Akad. Raita Karnīte Riga, 4 March 2011

1. Society, Environment andSustainability of Business2nd Annual International Conference ofThe Latvian Economic Association Akad. Raita Karnīte Riga, 4 March 2011

2. What Three dimensions and six questions for discussion From the economist’s point of view – all are interrelated Society – people and relations Environment – quality of life, resources: availability, use, economic megastrategy Sustainability of business – what to produce and how

3. Society How big is society? Is number of population important? Who we are, what is our motivation?

4. Population age structure – males and females, begining of 1992

5. Population age structure – males and females, begining of 2010

6. Population age structure – males and females, begining of year

7. Demographic profile of Latvia – Eurostat forecasts(2009 - 2061) – % change

8. Population structure in Tajikistan on January 1, 2009, thsd people.Total 7373.8 thsd people, 3698.9 thsd males 3674.9 thsd females) vīrieši sievietes

9. GDP per head(2009) (%, EU-27=100) and average population density (2007), people per 1 km2

10. GDP (2009) in market prices per 1 km2 and population density (2007), average per 1 km2

11. Government expenditure (2009) in market prices per 1 km2 and population density (2007), average per 1 km2

12. Relations – social choice and individual preferences Preferences: what people want: Young people: • to have good education, • to have good job and carrier opportunities • to live in prosperity Latvia – other country – who knows?

13. Relations – social choice and individual preferences Adult: • to live better now • to be honest if others are, if the government is • not able to change things. Latvia – other countries – who knows? Individual pereferences dominate Organisation of the society – political parties – civil society – collective pressure deminishes

14. Relations – social choice and individual preferences What remains for social choice: Low tax discipline – low social quaranties – essential needs are threatened Irrelevance to the state – somebody will come and do for me – emigration – lack of workforce – who are left should be highly effective These simple facts should be taken into account in economic policy Consolidation should be subbordinated – not main issue

15. The quality - education Formal education Life-long learning Lot of theories and reform proposals Major goal - to make people economically independent But also – to get value added from the spent money

16. Society Economy as if people matter: • provocative issue - kind of “should be” • what it is? – how much people may expect to receive - how much should they pay • sustainable consumption – yes, but how • who is supervisor – the state, traditions, ethics, material goals

17. Items of concern regarding “society” dimension The size – population policy The motivation - relations with the state The quality – education The organisation – civil organisations The expectations – what may I receive and what should I pay

18. Environment – issues for consideration Economy as a subsystem of nature – or nature as a factor in competition Economic use of resources (wood, sea) Compromise between economic activities and environment – dilemma of economic growth Competition of resources (land is also resource) Green economy – environment protection or mega business project

19. Sustainability of business In search of new business philosophy – lifestyle business, intrapreneurship, EFP What is needed for business to be sustainable: • market • stable business environment • scale (other businesses around) • effective business structure (sectors, size of companies) • smart and creative people who are in Latvia • trust to future • living conditions – schools, roads, home

20. Sustainability of business – current trends - macro

21. GDP growth – Baltic countries

22. Industry growth

23. Foreign trade, mln. LVL

24. Foreign trade - structure

25. Foreign trade Most important goods: Agriculture and food - 17.5% Timber and products – 18% Metal – 14% (steel and 8.4%) Mechanisms and appliances – 14.6% Total 64.1%) Oil and mineral fuel – 5.6% Chemical industry – 7.5%, of which pharmacy 4 percent points Transport vehicles and their parts – 5.6% of which surface transport means – 5 percent pionts

26. Issues for consideration Sustainable consumption Market, the state external economic policy, theoretical explanations Economic policy – development versus consolidation Environment – helps ar harms Business education – theory, practice, intersystems Motivation