Ambitious Venture in Latvia: Aligning Ambition with Strategy for a €10 Billion Economic Enhancement

Latvia has taken a significant step towards enhancing its logistics infrastructure, aiming to attract manufacturing and research and development (R&D) facilities serving the wider European Union (EU) and European Economic Area (EEA) markets. The country's Investment and Development Agency (LIAA) has reported early signs of interest from Nordic pension funds and German manufacturing firms.

The comprehensive investment attraction strategy, approved in August 2025, includes 15 strategic initiatives. One of these initiatives is pension fund reform, which aims to mobilise part of Latvia's €12 billion pension fund assets into domestic and regional investments.

The strategy also seeks to increase foreign direct investment (FDI) by nearly €10 billion over the next decade, raising the total FDI to €32 billion by 2035, a €10 billion increase from the current projected €22.5 billion. This ambitious goal could position Latvia as the Baltic's most investor-friendly economy.

To achieve this, the plan includes creating investor-friendly policies that streamline bureaucracy and expedite the setup process for new businesses. The strategy also aims to expand capital access for innovative businesses and expects a 40% increase in R&D spending as a share of GDP.

Through the state agency ALTUM, the government will expand export guarantees, providing a safety net for businesses venturing into international markets. The use of export credit guarantees is expected to boost investor confidence and encourage more foreign investment.

However, the implementation pace could be affected by political shifts in the future. Global competition is fierce, with other small economies like Ireland and Singapore aggressively courting the same investors. Talent retention is another challenge due to competition with higher-wage economies for skilled labor.

The first measurable outcomes are expected by mid-2026, with a review scheduled in 2028 to adjust targets and incentives as necessary. The plan expects to create 30,000 new jobs, mainly in high-skill sectors. If successful, Latvia could position itself as a hub for innovation and sustainable growth in the region.

Ambitious Venture in Latvia: Aligning Ambition with Strategy for a €10 Billion Economic Enhancement