Economic Growth and Changes in the Branch Structure of Economy in Latvia： Linkage and the Sequence

From 2000 to 2012 the Latvian economy experienced four important events： （1） accession to the European Union in 2004; （2） the fastest GDP growth in the European Union and one of the fastest in the world in 2006; （3） the fastest GDP decrease in the European Union and in the world in 2009; and （4） resumption of economic growth in 2011. Such substantial changes during relatively short period of time make the experience of Latvia interesting in context of economic growth. Now Latvia has success in overcoming the consequences of the global economic downturn but the question which still remains relevant is the rationality of the branch structure of economy, because of high share of non-tradable sector in GDP. Such high fluctuations of the GDP during period analyzed, as well as requirements of the modem economy show the necessity to provide changes in the branch structure of economy. The most acceptable and popular direction in accordance with the strategy ＂Europe 2020＂ indicates that these changes should be in favor to the innovative manufacturing branches. On the other hand, the question--whether the changes in the branch structure of economy would be a tool for maintaining and providing the economic growth in Latvia--is actual. The importance and relevance of this question are reinforced by the fact that there is no consensus in the literature about the sequence of the economic growth and changes in the branch structure of economy. The article considers the linkage between economic growth and the changes in the branch structure of economy in Latvia, as well as search for sequence between these processes.