Strengthening Lithuanian - Latvian Cross - Border Cooperation in the Context of International Trade

Abstract

The article analyses the strengthening of the competitiveness of countries based on crossborder cooperation through the prism of international trade indicators. Due to the increase in international competition, countries, especially small economies, are finding it increasingly difficult to maintain their position in the global market and remain competitive if this position is pursued individually. It is therefore necessary to review competition strategies and reassess opportunities and competitive advantages, as well as to promote coopetition between border region companies at institutional level. The article presents a new approach to regional competitiveness, which is achieved not through the development of the competitive advantages of the regions of individual countries, but through their cooperation and thus achieving common benefits. This is particularly relevant for border regions, as their uniqueness allows them to exploit cross-border region cooperation, which can generate added value by utilising the potential of cooperating regions to complement each other and become a competitive hub for economic growth. Only a strategic partnership based on regional cooperation will promote cooperation between manufacturers in different regions and ensure the achievement of co-creation and international development goals. The article analyses the case of Lithuania and Latvia as an example of cross-border cooperation, as internationally these countries are often matched and treated as one region, but in fact they compete fiercely with each other for better positions in foreign markets. This also shows that Lithuania’s and Latvia’s foreign trade with the European Union (hereinafter - the EU) accounted for the largest share of their foreign trade. Secondary statistical data of the EU-28 Eurostat of 2010 - 2019 and Finger Kreinin, RCA, and Lafay indices were used for the study. After assessing the convergence of the Lithuanian and Latvian export structure according to the FKI index during the study and finding that the export structure of these countries is very similar, the relative comparative advantage of exports by individual product sectors was assessed on the basis of the RCA index and the comparative advantage on the basis of the LAFAY index. The study showed that both countries had comparative advantages in the same product groups. The identification of common points of contact has highlighted economic activities, the development of which could be given more attention through the cooperation between the countries, and which would ensure overall economic benefits. The article concludes with strategic recommendations and measures to promote cross-border cooperation and increase the region’s competitiveness. The article contributes to the regional economic subject literature, as the concept of cross-border region competitiveness is developed by promoting not the competition of individual regions, but their cooperation by discovering common similarities in economic development. The article presents methodological logic and empirical calculations that would allow policy makers to develop cooperation strategies with those border regions with which it is expedient to cooperate for greater economic benefits. Promoting regional development and reducing regional disparities not only between regions within the same country but also between different countries requires the patient and consistent work of governments, businesses and academia, as well as individual communities, to develop measures and initiatives to promote cross-border cooperation.