LATVIA HUMAN DEVELOPMENT REPORT 2000/2001

Rüjiena Baltic Sea AinaΩi Estonia

Salacgrîva Aloja

Strençi LimbaΩi Ape

Valdemårpils Alüksne VENTSPILS Césis Vi¬aka Lîgatne

Sigulda RÈGA VangaΩi Russia Kuldîga JËRMALA Påvilosta Lubåna Ikß˚ile BaloΩi Ogre Kårsava egums Brocéni Lielvårde LIEPÅJA P¬aviñas Varak¬åni Vi¬åni R‰ZEKNE Grobiña JELGAVA Jékabpils Priekule Viesîte Lîvåni Prei¬i

Aknîste Dagda Ilükste Kråslava

DAUGAVPILS Basic facts about (2000) Belarus

Population Health Number of inhabitants (millions) 2.4 Average life expectancy (years) 70.4 Natural increase (%) –0.8 Men 65 Population density (persons per sq. km.) 36.6 Women 76 Infant mortality (per 1000 births) 10.4 Population distribution (%) Number of physicians (per 10,000 inhabitants) 34.4 Rural 31 Urban 69 Economy Gross Domestic Product 4333 Gender distribution (%) (GDP - millions of lats) Males 46 GDP per capita (1995 average prices, in lats) 1243 Females 54 Actual GDP per capita (PPP$, 1998) 5802 Actual GDP growth (%) 6.6 Age distribution (%) Unemployment rate (%) 7.8 0–14 years 17.8 Of working age 59.9 Employment distribution by sector (%) (males 15–59 years, females 15–57 years) Agriculture 17 Of retirement age 22.3 Industry 24 Services 59 National composition (%) Latvians 57.7 Government expenditures (% of GDP) Russians 29.6 Total: 40.3 Belarussians 4.1 of which: Defence 1.0 Ukrainians 2.7 Education 6.8 Poles 2.5 Health 4.8 Lithuanians 1.4 Social security 14.3 Others 2.0 Average exchange rate of LVL per USD 0.606 Human Development Index rank 63/174 Area 64,600 sq. km. (Global Human Development Report 2000) Adult literacy rate (%) 99.8

10 INTRODUCTION Open and responsible policy-making as a condition for human development

The principal theme of the publication Latvia growth and sectoral competitiveness with the aid of Human Development Report 2000/2001 is the con- goal-oriented political decisions and solutions. The nection between human development and policy- aim of policy as the cornerstone of any national making. This Report addresses policy analysis and development strategy is to achieve a competitive advances two main questions: is policy-making in national economy that is able to integrate into the Latvia sufficiently human development-oriented, world economy. and what policy improvements are required for the However, politicians must also devote their further advancement of human development? efforts to development issues in a broader sense. The focus on policy analysis in the sixth annual Economic decisions should not only conform to the Latvia Report on Human Development is not acci- present challenges of science and technology. They dental. Previous Reports have dealt with other should also be socially responsible and should not important issues. The theme of the 1995 Report was lead to unfavourable social consequences. social integration and human development, while Politicians in any democratic country must be the 1996 Report addressed the impact of economic loyal to all social strata and consider the interests of and social changes on human development. various social groups. A government must not pro- The 1997 Report dealt with inequality and mote the development of a specific sector, institu- human development, while the 1998 Report tion or social group at the expense of others. assessed the role of the individual, the State and Unequal internal growth creates complications, and the private sector in human development. The can even hinder cooperation between such social most recent 1999 Report dealt with the impact of groups as politicians, business people, and those globalization on human development in Latvia. involved in culture and education. Yet it is precisely These Reports have encouraged public debate such interaction that must form the basis upon which and have offered various recommendations to the successful development ideas can be realized. government and to the public at large. This Report • The current mechanisms of power and accountability is focusing on policy-making itself as an essential must be assessed. Policy decisions are affecting indi- means for achieving human development goals. viduals on an increasing basis, beginning with the There are a number of reasons for focusing on food that they eat and the medicines that they take, policy issues and policy analysis when considering and ending with the telecommunications that they the development of Latvia at the beginning of this use. It is therefore important for the public to raise new century. such questions as: “Who pulls the strings, on whose • Latvia’s democratic experience must be assessed. During behalf, and how is this leverage applied? How are the ten years since Latvia has regained its inde- decisions that affect my life made?” People wish to pendence, a successful transformation has taken be informed about policy decisions and to feel con- place from authoritarian to democratic rule. This is a fident that their interests are being taken into con- major achievement for human development. Viable sideration. democratic institutions have been established and • The moral and civil foundations of policy must be exam- democratic experience has been accumulated. ined. In Latvia the public has been growing increas- However, shortcomings in policy-making have ingly vocal in demanding an honest, responsible emerged as well. In order to prevent future short- and transparent policy-making process that comings and to improve policy-making, it is neces- respects the interests of various groups and social sary to assess both the policy practised to date and strata. In other words, people want policy-making to the activities of policy institutions. be based on strong moral and civil foundations. • The technological and public accountability of policy-mak- This cannot happen on its own accord, as it ing must be co-ordinated. This is a period when politi- depends on the integrity and democratic principles cians in many countries are promoting economic of the participants in the policy-making process.

11 LATVIA HUMAN DEVELOPMENT REPORT 2000/2001

Relations between Latvia’s institutions of power community of policy makers shares not only a and the general public must be improved. They heightened interest in policy and a wish to partici- must be rendered less formal and distanced, and pate in its processes. In many instances actual par- the level of mutual trust and dialogue must be ticipation in political decision-making and imple- increased. mentation is gradually increasing. Thus, new • Individual interests must be co-ordinated with the com- networks of political activity are being formed, mon interests of society. Many societies have been involving a wide variety of interest groups in addi- experiencing a blossoming of individual identity tion to government institutions. and interests, and the placement of individual goals and personal fulfilment ahead of common goals. The merger of individual interests with those What is policy? of society as a whole is also becoming more difficult because adherence to such previously stable social The term “policy” is the central category of this entities as class, national, ethnic and religious Report, and it is therefore important to explain it. groups is weakening. This is best done by imagining policy to be an inter- Therefore, efforts at social integration in Latvia mediary between the private arena (or private must overcome those obstacles that are furthering space) – where the free market and individuals the separation and alienation of individuals and operate – and the public arena, which is the domain groups. Democracy recognizes freedom of the indi- of the State and civil society. These four elements – vidual and the right to a private life. It does not free individuals, the market, the State and civil attempt to enforce a collective will and is the most society – form society as a whole. Public policy suitable political form under which freedom of the manifests itself in society as the co-ordinator and individual can be realized. However, even in a promoter of interaction between the often variable democracy the freedom of the individual is possi- and conflicting interests of these agents and insti- ble only as long as it does not infringe on the free- tutions. For example, labour laws regulate the rela- dom of others. Therefore, democratic procedures tions between employees and employers, thus remain the most suitable for co-ordinating individ- ensuring that free market organizations also ual interests, serving the common good and devel- observe principles of social responsibility. The oping a common space of solidarity. involvement of civil society organizations in policy- • The quality of policy-making must be raised. Never making is providing a counterbalance to the gov- before has the quality of policy-making been so ernment, which can no longer be used as a tool to important to human development in Latvia as at serve only the ruling class. present. It has become obvious that shortcomings Public policy manifests itself in the interaction in policy-making, rather than a lack of funding, often of individuals, groups and institutions, where differ- present the main obstacles to human develop- ent agents expressing varied wishes and aspira- ment. Besides wrong political decisions and inef- tions search for the best commonly acceptable fective solutions, several other factors are also hin- solutions. This is only possible if policy-making dering Latvia’s overall development. These include occurs in an open system, where the involvement of mutual political distrust, a tendency to decide all interested parties is possible. As far as human many public issues behind closed doors, a disre- development is concerned (in the sense of a gard for democratic norms and the inability of many broadening of opportunities), open policy-making to make their voices heard. promotes the development of political opportuni- • New agents are entering politics and the community of ties and choice, and ensures that political choice policy makers is expanding. New political partners are will not be wrested from individuals. introducing themselves more and more actively in Although interests and ideas will always conflict Latvia’s political arena. Public initiative groups, in any society, open policy-making provides a much non-governmental organizations (NGOs), sectoral wider arena for dialogue and the realization of the and professional associations, policy analysts, and public good than closed policy-making. Open poli- active individuals are appearing alongside the tra- cy-making is the most suitable form of administra- ditional centres of power, namely: the legislature, tion for a civil society because it creates conditions the executive (i.e. the central government and where the people themselves can decide on issues municipalities), and the judiciary. This expanded of importance to them.

12 INTRODUCTION

In the view of the authors of this Report, public In Latvia’s fragmented society many independ- policy cannot be separated from the individual in ent public arenas are being formed, and this is society. Rather, it may be defined as the involve- strengthening the democratic system as a whole. ment of people at all levels of power in decision- Associations of apartment owners, community, making on issues that influence the conditions of and neighbourhood development organiza- their lives. tions, rural partnerships and parents’ committees Therefore, public policy is not to be are showing that individual and public interests sequestered at the top of the power pyramid and is may be expanded, and that collective action is pos- not to be seen as the privilege of the chosen few, sible in different micro environments. When these but rather as the realization by individuals of their “small” public arenas merge, a common identity inalienable right to decide on conditions affecting emerges: the individual is aware that he or she is a their lives. Thus the authors of this Report have functional part of society and of the State. attempted to transcend the traditional understand- The publication Latvia Human Development ing of policy, and to highlight not only the analysis Report 2000/2001 stresses the importance of pol- of political institutions, but also the analysis of icy-making in human development and urges con- individual and collective political action. tinued perseverance in the implementation of The theoretical basis of this Report is based on democratic, responsible, competent and open the human development concept supported by the policy-making in Latvia. The meaningful participa- UNDP, which places human needs at the centre of tion of a country’s inhabitants in public affairs – economic and social development, as well as cur- besides permitting them to be real decision-mak- rent social ideas on civil society, public space, ers in development processes – permits them to democracy, involvement and public responsibility. be truly integrated in their local community, in the Democratic policy-making best ensures the national State and in the European community of representation of individual and common inter- nations. ests, as well as the adoption of the most widely It should be recognized, however, that policy acceptable solutions, because democracy pro- as such is not a wonder drug and that it does have vides the opportunity for all interests to be heard. its limitations. Policy does not encompass all Since it is difficult to create and establish a demo- aspects of human development, because it does cratic regime without public participation, the Report not reach into all the manifold aspects of public places a great deal stress on this concept, as ulti- life. Several important facets in people’s lives and mately, the people themselves are responsible for human development (for example, moral and partaking in the resolution of those issues that con- emotional relations) cannot be regulated by polit- cern them. ical means. With active public participation, important Policy cannot directly improve the material well- everyday issues also become important political being of the population, as this is primarily the issues. Participation is necessary at all levels of function of private business and the free market, administration: at one’s home, in the municipality, although policy may create favourable market con- and on a national scale for realizing the goals of ditions. Policy does not release individuals from human development. Without political participa- their rights and obligations to realize their own tion, it is impossible to direct human concerns and goals in life, and it cannot regulate a person’s inti- needs to the centre of political attention, and to macy and subjective dimension of freedom. establish political solutions for promoting improve- ments in daily life. The other idea brought to the forefront of this Basic terms used in this Report is the widening of the public arena, which consists of contact points that form when different Report representatives of society meet to realize their common interests. In the public arena people The terms politics, policy, public policy, and human resolve common problems and co-operate with development policy are used throughout this Report. government institutions, thus helping to realize the Some of these have already become household common good and reducing the likelihood of an words, while others are less well-known. The main outbreak of deep-rooted conflicts. terms are explained below.

13 LATVIA HUMAN DEVELOPMENT REPORT 2000/2001

Politics. Politics in this Report refers to the entire- The Human Development ty of political agents and institutions that are active in politics, and to the entirety of political relations, Report as a partner in ideologies, resources, instruments and methods of political activity that are used by these agents and the shaping of open policy- institutions. The various aspects of politics are known by other definitions, such as political life, politi- making. cal process, political events, political arena, political activities, political views, political persuasion, political principles, ideolo- The principal aim of the Latvia Human Devel- gy, and political style. Thus the term politics embraces opment Report 2000/2001 publication is to ana- a broad view of politics as a whole. lyze the policy-making process in Latvia and, with Policy. The term policy is used in this Report to the aid of the Report’s analyses and recommenda- describe policy areas, directions and sectors. Policy tions, to provide a practical contribution to the (or policies) refers to the political strategies and activities of various levels of administration – the solutions adopted in a certain area of life. Econom- Saeima (Parliament), the government (Cabinet of ic, social, educational, health care, employment, Ministers), ministries, local governments and non- and rural development policies are specific exam- governmental organizations. ples of policy. The term policy particularly stresses Previous Reports have always taken an active the sequence of drawing up, implementing and social position. This Report, possibly more than evaluating the results of a particular course of previous ones, voices an active political stance in action. The various aspects of policy are related to support of strengthening democratic and open pol- such other terms as political strategy, political platform icy-making in Latvia. Only a policy that is drawn up and political vision, political programmes, sub-programmes, and implemented with the involvement of political plans, action plans, projects and solutions, political choice parties, national institutions, non-governmental and political alternatives, political instruments, policy moni- organizations, interest groups, professional associa- toring and policy assessment. tions, independent experts and other political In other words, policy is characterized by a agents, can best advance human development. sequence of specific goals, means and actions, and One of the strongest impressions conveyed dur- entails systematic political action involving various ing the drafting of this Report was the frankness of institutions and other agents. The implementation many people in discussing political issues, and their of various policies and their results are shown in the true interest in the establishment of improved poli- human development indexes measuring material cy-making in Latvia. Most of those interviewed not wealth, levels of education, public health condi- only talked openly about existing political prob- tions and social welfare. lems, but also expressed a wish to address them. Public policy. The term public policy may be used to Such an attitude shows that significant changes describe both politics in general and specific poli- have taken place in public awareness, and that cies. Public policy places particular stress on the pub- society is ready to re-assess its political values. It lic nature of policy and such aspects as transparen- wants to put worthwhile content into politics and to cy, social interests, democratic representation, offer constructive recommendations. This change in participation, civil society, accountability, access to political awareness is not abstract, but is taking information and others. place at the core of society and in the minds of the Human development policy. This term marks the people. Those who wish to improve the country’s most essential link to the ideals of human develop- policy-making processes no longer feel alone, ment. Human development policy stresses the need to because they are now being joined by an increasing put the main values of human development – edu- number of like-minded people. cation, public health, improving the material wel- The analysis provided in this Report is often crit- fare and quality of life of the population – at the ical and reveals the shortcomings of political life in centre of public policy. Thus human development policy Latvia. However, the Report also attempts to bring refers to politics in general and specific policy direct- out the positive in Latvian politics. Although the tone ed toward human development goals. of this Report is sometimes sharp, it underlies a pos- itive sense of idealism – the conviction that while pol- itics and policy-making do have their shortcomings

14 INTRODUCTION

(which can be corrected), good intentions and target- human development indicators as GDP per capita ed actions have already led to many specific and its distribution by regions, household income improvements, of which Latvians can truly be proud. and the purchasing power of the population, employment and unemployment, the demographic situation, public health and education. The Statisti- Structure of the Report cal Appendix that follows shows the changes that have occurred in these and other human develop- This Report’s first chapter is entitled Public Policy ment indicators from 1993 to 1999. and Human Development. It provides a general As in past Reports, the end of each Chapter description of public policy in Latvia, analyzes cites the main conclusions and recommendations existing policies and their impact on human devel- that have been given in each particular area of opment, and shows by example the negative mani- analysis, while the end of the Report itself provides festations of closed policy-making. Conversely, this a summary of its main recommendations. Chapter also cites positive examples and mecha- nisms resulting from open policy-making. From the results obtained in interviews with Saeima deputies, Acknowledgements members of the general population, local govern- ment leaders, civil servants and experts, recom- This Report is the result of an open exchange of mendations were prepared on how to render poli- opinions. Many other people besides the authors cy-making more open. have made significant contributions to its realiza- Chapter 2 focuses on the Public Policy Process. It tion. The UNDP and the Institute of Philosophy and describes the main political agents in Latvia and Sociology at the University of Latvia carried out a analyzes decision-making in the Saeima, the govern- joint study entitled Public Policy and Participation in ment and local governments. This Chapter also Latvia for the drafting of this Report. This study examines how the political agenda is formed, and included several polls. One thousand inhabitants, describes the principal characteristics of present- plus all 100 deputies of the Saeima (of whom 37 day public policy in Latvia. responded), the directors of all ministry depart- Chapter 3 addresses the Advent of Participation in ments, and the chairpersons of all local govern- Public Policy and focuses on the participation of the ments (of whom 210 returned questionnaires) were population in policy-making processes. Various polled. The authors also interviewed more than 60 forms, resources, strategies and motivations of political party and NGO leaders, civil servants, public participation are analyzed on the basis of media representatives and other experts involved specific examples from the perspective of the indi- in (or well informed about) the public policy vidual and various interest groups. This Chapter process. describes how networks of political influence are The first draft of this Report was discussed at gradually formed in civil society. The role of the special seminars organized by the UNDP and media in policy-making is also emphasized. attended by representatives of the Saeima, the Chapter 4 deals with Administrative Capacity in the State Chancellery, ministries, local governments, Context of Human Development. It assesses the capaci- NGOs and the media. Their comments and sugges- ty of Latvia’s central administrative institutions tions greatly helped in the creation of the final (namely, the government and its ministries) and product. Thus the analyses and recommendations local governments to draw up and implement effec- in this Report are based on the input of many peo- tive and responsible action policies in accordance ple, to whom the authors are most grateful. with the interests of human development. This A significant contribution to this Report was Chapter also stresses the importance of competent made by seven guest authors – eminent people policy analysis for ensuring the optimal resolution representing various walks of life ranging from the of policy issues, and the necessity of achieving a arts to banking, NGOs, sports, local and regional stronger link between the country’s decision-mak- governments. These authors highlighted their pride ing institutions and the public in the policy-making in the country of their birth (or ancestral heritage). and implementation processes. Their uplifting statements demonstrate that The Appendix, or Review of Latvia’s Main Human Latvia’s self-confidence is growing – fuelled by the Development Indicators, analyzes such important will, actions and achievements of its people.

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