Leveraging the OECD regional attractiveness framework to guide regional policy in Latvia
The OECD regional attractiveness framework provides Latvia with a comprehensive, multidimensional tool to better understand regional dynamics and guide place-based policy action. By combining internationally comparable indicators across six domains – ranging from economic performance and connectivity to well-being and environmental quality – the framework moves beyond traditional metrics to capture the complex drivers of competitiveness, resilience, and quality of life.
Across the six domains of the OECD regional attractiveness framework, several recurring territorial patterns emerge in Latvia. The framework's multidimensional lens is particularly valuable because it surfaces dynamics that conventional indicators – such as GDP, employment, population – often obscure. It reveals, for instance, that some of Latvia's most economically marginal municipalities are also recording the fastest growth in housing prices, suggesting rising affordability pressures beyond the metropolitan core. It shows that territories with exceptional cultural and natural assets – rich museum and theatre infrastructure, near-total renewable electricity generation, and forest cover far exceeding EU norms – are nonetheless attracting only a fraction of the visitor numbers that comparable EU territories generate. And it reveals that connectivity gaps, both digital and physical, are far more acute and geographically widespread than regional averages suggest, with travel times to schools and hospitals in many municipalities running at several times the EU median.
Three broad patterns stand out. First, economic attractiveness is heavily concentrated, with strong productivity and GDP per capita confined largely to Riga and a small number of surrounding municipalities, while most other territories record outcomes well below EU benchmarks – Latgale records some of the starkest disparities on the continent. Second, natural and cultural assets are a genuine and broadly shared strength but are systematically failing to translate into stronger economic outcomes, whether in tourism, green economic activity, or talent attraction. Third, connectedness – both digital and physical – is among the most widespread constraints, limiting the ability of territories to leverage their assets and access opportunities regardless of where they sit in the national economic hierarchy.
Five use cases developed in Chapter 2 demonstrate how the OECD regional attractiveness framework can help policymakers address these challenges across the full regional development policy cycle:
Identifying territorial strengths and trade-offs shows how multidimensional indicators can strengthen territorial diagnosis and prioritisation – helping national and subnational policymakers in Latvia identify local strengths, structural constraints, and trade-offs across policy objectives, including in the design of development planning documents for territorial development.
Detecting untapped potential and structural mismatches illustrates how the OECD framework can reveal where territorial assets are not translating into economic outcomes – for instance where strong natural or cultural assets are not generating tourism demand, or where proximity to Riga is not producing expected economic spillovers – pointing to where place-based interventions could unlock underused potential across Latvia.
Supporting territorial co-operation exhibits how comparable municipal-level data can surface complementarities between neighbouring territories in Latvia, supporting the identification and design of inter-municipal co-operation arrangements and cross-border initiatives, including under programmes such as Interreg.
Grouping territories facing similar challenges shows how mapping families of places in Latvia with comparable attractiveness profiles – such as eastern border municipalities, rural areas, or municipalities located around large cities – can support more differentiated policy instruments and improve co-ordination across ministries designing programmes for specific types of places.
Strengthening monitoring and evaluation examines how the OECD regional attractiveness framework can provide a consistent, internationally benchmarked evidence base to assess whether reforms and investments under the Administrative Territorial Reform, EU Cohesion Policy, and the development planning documents for territorial development are improving competitiveness, service accessibility, and quality of life over time in Latvia.
Realising the OECD framework's potential requires that it be embedded systematically into the policy processes through which regional development priorities are set, investments allocated, and outcomes evaluated. The national government would benefit from integrating attractiveness indicators into development planning documents for territorial development, EU programme appraisal criteria for the monitoring frameworks tracking progress. Planning regions and municipalities, co-ordinated by VARAM, can use the multidimensional diagnostics as an evidence base for regional investment priorities, while VARAM can use the territorial lens to ground its collaboration with other ministries – demonstrating how attractiveness disparities across places enable a more targeted investment approach. Building the interpretive capacity of planning regions and municipalities to use this evidence in their planning and investment decisions will be essential to ensuring the framework delivers results in practice. Ireland's Regional Development Monitor – which links territorial indicators directly to statutory regional planning obligations – offers a practical model for how this kind of institutionalisation can work.
Multi-level governance for regional development in Latvia
Latvia has established important foundations that support the multi-level governance of regional development. The 2021 Administrative-Territorial Reform has produced larger, more financially viable local governments with an eye on more efficient and effective public service delivery and investment. These local governments operate within a robust legislative and strategic planning framework that establishes clear responsibilities and provides a shared, multi-level roadmap for territorial action. Latvia also benefits from an intermediate planning region tier that plays an important role in co-ordinating territorial development efforts at a larger scale, and local and regional government associations that provide their members with clear avenues for multi-level dialogue on territorial issues.
There are, however, opportunities to further strengthen these foundations. The economic concentration, connectivity gaps, and service access disparities identified through the attractiveness framework are not only spatial outcomes. They are also symptoms of governance arrangements that could be further strengthened to better co-ordinate investment across sectors and among levels of government, and to tailor policies and programmes to the differentiated needs of individual territories. At the national level, regional development could be more systematically embedded as a cross-sectoral priority. At the subnational level, more structured engagement between planning regions, local government associations, and the full range of relevant line ministries would help ensure regionally identified priorities are better reflected in national investment and policy decisions. Specifically at the local level, strengthening the evidence base for inter-municipal co-operation could help municipalities better identify where collaborative approaches to service delivery might generate additional benefits, particularly given Latvia’s sustained demographic pressures. Latvia's subnational governments have a solid financial and human resource base, and targeted steps to further strengthen it – addressing subnational data gaps and building specific performance measurement skills – would enhance the ability of planning regions and municipalities to lead regional development in their territories. The governance analysis underpinning these observations is developed in Chapter 3.
The following policy considerations draw from the analysis in Chapters 2 and 3, conducted on the basis of stakeholder interviews across Latvia's five regions, workshops with most of Latvia's 42 municipalities, and desk research and data analysis.
1. Strengthening mechanisms for the inter-ministerial and multi-level co-ordination of regional development
There is scope to further strengthen the co-ordination mechanisms through which national and subnational actors align their priorities, actions and resources for regional development. Currently, regional development is typically regarded as a sectoral rather than a cross-sectoral priority by line ministries. Moreover, the ability of subnational actors to engage national decision makers on territorial development issues is often limited to VARAM, notwithstanding the important role of other line ministries in supporting the achievement of territorial development objectives. To address this, the government could consider establishing a thematic cabinet committee for regional development – drawing on the precedent of committees already in place for energy, environment, and digital modernisation – to provide a dedicated forum that encourages line ministries to systematically incorporate a territorial lens into their sectoral policies and programmes. In parallel, creating a dedicated multi-level co-ordination body that brings together relevant line ministries alongside planning regions and local government associations would provide a structured forum through which territorial development needs can more systematically inform national-level investment and policy decisions. This, in turn, can help reduce the risk of place-blind policymaking across levels of government.
2. Creating an evidence base to identify potential inter-municipal co-operation needs
Latvian legislation establishes a clear legal framework for inter-municipal co-operation, and collaborative initiatives are already underway in areas such as waste management, transport, and social care. However, additional data are needed to help municipalities identify where additional collaborative approaches to service delivery might improve territorial well-being. This is particularly pertinent given the sustained demographic pressures facing many municipalities – particularly rural and border ones. One way to do this would be to improve access to standardised, comparable data on the quality and accessibility of municipal services, published through a single accessible portal, and establish a regional-level stock-taking on inter-municipal co-operation arrangements (including their sectoral scope and territorial coverage) and good practices across jurisdictions. This would help municipalities identify service delivery gaps, learn from existing co-operative experience, and make more informed decisions about whether and how to pursue arrangements of their own.
3. Further strengthening subnational data availability and capacity-building support for planning regions
Latvia's planning regions have a solid human and technical resource base and make an important contribution across their mandates. There are, however, areas where this base could be further strengthened. On data, embedding the OECD's regional attractiveness indicators into existing national territorial data portals – particularly RAIM – would equip planning regions and municipalities with a richer, internationally benchmarked evidence base for regional development programming, monitoring and evaluation. On capacity, VARAM could expand the targeted capacity building support it already provides to planning regions. This could include ensuring that any diagnostic survey explicitly considers areas identified in recent research as warranting attention – including monitoring and evaluation, investment planning and promotion, and evidence-based territorial economic analysis – and developing multi-year training programmes with clearly defined learning outcomes in partnership with relevant providers.