ECONOMICS DOI:10.22616/rrd.23.2017.056 DEVELOPMENT TRENDS IN THE NATIONAL ECONOMY SECTORS IN THE BALTIC STATES IN 2005-2015 Liana Supe, Inguna Jurgelane Riga Technical University, Latvia [email protected]; [email protected] Abstract The processes of globalization in the world economy have a significant impact on different processes and development in all national economy sectors. Innovations and technological development have also increased the competition between economic operators. Faster growth is also observed in service industries. The global economic downturn affected the Baltic States whose development suffered a sharp decline at the end of 2008 and in 2009. A sudden drop in the demand in export markets, as well as the decline in the demand in the domestic markets due to low purchasing power contributed to the deterioration of the economic situation in the Baltic States, particularly in the manufacturing and construction sectors. Starting from 2011, the economic indicators in the Baltic States have been growing and here the export of goods and services can be mentioned as the main contributor to the development of the economy in the Baltic States. Significant changes in the development of economic sectors started in 2013 due to Russia’s economic problems. During the period 2005 – 2015, most of the value added to the overall structure of the national economy in all three Baltic States was brought by trade and manufacturing. The aim of the research is to analyse the national economy sectors in the Baltic States during the period 2005 – 2015 in order to determine processes that affected the development of economy sectors in each of the countries, or the opposite – the recession, thus finding the most competitive sector of the national economy of the Baltic States. Key words: national economy sectors, Baltic States, competitiveness. Introduction competitive sector in the long-term development in After joining the European Union in 2004, the each of the Baltic States and to draw conclusions. Baltic States experienced a rapid economic growth and at the same time a sharp rise in commodity prices, Materials and Methods which led to high inflation. In 2009, along with the During the research, quantitative and qualitative economic downturn in the global economy, the Baltic methods were used – monographic or descriptive States experienced a sharp decline in the national method, analysis and synthesis method; data statistical economy when the volumes of the products sold in the research methods – grouping, comparison, analysis domestic market and the volumes of export products of relative and average indicators, establishment dropped. In early 2010, the national economy in the and analysis of dynamic series. For labour market Baltic States gradually recovered; the most successful analysis, statistical data of 10 years were compared. economic stabilization took place in Estonia, followed Calculations and data processing were performed by Lithuania and Latvia. One of the most important using the software Microsoft Excel. Data on the priorities of Estonia for the year 2010 was the fulfilment national economy sectors were retrieved from the of the Maastricht criteria, and with the introduction Statistical Bureaus of each Baltic State, as well as from of the Euro on 1 January 2011 Estonia joined the the national reports on the development of the national Eurozone. Other priorities to be mentioned are economy. To calculate the value added by each sector promotion of the quality of education and preparation to the overall structure of the national economy, the of the independence of the energy sector (Ministry of authors used the data of the Central Statistical Bureau Economic Affairs and Communications of Estonia, data on gross value added broken down by kinds of 2005). In Latvia, the top priorities were reducing the activities, at current prices, without separating into unemployment and promoting entrepreneurship, as subsectors, but on the basis of key sectors according to well as structural reforms in the public institutions. the NACE classification. To calculate growth rates the Like Estonia, Lithuania set the following priorities: authors used the data of the Central Statistical Bureau accession to the Eurozone, as well as diversification data on gross value added broken down by kinds of of energy suppliers (competition) and increasing the activities, at current prices, separating in subsectors independence in the energy sector. Lithuania as the on the basis of key sectors according to the NACE last of the Baltic States joined the Eurozone on 1 classification. January 2015. The following tasks have been defined to reach the Results and Discussion aim - to analyse the structure of the national economy According to the statistical classification of in each of the Baltic States; to study the key sectors economic activities (Eurostat, 2017), in the European of the national economies; to determine the most Community the national economy sectors are divided 104 RESEARCH FOR RURAL DEVELOPMENT 2017, VOLUME 2 DEVELOPMENT TRENDS IN THE NATIONAL ECONOMY SECTORS IN THE BALTIC STATES IN 2005-2015 Liana Supe, Inguna Jurgelane into agriculture, forestry and fishing; mining and activities; arts, entertainment and recreation; activities quarrying; electricity, gas, steam and air conditioning; of households as employers; undifferentiated goods- water supply, sewerage, waste management and and services-producing activities of households for remediation, manufacturing; construction. The rest are own use; activities of extraterritorial organizations service industries – wholesale and retail trade, repair and bodies. of motor vehicles and motorcycles; transportation and storage; accommodation and food service activities; The development of the national economy sectors in information and communication; financial and Latvia insurance activities; real estate activities; professional, On the basis of the reports on the national scientific and technical activities; administrative and economy by the Ministry of Economics of the support service activities; other service activities; Republic of Latvia for 2005 – 2015 (Ministry of public administration and defence; compulsory social Economics of the Republic of Latvia, 2005; 2015), security; education; human health and social work the fastest growing economy sector is service sector, Table 1 The structure of the national economy of Latvia by value added, 2005 – 2015, % (designed by the authors according to the data of the Central Statistical Bureau of Latvia) Year Economic Activity 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Agriculture, Forestry and Fishing 4.3 3.7 3.7 3.3 3.7 4.4 3.9 3.7 3.7 3.5 3.4 Mining and quarrying 0.3 0.3 0.3 0.3 0.5 0.5 0.5 0.5 0.5 0.5 0.5 Manufacturing 13.0 12.1 11.4 10.8 10.9 13.4 13.2 13.1 12.7 12.3 12.3 Electricity, gas, steam and air 2.2 2.1 2.0 2.5 3.4 3.9 3.5 3.3 3.2 3.0 2.8 conditioning supply Water supply, sewerage, waste management and remediation 0.7 0.7 0.7 0.8 1.2 1.0 1.0 0.9 0.9 0.9 0.9 activities Construction 6.7 8.5 10.1 10.1 7.7 5.0 5.9 6.4 6.5 6.7 6.4 Wholesale and retail trade; repair of motor vehicles and 16.5 16.8 15.6 14.0 15.1 15.6 14.7 14.1 14.0 14.1 14.0 motorcycles Transportation and storage 12.3 9.8 8.4 9.3 10.5 10.5 10.5 10.5 10.2 10.1 9.5 Accommodation and food service 1.5 1.5 1.6 1.6 1.6 1.6 1.7 1.6 1.7 1.8 1.9 activities Information and communication 4.6 4.1 3.6 3.8 4.2 4.6 4.3 4.3 4.4 4.4 4.6 Financial and insurance activities 4.4 5.2 5.2 5.6 3.6 3.4 4.0 4.1 4.0 4.5 4.7 Real estate activities 9.5 11.3 12.3 11.1 11.2 10.2 11.0 11.9 12.6 13.2 13.3 Professional, scientific and 3.8 3.6 4.1 4.5 4.6 4.5 4.6 4.5 4.4 4.1 4.2 technical activities Administrative and support 2.3 2.2 2.4 2.5 2.5 2.8 3.1 3.0 3.0 2.8 2.9 service activities Public administration and defence; compulsory social 7.3 7.9 8.4 8.5 7.8 7.5 7.5 7.3 7.3 7.3 7.4 security Education 5.0 4.6 4.6 5.4 5.9 5.2 4.9 4.8 4.9 4.9 5.0 Human health and social work 2.8 2.7 2.6 3.0 3.2 3.1 2.9 2.9 3.0 3.2 3.3 activities Arts, entertainment and 2.0 2.2 2.1 2.1 1.7 1.8 1.9 1.9 2.0 2.0 2.1 recreation Other service activities 0.8 0.7 0.8 0.7 0.8 0.8 0.8 0.9 0.8 0.8 - Activities of households as 0.1 0.1 0.1 0.1 0.2 0.2 0.2 0.2 0.1 0.2 - employers RESEARCH FOR RURAL DEVELOPMENT 2017, VOLUME 2 105 DEVELOPMENT TRENDS IN THE NATIONAL ECONOMY SECTORS IN Liana Supe, Inguna Jurgelane THE BALTIC STATES IN 2005-2015 especially commercial services. The construction wood and of products of wood and cork – 17.2%, sector witnessed a very rapid growth in the period while in 2015 these shares were 23.6% and 27.0% from 2007 to 2008; this growth was due to the changes accordingly.