Over the past twenty years the Baltic states have shown strong economic growth and close integration into global value chains, yet some of the benefits of foreign investment have still not spread fully to businesses in the local economy.

The region continues to face challenges relating to a shortage of skilled labour, capacity constraints among small and medium-sized enterprises (SMEs) and the concentration of investment in capital cities.

These are the conclusions of the study “Strengthening FDI and SME Linkages in the Baltic States”, published on 26 January 2026 by the Organisation for Economic Co-operation and Development (OECD) and produced in cooperation with the European Commission and with its co-funding. Latvia's involvement in the study was coordinated by the Ministry of Economics, which brought in state institutions and social partners and provided technical support for the fact-finding mission and other activities in the preparation of the study.

The study analyses the impact of foreign direct investment (FDI) on the economies of the Baltic states and its interaction with SMEs, in order to assess how foreign investment can foster the growth of local businesses, innovation and integration into international markets.

The findings show that in Latvia foreign investment is growing particularly strongly in professional, scientific and technical services – from 3% in 2013 to 41% in 2023. Foreign investment also increased in ICT, real estate and the financial services sector.

The OECD's main recommendations for the Baltic states:

• develop targeted cooperation programmes between foreign investors and SMEs;
• strengthen coordination between state institutions;
• make use of cooperation opportunities on a Baltic-wide scale.

Raivis Bremšmits, State Secretary of the Ministry of Economics:

“This study shows that foreign investment is not only capital, but also an opportunity for our businesses to grow, to learn and to take part in international supply chains. Our aim is to ensure that these opportunities are taken up throughout the country - not only in the capital, but also in the regions, where there are enterprising people, sectors with room to develop and the potential to create higher added value. By strengthening cooperation between local businesses and foreign investors, we will promote sustainable growth and balanced regional development.”