Software industry adds substantially to GDP

RIGA - Last year the software industry added 16.5 million lats ($26 million) to the Latvian gross domestic product and 4 million lats in tax revenues, reported the Datamonitor company. According to company estimates, by 2004, the software industry will add up to 49 million lats to the Latvian GDP and 11.6 million lats in taxes. The software industry has also moved ahead of other industrial sectors in terms of the average contribution to GDP per employee. For example, in agriculture the average contribution to GDP is 2,700 lats per employee. In financial intermediation this figure stands at 11,000 lats, but in the software industry the average contribution to GDP is 31,000 lats per employee.

The average annual salary to employees in the software industry is 3,000 lats, much higher that the average annual wage in Latvia, currently estimated at 1,800 lats. By percentages, software industry employees are paid 77 percent more than the national average salary and 8 percent above the average salary for people employed in other IT areas.

Datamonitor said that software piracy was inflicting great damage to the Latvian economy. About 77 percent of software used in Latvia is pirated. As a result, the national economy loses some 55 million lats in retail revenues and about 15 million lats in tax revenues, not to mention the slowing effect on creation of new jobs. At present the Latvian software industry employs 2,180 people, but this figure could increase dramatically upon restriction of pirated software availability.

Datamonitor is an international company founded in 1989. The company develops strategic planning programs, provides consulting services and carries out market and competitive analysis. In 2000, the Latvian GDP was 2.95 billion lats, in constant prices, up by 6.6 percent from 1999.