OECD Recommends Latvia Improve Healthcare and Public Administration to Raise Living Standards
In its latest economic review, the OECD urges Latvia to boost investment, cut bureaucracy, and strengthen healthcare to close the gap with developed nations.
Ten years after joining the OECD, Latvia continues to approach the living standards of wealthy countries, but growth is held back by several structural issues, according to the organization's new economic survey.
Key obstacles include inefficient public administration, underfunded healthcare, and weak investment attraction. OECD senior economist Robert Grundke notes that Latvia must improve banking competition, as interest rates and collateral requirements are among the highest in the OECD, limiting access to finance. He recommends further developing the capital market, for instance by listing minority stakes in state-owned enterprises, and strengthening the funded pension system by redirecting more savings into local investments.
SEB Bank economist Dainis Gašpuitis says the public sector needs to become much more flexible, handing more initiative to the private sector – though this is politically difficult. Economics Minister Viktors Valainis agrees, pointing to his own ministry's experience: reducing the Investment and Development Agency of Latvia (LIAA) staff by 10% led to a 54% increase in attracted investments. He calls for similar reforms across all public administration.
Healthcare remains a particular concern. While the situation is gradually improving, life expectancy in Latvia is among the lowest in the OECD – just above 70 years for men. The sector lacks funding, which could partly come from cutting public administration expenses.
The OECD publishes such reviews approximately every two years, so the next assessment will show how far Latvia has implemented recommendations to strengthen public finances, promote investment and innovation, improve healthcare, reduce administrative burdens, accelerate the green transition, and address labor shortages.
