Describing the reasons for the economic differences that have pushed Latvia into last place in the Baltics, Luminor bank economist Pēteris Strautiņš points out that Estonia's superior economic development compared to Latvia is primarily driven by service exports. First and foremost, this relates to a dominance in IT and business services, but also in areas such as tourism and transport. The Luminor expert notes that in 2021, Estonia's per capita export of business services (the 'other business services' item in the balance of payments) was €1596, while Latvia's was €713. In information and communication services, the figures were €1329 and €504 respectively, to Latvia's disadvantage.

“Recently there has also been much talk about Lithuania's rapid breakthrough in these areas, but its figures are quite similar to Latvia's, at 862 and 443 euros respectively in the two sectors mentioned. The totals are much higher because the population is larger,” adds P. Strautiņš.

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...an important factor in economic progress was also the ethnic division of Latvian society. “In conditions where a part of society saw our country's place in the world and its desired geopolitical orientation quite differently, it has been harder to carry out the necessary reforms,” the economic expert concludes. In his view, the rapid breakthrough in Lithuania over the last five years was largely determined by successful work at the municipal level, which in Latvia was largely hindered by that same ethnic fragmentation. The importance of local development policy is also well illustrated by the contrasts within Latvia between better and worse-managed municipalities. Describing the starting positions at the beginning of the Baltic states' independence, the economist says that in many ways Latvia's industry was then the most technologically advanced, but also particularly deeply integrated into the USSR's production system and military-industrial complex. Thus, it was easier for Lithuanian furniture and mineral fertilisers to find a market in the West than for the weapon components manufactured in Latvia.
https://neatkariga.nra.lv/ekonomika/405497-no-igaunijas-un-lietuvas-attistiba-atpaliekam-par-desmitgadi-kapec