The Possibilities for Increasing Latvia’s Exports of Goods

UNIVERSITY OF TARTU

Economics department

GLOBAL ECONOMY REPORT

The possibilities for increasing Latvia’s exports of goods.

Reinis Virza

Tartu 2018

Introduction

Exports are the merchandise and ventures created in one nation and acquired by residents of another nation. It doesn't make a difference what the great or administration is. It doesn't make a difference how it is sent. It can be transported, sent by email, or conveyed in individual gear on a plane. If it is produced domestically and sold to someone from another country it is an export. The main function of an export is to ensure the supply of goods and services that, for various reasons, are not acquired or produced in the countries where they are imported.  

The aim of the paper is to theoretically look at exports, their properties, and to study the current situation in exports to the Latvian economy.

Export types

There are 4 types of export. The first group - there are a lot of resources that can not be used in the country. As an example, timber and products produced from them. The second group has so much resources that it's enough for consumption and stays the same. Many factories produce so much that there is a small proportion of domestic consumption for domestic consumption, the rest of the domestic market is redundant and exported. The third group - industrial production is beneficial if a large external market can be used together with the internal market. The fourth group - milk production, livestock breeding and fish catches are carried out to the extent that part of the production can be sold abroad and part of the domestic market. (Zīle H. 2003)

Main segments of Latvia’s exports

Latvia has a one of a kind geological area on the shore of the Baltic Sea and at the focal point of the Baltic countries. For a long time, this has put Latvia unequivocally at an intersection of international business. Since the fourteenth century, Latvia has been a noteworthy business center point amongst west and east, and was at the focal point of the Hanseatic League, the world's first Free Trade Area. Remote exchange Latvia has reliably expanded since the recovering of autonomy, especially after Latvia's accession to the EU. As indicated by the temporary information gave by the Central Statistical Bureau of Latvia, in 2017 the estimation of aggregate fares expanded by 10% and imports expanded by 14.5% contrasted with the earlier year. In 2017, fares to EU nations made up to 71% of the aggregate volume of Latvian fares and expanded by 523 million euro or 6.9% contrasted with 2016. Latvian exports by main sectors in 2017 were: Machinery and mechanical appliances; electrical equipment (17,38%), wood and articles of wood (16,51%), prepared foodstuffs (9,53%), base metals and articles of base metals (8,94%) and other (14,21%). (Centrala Statistikas Parvalde, 2018)

The main and traditional export markets of Latvia are EU countries, the largest of which are Lithuania and Estonia, and only a relatively small part is occupied by the CIS and other third countries. The share of Latvian exports to fast-growing economies such as China and India is small. In the future, further development of exports should be oriented not only on important Latvian export markets or geographically close, large and potentially growing markets, but also on markets that are of interest to Latvian entrepreneurs, as well as on markets where there is a demand for Latvian supply opportunities (market niches).

Situation right now

When in doubt, January is described by weaker outside exchange action than in different months, notwithstanding, this year, the positive development of products in sends out this year kept up a genuinely stable development of assembling in the earlier months. Great fares were likewise impacted by the ascent in worldwide costs for oil, different nourishment items, oats, timber and metals. In January of this current year, great fare execution kept on developing in sends out in 2017, when the fare estimation of merchandise expanded by 10.1% contrasted with 2016. A year ago's perceived fare execution was accomplished on account of the development of all divisions of fares. This was encouraged by the change of the worldwide financial circumstance, the expansion in worldwide costs for oil, drain, meat, metals, etc. In spite of the fact that toward the start of the year, one of the principle send out divisions - the timber business - was the drop underway, which was because of the high base of January a year ago and unfriendly climate conditions in January this year, while the fare estimation of wood in January demonstrated an expansion both in December and January of the earlier year . The dedication of this industry to stop and keep on growing likewise this year is seen by an expansion in the non-monetary speculation of the timber business in the last quarter of a year ago and a few venture designs, for instance, SIA Graanul Invest, a mechanical pellet maker, EUR 2.1 million in interests in the change of wood pellet generation lines, the making of the Baltic Pellets Energy Particleboard plant contributing 30 million euros, finishing of the Stiga RM Birch Plywood Factory, Ltd. Kokprocess 98, a speculation of 13.6 million euros for the presentation of new innovations and items into creation. (Pelece D, 2018)

How to increase export

Exports assume an essential part in the nations economy, impacting the level of financial development, employment and the adjust of installments. But why export is that important? There are few main reasons. Firstly growth in export can make extra working places and automatically unemployment rate will decrease. For example growth in metal exports has created many working places for Latvians who are living outside of Riga, in countryside, because usually this kind of factories ar built outside of big cities. Development of an economy is straight forward connected with exports. On the off chance that fares increment at a quicker pace when contrasted with imports, nothing can prevent an economy from being a created one. Then again, the unsteadiness in fares can antagonistically influences the procedure of economic development. (DeeKay, n.d.)