Brigham Young University Marriott School of Management's Business travel in Mexico (Bering guides) PDF

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However the bottom line is that Latvia will enter the EU in 2004 as the EU’s poorest member state. The latest official figures from the EU suggest that Latvia has a GDP per capita at a purchasing power of 33 per cent of the EU average. Latvia will also be ranked as one of the most corrupt countries in the EU – in the 2002 Transparency International Corruption Perceptions index Latvia was ranked joint 52 (out of 102 countries), compared with Lithuania at 36 and Estonia at 29 and the lowest incumbent EU country, Greece, at 44.

3 On the other hand, there are some clear areas of concern within the tax and customs administration in Latvia that need to be addressed in order to yield significant improvements in the business environment. Besides tax rates, another issue of concern to businesses is tax penalties, both in terms of the proportion of respondents selecting this as a problem and in terms of their severity. Many businesses and professional accountants agree that severe penalties are applied to firms who have made minor technical errors, while other firms escape the attention of the tax authorities altogether.

This has certainly brought Latvia noticeable benefits – estimates made at BICEPS using a computable general equilibrium (CGE) model of the Latvian economy suggest that these benefits have been worth about 1 per cent of Latvia’s GDP. Important, but not a radical transformation of the society and economy. Accession itself will not lead to further tariff reductions except in agriculture, where tariffs and import quotas will be replaced by the mechanisms of the common agricultural policy (CAP). However, market access for Latvia and the other accession countries will be improved through another route – the reduction of so-called ‘real trade costs’.

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