Economist: Lat­vian res­i­dents’ over­all sat­is­fac­tion with life is be­low most EU coun­tries

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There are many dif­fer­ent mea­sure­ments in the world that seem im­pos­si­ble to mea­sure – our qual­ity of life and de­vel­op­ment progress, says Bank of Latvia economist Daina Paula in a pub­li­ca­tion of, com­ment­ing on dif­fer­ent mea­sure­ments that help char­ac­ter­ize de­vel­op­ment of na­tional econ­omy and peo­ple’s qual­ity of life.

Latvia’s po­si­tion in such mea­sure­ments is var­ied. For ex­am­ple, Latvia has the 20th freest econ­omy among 180 coun­tries (in­crease by 16 po­si­tions). Res­i­dents’ over­all sat­is­fac­tion with life has also im­proved, putting the coun­try on the 54th place (in­crease by 12 places). This is also shown by the lat­est data from Her­itage Foun­da­tion and World Hap­pi­ness Re­port.

Aside from th­ese tops, there are also other more or less known mea­sure­ments that help char­ac­ter­ize na­tional eco­nomic growth, peo­ple’s qual­ity of life and over­all sat­is­fac­tion with life.

«The qual­ity of life does not change if we do or don’t know about th­ese mea­sure­ments, but they can none­the­less help cre­ate a valu­able pic­ture about the di­rec­tion na­tional econ­omy is headed. This can be use­ful for the re­al­iza­tion of coun­tries eco­nomic poli­cies,» the ex­pert says.

How big are we and how do we grow?

Lat­vians make up only 0.026% of the world’s pop­u­la­tion. On top of that, Latvia’s pop­u­la­tion tends to de­cline, says the economist. «But Latvia’s con­tri­bu­tion to the world’s GDP is close to 0.037% (as­sess­ment of the World Bank for 2015 and In­ter­na­tional Mone­tary Fund’s as­sess­ment for 2016) and 0.042% (UN as­sess­ment for 2015). This is not much. Nev­er­the­less, an av­er­age Lat­vian res­i­dent pro­ducer higher added value than an av­er­age res­i­dent in the world. Look­ing at it this way, an av­er­age Lat­vian res­i­dent is also wealth­ier.» In ad­di­tion, if we look at how Latvia is rep­re­sented in the world trade (in the value of its coun­try’s sold goods), the coun­try’s pres­ence in world ex­ports reaches 0.07%.

«The abil­ity of the state and busi­nesses to in­crease mar­ket share is often con­sid­ered one of the touch­stones for com­pet­i­tive­ness. There are sev­eral recipes for im­prov­ing mar­ket share growth. One of them, es­pe­cially if the in­ter­na­tional mar­ket of­fers com­pa­ra­ble goods, is find­ing a way to or­ga­nize pro­duc­tion in such a way that it is pos­si­ble to re­duce costs per each pro­duc­tion unit,» Paula com­ments on mar­ket com­pet­i­tive­ness.

It should be noted that Latvia’s ex­port share in the world mar­ket had in­creased slightly in 2016. In the Euro­pean Union, Latvia’s mar­ket share had grown 5.7%. Ex­port hare in the EU grew at the ex­pense of com­pet­i­tive­ness ef­fect, and not as much be­cause Latvia would have in­crease ex­ports to coun­tries in which im­port vol­umes had in­creased (mar­ket ef­fect) or cat­e­gories of goods whose im­ports in EU coun­tries had grown the most (prod­uct ef­fect).

Can so­cial pol­icy help cre­ate the feel­ing that life is get­ting bet­ter?

So­cial progress in­dex is high in coun­tries that have well-de­vel­oped so­cial poli­cies. Scan­di­na­vian coun­tries are a prime ex­am­ple. Nev­er­the­less, so­cial ex­penses do not im­prove the feel­ing of hap­pi­ness on their own, the ex­pert says.

«First of all, to have such ex­penses a coun­try need tax rev­enue. Of course, con­sumers could feel that pay­ing large taxes also means they have the right to de­mand as much in re­turn. How­ever, so­cial pol­icy was cre­ated as a mech­a­nism to patch holes. The rea­son for the very ex­is­tence of so­cial poli­cies lies in so­ci­ety’s in­abil­ity to form sav­ings for all their needs, as well as the de­sire to equal­ize avail­abil­ity of some ser­vice even if con­sumers never use them,» Paula notes.

«There is al­ways room for dis­cus­sion about the state as a night watch­man and how much it pokes its nose into peo­ple’s lives by of­fer­ing all kinds of insurance mech­a­nisms,» the ex­pert men­tions.


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