Two current events in September might have seemed at first glance to be dedicated to professionally distinct issues. One focused on how to generate greater value in Latvia's exports, and the other on how to develop a more circular business model. However, the creation of complex products and the circular economy are united by the issue of competitiveness – not just the ability to sell a product, but also the ability to retain its value after the sale. Longevity, repairability, and recyclability can become additional sources of competitiveness throughout the product's life cycle.
Complexity does not in itself create value
The path to the structural transformation of the economy and exports has already been analysed by my colleague. To touch upon it again – a more complex product is based on a set of knowledge, technologies, and specialised skills, the relatively rare combination of which makes the product difficult to imitate. However, complexity does not in itself create value; value is ensured by market demand. If you add 100 more parts to a coffee machine, but the coffee does not taste better, the machine does not become easier to use, or the design does not become more attractive to the client, then complexity alone is not enough. The buyer will purchase it and be willing to pay more if it satisfies their needs better than the alternatives. This allows a company to compete based on the value created for the customer and to earn more. It is similar in the circular economy. In both cases, demand is decisive. It is not enough to create a complex product if it does not solve a customer's need and there is no demand for it. Likewise, it is not enough to offer a circular economy solution if it is not convenient and people do not choose to use it in their daily lives.
The path to a more prosperous Latvia is marked out – the creation of more complex products. At the same time, what will happen to these complex products in five, ten, or more years also deserves attention. The design of a technologically complex product may involve composite materials, electronics, batteries, and tightly integrated parts. This can make the product not only more difficult to manufacture, but also more difficult to dismantle, repair, and recycle.
Recyclability and repairability as facets of product competitiveness
Competitiveness does not end the moment a product is manufactured and sold. The thoughtfulness of its future life cycle also matters – whether the product can be repaired and dismantled, its parts reused, and its materials recycled. In Latvia, the rate of returning materials to the economy is low (around 6% of materials used, which is half the European Union (EU) average (1)). Recyclability and repairability are not just waste reduction and environmental issues; they are also facets of a product's competitiveness.
This does not mean that recyclability automatically ensures higher competitiveness. It may lead to higher costs in design or production, for example, if modular construction, more easily separable materials, or the provision of spare parts are required. However, as I mentioned, competitiveness is also determined by the ability to create greater value for the customer and build long-term relationships. It may seem to a manufacturer that it is more profitable to sell a new product every time the old one breaks. However, in the long run, a repairable product can become a competitive advantage.
· A longer-lasting and repairable product can mean lower total costs for the customer over the entire period of use, which is why they may be willing to pay a higher initial price. In a European Commission (EC) survey, half of the respondents in Latvia (and nearly 60% in the EU), when buying products such as furniture, textiles, or electronic devices, would be willing to pay more for products that are easier to repair, recycle, and/or produced in an ecologically sustainable way (2).
· Repair creates repeated contact with the customer. After the initial sale, the company can offer maintenance, spare parts, and software updates. The Organisation for Economic Co-operation and Development (OECD) points out that repeated interaction between suppliers and customers can foster customer loyalty; multiple post-purchase contacts provide an opportunity to strengthen trust in the brand and increase the likelihood that the customer will choose it for their next purchase (3).
· If two pieces of equipment have a similar technical function, but one has parts available for ten years while the other must be replaced after one significant fault, then the first manufacturer sells not only the equipment but also the security of its long-term use. Especially in markets for more expensive and professional-grade products, this can be one of the most important criteria for choice. The OECD also examines the business model of long-lasting products, in which higher quality and a longer service life allow for a higher price (3).
· For certain product groups, repairability and longevity are becoming mandatory conditions for being allowed to be offered on the EU market, and thus a competitive advantage. Therefore, companies that design products to be repairable and long-lasting from the outset can be better prepared for a market where these requirements are becoming stricter.
European requirements are driving us towards longer-lasting products
In EU policy, a shift is emerging from “how to recycle generated waste” to “how to create a product that does not become waste too quickly”. For example, since June 2025, ecodesign requirements have applied to smartphones and tablets placed on the EU market: battery longevity is set, there are requirements regarding dismantling and repair, critical spare parts must be available for seven years after a model's sale ends, and there must be access to repairs and necessary software (4). Furthermore, the Right to Repair Directive stipulates that EU member states must apply its requirements from 31 July 2026. These foresee the manufacturer's obligation to repair goods at the consumer's request if repair is possible. The prices of spare parts offered by manufacturers must not deter consumers from repairing, and manufacturers must not use hardware or software techniques that impede repair without legitimate, objective justification. Work on transposing the directive's requirements is still ongoing in Latvia, with stakeholders debating their implementation (5).
European Commission estimates show that the premature replacement of repairable goods with new ones generates about 35 million tonnes of waste annually in the EU. The Commission expects the new regulation to generate additional growth and investment in the repair and maintenance sector (6).
We are recycling more, but there is still plenty of waste
In Latvia, one inhabitant generates an average of 462 kilograms of municipal waste per year – meaning 2024 data indicates nearly half a tonne per year (7), 52.7% of which was recycled. Although recycling has grown significantly over the last ten years (in 2014, only 27.0% was recycled) (8), it is still not reaching the targets set by the EU (9). Despite the decline in the population, the total volume of waste has not decreased over a ten-year view (10).
As we move towards higher recycling targets, product design is becoming increasingly important: it is much more difficult, or even impossible, to recycle products where different materials are inseparable or where the composition of the materials hinders or makes recycling impossible. In other words, even if we have achieved a high culture of waste collection and sorting, we will subsequently hit a wall with the product's composition.
The circular economy does not start at the waste bin, but at the drawing board
Better waste sorting alone is not enough if products continue to enter the market whose materials cannot be separated, whose damaged parts are not replaceable, or whose repair costs almost as much as a new item. The recyclability and repairability of a product are largely decided at the moment it is designed. Moreover, such a design is not just an environmental requirement – it can also be a quality signal for an export product. If a company offers not only a technologically complex product but also guarantees spare parts, service, and a long service life, it can compete on reliability and lower total costs for the customer over the entire life of the product.
A longer-lasting product can reduce the need to buy a new one frequently, but for the company, it also opens up revenue opportunities in maintenance, repair, and product improvement. One can also compete with a longer service life, modular construction, the ability to replace or upgrade parts, take-back schemes, repairs, and recycled materials. These are also knowledge, technology, and design skills – and thus the same capabilities that can make a product more complex, valuable to the client, and difficult for competitors to imitate.
More value from fewer resources
Thoughtful product design and a circular life cycle allow the complexity of a product to be transformed not only into higher income at the moment of sale, but also into value that is retained for longer. Thus, in the yardstick of structural economic transformation, knowledge gains an additional dimension – not only to create a more complex product, and thus greater value for the labour invested, but also to achieve more lasting value for the materials invested and not create extra tonnes of waste. Therefore, knowledge must help create higher income from the total set of resources used, including both labour and material resources.
In order for the population's income, or material well-being, to increase, demanded, knowledge-intensive, complex, and valuable products for the client must be created. It is in the public interest to create such complex products that are not wasteful in terms of material resources, do not create waste flows, and are gentle on the environment. By creating greater value with the labour invested and keeping materials in circulation longer, we can become wealthier today, while preserving the quality of life for the future.
Sources used
1. Circular material use rate
2. Attitudes of Europeans towards Environment
3. Business Models for the Circular Economy
4. Smartphones and Tablets – European Commission
5. Directive – EU – 2024/1799 – EN – EUR-Lex
6. Right to repair products – Consilium
7. Generation of municipal waste per capita
8. Recycling rate of municipal waste
9. EUR-Lex – 02008L0098-20180705 – EN – EUR-Lex
10. Generation of waste by waste category