IDENTIFYING TRADED CLUSTER INDUSTRIES IN LATVIA

Cluster based entrepreneurship is an important tool to foster economic growth of companies and regions. Recent studies show a strong positive link between the existence of clusters and productivity, efficiency, innovative capacity, and overall competitiveness of the companies that leads to competitive regions. Considering the benefits of regional clusters, support for cluster initiatives through special programmes and other tools supporting cluster formation, is available in Latvia from 2009. The initial stage of regional cluster development is concentration of the economic activity in certain regions; thereby, the author of this article looks at economic activities at regional level and finds those industries that have potential forming regional clusters. Economic activity, both in general and specific industries, has a tendency to concentrate in certain geographic areas. Findings show that all industries are concentrated in Latvia, with an average Gini coefficient being equal to 0.54. Location Gini calculation allows the author to group industries into local, resource dependent, and traded cluster industries. The main focus of the article is put on traded cluster industries that locate in certain regions owing to regional attractiveness and competitiveness, thus, forming regional business clusters. Seven cluster categories with 47 traded cluster industries are identified of which 49% are manufacturing and 51% are service industries. Twenty-none per cent of all enterprises are engaged in these industries in Latvia but they employ 40% of working population; 40% of net turnover of enterprises is concentrated and 40% of nonfinancial investment are attracted there. Available cluster support is also concentrated in these industries.