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In this page: FDI in Figures | Why You Should Choose to Invest in Latvia | Procedures Relative to Foreign Investment | Investment Opportunities


FDI in Figures

In a context where global foreign investment increased by 10.9% in 2013, in particular in Europe (+25.2%) and in Latin America (+17.5%), FDI flows to developing economies reached a new high of US$759 billion. However macroeconomic fragility and policy uncertainties are driving investors to caution.

Before the country opened up to a market economy, the main source of the country's FDI came from privatizations. Today, a significant portion of FDI comes from re-investments and classic merger/acquisition operations. The main foreign investments were made in the telecommunications, oil pipelines, real estate, retailing and banking sectors. After strong annual growth since its accession to the EU, the stock of foreign direct investment (FDI) in Latvia decreased in 2009 as a result of the international crisis, and again resumed a modest growth since 2010. The 2008-2009 financial crisis and the risk of bankruptcy of the Latvian economy have indeed made foreign investment fall sharply. The rating agencies ranked Latvia among the most risky destinations for investment. Since the end of 2008, Latvia experienced an enormous fall in FDI flows, and these have started to revive slowly since the second quarter of 2010. In 2012 the flows remain positive, although weakened by the unfavorable state of the European economy. In 2013 FDI reached only USD 988 million.

The largest investors in Latvia are Estonia and the Scandinavian countries - especially Sweden (over 20% of all investments in 2013) - representing more than a third of all FDI, Denmark and Germany.

Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).


Country Comparison For the Protection of Investors

  Latvia Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 5.0 7.0 7.0 5.0
Index of Manager’s Responsibility** 4.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 6.0 9.0 5.0
Index of Investor Protection**** 5.7 5.9 8.3 5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Foreign Direct Investment 201120122013
FDI Inward Flow (million USD) 1,4661,109808
FDI Stock (million USD) 12,09213,57715,654
Performance Index*, Ranking on 181 Economies 117--
Potential Index**, Ranking on 177 Economies 80--
Number of Greenfield Investments*** 201418
FDI Inwards (in % of GFCF****)
FDI Stock (in % of GDP) 42.547.850.6

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

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Why You Should Choose to Invest in Latvia

Strong Points
The country's main strong points are:
- A skilled and inexpensive workforce;
- Legislation that is harmonized with the European Union and favorable to investments;
- A simple and attractive taxation system;
- The presence of strategic transit and logistics centers;
- High productivity;
- Low taxes; and
- A strategic geographical location, which allow access to Russia and to the former Soviet republics.
Weak Points
The country's main weaknesses are:
- The limited size of its domestic market;
- The low numbers of foreign companies in the country;
- Economic instability and high market fluctuations. In this regard, the economic crisis, which Latvia is currently going through has shown the country's limitations, which remain subject to political and social instability and whose economy could deteriorate rapidly.
Government Measures to Motivate or Restrict FDI
Following its independence, Latvia decided to launch itself in the market economy and to acquire the capital it was lacking. It therefore progressively opened itself up to direct foreign investments. In order to attract foreign companies, the Latvian government offers financial assistance. Its strategy is especially to promote the high technology industrial sector. The different funding enable the quality of services to be improved. A loan and semi-loan plan has also been launched to promote SMEs.

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Procedures Relative to Foreign Investment

Freedom of Establishment
Acquisition of Holdings
A majority holding interest in the capital of a local company is legal.
Obligation to Declare
The agency for the promotion of foreign investment in the country provides information about the authorizations necessary for setting up business.
Competent Organization For the Declaration
Investment Agency of Latvia

Learn more about Foreign Investment in Latvia on, the Directory for International Trade Service Providers.

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Investment Opportunities

Investment Aid Agency
Investment Agency of Latvia
Development Agency of Latvia
Tenders, Projects and Public Procurement
Tenders Info, Tenders in Latvia
Globaltenders, Tenders & Projects from Latvia
Ted - Tenders Electronic daily, Business opportunities in EU 27
DgMarket, Tenders Worldwide
Other Useful Resources
BALTCAP Management is a Baltic III investment fund,  with investment by the BRED, which has about 80 M EUR at its disposal and which helps especially SMEs operating in one of the Baltic countries.
Baltics Small Equity Fund - SEAF

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Learn more about Investing in Latvia on, the Directory for International Trade Service Providers.

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Last Updates: October 2014