Towards a Coordinated Investment Strategy for Riga, Tallinn and Vilnius

A report for BaltMet Invest. Baltic Sea Region INTERREG III B Project

Authors: Alf Vanags, Mark Chandler, Zane Leduskrasta, Sirje Padam.

This report is the result of an 18 month process in which the team followed a not always linear path. The particular challenge was how to incorporate the cross border element inherent in the idea of a coordinated investment strategy. In order to address this we have tried to move away form a model where the Baltic capitals are competing for investment and perhaps in the context of a growing shortage of workers competing also for people. This is line with the views of the EU Commission in its working paper on cohesion policy and cities (EC (2005)) where it is argued that competition can be counterproductive and the Commission’s working paper emphasises ‘coordination or strategic alliances’ as a ‘tool for balanced development’. The cooperative approach to a regional strategy is also evident at the political level in the recently published report on Europe’s Strategy for the Baltic Sea Region from the Baltic Strategy Working Group of 7 MEPs who have called for greater economic integration in the region including with Kaliningrad. Kaliningrad could indeed represent an opportunity to extend the methodology developed in the BaltMet Invest coordinated investment strategy. Here interestingly, the most recent evidence shows that the three Baltic metropolises are becoming increasingly integrated in terms of both trade flows and a common network of foreign direct investment (FDI).

The staring point of the report is the strategic and economic importance of the three Baltic capitals, Riga, Tallinn and Vilnius, in their countries and in the region. This is developed in the section on the economic role of the capitals. This importance is consistent with the EU policy context. In its working paper on cohesion policy and cities (EC (2005)) the European Commission underlines the importance of cities as key players in regional development, including cities located in peripheral areas. This is rather important for the Baltic capitals who, while peripheral in global and even EU terms, are arguably better located on the southern shore of the Baltic Sea than are Stockholm and Helsinki.

After analysing the economic role of the capitals the report examines evidence on what it is that investors look for. This followed by a discussion of the relative importance of competition and cooperation. A key element of the report is to turn the individual city visions into a common vision of “The Baltic region as the most attractive investment area in CEE” and the actions the city councils can take in promoting this.