Unofficial networks are probably more influential than in Estonia, and this might be a more serious threat for foreigners. The legal system is quite developed, but the implementation is not as strict as in Estonia. The bankruptcy law has not yet been strictly implemented, and the strengthened regulation for banks resulted in a serious banking crisis in 1995. Regulation of international trade is quite liberal except for some high tariffs on imports of foodstuffs. Restructuring in Latvia seems to be somewhat more reluctant than in Estonia.
Privatization is much slower and the level of gross investments lower.
The technological base of the fixed capital is probably not attractive for many foreign investors. Products from forestry and agriculture are the most important primary resources. The price of labor is somewhat lower than in Estonia, probably reflecting a lower level of restructuring and productivity. Latvia's potential lies mainly in the clusters connected to wood and food products. However, there might also be a potential in Riga developing as an important financial center.