The annual RIO Country Report offers an analysis of the R&I system in Latvia, including relevant policies and funding, with particular focus on topics critical for EU policies. The report identifies the main challenges of the Latvian research and innovation system and assesses the policy response.
A small country like Latvia until recently used to have a total of 150 registered research institutions. The practice of registering any qualifying, self-defined small group of researchers as a research unit results in a structure that is fragmented and duplicative across all areas of research. None of the country’s universities is among the top universities in Europe. Various reports state that the main challenges in the Latvian public research system are an inadequate public funding system, low levels of internationalisation, insufficient human resources and a lack of internationally-approved accreditation. Public expenditure per student is among the lowest in the EU, and the financing model until recently lacked performance-based components.
The Council CSR 2014 included a recommendation worded as follows: “Step up implementation of the higher education reform, in particular through the establishment of an independent accreditation agency and a financing model that rewards quality. Take steps for a more integrated and comprehensive research system also by concentrating financing towards internationally competitive research institutions.”
Inadequate public funding in a fragmented research and innovation system (fragmentation makes an increase in public financing ineffective) is naturally leading to a lack of scientific excellence (for example, the share of scientific publications in the top 10% of the most cited is 4% and falling and the licence and patent revenues are very low). An adequate quality of the science base is a necessary precondition for improving knowledge transfer and for addressing the needs of local industry (see challenge 1). In that context, the fact that public R&D intensity reached only 0.44% of GDP in 2014 and remains excessively dependent on EU structural funds signals the existence of a clear challenge.
The scientific excellence challenge is exacerbated by the lack of human capital and low level of internationalisation. The number of new doctoral graduates per thousand population aged 25–34 in Latvia is among the lowest in the EU (0.95 in 2012, EU average: 1.81). The proportion of foreign university students and professors in Latvia is also low and the national requirement that most teaching and research must be done in Latvian (“Official Language Law") is a further obstacle.
Large-scale reforms of HEIs and PROs are currently under way to improve the quality and relevance of public R&D. As part of this process, research institutions have been assessed by international experts (in co-operation with the Nordic Council of Ministers and NordForsk, undertaken by Technopolis) and the results came out in 2014. According to the assessment, only 15 out of 150 evaluated research institutes and research groups in HEIs received the highest evaluation and were recognized as international players.
As a result, the first step after amendments in the Regulation on “Order of calculation and allocation of institutional funding to research institutes” was to reduce the number of registered research groups to 90. The reform is currently continuing with further consolidation by merging the weaker institutions with excellent ones, by consolidating similar research structures and by limiting financial support only to PROs which after the consolidation process will have more than 25 FTE of research personnel (in several specific sectors 10 or 5). In addition, the government provided (on limited competition basis) additional €9.9 m of funds to support excellent institutes to develop their strategy and to integrate weaker institutions until November 2015. The reform also entails an increase by 10% of the calculated basic infrastructure grant to those research institutions which received an evaluation score 4 or 5 (i.e. are among excellent science organisations) since 1 January 2015 and excludes those whose evaluation marks are 1 or 2 (starting from 1 January 2016).
In addition, a reform of the way universities are financed is taking place. A new quality-targeting financing model has been developed, based on the recommendations from a recent World Bank study, and some performance-oriented funding will be piloted in 2015-2016. The WB recommendations suggest a three pillar model which foresees a combination of stable financing (basic funding – pillar 1) with performance based component using a formula with performance indicators (pillar 2), and an innovation component based on three mission target agreements with the Ministry of Education and Science (pillar 3). The legal acts regarding the above-described model have been adopted by the end of 2015.
In terms of relevant policy measures aimed at increasing the scientific excellence, in the 2014-2020 programming period some of the programs are: Strengthening the institutional capacity of scientific institutions (€15.25 m), Grants for post-doctoral research (€64 m), Practically oriented research (€76.5 m), Development of the R&D infrastructure (€100 m).
Latvia has embarked on ambitious and large-scale reforms to address the problems in the public research system. It's currently on track to finalize the process of consolidation of research institutions although the pace could be faster. The country has also made gradual progress in setting up an internationally approved accreditation system and the plans to introduce a new financing model are indicatively foreseen for 2016. The financing and the consolidation processes are slowed down by a lot of vested interests – a reluctant big part of the research community whose funding would be cut as a result of the reforms.
Notwithstanding the ambitious reforms, the most fundamental problems of the Latvian public research remain the very low level of research funding across the whole system and the lack of orientation of research objectives towards the needs of industry. Demographic trends of migration and brain drain exacerbate the issue further although the number of PhD graduates has been steadily rising in the recent years.
Last but not least, the entrepreneurial culture is still underdeveloped in Latvian universities and thus requires more effective incentive systems, e.g. modifications to the career criteria for researchers, university IPR policies, critical evaluation of the effectiveness of the existing knowledge transfer offices, and entrepreneurial training. Instead of encouragement for researchers to spin off and convert their knowledge into products, there is a tendency to unnecessarily complicate such activities, for example by requiring all research costs to be covered upfront, before the attempt to convert research into product shows any signs of commercial viability.