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The main national indicator of economic health is the gross
domestic product (GDP), which can simply be described as the
total national income yearly. To allow comparison between
countries, the GDP is calculated per capita - the total income
divided by the population. For assessment of worker productivity
and technological development, the domestic product is divided by
the population of working age.
The gross domestic product
at average prices of 1995 and changes in consumer prices in
Latvia, 1991-2000
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Since 1990, Latvia has been in a transition to a market economy,
similar to that in other countries undergoing political and
economic change (transition economy). Between 1990 and 1995, the
GDP decreased by two times. Since 1995, the GDP has maintained a
rising trend.
Added value of the main sectors of the gross domestic
product is approaching the characteristic proportions of developed
countries. In 2000, the goods-producing sector contributed 29.8%
of the entire added value (agriculture - 4.5%, other fields of the
goods sector - 25.3%). The service sector contributed 70.2% of the
GDP. Compared with the previous year, there has been growth in the
agricultural and industrial sectors by 9.2% and 5.7%, respectively.
The added value of the service sector increased by 7.1% compared
to 1999.
Following the decrease in the GDP, the consumption of
electricity decreased between 1990 and 1995 by 1.8 times.
During this period, there was a slight lag in the decrease in
electrical consumption after the fall in GDP. Since 1996, both
indicators have synchronized. Beginning in 1999, there has been a
tendency in changes in GDP and electrical energy consumption - a
growth in GDP has occurred with a drop in electrical energy
consumption by 6%. However, it is not known if this represents a
stable real trend. Similarly, since 1996, the Central Statistical
Bureau of Latvia also has described a fall in electricity
consumption by 16.6% between 1996 and 2000, despite a growth in
GDP.
The total number of labour force in the economy has
stabilized since 1995. The Russian crisis in 1998-1999 did not
significantly affect employment, because workers from bankrupt
enterprises located work elsewhere, but where low salaries were
offered. A high proportion of employed in the agricultural sector
is still characteristic, but this will decrease in the future due
to opening of enterprises with improved technologies in rural
areas and increasing productivity of this field. In countries with
a similar gross product in agricultural production as in Latvia,
higher work productivity allows to employ less workers in the
agricultural sector: 2-3 time less in Central and Eastern Europe,
10 times less in the European Community countries. In Latvia, the
relative amount of employment has increased in services, which was
minimally developed before the 1990's.
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