Is part of the Latvian economy already in the middle-income trap?

Igors Kasjanovs

Published: March 2015

There are fears that the observed moderation of growth rates in Latvia suggest it may soon be stuck in a Middle Income Trap. No uniform understanding has been reached as to what a Middle Income Trap is and what signs testify to its existence. In order to avoid the danger of this trap structural reforms will be necessary which together with higher quality investment could raise Total Factor Productivity.