Competitiveness of Latvian machinery and metalworking industry in the situation of global crisis

Abstract

Latvian Machinery and Metalworking Industry (the LMMI) is one of the key sectors of the processing industry. Its average share in total manufacturing output is 25%. Statistical analysis outlines that the downturn has affected LMMI more deeply compared to other manufacturing sectors. Within last year, its share of manufacturing output felt down to 19% and exports in 2009 compared to 2008 dropped by 43%, respectively, the biggest decline among all manufacturing sectors. This trend is extremely critical as export accounts average of 70% of the total LMMI output. The aim of this study is to determine the key aspects of the decrease of LMMI competitiveness in a situation of global downturn. One of the reasons might be sharp decline of productivity in 2009 – by 42% compared to 2008, but substantial impact has had the EU industry downturn because LMM main export markets are EU countries.