According to the World Bank Group, Latvia ranks 22nd out of 189 countries in terms of ease of doing business. The country ranks in the top 20 for corporate credit acquisition; in the top 30: starting a business, real estate construction and registration, easy and efficient tax payment, international trade and enforcement of contracts; and among the top 50 for bankruptcy resolution and minority investor protection. The weakest point of Latvia's business environment is by far the basic power supply for newly built properties, where the country ranks 65th.

Overall, Latvia is the most favorable for companies that do not plan to participate in the construction of new infrastructure. Ease of starting a business, paying taxes and getting credit makes a good combination with cheap but skilled and educated labor and low infrastructure and facility costs. Because of this, Latvia is a very popular country for starting a business, especially for entrepreneurs from outside the EU, as overall it takes a lot less investment to start a business in Latvia than in most other EU Member States, while the bottom line (in terms of the quality) is the same. The business risks for such entrepreneurs are comparatively low if they take into account the possible competition in the local market.

Legal framework
Since Latvia joined the European Union in 2004, it has adopted most of the Union's laws and directives. One of the examples is the Schengen Agreement, which allows free international trade with other EU member states (more on Latvian market access from the EU here).

Latvian politics favors the free market and consistency with EU policies. Some analyzes classify Latvian legislation as conservative, meaning that new policies take a long time to be accepted by the government and are generally treated with caution. Legislative initiatives of the EU are excluded from this. Latvia aspires to be an active member of the European Economic Area and tries to adapt its policies to European standards.

economic geography
Most of the companies are concentrated in the Latvian capital Riga and the surrounding cities. Other major cities often specialize in certain market sectors, e.g. The port cities of Ventspils and Liepāja offer ice-free ports (read more about logistics in Latvia), while Daugavpils is a major rail hub.

Cities of regional importance also play a role in Latvia's economic environment. For example, in the city of Rezekne is the Rezekne Free Economic Zone. The FEZ contributes to the development of the region and attracts companies with a real estate tax break of up to 100%, a corporate income tax break of 80% and a return on investment through tax incentives of up to 55%. Rezekne is also an important railway junction.

The most urbanized regions of Latvia are the central, eastern and western regions. However, it must be noted that while the central region is urban through and through, the east and west are urban in the sense that the majority of the population lives near major cities, with small rural areas in between. The southern and north-eastern regions are largely rural.

Market freedom
Latvia is a free market economy, which means that economic policies are aimed at reducing state intervention and preventing the emergence of monopolies. According to the Wall Street Journal and the Heritage Foundation, Latvia is the 37th freest economy in the world. Latvia's score in this case is supported by high levels of tax, trade, investment and business freedoms, but is somewhat hampered by corruption and government spending.

In Europe, Latvia ranks 17th in the market freedom ranking. This position is getting stronger every year as Latvia takes steps to integrate into the European Economic Zone and catch up with the main member states.