Priorities of Latvia in the Field of Innovation Stakeholders’ seminar “EU Strategy for the Baltic Sea Region – Incentive for Innovative Entrepreneurship” Juris Pūce State Secretary Ministry of Economics of the Republic of Latvia

Content  Economic development trends  Economic challenges and policies for further growth  Innovation support activities 2

Economic development of Latvia in the medium term Forecast of Latvia’s GDP (2004 = 100) Rapid development scenarioRapid development scenario 4.5% in average annual GDP growth rate: 4.5% Moderate development scenarioModerate development scenario 2% in average annual GDP growth rate: 2% 3 Economic development trends (I)

4 Economic development trends (II) The economy has resumed growth, main driving force - exports Seasonally adjusted data, 4th quarter of 2005 = 100

Decomposition of Latvian exports share’s growth to the EU by using a permanent market share analysis (%) -21,1% +28,5% 5 Competitiveness has a major role in export growth +40,2% 58% 58% of exports growth was driven by increasing competitiveness 45% of exports growth was driven by increasing competitiveness 6% of exports decline was effected by decreasing competitiveness Economic development trends (III)

Economic development trends (IV) Qualitative changes in Latvian export structure

Share of BSR countries* hi-tech intra-EU exports in total exports, % Data source: Eurostat Economic development trends (V) * except Germany

Main elements for competitiveness... Source: GCI

Competitiveness of Latvia Source: GCI

Innovation support system Research and technological development Knowledge and technology transfer Market (new products, technologies and business) Support for fundamental research and State research programs Support for participating in international research programs Support for applied and market oriented research projects Support for Technology transfer contact points in Universities Competence centers Business incubators – support for new innovative companies Innovation and entrepreneurship motivation and awareness program Support for development of new products and technologies Development of research infrastructure Support for introducing of new products and technologies in production Support for high-added value investment projects Venture capital and early stage funding (pre-seed, seed funds) Development of commercial research infrastructure Activities to rise capacity of researchers and to attract new researchers Technology incubator (in development) Ministry of Education and ScienceMinistry of Economics

Key policy directions:  To promote cooperation between enterprises and researchers  To support development of innovative companies  To promote access to early stage finance Innovation priorities in Latvia Quantitative target of Latvia for expenditures on R&D is 1.5% of GDP in 2020

Promotion of cooperation between enterprises and researchers  Goal: to bring together researchers and enterprises to implement common, knowledge-intensive industrial research and product development projects  6 Competence centres established (Transport and Mechanical Engineering; ICT; Pharmacy and Chemistry; Forestry; Electronics an Optics; Environment, Bio-energy and Biotechnology)  70 companies, mostly SMEs, involved in competence centres  Financing from public resources: 56 MEUR, private co-financing: 30 MEUR  Goal: to encourage practical linkages between scientists and entrepreneurs and promote commercialization of state funded research  8 TTOs established at higher education institutions  Financing from public resources: 2.75 MEUR Technology Transfer Offices (TTOs) Competence Centres (CC)

 Support for: Industrial research (aid intensity 50-70%) experimental work and prototyping (aid intensity 25-45%) production equipment acquisition (aid intensity 35 %) 188 contracts signed on ~45 MEUR  Support for: equipment purchase, industrial building construction or reconstruction (aid intensity 45 %) support for large-scale projects, min. amount 4.25 MEUR 27 contracts signed on ~84 MEUR  Funds available exclusively for “green technologies” development and introduction into production  Norwegian Financial instrument financing – 11 MEUR  Support available for ~ 100 companies Support for development of innovative companies (I) Grants for development and introduction of new products and technologies in production Grants for knowledge or technology-intensive high value-added investments Smart technology fund NEW 2012

 Goal: to support development of new competitive and viable enterprises by providing them with appropriate business environment and business support services, e.g. infrastructure and consultations  10 BI established: 9 regional (296 enterprises) and 1 in Riga for creative industries (42 enterprises)  Funding: 28,7 MEUR (ERDF)  Goal: to motivate the wide range of society to start their own business and to develop innovations and use innovative solutions  Implemented by Latvian Investment and Development Agency  Funding: 2,4 MEUR (ERDF) Support for development of innovative companies (II) Business incubators (BI) Innovation and entrepreneurship motivation programme

Access to early stage finance  Goal: to improve access to venture capital and early stage financing to promote creation and development of innovative fast growing companies  Measures: Seed and star-up funds – financing for development of initial concept or product development and initial marketing Venture capital instruments – financing for growth and expansion of companies in order to help them to increase production capacity Mezzanine instrument – funding for companies in addition to bank loans to cover the investment costs of the project  New measures are developed: Co-investment and Growth funds (from 2012)  Planed outcome – at least 125 enterprises supported  Funding – 87.5 MEUR ( ) Venture capital and seed money

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