self-government in the Latgale planning region contributed to the SGFEF. A close correlation can be observed between the aggregate grant received by planning regions and their territorial development level index value: the lower the index, the greater the grant received from the SGFEF (see Figure 95).

Table 84. Payments into the self-government financial equalisation fund and grants from the fund (including the additional grant) in 2011, in distribution by planning region*.

Figure 95. Territorial development level index of the planning regions (according to 2011 data) and the net contribution/ grant of self-governments to/from the self-government financial equalisation fund in 2011, per capita*. * Calculations based on data by the Treasury and OCMA.

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In 2012, the calculations of self-government financial equalisation were included in Cabinet Regulation No 1030 of December 27, 2011 “Regulations on the Revenue of the Self-government Financial Equalisation Fund and Procedures for Allocation Thereof in 2012”. According to the Regulation, the revenue of the self-government financial equalisation for 2012 has been budgeted in the amount of LVL 69.50 million, which consists of a state budget grant (LVL 8.45 million) and contributions by self-governments (LVL 61.05 million). In 2012, 18 municipalities are contributors to the fund, including five cities. In accordance with the Law on State Budget for 2012, the additional grant from the state budget as provided for in the Law on Equalisation of Self-government Finances is planned in the amount of LVL 5.7 million, while LVL 1.4 million has been budgeted as

an earmarked grant for children in orphanages (placed there before 1998) and residents in retirement homes (placed there before 1998). Thus, overall, LVL 15.5 million has been budgeted from the state budget in 2012 towards the implementation of the provisions of the financial equalisation law, which is the same amount as in 2011. For several years now, improving the self-government financial equalisation system has been on the government’s agenda. The Ministry of Environmental Protection and Regional Development as the authority responsible for the development of self-governments, in cooperation with the Ministry of Finance, self-governments, experts and politicians needs to reach an agreement and draw up a proposal and the necessary draft legislation for a new system of self-government financial equalisation.

BUDGET EXPENDITURE OF SELF-GOVERNMENTS In 2011, the volume of expenditure in the consoli dated general budget of self-governments was LVL 1391.41 million. The self-government principal budget expenditures amounted to LVL 1 448.93 million gross and LVL 1 364.87 million net; self-government special budget expenditure was LVL 26.78 million gross and LVL 21.35 million net. In 2011, the expenditures of selfgovernments exceeded the revenues (see Table 85).

Analysis of self-government principal budget expenditure according to economic classification shows that, in 2011, maintenance expenses constituted 76.7 %, of which 37.2 %, or LVL 538.64 million was represented by remuneration expenses in the principal budget expenditure (net). Compared with 2010, remuneration expenses in the principal budget of self-governments increased by 3.5 %. In 2011, 23.0 % of principal budget expenditure was capital expenditure: compared with the year before, the volume and share of capital expenditure increased, which is related to increased transfers towards the implementation of projects financed from the EU Structural Funds (see Tables 86 and 87). Annex 5 to this report provides the Table 85. Expenditures of the principal budget, special budget and indicators of self-government budget consolidated budget of self-governments, 2009 to 2011*. expenditure by economic classification for all 119 self-governments. It should be added that the share of capital expenditure in the principal budgets of self-governments in 2011 ranged between 2.2 % (Auce municipality) to 57.3 % (Valka municipality).

Table 86. Expenditure of the principal budget of selfgovernments according to economic categories in 2010**.

* Sources of data: Annual report on the implementation of the consolidated general state budget – implementation of the consolidated self-government budget in 2009 and 2010 (including donations and gifts). For 2011: official monthly report (January to December) on the implementation of the consolidated self-government budget (excluding donations and gifts). ** Data of the Annual report on the implementation of the consolidated general state budget – report on the implementation of the of principal self-government budget.

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Table 87. Expenditure of the principal budget of selfgovernments according to economic categories in 2011*. * Calculations made based on the data of the official monthly report (January to December) on the implementation of the consolidated general budget – report on the implementation of the principal selfgovernment budget (Table 8).

A summary of self-government expenditures by planning region reveals that, in 2011, the Riga region had the highest capital expenditure in the principal budget in terms of volume, (LVL 124.17 million), and the Zemgale region had the lowest (LVL 44.62 million), and the same applied to the year 2010. The highest share of capital expenditure in the principal budget was in the Latgale region (30.7 %) and the lowest was in the Riga region (17.5 %), whereas when expressed per capita, the Vidzeme region (LVL 202) and the Latgale region (LVL 201) had the highest capital expenditure and the Riga region had the lowest (LVL 114; see Table 88). Self-government principal budget expenditure according to functional categories indicates the expenditure selfTable 88. Expenditure of the principal budget of selfgovernments have incurred in various areas and sectors. The governments according to economical classification in data for 2010 and 2011 have been provided in Tables 89 and 2011, by planning region*. 90. In should be considered that this expenditure includes not only spending for own needs, but also contributions by self-governments to the self-government financial equalisation fund. Compared with the preceding year, self-government expenditures increased in all functional categories in 2011. In 2011, the largest self-government expenditures were education-related (38.1 %), yet these include not only the building maintenance and management expenses of educational institutions but also teacher salaries, which are funded from an earmarked state budget grant. The second largest spending category in 2011 was economic operations: 16.5 % of principal budget expenditure (this also includes expenditure for transportation and transport infrastructure); general governmental services were the third largest, 12.6 %. It should be added that this category also includes the contributions made by self-governments into the finanTable 89. Expenditure of the principal budget of selfcial equalisation fund and interest payments on governments according to functional categories in 2010**. loans, which in the majority of cases would be attributable to expenditure for other functions. If the contributions to the financial equalisation fund and interest payments are subtracted from expenditure for general governmental services, the latter would form a 6.1 % share in the principal budget expenditure. Expenditure for the management of self-government housing and grounds in 2011 constituted 11.9 % of the principal budget expenditure; social security – 10.4 %; recreation, culture and religion – 7.2 %; public order and safety – 1.5 %; environmental protection – 1.4 % and healthcare – 0.4 %. The latest (2011) results of the self-government self-assessment survey show that one third of self-governments believe that they do not have sufficient funds to perform their funcTable 90. Expenditure of the principal budget of self-governments tions. However, compared to the preceding year, according to functional categories in 2011***. * The calculations were made based on the data of the official monthly report (January to December 2011) on the implementation of the principal self-government budget. ** Annual report on the implementation of the consolidated general state budget – data of the report on the implementation of the principal self-government budget. *** Calculations made based on the data of the official monthly report (January to December) on the implementation of the consolidated general budget – report on the implementation of the principal self-government budget (Table 8).

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the number of the selfgovernments believing that they have sufficient funds, increased. In the wake of the economic crisis, when the resources at the disposal of selfTable 91. Answers to the governments shrank, self-governments have question of self-government become relatively more self-assessment, “Does frugal and understandthe self-government have ing, as the share of the sufficient funds to perform all self-governments that autonomous functions?”, %*. in 2011 believed that they had sufficient financial resources became larger than in the years before the downturn and before the conclusion of the administrative territorial reform (see Table 91). Annex 6 to this report provides the indicators of self-government budget expenditure by functional

classification for all 119 self-governments in 2011. These data reflect the absolute expenditure of each selfgovernment by function, as well as per capita expenditure and the share of the expenditure component of respective functions in the total expenditure. Thus, for example, the adjusted spending on general governmental services (less contributions to the SGFEF and interest payments) in selfgovernments fluctuated between LVL 18 per capita (Riga, Marupe municipality) and LVL 210 per capita (Varaklani municipality, for which the elevated spending in this category can be explained by the reconstruction work and energy efficiency improvements on the buildings of the municipality council and parish administrations, the purchase of a bus and land survey work). The proportion of governmental service expenditure (adjusted) in the budget expenditure ranged from 2.7 % (Riga) to 31.1 % (Varaklani municipality). This report will focus more on self-government expenditure on education and social services and social assistance.

EDUCATION EXPENDITURE In Latvia, education-related expenditure has traditionally been the largest expenditure category of selfgovernments. Self-governments provide their residents with basic education and general secondary education, supply places for pre-school and school-age children at learning and educational institutions, provide organisational and financial support to extra-scholastic learning and educational establishments. In 2011, education-related expenditure in the principal budget of self-governments amounted to LVL 552.24 million, or LVL 249 per capita; it formed 38.1 % of all principal budget expenditure (average for national cities: 36.7 %, for municipalities: 39.6 %). This expenditure pertains to the entire extensive spectrum of the educational function: it includes both the maintenance component and investment in education infrastructure, as well as remuneration for teachers, for which earmarked grants from the state budget are received. In 2011, the earmarked state budget grant for teacher salaries was LVL 166.88 million, which constituted 30.2 % of all education spending. After 2008, for two consecutive years, spending on education by self-governments diminished significantly, but it increased slightly in 2011 as compared to 2010 (see Table 92). The previous reduction in expenditure was associated with the decrease in the number of pupils as well as schools, and with changes in education funding, including pay cuts for teachers. In the 2010/2011 academic year, 830 general education day schools operated in Latvia, of those 793 were self-government schools, whereas in 2011/2012, the

figure was 814, with self-government schools numbering 775 (see Table 93). In 2011/2012, viewed in terms of planning region, there were six to eight pupils per educator in the general education day schools (see Table 94).

* Latvijas vietējo pašvaldību darbība to vadītāju vērtējumā. Riga: CSB, 2011.

* Data by the Treasury. ** Data by the Ministry of Education and Science.

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Table 92. Self-government principal budget expenditure on education, 2007 to 2011*.

Table 93. Number of pupils and educators in general education day schools, academic years 2006/07 to 2011/12**.

Figure 96. Per capita expenditure for education in self-government principal budgets in 2011*.

* Calculations based on data by the Treasury and OCMA.

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Table 94. Number of pupils and educators in general education day schools in the 2011/2012 academic year, by planning region*. Table 95 shows the self-government principal budget expenditure for education in breakdown by planning region in 2011. When calculated per capita, educational spending was lowest in the Riga region (LVL 236) and highest in the Vidzeme region (LVL 284). To remind, this includes both maintenance expenses and investment spending.

Table 95. Self-government principal budget expenditure for education in breakdown by planning region in 2011**. The volume of expenditure budgeted for education in self-governments in 2011 ranged from LVL 385 700 in Rucava municipality to LVL 9.83 million in Rezekne municipality (in the municipality group) and from LVL 5.57 million in Jekabpils to LVL 165.49 million in Riga (in the city group). When principal budget

* Data by the Ministry of Education and Science. ** Data by the Treasury.

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xpenditure for education is compared per capita, in e 2011 it ranged between LVL 137 in Riebini municipality to LVL 558 in Baltinava municipality. It should be noted that these indicators include investments. Expressed a share in the total expenditure of self-government principal budgets, education accounted for 14.0 % in Valka municipality (which is a municipality that had substantial investments in other sectors) to 66.3 % in Malpils municipality. The self-government of Malpils municipality manages not only a pre-school educational institution, secondary school, an elementary boarding school, music and arts school, but also a vocational secondary school; furthermore, investment took place in the education infrastructure. The table in Annex 7 to this report comprises the data on education-related expenditure in the principal budget of all self-governments in 2011, while Figure 96 plots the per capita education spending of self-government principal budgets for 2011 on a map. The analysis of the 2011 self-government budgets provided in this report is based on monthly reports (December to January 2011), yet the monthly report does not give a more detailed breakdown of education spending according to the type of education and expenditure – this can only be seen in the annual report of each self-government. For instance, the situation in 2010 in the most populous and least populous selfgovernment – that is, Riga and Baltinava municipality – was as follows. In Riga, in the total education-related expenditure of LVL 145.14 million, 91.3 % consisted of maintenance expenses and 8.7 % of capital expenditure. Of the expenditure, 55.4 % went towards general education, 27.0 % to pre-school educational institutions, 13.9 % to interest-related and professional orientation educational institutions and 3.6 % to other needs, including educational management. In turn, the education spending in Baltinava municipality in 2010 was LVL 933 200, of which 79.6 % was maintenance expenditure and 20.4 % capital expenditure. In Baltinava municipality, 83.5 % of education expenditure was used for general education, 13.7 % – for interest related and professional orientation education and 2.9 % – for pre-school education.

SOCIAL SERVICES AND SOCIAL ASSISTANCE EXPENDITURE In 2011, self-government principal budget expenditure in the functional category of social security – which includes expenditure for both social services and social assistance or benefits – constituted LVL 151.08 million, or LVL 68 per capita, and accounted for 10.4 % of the total principal budget expenditure. Compared with 2010, in 2011 spending on social services and social assistance needs increased by 13.3 %. This category of expenditure also increased in the preceding years, as the demand for social assistance rose, even though the overall expenditure of self-governments in 2009 and 2010 shrank. In the group of national cities, the average expenditure for the social security function in 2011 was LVL 74 per capita, while in municipalities this figure was LVL 62. Self-government expenditure data according to economic classification indicate that, in 2011, self-government expenditure for social benefits from the selfgovernment budgets amounted to LVL 90.16 million (in 2010: LVL 83.76 million; in 2009: LVL 52.97 million), or an average of LVL 41 for each resident of the country and 6.6% of the principal budget expenditure. In the group of national cities, the average expenditure for benefit payments was LVL 43 per capita, while in the municipality group the figure was LVL 38. Table 96 lists the indicators of self-government principal budget expenditure for social benefits in 2011 in breakdown by planning region. The largest total volume of benefit payments was in the Riga planning region, as it also has the largest population. Compared with the previous year, the volume of spending for social benefits in the Riga planning region expanded by 22 %; it also increased slightly – by nearly one per cent – in the Latgale region, whereas in the other three regions the

Table 96. Self-government principal budget expenditure for social benefits in 2011, by planning region*.

self-government expenditure for benefits decreased. Just as in 2010, the largest per capita volume of social benefits in 2011 was in the Latgale region, and the share of social benefit spending in the principal budget expenditure was also highest in Latgale, as the need for benefits in this region is the greatest. Annex 8 to this report comprises data on the principal budget expenditure for social security (according to functional classification) and social benefits (according to economic classification) in 2011 for all self-governments. It needs to be remarked that not all self-governments include all social benefits under the functional budget category of social security – depending on the nature of the benefit, these are also reported under education, housing management or healthcare. There is some inconsistency regarding the issue of classification of expenditure, which means that, not for the first year, a situation is developing where the expenditure for social benefits in some selfgovernments exceeds the expenditure for social security. When the average per capita spending on social security (a functional category) by self-governments is compared, it is evident that, in 2011, this ranged between LVL 11 in Dundaga municipality and LVL 200 in Krustpils municipality. It should be noted that investment has also been included in this figure. According to law, self-governments are required to provide two types of social benefits: a guaranteed minimum income (GMI) allowance and a housing allowance. All other benefits are determined by the self-governments themselves. Since October 2009, as part of the Social Security Net Strategy, self-governments have been receiving state aid, including a partial compensation for payments of these two mandatory benefits. The state reimburses self-governments for 50 % of the funds used on the GMI allowance and 20 % of the spending on the housing allowance. A comparison of the per capita principal budget expenditure for social benefits by self-governments in 2011 is depicted in Figure 97. Spending on benefits in selfgovernments ranged from LVL 15 per capita in Kekava municipality to LVL 86 per capita in Rezekne municipality. In the group of national cities, the largest per capita expenditure was in Rezekne (LVL 59) and the smallest – in Jurmala (LVL 28). The share of social benefits in the expenditure of self-government principal budgets varied in the range from 1.5 % in Adazi municipality to 18.0 % in Vilani municipality.

* Data by the Treasury.

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FigureÂ 97. Per capita expenditure for social benefits in self-government principal budgets in 2011*.

* Calculations based on data by the Treasury and OCMA.

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IX INVESTMENT OF THE EU FUNDS IN THE REGIONS OF LATVIA Since Latvia’s accession to the European Union, resources allocated by the EU have represented some of the key funding aimed at territorial development. They were of special importance during the economic crisis and in the post-crisis period. In implementing the EU regional policy, Latvia, as an EU Member State, uses the financial assistance from the EU towards economic and social development. The main financial instruments under which Latvia receives financial assistance are the European Regional Development Fund (ERDF), the European Social Fund (ESF), the Cohesion Fund (CF), the European Agricultural Fund for Rural Development (EAFRD) and the European Fisheries Fund (EFF). The management of the ERDF, ESF and CF in Latvia is ensured by the Ministry of Finance. In the 2007–2013 period, the funds are implemented in accordance with the National Strategic Reference Framework for 2007–2013 (NSRF), which defines the overall strategy of EU fund implementation. Support to the agricultural and

fisheries sector in the 2007–2013 period is coordinated by the Ministry of Agriculture, which administers the EAFRD and the EFF. Support from the EAFRD is ensured through the implementation of the Rural Development Programme for 2007–2013, whereas assistance from the EFF is realised in accordance with the Operational Programme for the Implementation of European Fisheries Fund Support for 2007–2013. In addition to resources from the EU funds awarded as part of the above programmes, Latvia also receives European Union funding under various Community initiatives, such as EQUAL, INTERREG and others, and participates in various others EU-funded programmes. Further in this chapter, the situation concerning EU fund investment in the regions of Latvia as part of the implementation of the NSRF from 2007 to the end of 2011 will be discussed, as will be the public funding of projects within the two programmes managed by the Ministry of Agriculture in the same period.

INVESTMENT OF THE EU FUNDS IN THE REGIONS AS PART OF IMPLEMENTATION OF THE NSRF The National Strategic Reference Framework for 2007–2013 is the main national-level document in Latvia for the Structural Funds and the Cohesion Fund that ensures the linking of the EU cohesion policy with the national priorities and provides a rationale for the choice of such priorities and defines a strategy for the implementation of the funds and the framework for managing these, it ensures coordination among the operational programmes and other financial instruments. The NSRF was drawn up taking into account the objectives and axes of activity specified in the National Development Plan for 2007–2013 and the national Lisbon strategy of Latvia, as well as keeping in mind the provisions of the long-term concept paper approved by the Saeima, The Model for Growth of Latvia: Human Being in the First Place*. It is stated in the NSRF that the main task for the 2007–2013 period to be accomplished with the aid of the Structural Funds and the Cohesion Fund is to create the necessary preconditions and directly bring about changes that would ensure the formation of a knowledge-intensive economy in the country. Thus, with respect to the investment from the funds, the greatest emphasis would be on measures that develop knowledge as the main resource for growth and create favourable

living conditions for humans as the bearers of this resource*. In order to achieve this objective, investment from the Structural Funds and the Cohesion Fund has been planned along three thematic axes: development of human resources and their effective use, improved competitiveness and movement towards a knowledgeintensive economy, improvements in public services and the infrastructure as a prerequisite for a balanced development of the country and its territories. In accordance with these axes, investment is channelled via three operational programmes. They are: •o perational programme 1 – “Human Resources and Employment” (an ESF operational programme); • operational programme 2 – “Entrepreneurship and Innovations” (an ERDF operational programme); •o perational programme 3 – “Infrastructure and Services” (an operational programme of the ERDF and the Cohesion Fund).

* Summary of the National Strategic Reference Framework.

The document specifies the following horizontal priorities: “Balanced territorial development”, “Information society”, “Equal opportunities”, “Sustainable development”, “Macroeconomic stability” and “International competitiveness of the city of Riga”.

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The funding budgeted for Latvia in 2007–2013 towards the implementation of the objectives of the cohesion policy through the three EU funds mentioned above is EUR 4.53 billion, or LVL 3.18 billion, of which 12 % is intended for implementing operational programme 1, 16 % – for implementing operational programme 2 and 72 % – for implementing operational programme 3. National co-financing needs to be provided alongside the financing from the EU funds. In the NSRF, each operational programme is divided into measures which, in turn, are divided into activities, with some activities also having sub-activities. MEPRD and SRDA as the responsible body and the liaison body, respectively, participate in the implementation of several NSRF activities/sub-activities. MEPRD is the responsible body in 21 activity/sub-activity, while SRDA is the liaison body in eight activities/sub-activities (see Table 97).

Table 97. Responsibility of MEPRD and SRDA in the implementation of the NSRF*. * Source of data: www.esfondi.lv.

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MEPRD is also responsible for monitoring the implementation of four horizontal priorities and every year produces three reports: the first analyses the implementation of the priorities “Balanced territorial development” and “International competitiveness of the city of Riga”; the second covers the implementation of the priority “Information society” and the third looks at the implementation of the priority “Sustainable development”. The horizontal priorities included in the first report are directly related to regional development, and therefore this chapter provides information below that relies on the data of the “Report on the Implementation of the Horizontal Priorities “Balanced Territorial Development” and “International Competitiveness of the City of Riga” in 2007–2011”, produced by MEPRD and published in May 2012. In the report, MEPRD reviews the payments made as part of the priorities from the EU funds and the state budget during the period from January 1, 2007 to December 31, 2011. In the context of territorial development, an indicator of this kind provides information on the public funding that has effectively reached specific territories within the specified period. In order to provide objective information on EU fund investment in the regions of Latvia, the EU fund activities/ sub-activities (hereinafter: activities) have been categorised according to the extent of their impact as activities with national, regional or local impact, based on an assessment of the scale of the operations of the beneficiaries specified in the implementation conditions of an activity and actual beneficiaries, and only investments taking place on a regional or local scale are deemed to pertain to regional development. At the same time, aspects such as the territorial scale of the outcomes of the implementation of an activity specified in the supplements to the operational programmes and the project implementation territory specified in the approved project applications were considered. Activities with a regional impact support higher and vocational education and the promotion of inclusive education; the development of infrastructure for higher, vocational and specialised education; the development of social care infrastructure and services; the development of science, research and technology; the development of healthcare infrastructure; the improvement of regional motor roads; the improvement of small port infrastructure; the development of waste management; the d evelopment of tourism infrastructure; the promotion of growth of national and regional development centres; the preservation of national landmarks; the sustainable development of the city of Riga and the sustainable development of the public transportation system.

Activities with a local impact support the following: administrative capacity building of non-governmental organisations and local self-governments; recruitment of professionals in the planning regions and local selfgovernments; training organised by businesses; recruitment of highly qualified employees for businesses; development of new products, technologies and high value-added output; marketing activities to enter international markets; development of micro, small and medium economic operators in specially assisted areas; development of pre-school and secondary education infrastructure; development of traffic safety, water management and heating infrastructure; insulation of buildings and use of renewable energy resources to develop cogeneration power stations; public transportation outside Riga; development of bicycling tourism products; improvement of thoroughfares; preservation of cultural heritage; creation of infrastructure to mitigate flooding hazards. The amount of EU fund investment disbursed between January 1, 2007 and December 31, 2011 was LVL 1.707 billion, in which more than a half (LVL 1.004 billion, or 58.8 %) consisted of funding for activities with a regional or local impact (among them activities that were implemented not in a specific region but can be attributed to all regions. In figures and tables, this kind of funding is designated as “All Latvia”). Activities with a national impact accounted for 41.2 % of the funding (see Figure 98).

In the reporting period, 3 218 projects were implemented, of those 210 were projects with a national impact and 3 008 projects with a regional and local impact. Of the projects implemented as part of activities with a regional and local impact, only three had an effect on the horizontal priority “International competitiveness of the city of Riga”, while 2 719 projects had an effect on the horizontal priority “Balanced territorial development” and 286 had impact on both horizontal priorities. Of the total number of projects (also including projects with a national impact) 40.4 % were implemented in the Riga region, 14.4 % in the Kurzeme region, 13.5 % in the Vidzeme region, 12.3 % in the Latgale region and 11.9 % in the Zemgale region. Despite the substantial amount of funding, the share of projects whose implementation applies to all regions was not large: only 3.6 % in the total number of projects. Projects in activities with a national impact had the largest share of financing, yet in terms of number they accounted only for 6.5 % of all projects. It is evident from reviewing the per capita funding in the planning regions that the largest amount of funding in activities with a regional and local impact was raised in the Kurzeme region – LVL 652 per resident – the Riga region attracted the least amount of funding, LVL 267 per resident. The figure for the Vidzeme region was only slightly lower than that for Kurzeme, LVL 633 per capita; Latgale and Zemgale had similar levels of funding, LVL 542 and LVL 536 per capita, respectively (see Figure 99).

Figure 98. Distribution of EU fund investment across planning regions and according to activity impact, 2007 to 2011*. A comparison of the planning regions reveals that, in the five years, the largest amount of funding was raised in the Riga region, LVL 291.41 million, followed by Kurzeme with LVL 193.21 million, Latgale with LVL 181.74 million, Zemgale with LVL 148.63 million and Vidzeme with LVL 146.24 million in funding (see Table 98).

Table 98. EU fund investment in activities with a regional or local impact across planning regions, 2007 to 2011*. * MEPRD data.

Figure 99. Per capita EU fund investment in activities with a regional and local impact across planning regions, 2007 to 2011*. Among the EU fund investment activities with a regional and local impact covered in the MEPRD report, in the period from 2007 to 2011, operational programme “Infrastructure and Services” formed the greatest share (79.3 %) – both in the country as a whole and in all planning regions. The share of payments in operational programme “Entrepreneurship and Innovations” was 13.0 %, whereas that of operational programme “Human Resources and Employment”, 7.7 % (see Figure 100 and 101). * MEPRD data.

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The activities with a regional impact in operational programme “Human Resources and Employment” provide support to the promotion of science, higher education, vocational education and inclusive education as well as the development of social care services in the regions. The activities with a local impact in the operational programme support the administrative capacity-building of non-governmental organisations, planning regions and local self-governments, the recruitment of professionals for the planning regions, national cities and municipalities, and training organised by economic operators and the recruitment of highly qualified employees for businesses. In the reference period, a significant share of financing in the activities of operational programme 1 with a regional and local impact, 53.1 %, was raised by the Riga region, whereas the Vidzeme region only received 2.7 % of the funding. Among the remaining regions, the share of activity financing ranged between 9.3 % and 17.6 %. The funding of the projects implemented in all of Latvia accounted for 3.3 % of all payments made (see Table 99 and Figure 102). Figure 100. EU fund investment in activities with a regional and local impact in the planning regions from 2007 to 2011, in breakdown by operational programme*.

Table 99. EU fund investment in activities of operational programme 1, “Human Resources and Employment” with a regional and local impact in the planning regions from 2007 to 2011*.

Figure 101. Per capita EU fund investment in activities with a regional and local impact in the planning regions in 2007 to 2011, in breakdown by operational programme*.

perational Programme 1 – O “Human Resources and Employment”

Figure 102. EU fund investment in activities of operational programme 1, “Human Resources and Employment” with a regional and local impact in breakdown by planning region, from 2007 to 2011*.

The volume of NSRF operational programme 1, “Human Resources and Employment” in the period from 2007 to 2011 was LVL 77.53 million or 7.7 % of the funding paid out in all operational programmes.

Upon evaluating the number of projects receiving funding in this operational programme and the volume of funding raised, it is evident that a similar number of projects does not translate into a similar amount of financing towards the implementation of those projects. The considerable disparities – i.e., the share of the Riga region in the funding raised, which exceeds that of other

* MEPRD data.

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regions several times – in the distribution of the funding of activities with a regional impact can be explained by the fact that the majority of the country’s scientific institutions and higher and vocational education institutions are located in Riga, whereas the inconsistency of allocation of funding for activities with a local impact could be due to the fact that most registered businesses and NGOs operate in Riga. A comparison of the per capita funding of activities with a regional and local impact in operational programme 1 in the planning regions does, however, indicate the Latgale planning region received the most funding, LVL 41 per capita, whereas the lowest figure was in the Vidzeme region – a mere LVL 9 per capita (see Figure 103).

Figure 103. Per capita EU fund investment in activities of operational programme 1, “Human Resources and Employment” with a regional and local impact in the planning regions from 2007 to 2011*.

perational Programme 2 – O “Entrepreneurship and Innovations” The volume of NSRF operational programme 2, “Entrepreneurship and Innovations” in the period from 2007 to 2011 comprised LVL 130.39 million, or 13.0 % of the funding paid out in all operational programmes. The activities under operational programme “Entrepreneurship and innovations” with impact at the regional level support the development of science and research and transfer of technologies and international cooperation projects in science and technology, whereas activities with impact at the local level: the development and commercial implementation of new products and technologies, projects to produce goods with high added value, marketing activities for entering foreign markets, high value-added investments, as well as the development of micro, small and medium businesses in specially assisted areas. In the activities with a regional and local impact in operational programme 2 during the period from 2007 to 2011, the largest share of financing was raised by the Riga region and the Kurzeme region – 47.9 % and 25.1 % of the total volume, respectively – while the Zemgale, Latgale and Vidzeme region received a much smaller amount of financing, ranging from 8.2 % to 9.6 % (see Table 100 and Figure 104). * MEPRD data.

Table 100. EU fund investment in activities of operational programme 2, “Entrepreneurship and Innovations” with a regional and local impact in the planning regions from 2007 to 2011*.

Figure 104. EU fund investment in activities of operational programme 2, “Entrepreneurship and Innovations” with a regional and local impact in breakdown by planning region, from 2007 to 2011*. A comparison of the per capita financing of the activities under operational programme “Entrepreneurship and Innovations” across the planning regions reveals that in activities with both a regional and local impact, as well as in activities with a local impact alone, the Kurzeme region received considerably more funding per capita than any other region, LVL 111. The Riga and Vidzeme region receiving funding that was nearly half that – LVL 57 and LVL 54, respectively – whereas the Zemgale and Latgale regions received LVL 39 and LVL 36 per capita, respectively (see Figure 105).

Figure 105. Per capita EU fund investment in activities of operational programme 2, “Entrepreneurship and Innovations” with a regional and local impact in the planning regions from 2007 to 2011*. * MEPRD data.

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perational Programme 3 – O “Infrastructure and Services” The volume of NSRF operational programme 3, “Infrastructure and Services”, in the period from 2007 to 2011 was LVL 796.05 million, or 79.3 % of the funding paid out in all operational programmes. Activities with a regional impact in operational programme “Infrastructure and Services” support to the following: development of infrastructure for higher, vocational and specialised education; development of in-patient and emergency healthcare infrastructure; improvement of state regional motor road routes; improvement of small port infrastructure, development of regional waste management systems; recovery of historically polluted sites; development of tourism infrastructure; promotion of growth of national and regional development centres; preservation of national urban construction landmarks; improvement of infrastructure for the provision of social services; sustainable development of the city of Riga; sustainable development of the public transportation system; and the development of e-government infrastructure (information systems and electronic services), which has a horizontal impact on regional development as a whole. Activities with a local impact, in their turn, support the development of infrastructure of preschool and secondary education; the development of services of general practitioner, healthcare centre and alternative care services; development of transportation safety, water management, waste management and heating supply infrastructure in populated areas; heat insulation of buildings and use of renewable energy resources for the development of cogeneration power stations; public transportation outside Riga; the development of national bicycling tourism products; improvement of thoroughfare routes within the territory of cities and municipalities; computerisation of educational institutions; optimisation of the network of general education institutions; preservation of cultural heritage; and the creation of infrastructure to reduce flooding risks. In the activities with a regional and local impact of operational programme three, the distribution of the funding disbursed among the planning regions over the five years was fairly even, ranging between 16.4 % and 23.6 %. The funding of the projects attributable to all of Latvia accounted for 5.1 % of the total volume of investment (see Table 101 and Figure 106). A comparison of the per capita funding under operational programme 3 in the planning regions indicates that the Vidzeme region raised the largest volume of funding in activities with a regional and local impact: LVL 570 per capita. Kurzeme (LVL 505), Zemgale (LVL 472) and Latgale (LVL 466) showed relatively similar levels, whereas the Riga region had by far the lowest funding per capita (LVL 172) – of course this is due to the manifestly larger population of the Riga region, though the distribution of investment among the regions in absolute numbers is similar (see Figure 107).

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Table 101. EU fund investment in activities of operational programme 3, “Infrastructure and Services”, with a regional and local impact in the planning regions from 2007 to 2011*.

Figure 106. EU fund investment in activities of operational programme 3, “Infrastructure and Services”, with a regional and local impact in breakdown by planning region, from 2007 to 2011*.

Figure 107. Per capita EU fund investment in activities of operational programme 3, “Infrastructure and Services”, with a regional and local impact in the planning regions from 2007 to 2011*. In the conclusion of its report on the horizontal priorities “Balanced territorial development” and “International competitiveness of the city of Riga”, MEPRD has highlighted examples of best practice in the observation of the horizontal priorities: • in the urban priority “Polycentric development”, which is overseen by MEPRD, investment is made with the aim of promoting the growth and competitiveness of the development centres of national and regional importance defined in the * MEPRD data.

spatial development perspective of Latvia 2030 and facilitating the strengthening of urban-rural functional ties. At the same time, the priority is a best practice example for support according to the territorial approach, where investment is based on the priorities defined by the territorial planning documents, thus ensuring that investment is made that these territories truly need, that is welladvised and fits with the overall developmental vision of the territory. Development projects of 17 national and regional development centres, including the city of Riga, were defined based on the integrated development programme strategy and work towards a targeted growth of those selfgovernments in the direction chosen by them. In order to encourage a better understanding of the impact on territorial development and benefits of EU fund financing by the general public, MEPRD has produced a photography book and video material on the completed projects; • in the activity “Support for investments in micro, small and medium-sized enterprises operating in specially assisted areas”, managed by the Ministry of Economics, support was given to projects implemented in specially assisted areas (e.g., project of LLC Tehnika Auce “Upgrade of the milling process” in Auce municipality; project of LLC Janus M “Expansion of existing economic activity” in Vilani municipality; project of LLC NOOK serviss “Expansion of metal processing shop and diversification of output” in Rezekne municipality; as part of the project of LLC Gammaplasts, to reduce transportation costs, a new production section will be established in Ludza municipality; the project of LLC Baltic BS Company proposes to create a new production facility of equipment for sports and leisure grounds in Rezekne municipality); • the distribution of the aid intensity of the activities managed by the Ministry of Welfare across regions essentially corresponds to the aid intensity prescribed in the operational programme supplements, and it is adequate with respect to the

current unemployment rate in the country. The highest aid intensity is in the Latgale and Riga regions: the former has the highest unemployment rate in the country, whereas the high aid intensity in the Riga region can be supported by the fact that the Riga region, as the most populous area of the country, has the highest number of registered unemployed persons nationally; • under activity “Establishment of a network of multifunctional culture halls of national and regional importance”, managed by the Ministry of Culture, three projects were approved, whereby the principles of the horizontal priority “Balanced territorial development” were observed in the assessment process; the projects propose to establish multifunctional centres in the Latgale region (Eastern Latvia Regional Multifunctional Centre), in the Vidzeme region (Vidzeme Centre for Music and Culture) and in the Kurzeme region (Liepaja Multifunctional Centre Lielais dzintars). In order to improve the monitoring of the horizontal priorities “Balanced territorial development” and “International competitiveness of the city of Riga”, it is necessary to assess the impact of the EU funds on territorial development, i.e., the changes that have been brought about in the territories as a result of the implementation of projects financed from the EU funds. This means that the existing information needs to be supplemented with information on the results of the implementation of EU fund projects (e.g., jobs created, reduced public sector expenditure, etc.) that are universal and applicable to the assessment of the impact of EU fund activities in various sectors on the development of the territories. In 2011, MEPRD issued a call for tenders for an "Assessment of the Impact of the European Union Structural Funds and the Cohesion Fund for 2007–2013 on the Development of Territories in Latvia". It is expected that the survey will begin in 2012, and the greatest challenge will be obtaining comparable information on the EU funds and developing an approach for assessing the impact of the EU funds on the development of territories.

PROGRAMMES MANAGED BY THE MINISTRY OF AGRICULTURE For the very first time, the report Development of egions in Latvia includes information on the funding of R projects co-financed by the EU funds in the regions in accordance with the Latvian Rural Development Programme for 2007–2013 and the Operational Programme for the Implementation of European Fisheries Fund Support for 2007–2013, and overseen by the Ministry of Agriculture. It needs to be stressed that the funding discussed here is only a part of the European Union and national funding managed by the Ministry of Agriculture that is allocated to various territories – what is covered here is project funding in development programmes.

For the implementation of the Rural Development Programme for 2007–2013, assistance is provided from the European Agricultural Fund for Rural Development (EAFRD), whereas for the implementation of the O perational Programme for the Implementation of European Fisheries Fund Support for 2007–2013, support is available from the European Fisheries Fund (EFF). In the implementation of these programmes, the Ministry of Agriculture acts as the managing authority, whereas the functions of the managing authority secretariat and intermediate body are carried out by the Rural Support Service (RSS).

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According to the information provided by RSS, in the period from 2007 – which is when the current programming period began – to December 31, 2011, a total of 13 599 projects co-financed from the EAFRD and the EFF have been funded, and the total public funding (EU fund and State budget financing) amounted to LVL 311.51 million. Furthermore, 12 691 projects were funded by implementing the EAFRD Rural Development Programme (for a sum total of LVL 258.60 million), and 908 projects were funded by implementing the EFF Operational Programme (for a total of LVL 52.91 million). Besides the financing mentioned above, area payment measures are also implemented from the EAFRD under the Rural Development Programme, funded based on applications from the beneficiaries (together with EAGF applications). For the purposes of discussing the distribution of EAFRD and EFF financing across the territories, projects under “Technical assistance” measures worth LVL 10.90 million (LVL 9.74 million from the EAFRD and LVL 1.16 million from the EFF) and the EAFRD loan fund in the amount of LVL 26.42 million and the EFF loan fund in the amount of LVL 5.00 have been judged to be measures on the national scale and are thus excluded from territorial consideration. The Rural Support Service has adjudged funds allocated to projects in the amount of LVL 269.19 million, including LVL 222.44 million from the EAFRD and LVL 46.75 million from the EFF, to have a territorial impact. It should be noted that, in assessing the territorial nature and affiliation of projects, RSS uses an approach that differs from that used by MEPRD: RSS attributes each territorial project to the territory of that self-government (within municipalities: also to territorial units) in which the project is being implemented. If a project is implemented in multiple territories, this is noted, yet the entire amount of funding is added for the self-government territory that has the largest share of the project funding. In the RSS database, information is available of territorial projects both in breakdown by the 119 self-governments and in an even finer breakdown – by municipal parishes and towns. The data compiled on the EAFRD and EFF projects in distribution by planning region between 2007 and 2011 reveal that the largest volume and share of funding relative to the overall funding of projects with a territorial impact was in the Kurzeme region, 29 %, while the smallest was in the Riga region, 15 %. When financing is expressed per capita, too, Kurzeme had the highest figure and the Riga region had the lowest. In turn, Vidzeme had the highest number of funded projects (see Table 102, Figures 108, 109 and 111). Figure 110 depicts the public funding of territorial EAFRD and EFF projects per capita in distribution across municipalities and national cities. In the period from 2007 to 2011, Mersrags municipality (LVL 1 827) and Roja municipality (LVL 1 205) received the largest per capita funding, both of which are relatively small municipalities with small ports. The projects supported in these municipalities include ones whose impact is felt more by the residents (development of the port infrastructure) and ones whose impact is less perceptible (cutting-up

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of ships). The smallest per capita funding was in Riga and the Pieriga self-governments, as well as in cities not located on the sea. At the same time, it needs to be pointed out that a per capita calculation of this funding is not entirely suitable for an objective assessment.

Figure 108. Distribution of the public funding of EAFRD and EFF projects by planning region and in accordance with the scale of the measures, from 2007 to 2011*.

Table 102. Public funding of EAFRD and EFF projects with a territorial impact from 2007 to 2011*.

Figure 109. Per capita public funding of EAFRD and EFF projects with a territorial impact in the planning regions from 2007 to 2011*.

* RSS data.

FigureÂ 110. Distribution of public funding of EAFRD and EFF projects with a territorial impact by planning region from 2007 to 2011*.

* RSS data.

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Figure 111. Per capita public funding of EAFRD and EFF projects with a territorial impact in the planning regions from 2007 to 2011*.

rojects under the Rural P Development Programme The Rural Development Programme has been structured along four axes: • A xis 1: Promotion of the competitiveness of the agricultural and forestry sectors; •A xis 2: Improvement of the environment and rural landscape; • A xis 3: Promotion of rural life quality and diversification of economy; •A xis 4: Implementation of the LEADER approach. Axis 1 aims to raise the competitiveness of agricultural and forestry businesses by supporting their restructuring, cooperation, development and innovation and improve the professional qualifications and knowledge of the population and ensure access to the necessary advisory services. Measures under Axis 2 promote the improvement of the environment and the rural landscape by supporting measures aimed at the preservation of natural treasures, an appealing landscape and biodiversity in rural areas. Axis 3 aims to promote the quality of life in rural regions by supporting the development of local roads and the infrastructure needed by local initiative groups, to diversify economic activity and to preserve and develop the cultural heritage of rural areas. The objective of Axis 4 is to ensure a successful implementation of the rural development programme by deploying the LEADER approach by promoting the activities of local action groups, cooperation and participation in the implementation of measures, thus improving governance mechanisms at the local level that are based on local needs and enhancing the potential for sustainable development in rural territories. The axes are subdivided into measures, under which projects are undertaken or area payments awarded. The projects implemented under the Programme are not just related to agriculture, forestry, rural business activity and development thereof, but also to the * RSS data.

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processing of agricultural products, training and other measures that are realised not only within rural territories but also in large urban centres. The budgeted funding of the Rural Development Programme for the entire period until 2013 is EUR 1.37 billion or LVL 961.9 million, which includes EUR 1.04 billion or LVL 731.7 million from the EU fund. As part of the programme, payments had been made towards EAFRD-funded projects in the amount of LVL 258.60 million by the end of 2011, of which funding for territorial projects constituted LVL 222.44 million. As part of the Rural Development Programme, the highest volume of funding went to the Zemgale region, which is the Latvian region with the highest agricultural intensity. It was followed by the Vidzeme, Kurzeme and Latgale regions, whereas the Riga region had the smallest funding. If, in turn, public funding is expressed in per capita terms, the Vidzeme region ended up with the highest amount, which is the region with the smallest population, and it was followed by the Zemgale region. The largest number of projects was implemented in the Zemgale region. In terms of the number of projects, the Latgale region trails Zemgale only slightly, yet it is only ranked fourth in terms of the volume of funding (see Table 103 and Figures 112 and 114). Figure 113 reflects the public funding of the EAFRD in the period from 2007 to 2011 per 100 hectares (one square kilometre) of self-government area in municipalities and national cities. The highest amount of financing was raised by self-governments in the central part of Latvia, also known as the breadbasket of Latvia and which have the highest share of agricultural land. The relatively high amount of funding by area in towns and cities is associated with food processing businesses.

Table 103. Public funding of territorial EAFRD projects from 2007 to 2011*.

Figure 112. Distribution of public funding of territorial EAFRD projects by planning region from 2007 to 2011*. * RSS data.

FigureÂ 113. Public funding of territorial EAFRD projects per 100Â hectares of self-government area from 2007 to 2011*.

* RSS data.

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From 2007 to 2011, projects in all planning regions received funding under the Operational Programme, but the largest portion of the funding understandably went to the regions located on the seacoast, i.e., the Kurzeme and Riga regions. The funding share of the Kurzeme region was 70 % of the total volume, that of the Riga region was 21 % (see Table 104, Figures 115 and 116).

Figure 114. Per capita public funding of territorial EAFRD projects in the planning regions from 2007 to 2011*.

rojects under the Operational P Programme for the Implementation of European Fisheries Fund Support The objectives of the Operational Programme for the Implementation of European Fisheries Fund Support are as follows: • fishery businesses and a Latvian fishing fleet that are balanced with respect to the fish resources and competitive; •a quaculture, inland fishery and processing businesses producing high-quality, high value-added products that meet the market demand; • integrated and sustainable development of fisheryrelated territories and fishery-dependent human resources.

Table 104. Public funding of territorial EFF projects from 2007 to 2011*.

Figure 115. Distribution of public funding of territorial EFF projects by planning region from 2007 to 2011*.

The Operational Programme comprises five priority axes of the EFF: •m easures to adapt the Community fishing fleet; •a quaculture, inland fishing, processing and marketing; • c ollective action measures; • s ustainable development of fishing areas; • t echnical assistance. The budgeted funding within the Operational Programme for the entire period, from 2007 to 2013, is EUR 166.69 million or LVL 117.15 million, which includes EUR 125.02 million or LVL 87.86 million from the EU fund. As part of the programme, payments had been made towards EFF-funded projects in the amount of LVL 52.91 million by the end of 2011, of which funding for territorial projects constituted LVL 46.75 million.

* RSS data.

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Figure 116. Per capita public funding of territorial EFF projects in the planning regions from 2007 to 2011*.

* RSS data.

X REGIONAL DEVELOPMENT SUPPORT INSTRUMENTS MANAGED BY MEPRD AND SRDA The Ministry of Environmental Protection and Regional Development (MEPRD), formed on January 1, 2011 after annexing the Ministry of Regional Development and Local Government to the Ministry of Environment, is responsible for development planning and the coordination of financial instruments promoting regional development within the country. The State Regional Development Agency (SRDA), which is subordinated to MEPRD, ensures the implementation of the national regional development policy. There exist substantial disparities among the planning regions in Latvia – these have been analysed in the previous chapters of this report. If it were not for focused support measures, implemented in a targeted way by the state, the gaps between regions would be even larger, which would have an adverse overall impact on the development of the

country as a whole. In 2011, MEPRD and SRDA oversaw a number of regional development support instruments: EU-funded, as well as funded from certain foreign funds and from the state budget. An overview of the investment from the EU funds was given in the preceding chapter, whereas in this chapter, MEPRD and SRDA data are used to look at the other financial instruments managed by the Ministry and the Agency. In 2011, two national support measures for regional development, several EU support measures for European territorial cooperation, measures of the European Economic Area Financial Mechanism, the Norwegian Financial Mechanism, measures as part of the Social Safety Network and the climate change financial instrument, and measures under the Latvian-Swiss Cooperation Programme were implemented under the management of MEPRD and SRDA.

NATIONAL SUPPORT MEASURES FOR REGIONAL DEVELOPMENT In 2011, MEPRD and SRDA implemented two state (national) support measures, or instruments, for regional development: •e armarked grants for the development of spatial plans of the planning regions and self-governments and amendments thereto; •e armarked grants to self-governments to provide free internet and computer use at self-government libraries. In 2011, the total state budget funding in both national support instruments, LVL 351 200, was less than in the preceding period. In 2008, the total funding of the national instruments managed by MRDLG and SRDA amounted to LVL 78.3 million; in 2009 – LVL 17.4 million; whereas in 2010 it was LVL 384 100.

Earmarked Grants for Spatial Planning A precondition for the sustainable development of self-governments and regions is the balancing of the interests of socio-economic development and environmental protection. Sustainable development entails an environmental, economic and social sphere in interaction. In order to ensure a balanced development and maintenance of these spheres, well thought-out spatial planning is required. Successful territorial development requires that all stakeholders participate in the planning process and that their opinions are heard and interests heeded. Spatial planning is a way to achieve a successful

and balanced management of territories. It is an instrument that links land-use in a particular territory with the developmental priorities and policy and the principles of development programmes in that territory. In spatial plans, the objectives put forward in the policy documents are reflected in the form of regulations for spatial zoning, land-use and construction development. State budget grants for the development of spatial plans have been available to self-governments since 1996. In 2011, the procedures of awarding the grants were prescribed by Cabinet Regulation No 121 of February 14, 2006 “Procedures by which Earmarked Grants are Awarded for the Development of Planning Region and Local Self-government Spatial Plans and Amendments Thereto” (with amendments). Since 2003, the earmarked grants are also awarded for measures relating to the preparation of the spatial plan, including a strategic assessment of environmental impact. European Social Fund resources are also available for development planning under activity 1.5.3.2 of operational programme 1, “Development planning capacity building of planning regions and local governments” (see Chapter IX). SRDA is the institution which since 2008 has been accepting requests from self-governments for earmarked grants towards the development of spatial plans, it also disburses them and produces a report evaluating the use of the grants awarded and the co-financing by the recipients of the grants. By the beginning of 2011, self-governments had received LVL 10 million towards the development of spatial plans. It should be added that not all self-governments

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for which the earmarked grants for the development of a planning document have been approved are capable of implementing these within the period specified in the Cabinet Regulation, which means that the budgeted volume of earmarked grants every year exceeded the actual implementation. In 2011, the self-governments of nine municipalities received an earmarked state budget grant to develop amendments to the spatial plan of the entire administrative territory or a part thereof: Tukums municipality (Degole and Irlava parishes), Priekule municipality (Gramzda parish), Grobina municipality (the town of Grobina), Krustpils municipality (Krustpils parish), Preili municipality, Roja municipality, Sala municipality, Talsi municipality (the town of Valdemarpils) and one city selfgovernment: the city of Valmiera. One self-government, Valka municipality, received an earmarked grant towards the development of a new spatial plan. The total amount of the grants disbursed was LVL 34 200. Table 105 provides details on the distribution of earmarked grants intended for spatial planning among self-governments in the planning regions in 2011 and the total volume of such grants in the period from 2003 to (and including) 2011. In 2011, the self-governments of the Vidzeme region received the largest amount of earmarked grants for spatial plans, which was four times the amount in the Latgale region. The differences are not due to the number of self-governments or the size of the population but rather the number of applications for the earmarked grants in the given year. The distribution of the volume of the earmarked grants received over nine years across the planning regions was relatively similar: Latgale had the greatest share in the total amount of grants, 22.4 %, while Riga had the smallest share with 17.4 %. These differences are a reflection of the number of local self-governments in the planning regions before the administrative territorial reform, when Latgale had the largest number and the Riga region had the fewest self-governments. The difference in the grants paid out is also reflected in the distribution of the volume of the earmarked grants per

1 000 inhabitants. In 2011, the highest figure was in the Vidzeme region, which exceeded the performance of the other regions several times: Vidzeme has the smallest population but it received the highest amount in earmarked grants (see Figure 117). However, over a longer period, the differences in the size of the earmarked grants per 1 000 inhabitants even out. Admittedly, the Riga region forms an exception, with an indicator value that is four to five times lower than in the other planning regions, which can be explained by the average population per self-government territory before the administrative territorial reform, which exceeds the population elsewhere several times.

* MEPRD data.

Figure 117. Average earmarked grants for spatial planning per 1 000 inhabitants in the planning regions in 2011*.

armarked Grants to Provide Free E Internet and Computer Use at Selfgovernment Libraries

State budget earmarked grants to provide free internet access and computer use at self-government libraries have been awarded since 2007, and they aim to support self-governments in their efforts to provide residents with free access to the internet and computers at self-government libraries. The monitoring of the disbursement and spending of the earmarked grants is managed by SRDA. The calculation of the size of earmarked grants allocated to self-governments is based on the total subscription cost of an internet connection at libraries. Connection costs depend on the data transmission speed provided. The total amount of the earmarked grants awarded has varied in the course of time and reached the highest mark in 2008, when self-governments were awarded LVL 940 900 in earmarked grants. In 2009, the amount of the grants was 58 % and in 2010, 67 % less than in 2008. In 2011, the volume of earmarked grants for free internet and computer use at self-government libraries amounted to LVL 317 000, which is similar to the amount disbursed as grants in 2010. The reduction in the Table 105. Earmarked grants for spatial plans in 2011 and in the earmarked grants reflects the change in the portion of cost they cover: in 2008, the cost of free period from 2003 to 2011 in distribution by planning region*.

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internet and computer use at self-government libraries was covered in full, in 2009 the rate was 50 %, whereas in 2010 and 2011, only 40 %. Table 106 shows the distribution of the earmarked funds towards the provision of free internet and computer use at local government public libraries awarded in 2011, across planning regions, whereas Figure 118 illustrates the average size of the earmarked grants per 1 000 inhabitants.

Figure 118. Average amount of earmarked grants to provide free internet and computer use at self-government libraries per 1 000 inhabitants in the planning regions in 2011*.

Table 106. Earmarked grants to provide free internet and computer use at self-government libraries in breakdown by planning region in 2011*. Unlike with earmarked grants for spatial plans, the distribution of the amount of grants towards the provision of free internet and computer use at selfgovernment libraries among the planning regions has remained fairly constant year-by-year. Over a longer period, parallels can be drawn between the regional distribution of the total volume of both earmarked grants: the grants received in the planning regions are fairly similar.

Although the total amount of the earmarked grants to provide free internet and computer use at self-government libraries paid out to the self-governments of the Riga region in 2011 was similar to that in the other regions, the relative indicator per 1 000 inhabitants in the Riga region was roughly four times lower than elsewhere. The difference is caused by the substantial difference in the size of population between the Riga region and the remaining regions. The regional distribution of the amount of the earmarked grant is closely related to the number of selfgovernments (both before and after the administrative territorial reform), the number of self-government libraries and their branches, while the markedly higher population density of the Riga region – especially in Riga and Pieriga – means that a single library serves a much larger number of residents than in other regions.

EU SUPPORT FOR EUROPEAN TERRITORIAL COOPERATION For the period 2007 to 2013, MEPRD is also the national responsible body for the policy development and coordination for the programmes of Objective 3 of the EU Structural Funds, “European Territorial Cooperation” (ETC). The task of the national responsible body is to promote the implementation of the ETC programmes and projects in Latvia and to encourage the activity of Latvian project applicants, thus promoting the implementation of ERDF funding allocated to Latvia. In the 2007–2013 programming period, ten ETC programmes are being implemented in Latvia, of which eight are funded from the resources of the ERDF: •E stonia–Latvia Cross-border Cooperation Programme; • L atvia–Lithuania Cross-border Cooperation Programme; •C entral Baltic Sea Region Cross-border Cooperation Programme;

* MEPRD data.

•B altic Sea Region Transnational Cooperation Programme; • I nterregional cooperation programme, INTERREG IVC; •P rogramme for the development of urban environment, URBACT II; • ESPON 2013, a programme of the European Spatial Planning Observation Network; •P rogramme for the good governance of territorial cooperation programmes, INTERACT II. Two programmes are implemented with support from the European Neighbourhood and Partnership Instrument (ENPI): • L atvia–Lithuania–Belarus Cross-border Cooperation Programme; • E stonia–Latvia–Russia Cross-border Cooperation Programme.

* MEPRD data.

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The European Territorial Cooperation programmes are international by their nature: participants from at least two different countries take part in the programmes. The implementation of the ETC programmes takes place on the basis of concluded international agreements. The budget is funded jointly by the participating states, and it is not divided among the countries during the project selection procedure. The project partners of the ETC programmes may be various bodies and institutions. In Latvia, the planning regions, state administration institutions and bodies overseen by them, self-governments and institutions created by them, non-governmental organisations and, in some programs, private entrepreneurs are project partners in the ETC programmes. In the ETC programmes, funding is allocated in euro.* The total funding for the implementation of the ETC programmes allocated by the European Commission to Latvia in the 2007–2013 programming period is EUR 89.9 million, or LVL 63.2 million. The total available volume of funding available to the Latvian partners in all of the above ETC programmes constitutes EUR 501.8 million, or LVL 352.7 million. In the ETC programmes, the gain of the project partners of a particular state party may be greater than the national contribution to the programmes, which is why the activity of Latvian partners in the cooperation projects is of significance. The implementation of the ETC programmes commenced in 2008, and by the end of 2011, the number of approved projects involving Latvian partners reached 362, worth a total of LVL 496.02 million (the total amount of ERDF, ENPI and national co-financing in the total project budget)**: • t he majority of the projects have been approved under cross-border programmes: in the period from 2008 to 2011, a total of 209 projects were approved. The total project budget of the Latvian partners (ERDF, ENPI and national funding) makes up LVL 88.41 million. In the Latvia–Lithuania Programme, 115 projects were approved, as well as 57 projects in the Estonia– Latvia Programme, 47 projects in the Central Baltic Sea Region Programme, 20 projects in the Latvia– Lithuania–Belarus Programme and 17 projects in the Estonia–Latvia–Russia Programme; • t he number of projects approved as part of the transnational cooperation programme of the Baltic Sea Region involving Latvian partners was 63; the total budget of the Latvian partners in these is LVL 15.14 million (ERDF and national funding); • t he interregional cooperation programme, INTERREG IVC (35 projects approved with the participation of Latvian partners), the urban environment development programme, URBACT II (three projects approved), and the programme of the European Spatial Planning Observation Network, ESPON 2013 (five projects approved), cover the entire European Union. The total project budget of the Latvian partners in all these programmes constitutes LVL 5.14 million. * The exchange rate established by the Bank of Latvia (EUR 1 = LVL 0.702804) is used in the calculations. ** MEPRD data.

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The number of Latvian partners in the projects supported exceeds the number of projects, as each project may involve multiple Latvian partners. Estonia–Latvia Cross-border Cooperation Programme The Estonia–Latvia Cross-border Cooperation Programme supports cross-border cooperation projects between Estonian and Latvian partners within the programme territory (Kurzeme, Vidzeme and Riga regions in Latvia; Hiiumaa, Jõgeva, Lääne, Põlva, Pärnu, Saaremaa, Tartu, Valga, Võru and Viljandi regions in Estonia). This programme has three priorities: • “ Increased cohesion of the Programme area”; • “Higher competitiveness of the Programme area”; • “Active, sustainable and integrated communities”. Latvia–Lithuania Cross-border Cooperation Programme The objective of the Latvia–Lithuania Cross-border Cooperation Programme is to promote environmental causes, economic growth and the emergence of an appealing and dynamic community between the border regions of Latvia and Lithuania. The following territories participate in the Programme: Kurzeme, Zemgale and Latgale regions in Latvia; Klaipėda, Panevėžys, Šiauliai, Telšiai, Utena and Kaunas (as an additional territory) counties in Lithuania. Three priorities have been designated in the Programme: • “Encouragement of socioeconomic development and competitiveness of the region”; •“ Attractive living environment and development of sustainable community”; •“ Technical assistance – support for Programme implementation”. Latvia–Lithuania–Belarus Crossborder Cooperation Programme The objective of the Latvia–Lithuania–Belarus Crossborder Cooperation Programme is to strengthen the relations between Latvia, Lithuania and Belarus by way of bilateral and trilateral cooperation projects, thus helping to stimulate the development of the economy and the social sphere throughout the Programme territory. The Programme comprises the Latgale region in Latvia, Alytus, Kaunas, Panevėžys, Utena and Vilnius counties in Lithuania, and the Grodno, Minsk, Mogilev and Vitebsk voblasts and the city of Minsk in Belarus. Two priorities have been designated in the Programme: •“ Promotion of sustainable economic and social development”; • “Addressing common challenges”. Central Baltic Sea Region Crossborder Cooperation Programme The Central Baltic Sea Region Cross-border Cooperation Programme aims to promote the integration of the region into the European Union and facilitate the development of a dynamic and competitive region.

The eligible Programme territories in Latvia are the Kurzeme, Pieriga and Riga statistical (NUTS 3) regions and the Vidzeme and Zemgale regions as adjacent territories. The Programme incorporates three priorities: • “ Safe and healthy environment”; • “ Economically competitive and innovative region”; • “ Attractive and dynamic communities”. Baltic Sea Region Transnational Cooperation Programme The Baltic Sea Region Transnational Cooperation Programme has been established to promote regional development through transnational cooperation with the aim of creating a sustainable, competitive and territorially unified Baltic Sea Region. The eligible territory of the Programme comprises the EU Member States of Denmark, Sweden, Finland, Estonia, Latvia, Lithuania, Poland, German (individual federal lands in the northern part of the country: Berlin, Bremen, Hamburg, Brandenburg, Mecklenburg-Western Pomerania, Schleswig-Holstein, the Lüneburg NUTS 2 area in Lower Saxony), as well as Norway and the northwestern regions of Belarus and Russia. The Programme has four priorities: • “ Fostering innovations in the entire Baltic Sea region”; • “ Improving the internal and external accessibility of the Baltic Sea region”; • “ Managing the Baltic Sea as a common resource”; • “ Attractive and competitive cities and regions”. Interregional Cooperation Programme, INTERREG IVC The objective of INTERREG IVC is to support re gional development policy in the fields of innovations, knowledge economy, environment and risk prevention and to promote the economic modernisation and increased competitiveness of Europe. The eligible area of the Programme includes all the Member States of the European Union and Norway and Switzerland. The Programme has three priorities: • “ Innovations and the knowledge economy”; • “ Environment and risk prevention”; • “ Technical assistance”. Programme for the Development of Urban Environment, URBACT II The objective of the urban development programme URBACT II is to improve the effectiveness of sustainable, integrated urban development policy in Europe in order to implement the Lisbon and Gothenburg strategies. The eligible area of the Programme includes all the Member States of the European Union and Norway and Switzerland. The Programme has three priorities: • “ Cities: engines of growth and jobs”; • “ Attractive and socially cohesive cities”; • “ Technical assistance”.

ESPON 2013 Programme ESPON 2013 (European Observation Network for Territorial Development and Cohesion) has been created to support policy development and European scientific community building in the area of territorial development and spatial planning. Its main objective is to secure comparable information and evidence, conduct territorial development analysis and develop scenarios, and uncover the territorial capital and potential of regions for strengthening European competitiveness, territorial cooperation and sustainable and balanced development. The Programme involves all European Union Member States, as well as partner states: Iceland, Liechtenstein, Norway and Switzerland. The Programme has five priorities: • “ Applied research”; • “ Targeted analyses on user demand”; • “ Scientific platform and tools”; • “ Capitalisation of outcomes”; • “ Technical assistance, analytical support and communication”. Estonia–Latvia–Russia Cross-border Cooperation Programme The Programme is being implemented as part of the European Neighbourhood and Partnership Instrument, and its objective is to exploit the potential of the extensive border region towards the development of the regional economy by attracting investment to increase employment and the standard of living. The eligible territories of the Programme are the Latgale and Vidzeme NUTS 3 regions and Riga and Pieriga as supplemental territories in Latvia; Central Estonia, Southern Estonia and North-eastern Estonia, with Northern Estonia as a supplemental territory in Estonia; the Leningrad and Pskov oblasts and the city of St. Petersburg in Russia. Three priorities have been designated in the programme: • “ Promotion of socio-economic development’; • “ Common challenges”; • “ Promotion of people to people cooperation”. Table 107 provides the distribution of the Latvian partners (by number) in ETC programme projects approved between 2007 and 2011, by planning region. The activity of partners was highest in the Riga region, followed by Latgale. It should be noted that a number of organisations whose registered address is in the Riga region implemented projects in other planning regions as well. Table 108 reflects the total budget of the Latvian partners (ERDF, ENPI and national co-financing taken together) in the ETC programmes in the projects approved during the five-year period. The breakdown has been provided by planning region and by programme. In terms of volume, the largest amount of funding was raised in the Riga region, constituting 43.5 % of the entire funding of Latvian partners, followed by Latgale with a 21.3 % share, whereas the smallest overall project budget was raised in the Vidzeme region: 7.5 % of the funding of the Latvian partners. It has to be noted

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Table 107. Distribution of Latvian partners participating in projects approved in the ETC programmes from 2007 to 2011, by planning region*.

Table 108. Total project budget** of Latvian partners in ETC programmes in projects approved from 2007 to 2011, by planning region, thousand LVL*. that the distribution of the funding among the planning regions is also affected by the location of the registered offices of the project partners, which does not always coincide with the project site and the territory receiving the outcomes. The fact that the most funding was raised in the Riga reTable 109. Payments made under ETC programmes between 2007 and 2011, thousand LVL*. gion is also due to the fact that Riga is home to several national-level administration institutions/agencies and central higher education establishments. Figure 119 depicts the overall project budget of Latvian partners in the projects approved under the ETC programmes per 1 000 inhabitants, in breakdown by planning region; it reveals that, by the end of 2011, Latgale had the highest indicators and Vidzeme the lowest. Table 109 provides a summary of payments made between 2007 and 2011 to the projects under the ETC programmes managed by SRDA (except the ENPI proTable 110. Share of co-financing awarded and disbursed grammes: the Latvia–Lithuania–Belarus Cross-border under ETC programmes from 2007 to 2011, %*. Cooperation Programme and the Estonia–Latvia–Russia Cross-border Cooperation Programme). * MEPRD data. Table 110 compares the differences in the share ** The distribution of funding by region has been of funding awarded and disbursed as part of the ETC shown according to the contact addresses provided programmes across the planning regions. By the end by the Latvian project partners in the MEPRD project of 2011, the volume of the financing disbursed for the database or according to the main area of operation implementation of the projects was not proportional to of the beneficiary.

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the volume of financing awarded: the proportion of the disbursed funding was higher in the Latgale, Vidzeme and Zemgale regions, whereas in the Riga and Kurzeme regions it was lower than the share in the aggregate project budget. The differences can be explained by the varying rate at which funding is implemented, differences in the reporting periods of the programmes and the co-financing rates.

Figure 119. Total project budget* of Latvian partners in ETC programmes in projects approved from 2007 to 2011 per 1 000 inhabitants, by planning region, thousand LVL**.

OTHER SUPPORT INSTRUMENTS EEA and Norwegian Financial Mechanisms The 2004–2009 Programming Period of the EEA and Norwegian Financial Mechanisms

Table 111 provides information on the distribution of the funding of the EEA and Norwegian Financial Mechanism priorities managed by MEPRD according to the projects implemented in the planning regions. Details have been provided on projects that were implemented between 2007 and 2011 (the 2004–2009 programming period), except for the priority “Crossborder cooperation”***. When the three priorities are added up, it emerges that the largest volume of financing from the financial mechanisms, LVL 5.91 or 52.5 % of the total volume, was raised in the Riga region. It was followed by the Zemgale and Latgale regions, with

The objective of the European Economic Area (EEA) Financial Mechanism and the Norwegian Financial Mechanism is to address social and economic inequality within the European Economic Area and to strengthen bilateral relations among the donor states and the beneficiary state. Co-financing under the EEA Financial Mechanism is provided by the states of the European Economic Area and the European Free Trade Association, whereas the Kingdom of Norway funds the Norwegian Financial Mechanism. In 2011, MEPRD oversaw four priorities of the EEA and Norwegian Financial Mechanisms: “Regional policy and development of economic activity”, “Cross-border cooperation”, “Sustainable development” and “Environmental protection”. The implementation of the priorities “Regional policy and development of economic activity” and “Cross-border cooperation” was cofinanced from the Norwegian Financial Mechanism, whereas that of the priorities “Sustainable Table 111. Grant funding of the priorities of the EEA and development” and “Environmental protection”, Norwegian Financial Mechanisms in the period from 2007 to both by the EEA and the Norwegian Financial 2011 in breakdown by planning region, thousand LVL**. Mechanism. The implementation of both financial instruments * The distribution of funding by region has been takes place in the form of programmes, grant schemes shown according to the contact addresses provided and individual projects, which ensures more effective by the Latvian project partners in the MEPRD implementation and more focused support and proproject database or according to the main area of duces measurable outcomes and a greater impact of operation of the beneficiary. ** MEPRD data. the funding in the priority areas. On April 30, 2011, the *** Separate budget data on the Latvian partners of the implementation of the EEA and Norwegian Financial projects approved under the priority “Cross-border Mechanism projects approved during the 2004–2009 cooperation” are not available. programming period concluded. **** Including projects that cannot be attributed to a particular planning region.

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funding worth LVL 1.29 million and 1.05 million, respectively, or 11.5 % and 9.4 % of the total funding. Kurzeme received funding in the amount of LVL 0.84 or 7.5 % of the total funding awarded from the EEA and Norwegian Financial Mechanisms. The Vidzeme region received the least amount of funding, LVL 0.35 million or 3.1 % of the total. The amount of support from the EEA and Norwegian Financial Mechanisms per 1 000 inhabitants also reveals comparatively large disparities among the regions in this category: in the Riga region, the funding per 1 000 inhabitants was LVL 5 413, in Zemgale – LVL 4 713, while in Vidzeme it was a mere LVL 1 528 (see Figure 120).

Figure 120. Grant funding from the EEA and Norwegian Financial Mechanisms from 2007 to 2011 per 1 000 inhabitants, in breakdown by planning region*. Twenty-three projects were implemented as part of the priority “Regional policy and development of economic activities” of the Norwegian Financial Instrument (individual projects and programme "Promotion of the Development of Public and Private Partnership in Latvia"). Within the priority, measures were funded that were related to the promotion of local and regional development, public and private partnerships, balanced economic development, collaborative networking among local governments, higher education and research institutions, social partners and companies, regional development institutions, state and local government institutions of Latvia and Norway, institutional capacity-building at regional development institutions and strengthening of research and evaluation capacities in the context of regional development. The funding of the Norwegian Financial Mechanism in the projects approved in the 2004–2009 programming period amounted to LVL 5 261 990. Under programme “Sustainable development”, funding was used towards projects to protect natural resources and to improve the effectiveness of governance, measures to control air pollution, development of integrated environmental and forest economic accounts, and the drafting of documentation. Six projects were implemented within this programme in the 2004–2009 programming period, and the co-funding from the EEA

* MEPRD data.

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and Norwegian Financial Mechanisms in the approved projects reached LVL 1 683 110. Within the programme “Environmental protection”, 12 sub-projects were implemented relating to the development of methodology, transfer of international expertise, transfer of innovative technologies and the development of technologies. The funding of the EEA and Norwegian Financial Mechanisms in the projects approved in the 2004–2009 programming period amounted to LVL 4 304 390. The 2009–2014 Programming Period of the EEA and Norwegian Financial Mechanisms In 2010 work commenced on the implementation documents for the 2009–2014 programming period of the EEA and Norwegian Financial Mechanisms. On July 28, 2010, agreements were signed between the European Commission and the donor states regarding the allocation of support. The total funding from the EEA and Norwegian Financial Mechanisms awarded to Latvia (including donor state management expenses) in the 2009–2014 programming period is EUR 72.95 million or LVL 51.27 million. The volume of the funding awarded is some 30 % larger than in the previous programming period of the financial mechanisms. In order to secure the implementation of the financial mechanisms, Memoranda of Understanding were signed on April 28, 2011 between the Republic of Iceland, the Principality of Liechtenstein, the Kingdom of Norway and the Republic of Latvia (regarding the EEA Financial Mechanism) and the Kingdom of Norway and the Republic of Latvia (regarding the Norwegian Financial Instrument). These stipulate the rights and obligations of the donors and the beneficiary and cover the main aspects of implementation of the financial mechanisms in Latvia. It is planned that seven programmes will be implemented in Latvia in the 2009–2014 programming period of the EEA and Norwegian Financial Mechanisms. MEPRD will be responsible for two of these: “National climate policy” under the EEA Financial Mechanism and “Capacity-building and institutional cooperation between Latvian and Norwegian public institutions, local and regional authorities” under the Norwegian Financial Mechanism. In 2011, MEPRD produced draft applications for both programmes and submitted them to the Cabinet for approval.

Latvian-Swiss Cooperation Programme In 2009–2011, individual project of the Latvian-Swiss Cooperation Programme, “Implementation of local government activities by ensuring the transportation of schoolchildren and related support measures”, was implemented under the management of MEPRD and SRDA. The objective of the project was to improve the transportation system of schoolchildren in remote and less developed regions by providing transportation of schoolchildren from home to the educational establishment and back.

Within the project, a total of 59 municipality selfgovernments in Latvia received 110 school buses. Selfgovernments received the first buses in late September 2010, and delivery concluded in January 2011. Municipality self-governments received 42 MercedesBenz Intour 40-seat buses, 31 BMC Probus 31-seat buses, and 37 Mercedes-Benz Sprinter 19-seat buses. At the request of municipality self-governments, some school buses were equipped to accommodate people with disabilities. Municipality self-governments in the Latgale region received the most vehicles: 42 school buses altogether. Twenty-three buses went to the self-governments of the Kurzeme region, 19 to self-governments in the Zemgale region, 17 to self-governments in the Vidzeme region, while the municipalities of the Riga region received nine buses. It must be noted that the acquisition of school buses for self-governments was also funded as part of the implementation of the Social Safety Net Strategy.

territory of the self-governments or neighbouring territories, and in order to fund the acquisition of buses to the tune of 90 % for those municipality selfgovernments in which educational institutions have been closed or reorganised as a result of the education reform, or public transportation does not allow pupils to reach the educational institution. In 2011, compensations to cover transportation expenses of schoolchildren were paid to 44 self-governments in the amount of LVL 479 580. In accordance with the lists filed by municipality self-governments, 2 657 pupils required transportation in 2011, and a total of 22 374 pupils were transported. In 2011, compensations were requested for an average of 83 % of the total enrolment of the liquidated and reorganised schools (see Table 112).

Measures of the Social Safety Net Strategy The Social Safety Net Strategy was ratified with Cabinet Order No 490 of August 18, 2010 “On the Social Safety Net Strategy”. It was developed for the purpose of coordinating the actions of the state and self-governments in ensuring the basic needs of residents: adequate income, health services and educational opportunities. Given the objective of the Strategy, tasks were devised to achieve it: • t o provide a guaranteed minimum income (GMI) to needy persons while raising the level of the GMI; • t o provide work experience places within self-governments, thus promoting employment; • to ensure the availability of basic healthcare services and basic medicinal products to low-income persons; • to provide transportation services in the educational system and the availability of pre-school education; • to provide public transportation services to ca tegories of passengers eligible for fare discounts. In 2009–2011, SRDA administered two activities under the measure “Provision of transportation of schoolchildren for the transportation of schoolchildren to schools from settlements where schools have been closed as a result of educational reform”: •b y compensating municipality governments for the costs of the transportation of schoolchildren during the academic year; •b y awarding funds for the acquisition of buses for the transportation of schoolchildren. These activities are intended in order to compensate municipality self-governments for 90 % of the cost they have incurred covering the travel expenses of the students of the general and vocational education institutions reorganised and liquidated since May 29, 2009 who reside within the administrative

Table 112. Number of pupils transported and compensations paid out in 2011, by planning region*. A compensation of LVL 101 780 for the acquisition of three buses was paid out to one municipality selfgovernment in 2011, Rezekne municipality. Overall as part of this programme, since 2009, 62 self-governments have been compensated for the acquisition of 99 buses for the total amount of LVL 3 198 950.

Climate Change Financial Instrument The Ministry of Environmental Protection and Regional Development, as the successor of the Ministry of Environment, also manages the climate change financial instrument (CCFI), which is a programme of the state budget of the Republic of Latvia. The CCFI is not considered a regional development support instrument, but since it is managed by the ministry responsible for regional policy, this report discusses the distribution of the funding from this financial instrument in distribution across the Latvian regions as well. The objective of the climate change financial instrument is to promote the prevention of global climate change, adjustment to the consequences of climate change and facilitate reductions in the emissions of greenhouse gases – by implementing measures to improve the energy efficiencies of buildings in both the public and the private sector, developing and introducing technologies that use renewable energy resources, realising integrated solutions, etc. The CCFI is funded * MEPRD data.

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from the sale of the assigned amount units (AAUs) owned by the state, performed under international emissions trading in accordance with the provisions of the Kyoto Protocol. The sale of AAUs is possible because Latvia will not need all of the AAUs at its disposal to meet the obligations prescribed in the Kyoto Protocol for 2008–2012, i.e., an emissions reduction of 8 % from the 1990 levels, and the potential surplus will be at least 40 million units. The use of excess AAUs for other purposes, such as assigning them to businesses in the EU’s emissions allowance trading scheme, is not possible: AAUs cannot be converted into emissions allowances or used instead of emissions allowances. However, AAUs can be sold, and the proceeds can be invested in the development of Latvia. The decision on the sale of the AAUs was passed by the Cabinet on April 12, 2006 with Cabinet Order No 249 “On the Concept regarding the Participation of Latvia in International Emissions Trading”*. The activities of the CCFI are governed by the requirements on A AU sales of the international treaties entered into by Latvia and the approved acts of legislation, including the Law on Participation of the Republic of Latvia in the Flexible Mechanisms of the Kyoto Protocol**, Cabinet Regulation No 312 of April 28, 2009 “By-laws of the Advisory Council of the Climate Change Financial Instrument” and Cabinet Regulation No 644 of June 25, 2009 “Procedures for the Implementation of Projects Financed from the Climate Change Financial Instrument and for the Submission and Verification of Reports”*. In the period from 2009 to 2011, the following open project competitions of the climate change financial instrument took place: •“ Increasing the energy efficiency of self-government buildings” (CCFI-1); • “Development of technologies to reduce greenhouse gas emissions” (CCFI-2);

• “ Increasing the energy efficiency of the buildings of higher education institutions” (CCFI-3); • “ Technological transition from fossil to renewable energy resources” (CCFI-4); • “Complex solutions for the reduction of greenhouse gas emissions in the buildings of vocational education institutions” (CCFI-5); • “Complex solutions for the reduction of greenhouse gas emissions in production buildings” (CCFI-6); • “Complex solutions for the reduction of greenhouse gas emissions in self-government buildings” (CCFI-7); • “ Raising public awareness of the importance and possibilities of reducing greenhouse gas emissions” (CCFI-8); • “ Low-energy buildings” (CCFI-10); • “ Use of renewable energy resources in the household sector” (CCFI-11); •“ Use of renewable energy resources to reduce greenhouse gas emissions” (CCFI-12). Within the open competitions of project applications between 2009 and 2011, 1 597 projects were approved with the total eligible expenditure of LVL 188.29 million, in which CCFI funding accounted for LVL 116.01 million. Of the total number of projects, 1 219 were approved in 2011 within the competition “Use of renewable energy resources in the household sector” (CCFI-11). Table 113 provides details on the CCFI funding of the projects approved from 2009 to 2011 in distribution by open competition of project applications and planning region, whereas Table 114 isolates data for the year 2011. Table 115 shows data on the distribution of the total CCFI funding by year, in regional breakdown. The greatest volume of CCFI funding in projects approved between 2009 and 2011, both in terms of its total

Table 113. CCFI funding of the projects approved from 2009 to 2011 in distribution by open competition and planning region, thousand LVL***. * w ww.varam.gov.lv. ** Took effect on December 13, 2007. * ** MEPRD data.

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value (LVL 56.7 million) and in nearly all of the individual competitions, was in the Riga region – considerably more applications originated there than in any other region. The high share of approved project funding in the Riga region is determined by the fact that it has the largest population and the highest number of businesses. In the Vidzeme region, the amount of funding of approved projects was LVL 17.9 million, in Kurzeme it was LVL 16.7 million, whereas in Latgale and Zemgale the figure was LVL 13.0 million and Table 114. CCFI funding of the projects approved in 2011 in distribution by open LVL 11.6 million, respectively. competition and planning region, thousand LVL*. If the year 2011 is reviewed in isolation, the highest volume of funding of approved projects was characteristic of the Riga region, just as in the entire three-year period, whereas the second largest funding in terms of amount was in the approved projects in the Kurzeme region. The highest volume of CCFI funding per 1 000 inhabitants during the three years was in the Vidzeme region: LVL 78 600. In the Kurzeme region, the figure was LVL 51 900, Table 115. CCFI funding of the projects approved from 2009 to in the Zemgale region – LVL 42 500, while 2011 by planning region, thousand LVL*. the lowest amount was in the Latgale region, LVL 39 600 (see Figure 121).

Figure 121. CCFI funding of the projects approved from 2009 to 2011 per 1 000 inhabitants by planning region*.

* MEPRD data.

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XI DEVELOPMENT OF PUBLIC SERVICES The previous annual report, Development of Regions in Latvia 2010, included a chapter on public services for the first time, with the main emphasis being placed on e-services or the digitisation of services. As the ministry (MEPRD) and agency (SRDA) responsible for regional development continued active efforts in

2011 to promote the development of public services throughout Latvia, this report too devotes a chapter to public services, revealing not just the development of electronic services but also the various areas in which the responsible institutions operate to improve the services.

ELECTRONIC SERVICES Use of the Internet and Internet Access Access to the internet and its use in households, workplaces, for study and elsewhere is a precondition for the use of electronic services. According to CSB data, in 2011, 66.4 % of the Latvian residents regularly (at least once a week) used a computer, and 66.2 % used the internet regularly, while 73.4 % of the population have used the internet at least once (see Figure 122).

Figure 122. Share of the Latvian population that uses a computer and the internet regularly, 2004–2011*. The most active age group are 16-to-24-year-olds, among whom 98.0 % were using the internet. Among the cohort aged 25 to 34, 91.1 % used the internet regularly, as well as 79.8 % of the population aged 35 to 44, 59.8 % of those aged 45 to 54, 40.8 % of those aged 55 to 64, whereas in the 65 to 75 age group the internet was used by 13.2 % of the population. If an opposite indicator is used to the number of internet users, the share of the population aged 16 to 74 that has never used the internet, the figure for Latvia in 2011 was slightly higher than the average for the EU countries. * CSB data.

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According to data by Eurostat, in 2011, an average of 24 % of those aged 16 to 74 in EU countries had never used the internet, while the figure for Latvia was 27 %, ranking Latvia 15th among the 27 members. The best situation was in Sweden, where the share of those aged between 16 and 74 who have never used the internet was only 5 %. In Denmark and the Netherlands the figure was 7 %, in Luxembourg – 8 % and in Finland – 9 %. The worst-performing countries in terms of information and communication technology use were Romania, where 54 % of the population aged 16 to 74 had never used the internet, followed by Bulgaria with 46 % and Greece with 45 %. In terms of the share of internet users, Latvia outperformed Lithuania, where 33 % of the population had never used the internet, but trailed Estonia, where the figure was 20 % (see Figure 123). With every year, both the share of the population using the internet and the households that have access to a computer and the internet rises in Latvia. In 2011, 64.3 % of all Latvian households possessed a computer, and 63.6 % had access to the internet. It should be added that in 2006 and 2007 the number of households with internet access exceeded the number of those households with access to a computer – this can be explained by the fact that, in many Latvian households, access to the internet was only available via a mobile phone (see Figure 124). In terms of the share of households with internet access, Latvia (64 %) lagged behind the EU average (73 %) and only ranked 19th/20th among the Member States. The Netherlands led the European Union in this indicator with 94 % of all households having internet access in 2011 (see Figure 125). Among the statistical regions of Latvia, the highest rate of internet use in households, in 2011, was in the Pieriga region (71.3 %), which approached the EU average, and Riga (68.3 %), while Latgale had the lowest figure (47.4 %), where the share of households with internet access approximated the figures of the EU Member States with the lowest values for this indicator. It has to be noted that the share of households with internet access in the Latgale region declined in 2011 in comparison with 2010 (see Figure 126).

Figure 123. Share of the population aged 16 to 74 that has never used the internet in the European Union Member States in 2011*.

Figure 124. Share of Latvian households with access to a computer and the internet, 2004–2011**.

Figure 126. Share of households with internet access in the statistical regions of Latvia in 2010 and 2011**.

Figure 125. Share of households with internet access in the EU Member States in 2011*. * Eurostat data. ** CSB data.

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In 2011 in Latvia, 95.4 % of all businesses (with ten or more employees) used a computer and 92.2 % used the internet, whereas 53.4 % of all businesses had their own website.

To ensure internet access for all residents and thereby improve the availability of various services, support from the state budget has been provided since 2007 to provide the residents of self-governments throughout Latvia with free internet access and use of computers. In December 2011, SRDA conducted a survey of self-governments to study the situation regarding public internet access points in the self-governments. According to the survey data, 863 public internet access points (PIAPs) are available in the Latvian self-governments, of which 831 were outside of Riga: 749 PIAPs in municipalities and 82 PIAPs in the other eight national cities. Table 116 provides data on public internet access points across the statistical regions. At the end of 2011, the highest number of PIAPs was in the Latgale region, which can be explained by the highest number of municipal territorial units (parishes and municipality towns) found in this region. At present, the majority of municipality parishes and towns have at least one public internet access point.

Table 116. Public internet access points in the statistical regions at the end of 2011*. In 2011, the 831 public internet access points outside Riga were equipped with a total of 3 808 computers, which is an average of 4.6 computers per PIAP. The average figure for cities (excluding Riga) was 5.4 computers per PIAP. Free wireless internet (Wi-Fi) was available at 677 PIAPs outside Riga. Survey data indicate that the services of a visitor adviser were also provided at more than half of PIAPs (437); 258 PIAPs operated not just on workdays but also during holidays and/or weekends. At the end of 2011, there were an average of 2 569 residents per public internet access point, and this value varied very broadly across self-government territories: from 290 people per PIAP in Rugaji municipality to 21 900 in Riga. Generally, there are fewer residents per PIAP in municipalities with a lower relative population density – in municipalities outside the Riga planning region – and, conversely, the figure is higher in territories

* SRDA survey, calculations based on OCMA data, data by CSB.

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with a higher concentration of inhabitants, i.e., in Pieriga and national cities (see Figure 127). At the end of 2011, Rugaji municipality, where the population numbers 2 600 and which consists of two parishes, had nine public internet access points. The municipalities with the next highest relative values are Zilupe municipality (nine PIAPs, 399 residents per PIAP), Cibla municipality (seven PIAPs, 461 residents per PIAP), Rucava municipality (four PIAPs, 494 residents per PIAP) and Jekabpils municipality (11 PIAPs, 509 residents per PIAP). Among the cities, Daugavpils had the fewest residents to a PIAP: 31 PIAPs, 3 300 residents per PIAP. At the end of 2011, Riga had 32 public internet access points: essentially as many as in Daugavpils, whose population is seven times smaller. Ventspils (four PIAPs, 10 500 residents per PIAP) and Liepaja (eight PIAPs, 10 300 residents per PIAP) were the cities that followed Riga in terms of the resident-to-PIAP ratio. While for national cities – which are areas of compact settlement and a relatively high proportion of households with access to computers and the internet – these statistical values do not necessarily need to be regarded as negative (furthermore, one must take into the account the fact that the indicator does not consider the number of computers per PIAP, i.e., the size of PIAPs), in municipalities that are more remote relative to Riga, and especially if their area is relatively large, a high ratio of residents to one public internet access point is indeed a sign of limited access to this service. Among municipalities, those with the greatest resident-to-PIAP ratio at the end of 2011 were Grobina municipality (five territorial units, one PIAP, 10 300 residents per PIAP), Kandava municipality (seven territorial units, one PIAP, 9 700 residents per PIAP) and Dagda municipality (11 territorial units, one PIAP, 9 100 residents per PIAP). In addition to these municipalities, one should also mention Limbazi municipality (eight territorial units, three PIAPs) and Aloja municipality (six territorial units, including two towns, one PIAP).

E-Services As the number of internet users expands, so do the applications of the internet and the demand for a greater number of e-services and greater digitisation in the private and the public sector alike. Residents, businesses and other interested parties in Latvia are continuously provided new opportunities to receive the traditional information-related and administrative services of state and self-government authorities digitally. Statistics indicate that there is a growing demand for e-services from the public and businesses. The latest available data from Eurostat reveal that, in 2010, 31 % of residents in Latvia chose the internet to communicate with the public sector (in 2009, the figure was only 23 %). Compared with 2009, the share of such residents also increased noticeably in the European Union as a whole (from 29 % in 2009 to 32 % in 2010), yet both the Latvian figure and the EU average considerably lagged behind the leading countries in this area: in Denmark, 72 % of the residents used the internet to interface with public sector institutions in 2010, as did 62 % in Sweden (see Figure 128).

FigureÂ 127. Number of residents to a public internet access point in self-government territories at the end of 2011*.

* SRDA survey, calculations based on OCMA data.

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Figure 128. Share of residents using the internet to communicate with public sector institutions in the European Union Member States in 2010*. In 2010 in Latvia, 72 % of businesses (employing 10 or more) used the internet to communicate with the public sector (in 2009: 62 %). The average for the European Union in 2010 was 76 % (in 2009: 70 %), and it remains slightly higher than in Latvia (see Figure 129). While in terms of the demand for e-services Latvia’s overall position within the European Union does not yet reach the EU average, the country performs relatively

better in terms of the availability of e-services. An e-government survey conducted by Eurostat, which reviewed 20 basic services in all EU countries, indicates that, in 2010 in Latvia, 93 % of these services were provided as e-services: this exceeds the average for the EU (84 %). A year earlier, in 2009, only 66 % of the basic services had been offered as e-services in Latvia, which was below the EU average (see Figure 130).

Figure 129. Share of businesses using the internet to communicate with public sector institutions in the European Union Member States in 2010*.

* Eurostat data. ** In 2009.

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Figure 130. Share of 20 basic services available electronically in the European Union Member States, 2009 and 2010*. Since June 1, 2008, SRDA has been responsible for the implementation and improvement of e-services and e-procurement in the state and self-government sector. Through developing e-services, effective, economical, transparent, inclusive and democratic evolution of state administration and the development of the information society are promoted. Residents and businesses can receive services more quickly and cheaply using the internet, without restrictions on time – irrespective of the operating hours and location of the authorities. An e-service is a service whose mode of requesting or provision enables its availability remotely, aided by information and communication technologies. The following types of e-services can be distinguished: • information services: e-services that enable the client to receive information online; • transaction services: e-services whose output is equivalent to the output of a service provided in person, i.e., the client requests the service electronically, whereas the output of such service (notice, copy of a decision, etc.) is available after a period of time (depending on the rules of the particular institution and terms of service). For example, the client may request a notice via the internet, after which he or she is notified that the request has been received. The client does not have to visit the institution in question or wait in a queue; besides, the services can be used at any convenient time. Once the document is ready, the client is notified of this. There are several options for retrieval: there are services that allow the notice to be received in person (during the working hours and at the location specified by the institution), by registered mail or by e-mail signed using a secure digital signature**.

E-services may have the following levels of digitisation: • L evel 1: information about the service is available in electronic form on a public website of the service holder; • Level 2: electronic forms to request or to receive an electronic service are available to the recipient in digital form from a public website; • L evel 3: the recipient has the possibility to request a service electronically by digitally submitting the data necessary for the receipt of the services in a structured way or to receive the service electronically; • L evel 4: services are requested and received electronically; • L evel 5: services are delivered without a request from the recipient; the data required for the provision of the service are obtained without the involvement of the recipient by the provider of the electronic service**. The services have different requirements with respect to the authentication of the applicant. Accordingly, the following authentication levels have been defined: • undeclared (anonymous) identity (no need to indicate name); •d eclared identity (the client specifies name or e-mail address, telephone number); • c onfirmed identity (for example, the identity of the client is confirmed by a bank based on an agreement); • identity with a qualified confirmation (the client uses a digital signature).

* Eurostat data. ** www.vraa.gov.lv.

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The provision of e-services in the country takes place both in a decentralised manner – the relevant state institutions, self-governments or their institutions offer e-services on their websites or online portals – or in a centralised way, whereby some e-services, irrespective of their provider, are available on the internet in one location: the public services web portal www.latvija.lv.

nified State and Self-government U Service Web Portal, www.latvija.lv The purpose of the unified state and self-government service portal www.latvija.lv is to provide a single access point to all state and self-government public services of Latvia and centralised access to electronic services provided by various institutions. The portal allows one to receive information on all services provided by the state, receive e-services and track the progress of e-services with speed and relative convenience. The Catalogue of Public Services sums up information on the services provided to residents and businesses by state and self-government institutions. If an institution does not support the provision of a service electronically, the Catalogue provides details on alternative modes and possibilities of obtaining that service. Table 117 shows the most requested e-services on www.latvija.lv in 2011. Self-governments are increasingly offering their e-services on www.latvija.lv. Figure 131 depicts the information compiled by SRDA on the self-governments offer e-services on the unified portal and the number

Table 117. Most requested e-services on www.latvija.lv in 2011*.

of services offered. At this time, 23 self-governments make their services available on www.latvija.lv, and the total number of services is 772 (however, this figure includes e-services at various levels – including ones for which only a description is available)**. The selfgovernment of the city of Riga holds the record in the provision of e-services: it offers more than 250 of such services. However, the fact that a self-government does not offer services in the unified portal does not mean that such services are not being provided: the majority of self-governments offer e-services on their own websites, and the number of services there is also growing steadily. Three self-government services (trading in public places, organisation of trading in public places and

Figure 131. Number of e-services offered on www.latvija.lv in July 2012***. * Data by LICTA and SRDA. ** SRDA data, status as of July 2012. *** SRDA data.

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organisation of public events) are subject to Directive 2006/123/EC of the European Parliament and of the Council on services in the internal market, which states that information on the provision of these services must be made available in one place, and it should be possible to apply for and receive such services by electronic means. In instances where self-governments have not posted their services on the unified portal, www.latvija.lv provides links to the websites of the self-governments, thus avoiding forcing applicants to search for the self-government websites themselves. However, it needs to be noted that there is much room for growth in this area.

• Latvia implements e-procurement as provided in European Commission directives and applies the positive experience of the EU countries. Cabinet Regulation No 1241 of December 28, 2010 “Regulations on Centralised Procurement”, adopted in accordance with the Public Procurement Law, specify the instances where state direct administration institutions are required to use EPS. The use of EPS is optional for other institutions and self-governments. In 2011, the turnover of procurement in EPS was LVL 13.4 million – compared with 2010, the turnover figure increased by 90 %. In 2011, there were 281 active buyers within the system, EPS contained 60 000 product specifications, and 27 288 deliveries were ensured (see Figure 132).

Electronic Procurement System An important e-service for the public and the private sector alike that provides substantial economy of time and money is the Electronic Procurement System (EPS) managed by SRDA. It was created in 2005 and is the first electronic procurement system in the Baltic States, and SRDA has been maintaining it and ensured its operation and development since June 1, 2009. EPS is based on the principle of electronic catalogues, which works like an online shop for public sector organisations and where multiple suppliers offer their standard products. The system provides the following benefits for its users compared to classic procurement: • a faster procurement procedure: a shorter period from recognising the need to the delivery of the product; • s tate and self-government institutions are relieved of organising the procurement: procurement is carried out in a centralised manner by ensuring orders of goods via the Electronic Procurement System; • s tate budget funds are saved because when multiple orders are combined in centralised procurements, small procurements too can benefit from more favourable prices; • t ransparency, publicity and information availability increases for procurement: information on procurements is publicly available within EPS;

Figure 132. Turnover of the Electronic Procurement System in 2005–2011*. Calculations conducted by SRDA in accordance with a special methodology reveal that, during the second half of 2011 (more accurately, between August 1, 2011 to January 31, 2012), the Electronic Procurement System has provided public sector entities with savings worth LVL 1.957 million lats, of which LVL 1.512 million constituted direct savings and LVL 445 000 were indirect economies of administrative resources.

PROJECT FOR THE IMPROVEMENT OF THE PUBLIC SERVICES SYSTEM In February 2009, the State Chancellery concluded an agreement on the implementation of the European Social Fund project “Improvement of the system of public services”, and in July 2011 the responsibility for the monitoring of the implementation of the project passed from the State Chancellery to the Ministry of Environmental Protection and Regional Development. The project aims to establish a conceptual and methodological foundation for the development of the public

services system and to promote the application of clientoriented principles in the provision of services in public administration by reducing the administrative burden for businesses and residents. Project materials state that there is currently no single framework that would ensure a successful development * SRDA data.

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of the public services system, which is why improving public services is an important element of the structural reform: it is necessary in order for the state resources to be utilised in the most effective and efficient manner possible. At the conclusion of 2011, the following has been accomplished as part of the project: • a recommendable model for the provision of public services has been developed; • a ll public services provided by state administration institutions and capital companies (approx. 2 000) have been evaluated and described; • a unified listing of the public services provided by self-governments has been drawn up; • t he legal framework governing the provision of services, cooperation and information exchange between authorities, the operation of the public services catalogue and mechanisms for the funding of services have been evaluated; • proposals have been developed for the implementation of the principle of a one-stop agency with respect to the availability of state and self-government services; • five pilot service restructuring plans have been developed, substantially reducing the administrative burden for the client and cost to the holder and provider of the service. These pilot services are the following: – the event of childbirth, – obtaining a work incapacity certificate/granting of a sickness benefit, – issuance of a building permission, – cadastral information in an inheritance matter, – placement of advertising material, signs, announcements and other information material in public places.

The subsequent areas of action within the project are as follows: •d evelopment of a legal framework for integrated provision of public services and management procedures at institutions; • c reation of a single funding framework for public services that addresses issues relating to the cost of services, payments between institutions and the recording of service costs; •d evelopment of comprehensive IT solutions within state administration through the creation of a shared IT infrastructure in order to enable effective information exchange among service holders, service providers and clients; • digitisation of services by enabling standardised provision of services and remote availability; • c reation of a single client service system for the public services of state institutions by improving access to services in person; •d escription of all public services by state direct administration institutions, self-governments, capital companies and certain independent bodies and publication in the Catalogue of Public Services on the web portal www.latvija.lv; • ensuring participation by the public in decisionmaking processes; • t raining of the staff of public administration institutions (100 seminars have been planned) on matters regarding the management and provision of public services; • production of a manual and methodological guidance for the staff of state and self-government institutions. Based on the conclusions of the project, a Public Services Concept is under development in mid-2012. The project of the improvement of the system of public services is scheduled to be implemented by the end of 2013.

IMPLEMENTATION OF THE ONE-STOP AGENCY PRINCIPLE The so-called one-stop agency is closely related to improvements in public services. The term used in the English language is one-stop shop. The general meaning of a onestop agency is a location where various needs are fulfilled at once. In theory, the origins of the principle of a onestop agency/shop date back to the turn of the 1920s and 1930s. As equipment and technologies have progressed, the principle of a one-stop agency is no longer linked to a mere physical location but rather the use of wide-ranging interface or communication tools: telephone, e-mail, internet, etc. Nowadays banking offers a notable example of the principle of a one-stop shop being applied: a client can deal with an issue at any bank branch or address various matters through his or her banking consultant. The client can obtain information by telephone, a text message or by e-mail, or he or she can use the online bank, etc. A service that is convenient to the client is: • c lear and comprehensible;

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• r equires fewer steps by the client; • i s easily accessible (nearby), including online; • t akes up less of the client’s time. For a service to be comprehensible, a clear, accurate and relevant information needs to be provided on the following: • whether the client can (or is entitled to) receive the service in question; • where, at what time and by what means the service can be requested; • what documents or information need to be submitted. For a service to require fewer steps on the part of the client, it must be made sure that: •b efore the service is requested, application forms should be readily available to the client;

• public databases (information at the disposal of the public sector) are compatible so that the client does not need to provide information that the self-government or state agencies already possess. For a service to be easily accessible (nearby), one needs to ensure: • the option of using different channels (insofar permitted by law) at all stages of the service in which there is contact between the client and the selfgovernment; •p lacement of the institutions or their branch offices nearer to the client (decentralisation). For a service to take up less of the client’s time, all of the above factors need to be in place*. The notion of a place where various services are delivered at the same location is encapsulated not just in the concept of a one-stop agency (shop): other labels are used to describe it. For example, one may come across such terms as information centre, citizens’ service centre, single contact point, single window, community service centre, client service centre, etc.*. The development of a one-stop agency has to do not just with the convenience of clients (residents, businesses) but also the cost-efficiency of the administration institutions: there is no need for each service provider to set up their own service centres. On September 13, 2011, the Cabinet issued Order No 446 to approve the Concept for the Implementation of the Principle of a One-stop Agency in the Availability of State and Self-government Services (henceforth – Concept). It states the need for improving the organisation of the provision of state and self-government services by providing residents with accessible, convenient and comprehensible services throughout the country. The document notes that the objective of implementing the principle of a onestop agency is to enhance access to and the standard of services, to reduce the administrative burden and time consumed to receive services, and to reduce the cost of state administration by way of more optimal organisation of state administration tasks. The Concept, which was approved in 2011, points out that problems have been detected in the availability of services provided by the state and self-governments, such as poor accessibility and quality, inefficient use of state and self-government resources towards unsystematic improvements to service provision and delivery arrangements, and heterogeneous approaches to the implementation of the principle of a one-stop agency. It was found that, in order to optimise the cost of state administration, there is a tendency to remove the regional units of institutions, thus considerably diminishing the availability of services outside Riga**.

* Manual Vienas pieturas aģentūra pašvaldībā. Latgale Planning Region, 2011. ** Concept for the Implementation of the Principle of a One-stop Agency in the Availability of State and Selfgovernment Services. Approved pursuant to Cabinet Order No 446 of September 13, 2011.

The Concept states that now, when requesting a service, one needs to perform numerous and time-consuming procedures based on the submission and obtaining of various forms, licences, certificates, permits, reports, invoices and other legal and financial documents, requesting statements regarding information that other institutions possess and that is necessary for institutions to take a decision, causing a flow of information and documents in multiple directions. One of the solutions proposed by the Concept is for each sector of state administration, or even institution, to put in place its own system of serving individuals. Although such a proposal has been made, the Concept regards it negatively. Another solution that has been proposed and gained support is focused and consistent implementation of the principle of a one-stop agency in state administration – which could be considered a solution to the aforementioned problems. Given that self-governments are the largest holders and providers of services and are located nearest of all to the population, the Concept provides that, when conducting an assessment of state and self-government services, it should be established based on the nature, demand for and complexity of a service which services should be provided according to the principle of a one-stop agency using the self-government as the basis. Primary service centres should be set up at all self-governments, with the delivery being organised by using a multi-channel approach, both remotely and in person*. The Concept proposes that the following services be implemented remotely: • information services (by telephone or with the aid of operators): a single calling centre is provided, using portal www.latvija.lv and self-government websites; • f ully electronic services (stand-alone) anywhere with internet access, using www.latvija.lv and selfgovernment websites; • c orrespondence, including by e-mail. The Concept proposes that services in person would be available in national cities, the administrative centres of municipalities and in the larger settlements of the territorial units of municipalities. Services would be delivered in the country through a network of self-government services at more than 500 locations, whereby an assessment would be made as to the provision of which services in a given place is possible and permissible according to the one-stop agency principle and as to the demand for such services and the cost thereof. The Concept also notes that the possibility of consolidating the services of related sectors should be considered, with a unified network of additional service centres being established on the basis of self-governments in accordance with client segments (e.g., services to businesses, agricultural operators)*. * Concept for the Implementation of the Principle of a One-stop Agency in the Availability of State and Selfgovernment Services. Approved pursuant to Cabinet Order No 446 of September 13, 2011.

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The Concept does not provide for any new state administration institutions being set up. It proposes the option of separating the service supplier from the service holder and provider. The Concept also does not propose that all state administration services be provided in accordance with the one-stop agency principle. Each service and its suitability for provision via a one-stop agency needs to be assessed separately. In 2012, the developments proved to be more rapid than previously anticipated, and MEPRD is using the conclusions arrived at in the project to improve the system of public services to draw up a new Public Services Concept, which will also include the implementation and expansion of the one-stop agency principle in the provision of public services, albeit in a way that is different from that proposed in the Concept approved in 2011. With the ratification of the new, MEPRD-produced Public Services Concept by the government, the 2011 Concept will no longer apply. Despite the considerable prominence of the question of a one-stop agency in the reporting year, it should be remarked that this was not something entirely new for Latvia. There exist a number of best practice examples in the operations of state institutions and self-governments alike, and there have been efforts to extend the application of this principle. The principle of a one-stop agency has been used in the Latvian public sector since the first half of the 1990s. Initially, the term used most frequently was a one-stop bureau. One of the tasks of the Development Agency of Latvia,* formed in 1993, was to attract foreign investment. In its proposal to foreign businesses, the Agency invoked the services of a one-stop bureau that provides foreign businesses with all the information that may interest them regarding the conditions of business activity in Latvia, tax legislation, the opportunities to participate in the privatisation process, and it offered assistance in locating partners in Latvia. In fact, a reference to a one-stop shop remains very popular in relation to the information services of various countries in attracting foreign investors. The Road Traffic Safety Directorate can be mentioned as one of the first and most successful state institutions in Latvia that introduced the principle of a one-stop agency as a client-oriented principle in a larger sense – and the efforts to improve customer service at this institution never

ceased. In the recent years, there have been substantial improvements in service to clients at a number of other state institutions, which included the implementation of the one-stop agency principle. Notable – but not sole – positive examples were the State Revenue Service, the State Social Insurance Agency and the Office of Citizenship and Migration Affairs. With the more extensive implementation and advancement of information and communications technology, the services of the State Social Insurance Agency and the Office of Citizenship and Migration Affairs are no longer pegged to a client’s place of residence: clients can receive services at any territorial unit of these agencies. Self-governments, too, have long been familiar with the principle of a one-stop agency, and many of them have implemented it. In the Guidelines for the Development of Latvian Local Governments, adopted at the 5th Congress of the Latvian Association of Local and Regional Governments in 1995, Section VI “Local government services” states: “Self-governments need to implement forms of service that would ensure the provision of all the necessary information at one location and that would be geared at extending an effective service to each resident and maximum involvement of each business in the development of the territory.” One of the first self-governments in Latvia to implement the one-stop agency principle in a targeted manner was the self-government of the city of Liepaja. In 1999, a visitors’ centre commenced operations at the Liepaja selfgovernment, which had been set up as a one-stop agency and where visitors within the self-government went to obtain information or submit documents in order to resolve various issues. Other noteworthy examples among selfgovernments in terms of implementing one-stop agencies are those of the cities of Riga, Jekabpils and Jelgava as well as Dobele, Ilukste and Salaspils municipalities. At present, the example of Riga can be regarded as the most complete, comprehensive and varied instance of implementing a one-stop agency at a self-government*. It follows from this that the actual implementation and application of the one-stop agency principle has preceded the documents that are supposed to facilitate and regulate it. The varied practice enables the identification of the solutions most suited for services of various nature and for different situations and locations.

DEVELOPMENT OF PUBLIC SERVICES WITHIN THE CONTEXT OF THE DRAFT REGIONAL POLICY GUIDELINES Whereas the activities of MEPRD and SRDA – such as the expansion and improvement of e-services, implementation of the one-stop agency principle and the development of the public services system – reviewed above mainly touched on services of administrative nature (declaration of residence, making submissions,

a pplication for school places, etc.), the services discussed within the context of the regional development policy generally involve deriving direct benefits (learning at school, extra-scholastic activities, library services, opportunities to pursue sports, etc.).

* In 2003, it was reorganised to become State Agency “Investment and Development Agency of Latvia” (IDAL).

* Manual Vienas pieturas aģentūra pašvaldībā. Latgale Planning Region, 2011.

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In 2011, MEPRD continued active efforts to draw up new Regional Policy Guidelines (Guidelines). In observance of the development axes defined in the Sustainable Development Strategy of Latvia until 2030, MEPRD proposes a basket of services available in the territories as one of the elements of the regional policy support system in the new Guidelines. The draft Guidelines state that, given the negative demographic tendencies and the limited availability of public funding, the state cannot afford to provide the same range of services at all levels of settlement. The ideology of the service basket is to ensure equal access to services for everyone, but not everywhere. The service basket essentially means: the higher the level of settlement, the wider the range of services provided there. At the lowest level of settlement, a range of basic services has been identified for which it is essential to be provided at the same standard throughout the country. Accordingly, during the period of operation of these Guidelines, a preferred range (basket) of services will be defined and implemented for each level of settlement, so that residents and businesses can reckon with a certain range of services if they choose to live or operate within a particular territory, and to ensure well-advised and effective allocation of public investment funds*. The draft Guidelines state that the following settlement levels have been defined in Latvia (lowest to highest)**: •d evelopment centres of municipal importance (identified in the regional and local territorial development planning documents: spatial plan and/ or development programme); •d evelopment centres of regional importance (Kuldiga, Talsi, Tukums, Saldus, Dobele, Bauska, Ogre, Aizkraukle, Sigulda, Cesis, Limbazi, Smiltene, Aluksne, Gulbene, Madona, Valka, Balvi, Preili, Livani, Ludza, Kraslava); • development centres of national importance (Riga, Liepaja, Daugavpils, Ventspils, Jelgava, Jekabpils, Jurmala, Rezekne, Valmiera); •d evelopment centres of international importance (Riga, Liepaja, Daugavpils, Ventspils)***. The draft Guidelines provide that the service basket will be used as: • t he basis for the planning of all types of public investment in territories: planning regions and selfgovernments must provide support opportunities in accordance with the prescribed service basket; • a set of criteria for the assessment of the usefulness of the development strategies and investment projects proposed by the planning regions and selfgovernments, so as to prevent instances where selfgovernments wish to use public funding construct major public projects which they will not be able to utilise fully but whose maintenance costs will create a massive burden on the self-government budget. * Regional Policy Guidelines. Draft, July 5 2012. ** Centres of international, national and regional importance have been identified in the Spatial Development Perspective of Latvia 2030. *** Development centres of international importance are simultaneously national development centres.

The preferred range and spatial distribution of public services within the settlement structure of the country is defined for service areas associated with the population and development prospects within a certain territory of the country, i.e., health, social care, education, sport, culture, postal services and business support infrastructure*. The scope of public services for each settlement level has been determined by evaluating and considering the following: • t he spatial distribution of the existing services within the settlement system of the country; • the frequency/regularity of service delivery, observing the principle that the services received more frequently must be provided at the lowest possible settlement level; • t he nature of the services (a basic service that is important for all groups of residents or a specialised service that matters to certain groups of residents), observing the principle that the availability of the basic services must be provided at the lowest possible settlement level; •p riorities and criteria of the sectoral policy for the scope of services and their distribution across regions (e.g., number of residents who are users of the service, so as to ensure optimal availability of the service and efficiency of maintenance of the institution). The mobility factor is important in compensating a narrower range of services at the lowest level of settlement, i.e., the possibility to reach the location where services are provided within an acceptable amount of time and at a reasonable cost (provision of roads and public transportation). Another important aspect in ensuring services is cooperation between self-governments (including with the neighbouring self-governments in Estonia and Lithuania), which allows services to be made available to a larger population with a lower amount of investment (certain services could be provided to the residents of a self-government by another self-government). In addressing the issue of provision of various services, the resources available to the self-government need to be used as efficiently as possible. For example, the small rural schools in places where there is difficult to fill their enrolment could be transformed into multifunctional service centres providing a portion of the services prescribed for the lowest level of settlement, one-stop agencies, etc.*. The draft Guidelines provide that the filling of the service basket within the particular territory is the responsibility of the self-government, seeking out the most optimal solutions for the provision of the services and adopting decisions on the priorities for improving the availability and quality of the services, as well as determining the sequence of investments that need to be made. In turn, the role of the state is to define the basket of services and make support available to self-governments in making the investments necessary for the services. * Regional Policy Guidelines. Draft, July 5, 2012.

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The draft Guidelines stress that a key principle in defining and implementing a service basket is to avoid the deterioration of the quality and availability of any service, while assessing the most efficient ways of guaranteeing residents the availability and quality of specific services. It is the self-government that adopts decisions ensuring a rational distribution of sites where the services included in the basket are provided within its territory, i.e., which settlements within the territory will provide specific services – e.g., at the level of parish settlements – to make sure that the specified services are available to all residents of the municipality, while avoiding the creation of artificial service sites where the demand for them is low. The current demographic trends demand that the existing approach to service provision is revised and flexible, innovative solutions are sought, which are mobile and based on territorial cooperation. Hence, with regard to more specialised and less frequently requested services, self-governments need to assess the possibility of providing such services in cooperation with neighbouring self-governments (i.e., a shared location where a certain service is provided, with self-governments providing transportation to residents for getting there, as far as is feasible) and, the nature of the service permitting, enable remote delivery of as many services as possible. Only services to whose provision spatial differentiation according to the level of settlement is applicable are included in the basket of services; services associated

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with fulfilling the requirements of regulatory enactments and pertain to specific territories in accordance with the conditions prescribed in regulatory enactments are not included. For example, sewage collection and waste removal must be provided to all residents, irrespective of the level of settlement to which their place of residence belongs. Whereas, in respect of the distribution of the provision of such services, specific regulatory enactments lay down procedures for the drafting of feasibility studies in order to determine the location at which the service is provided. In planning investment, self-governments will be allocated financing towards investments necessary for the provision of the services included in the basket of services that are managed by the self-governments, whereas under sectoral support measures, funding will be budgeted for investment that is required for the provision of the services included in the basket but are overseen by the state, as well as those services not included in the basket the provision of which is prescribed by regulatory enactments. Self-governments have the discretion to make a wider range of services available to their residents than is prescribed for the specific settlement level, by funding the investment necessary for their provision from their own budget, i.e., the basket of services does not limit self-governments if they have funds available to provide a wider range of services to their population.

DEVELOPMENT TRENDS, CONCLUSIONS AND PROPOSALS Since the beginning of 2011, the Latvian institution responsible for regional policy has been the Ministry of Environmental Protection and Regional Development, formed by annexing the Ministry of Regional Development and Local Government to the Ministry of Environment. The merging of the ministries does not imply that issues related to the planning of regional development and territorial development have lost their significance. Quite the contrary: there is an ever increasing need for a regional policy that is intelligent, focused and aware with respect to particular territories. Planning traditions are evolving in Latvia, and the regulatory framework is gradually acquiring new forms: it is becoming more flexible, it inspires more trust, and it strives towards initiative and the continuity of planning. It is often not enough to set forth a general sectoral policy alone – it is also important how it affects particular territories and the people who live there. In order to improve the development planning system, the planning of socio-economic development and spatial planning are increasingly linked together. The actual administrative territorial division of the country currently does not meet all the requirements of the Law on Administrative Territories and Populated Areas: no regions (apriņķi) have been formed as required by the Law, and the population of many municipalities does not reach the prescribed threshold of four thousand (there were 28 such municipalities according to OCMA data as of January 1, 2012, and as many as 36 according to the provisional census data on March 1, 2011). Mersrags municipality, formed as a result of breaking up Roja municipality after the conclusion of the administrative territorial reform, also did not meet this criterion. According to the provisional data of the census, the population of the city of Jekabpils, too, is below the criterion value of 25 000 for (national) cities prescribed by the Law on Administrative Territories and Populated Areas. In the context of regional development, the early parliamentary elections in 2011 once again reminded of the relevance of harmonising the boundaries of the planning regions and electoral districts. The electoral districts of Riga, Vidzeme and Zemgale constitute territories that are different from the Riga, Vidzeme and Zemgale planning regions; only the electoral districts and planning regions of Kurzeme and Latgale coincide. One of the main problems in Latvia has been the declining population. The result of the 2011 census indicate that, since the last census in 2000, the national population has decreased by 13 %, whereas in the Latgale region, which saw the steepest decline in population, the rate was 21 %. The census data and data by OCMA regarding the size of the population – used in various calculations – differ. In the majority of self-government territories, the population according to the provisional census data is smaller than that according to OCMA data: the greatest margin of difference even exceeds 10 %, and only in some self-governments of the Pieriga region the population according to the census data exceeds the figure by OCMA. The fact that various institutions refer to data from different sources (CSB, OCMA) for various purposes may cause a number of ambiguities. Citing data sources is therefore of particular importance at this time, whereas in future efforts should be made to harmonise the data from various sources as far as it is possible. The final summary and coordination of the census results with other pertinent statistics will raise a challenge for the subsequent analysis of territories: changes in different comparable indicators (per capita, per 1 000 inhabitants, etc.) will be associated not only with changes in the state of affairs but also with significant adjustments brought about by the census. After several years of decline, signs of growth were evident in the Latvian economy in 2011: compared with the year before, the GDP figure improved, and the share of job seekers in the economically active population and the rate of unemployment both declined. An analysis of the data for the planning regions and self-government territories reveals that considerable socio-economic disparities exist among territories, and compared with the preceding years, the situation has not changed sharply. Similar to the years before, the Riga region has been a pronounced leader, while the Latgale region lagged behind other regions in terms of its socio-economic development. One of the indicators that best describes regional disparities – the variation index of regional GDP (dispersion) – shows that regional disparities have diminished slightly in Latvia over the past year. Effectively, the index reflects disparities between the Riga and Latgale regions, but since Latgale experienced the sharpest decline in population, this can often

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be used to explain the small rate of decrease in the differences in this as well as other comparable indicators that are calculated based on the population. However, some positive tendencies were also evident in the Latgale region: for instance, it was the only region where the number of children born in 2011 was greater than in 2010*. The traditional comparison, made in this report, of the range of key indicator values by city and municipality group indicates – if the indicators are contemplated individually – that the differences in certain indicators increased (for example, per capita revenue from personal income tax in self-government budgets in the municipality group, unemployment rate for both groups). In turn, the movement of the territorial development index values points to increasing differences in the city group and a diminishing gap in the municipality group. The territorial development index (now: territorial development level index), developed more than ten years ago for what was initially a narrow purpose (the programme of specially assisted regions with some one million lats in annual funding from the Regional Fund), with its newer extension, the territorial development level change index, has been applied extensively, both to assess territorial development and to differentiate support measures. One of the main applications of the territorial development level index is defining the intensity of state aid to selfgovernments in the form of grants towards projects co-financed from the EU Structural Funds and the Cohesion Fund and implemented by self-governments. In the period from 2007 to 2011, the total state budget grant to self-governments to co-finance EU fund projects was LVL 11.37 million. The distribution of this by regions reveals that the self-governments of the Latgale region received the largest volume of grant funding, with the Riga region self-governments receiving the least amount. When assessed in relative terms, per 1 000 inhabitants, the volume of state grants that went to the self-governments of the Latgale region was also more significant than the self-governments of the other planning regions. An overall conclusion can be drawn that the territorial development level index, as a criterion for determining the intensity of state grants, has proven to have worked well: a larger among of grant funding was awarded to self-governments located in regions with a lower level of socio-economic development, funds have been saved up that can be directed towards promoting development. Although opinions vary regarding the method of calculation of the territorial development indices, the discussion among the stakeholders has not yet produced a specific outcome; therefore, improving the methodology used to assess territorial development remains a relevant task. Perhaps a single, universal territorial development index needs not be sought but instead a number of complex indicators should be used for various purposes. The specific trajectory of the development of self-governments is contingent upon their location, population patterns and territorial ties. The development axes defined as part of the Spatial Development Perspective of the Sustainable Development Strategy of Latvia for 2030 emphasise the significance of development centres as the drivers of regional development, the need for urban and rural interaction and the creation of functional networks of development centres. No single methodology exists for identifying urban areas of influence. The designations of spatial (influence) and territorial (political, economical, statistical) analysis, too, are only at their formational stage. The urban influence areas used in this report not so much describe the influence of cities but rather serves as territories for the analysis of available statistical data. In this case, the reflection of influence is only relative. To determine the functional impact of urban centres, statistical data are needed for lower-tier territories – at least at the level of the territorial units of municipalities – as are qualitative and quantitative research studies. At this time, population data and a few other statistical indicators describing demographics are available from the level of municipal towns and parishes upwards, yet the lowest threshold for socio-economic indicators is usually self-government territories (cities and municipalities) or statistical and planning regions. Border territories – coastal areas and borderlands – are special spaces of development that are characterised by a marginal (peripheral) situation relative to the centre. Even though border territories generally exhibit lower values of socio-economic development indicators than the national averages, in some cases it is this location that provides developmental advantages. Ports, crossing points on the national border, coastal natural areas may become driving factors of development – or have done so already. The internal disparities of border territories mean that they cannot be deemed socially and economically uniform spaces. Socio-economic disparities emerge not just as a result of the impact of the borders themselves, but they may arise because of the peripheral location of border territories, affected by the distance from Riga and other nearby centres, as well as their * Provisional data by CSB.

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accessibility – i.e., factors that have no direct connection with the border. In the case of coastal areas, for instance, the population fluctuations within self-government territories display a direct correlation with the location relative to the national development centres. The self-government territories located closer to the major cities have preserved a larger population or, as in Pieriga, have seen a population increase, as opposed to the severely declining populations in the more remote self-governments. Similar conclusions also arise in respect of borderland territories. Here, an additional factor is the internal or external border of the European Union, yet the unfavourable socio-economic indicators of the self-governments in the external (Eastern) borderland are first and foremost a consequence of the relatively long distances to the capital and accessibilityrelated problems. At the same time, it cannot be denied that a set of local circumstances also play a part, including the divergent cultural and historical space. The promotion of cross-border cooperation opens up possibilities of shaping interactions between countries and raising investment in borderland areas. The next tasks in territorial grouping could be aimed at identifying territories that are target areas for state policy. Different support instruments need to be planned for differing groups of territories. Self-government budget data are an important indicator describing territorial development, especially for mutual comparisons. In 2011, after a decline during the previous years, the revenues and expenditures of both self-government budgets and the state consolidated general budget increased, and tax revenues continued to grow. However, self-government revenues increased more slowly than state budget revenues, which led to the share of the self-government revenues in the consolidated general budget of the state to decline accordingly. In turn, the share of self-government expenditure in the expenditure of the consolidated general state budget rose. Budget data for individual self-governments reflect large disparities among self-governments and their capacity for development. One of the most important regional development tools aimed at minimising the adverse differences among self-governments and at ensuring that services are provided as evenly as possible throughout the country is the system of self-government financial equalisation. Although in 2011 the discussions regarding improvements to the financial equalisation of self-governments were comparatively at a lower key than in the years before, the issue remains important and awaits a solution. The year 2011 saw an increase in state budget contributions towards the financial equalisation of self-governments: the state budget grant to the self-government financial equalisation fund edged up slightly, and special payments were made to the self-governments of national cities with the lowest budget revenues per capita after financial equalisation. In the recent years, resources from the European Union funds have been the most significant funds directed towards territorial development. In the period from the beginning of 2007 to the end of 2011, payments in the amount of LVL 2.018 billion were made under the National Strategic Reference Framework for 2007–2013, the Latvian Rural Development Programme for 2007–2013 and the Operational Programme for the Implementation of European Fisheries Fund Support for 2007–2013; of those, LVL 1.707 billion were under the NSRF and LVL 311.5 million in accordance with the programmes managed by the Ministry of Agriculture. It is too early yet to draw conclusions about the entire programming period: the data that have been analysed provide a picture for the interim period. Of the payments made between 2007 and 2011 towards the implementation of the National Strategic Reference Framework, LVL 1.004 billion were allocated to activities with a regional and local impact, or projects that had a direct impact on the territory of a region or a selfgovernment. A comparison of the planning regions reveals that, in the five years, the largest amount of funding was raised in the Riga region, LVL 291.41 million, followed by Kurzeme with LVL 193.21 million, Latgale with LVL 181.74 million, Zemgale with LVL 148.63 million and Vidzeme with LVL 146.24 million in funding. It is evident from reviewing the per capita funding in the planning regions that the largest amount of funding in activities with a regional and local impact was raised in the Kurzeme region – LVL 652 per capita – the Riga region attracted the least amount of funding, LVL 267 per capita. The figure for the Vidzeme region was only slightly lower than that for Kurzeme, LVL 633 per capita; Latgale and Zemgale had similar levels of funding, LVL 542 and LVL 536 per capita, respectively. These data do not yet allow an evaluation of the impact the implementation of the projects has had on the development of territories. The Assessment of the Impact of the European Union Structural Funds and the Cohesion Fund for 2007–2013 on the Development of Territories in Latvia, which has been commissioned by MEPRD, will provide an answer to this question. The data compiled on the EAFRD and EFF projects in distribution by planning region between 2007 and 2011 reveal that the largest volume and share of funding relative to the overall fund-

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ing of projects with a territorial impact was in the Kurzeme region, LVLÂ 76,5 million, while the smallest was in the Riga region, LVLÂ 41,4 million. When financing is expressed per capita, too, Kurzeme had the highest figure and the Riga region had the lowest. Vidzeme had the highest number of funded projects. A positive aspect is that all EU fund programmes compile data on payments in breakdown by territory. However, the methodologies of the institutions involved in the management and implementation of the NSRF and the monitoring body of the programmes managed by the Ministry of Agriculture differ slightly. It would be advisable for the next programming period if a single methodology were used by all development support instruments for attributing payments and outcomes to territories. The distribution of other payments of support instruments by planning region (both in absolute terms and in relative figures, i.e., relative to the population), as provided in this report, enables MEPRD, SRDA and the planning regions to evaluate why the activity of the regions and self-governments in the programmes has been so inconsistent â&#x20AC;&#x201C; whether they had no need for particular projects, whether they had limited information, or whether they lacked the capacity to implement the projects. The responsible units of MEPRD and SRDA must address the issue of harmonising the methodology for assessing the territorial impact of various support instruments and accumulation of corresponding data: this will provide a more complete information base and foundation for future decision-making. In 2011, a substantial improvement of public services took place in Latvia. According to the data, there was a fairly rapid increase in the use of information and communications technology by both individuals and businesses. This has also necessitated an expansion in the digitisation of public services. To improve public services, MEPRD and SRDA operate in several directions: they provide support to self-governments in running public internet access points, maintain the operation of the Electronic Procurement System, maintain and develop the unified state and self-government service portal, www.latvija.lv. Compared with the preceding year, the turnover of the Electronic Procurement System nearly doubled in 2011. The public sector savings due to the system, as computed by SRDA, allows for an even greater turnover to be projected. The number of e-services offered at www.latvija.lv is also increasing. It should, however, be pointed out that only a small number of self-governments offer their e-services on the web portal at this time. Upgrades and improvements to the portal will definitely expand both the range of services offered there by state institutions and selfgovernments and the number of users. As part of the project to improve the system of public services, taken over by MEPRD from the State Chancellery, it is expected that, by the end of 2013, a conceptual and methodological foundation for the development of the public services system will be created and application of client-oriented principles in the provision of services in public administration by reducing the administrative burden for businesses and residents will be promoted. The basket of services, included in the draft Regional Policy Guidelines of MEPRD, can be viewed as a complement to the concept of public services. The basket of services defines the range of services depending on settlement levels (centres) and is expected to serve as a basis for the planning of public investment in self-governments.

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Abbreviations Used AAU Cabinet CCFI CF CFCA CSB CSCC EAFRD EEA EFF ENPI EPS ERDF ESF ESPON ETC EU GDP GMI IDAL INTERACT INTERREG IT LatviaÂ 2030 LICTA LLC LSDP LVL LU FGES MEPRD NACE NATURAÂ 2000 NDP NUTS OCMA PIAP RDIM RTU SDSL SEA SGFEF SRDA SRS TDPIS URBACT

assigned amount unit Cabinet of Ministers of the Republic of Latvia Climate Change Financial Instrument Cohesion Fund Central Finance and Contracting Agency Central Statistical Bureau Cross-sectoral Coordination Centre European Agricultural Fund for Rural Development European Economic Area European Fisheries Fund European Neighbourhood and Partnership Instrument Electronic Procurement System European Regional Development Fund European Social Fund European Observation Network for Spatial Development and Cohesion European Territorial Cooperation European Union Gross domestic product guaranteed minimum income Investment and Development Agency of Latvia Programme for Good Governance of Territorial Cooperation Programmes Interregional Cooperation Programme information technology Sustainable Development Strategy of Latvia until 2030 Latvian Information and Communications Technology Association limited liability company Latvian Strategic Development Plan Latvian lats Faculty of Geography and Earth Sciences of the University of Latvia Ministry of Environmental Protection and Regional Development classification for the identification of business areas of activity network of protected areas created to preserve the natural diversity of the European Union National Development Plan classification of territorial units created for the purposes of EU statistics Office of Citizenship and Migration Affairs public internet access point Regional Development Indicators Module Riga Technical University Sustainable Development Strategy of Latvia until 2030 State Employment Agency Self-Government Financial Equalisation Fund State Regional Development Agency State Revenue Service Territorial Development Planning Information System Programme for the Development of Urban Environment

153

Bibliography Development of Regions in Latvia 2008. Riga: SRDA, 2009. Development of Regions in Latvia 2009. Riga: SRDA, 2010. Development of Regions in Latvia 2010. Riga: SRDA, 2011. Latvijas vietējo pašvaldību darbība to vadītāju vērtējumā. Riga: CSB, 2011. Krišjāne, Z. (project leader, LU FGES) Rīgas aglomerācijas robežu noteikšana. Riga: Riga City Council City Development Department, 2004. Pužulis, A. Robežu loma ģeogrāfiskās telpas organizācijā Latvijā. Doctoral thesis. Riga: University of Latvia, 2012. Hermansons, Z. Teritorijas attīstības indeksa praktiskā pielietojuma analīze un tā pilnveidošanas iespējas. Riga: Scientific Papers of the Riga Technical University. Series 3, volume 22. 2012. Manual: Vienas pieturas aģentūra pašvaldībā. Latgale Planning Region, 2011. Documents and Draft Documents Concept for the Implementation of the Principle of a One-stop Agency in the Availability of State and Self-government Services. Approved pursuant to Cabinet Order No 446 of September 13, 2011. Guidelines for the Spatial Development of Coastal Areas for 2011–2017. Approved pursuant to Cabinet Order No 169 of April 20, 2011. National Strategic Reference Framework for 2007–2013. Operational Programme for the Implementation of European Fisheries Fund Support for 2007–2013. Regional Policy Guidelines. Draft, July 5, 2012. Report on the Implementation of the Horizontal Priorities “Balanced Territorial Development” and “International Competitiveness of the City of Riga in 2007–2011. Riga: MEPRD, 2012. Rīgas plānošanas reģiona telpiskais (teritorijas) plānojums. Riga: Development Council of the Riga planning region, Riga Regional Development Agency, 2007. Rural Development Programme for 2007–2013. Sustainable Development Strategy of Latvia until 2030. Approved by a decision of the Saeima on June 10, 2010. Websites Central Statistical Bureau: www.csb.lv Database of policy planning documents: www.polsis.gov.lv Information on the EU funds: www.esfondi.lv Ministry of Agriculture of the Republic of Latvia: www.zm.gov.lv Ministry of Education and Science of the Republic of Latvia: www.izm.gov.lv Ministry of Environmental Protection and Regional Development of the Republic of Latvia: www.varam.gov.lv Ministry of Finance of the Republic of Latvia: www.fm.gov.lv Ministry of Transport of the Republic of Latvia: www.sam.gov.lv Office of Citizenship and Migration Affairs: www.pmlp.gov.lv Rural Support Service: www.lad.gov.lv State Employment Agency: www.nva.gov.lv State Regional Development Agency: www.vraa.gov.lv The Treasury: www.kase.gov.lv Unified State and self-government service web portal: www.latvija.lv VSIA Latvijas Vēstnesis: www.likumi.lv Kurzeme Planning Region: www.kurzemesregions.lv Latgale Planning Region: www.latgale.lv Riga Planning Region: www.rpr.gov.lv Vidzeme Planning Region: www.vidzeme.lv Zemgale Planning Region: www.zemgale.lv Council of Europe: www.coe.int Eurostat: epp.eurostat.ec.europa.eu

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ANNEX 2. Territorial Development Indices of Planning Regions, Cities and Municipalities Territorial Development Indices of Planning Regions

Territorial Development Indices of Cities

Territorial Development Indices of Municipalities

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