In the face of growing geopolitical tensions and global economic fragmentation, reliable institutions, the ability to adapt to change, and resilience to shocks play a crucial role in ensuring competitiveness. This is confirmed by the latest IMD World Competitiveness Ranking 2026, which evaluates 70 global economies. Latvia has moved up three spots in the ranking and now ranks 35th in the world.
Latvia has returned to its 2022 ranking level. Within the group of European, Middle Eastern, and African countries, Latvia ranks 23rd out of 45 countries, while among countries with a population of up to 20 million, Latvia ranks 22nd out of 38 countries. In a comparison of the competitiveness of the Baltic states, Latvia retains third place: Estonia ranks 28th globally; Lithuania ranks 34th. Latvia is one of the few countries in the region to have shown positive rating dynamics this year.
Professor Gundars Bērziņš, an economist and rector of the University of Latvia, after reviewing this year’s IMD World Competitiveness Ranking, concludes that “The IMD 2026 competitiveness results clearly show that in today’s world, competitiveness is increasingly determined not by a country’s size or resources, but by the quality of its institutions, society’s ability to adapt to change, and productivity. In this context, universities are a strategically important part of a country’s development infrastructure—it is here that new knowledge, innovations, and highly qualified specialists are cultivated, forming the foundation for economic growth. For Latvia to strengthen its competitiveness in the long term, we must make targeted investments in education, research, and knowledge transfer, while simultaneously strengthening reliable and effective institutions. Countries that are able to combine a strong education system, high-quality governance, and high productivity will be the ones that successfully overcome the challenges of the future.”
The results show that Latvia’s relatively strongest areas are infrastructure and business efficiency, while the main challenges remain in economic performance indicators. Competitiveness performance is grouped into four main dimensions, and in this assessment, Latvia’s lowest ranking in 2026 is in the area of economic performance, where it ranks 54th globally. In contrast, results in other dimensions are significantly better: government efficiency—32nd place; business efficiency—28th place; infrastructure—27th place.
“Latvia’s rise in the IMD World Competitiveness Ranking confirms that targeted efforts to improve the business environment, digital development, and public administration are yielding results. At the same time, this ranking clearly shows that competitiveness today is not just a matter of economic indicators—it is increasingly determined by trustworthy institutions, the ability to adapt to change, and effective cooperation between the government, the business community, and the academic sector. “To continue moving upward, we must focus on increasing productivity, developing exports, attracting investment, and promoting innovation, thereby strengthening Latvia’s ability to compete in the global economy,” emphasizes Ieva Jāgere, Director of the Investment and Development Agency of Latvia.
The IMD concludes that by 2026, competitiveness will no longer be merely a race based on costs, market size, or innovation. Institutional reliability—the ability to ensure predictable regulations, effective governance, and a business-friendly environment—is becoming increasingly important. Countries whose institutions are able to maintain stability and trust amid uncertainty gain significant competitive advantages.
“The world is becoming increasingly fragmented, which is why the value of trustworthy institutions is growing. Countries with proven and trustworthy institutions gain an advantage in such circumstances, as business can continue relatively stably there,” emphasizes Arturo Bris, director of the IMD World Competitiveness Center.
The IMD analysis shows that the most successful economies are characterized by strong and reliable public institutions; effective government performance and high-quality regulation; the ability to adapt to geopolitical changes; business efficiency and productivity; digital readiness and investment in technology; resilience to economic shocks; and long-term investment in human capital, infrastructure, and innovation.
This year, Singapore ranks first in the world, having regained the top spot following significant improvements in business efficiency. Hong Kong ranks second, while Switzerland ranks third, having lost its top spot primarily due to a decline in economic performance. Taiwan and the United Arab Emirates also rank among the top five, followed by Denmark, Ireland, the Netherlands, Sweden, and the United States.
The IMD notes that Asian economies continue to strengthen their positions thanks to targeted industrial policies and digital investments, while several European countries are facing a decline in competitiveness due to high costs, a growing fiscal burden, and labor market challenges.
About the IMD World Competitiveness Ranking
The IMD World Competitiveness Ranking has been published for 38 years. It analyzes countries’ ability to create and maintain a business-friendly environment. The ranking is based on 172 statistical indicators and 92 questions from a business survey, evaluating four main dimensions: economic performance, government efficiency, business efficiency, and infrastructure.