Growth of food sector’s productivity through innovations

Abstract

Productivity is the ultimate driver of long-run economic growth but productivity of European countries, particularly Latvia, is lagging behind the United States (US) and some other developed countries. The purpose of this paper is: to find out and to recommend innovations’ types, which are more suitable for increasing the competitiveness (i. e., productivity) of manufacturing enterprises, in particular, of Latvia’s food sector’s enterprises; where the tasks are: 1) to clarify the current situation regarding to the competiveness, particularly productivity, and innovations in the Latvia’s food sector, comparing with other Baltic States; and 2) to find out financially the least consuming innovative tools for increasing the competitiveness and productivity of food sector’s enterprises. The comparison of productivity between the Baltic countries and other European Union (EU) countries (EU – average) highlights that it is lower in Latvia. At the same time, the share of personnel costs in the production value is considerably higher. Moreover, the value added per employer is also smaller. The share of innovative food enterprises in Latvia is the lowest among Baltic countries, and also in EU. Comparing the types of innovation, the organisational innovations are less common in EU, Baltic countries and, especially, in Latvia, than in US. The results strongly highlight the importance of organisational, notably management, innovations as a tool (requiring smaller investments) for increasing the productivity of food enterprises. The implementation of organisational and process innovations, inter alia, management practices and tools, deliver improvements in effectiveness, particularly productivity, and will offer more potential for competitive advantage than others.