Latvia in AI Race with EU Countries – Potential is There, But We Need to Hurry Up

Latvia finds itself in a high-stakes race to adopt Artificial Intelligence (AI) alongside its European Union peers. As AI becomes a defining force in economic competitiveness and public innovation, countries across the EU are accelerating their adoption strategies. While many enterprises and governments are already leveraging AI to boost efficiency and transformation, Latvia must act faster to close the gap. This article explores Latvia’s current position in the AI landscape and how it compares to leading EU and global trends.

In 2024, 13.5% of EU enterprises with ten or more employees utilized AI technologies, an increase from 8% in 2023. Adoption was significantly higher among large enterprises (41.2%) compared to small businesses (11.2%), with countries like Denmark, Sweden, and Belgium each nearing 25% adoption rates  (Eurostat, 2025). 

This data highlights a clear pattern: countries with a higher concentration of large companies and more substantial financial and human resources are better positioned to implement AI. This helps explain why nations with predominantly small and medium-sized enterprises, such as Latvia and Lithuania, tend to lag behind their Western counterparts. However, Estonia defies this trend within the Baltic region, having made remarkable progress and serving as a leading example of AI-driven innovation.

Meanwhile, Latvia has begun exploring AI integration in the public sector. A 2025 situational report by the State Audit Office found that 17% of Latvian government institutions already use AI tools, and 22% plan to adopt them soon. However, 55% of institutions still lack clear strategies for AI adoption (State Audit Office Report (LV), 2025).

Current use cases in public administration include automated document translation, data analysis, virtual assistants, and information retrieval. Among institutions already using AI, 41% reported productivity improvements. Additionally, 18% have conducted feasibility studies, and 28% plan to include AI objectives in their strategic plans (VARAM Survey, 2024).

Nonetheless, significant barriers persist: a lack of a unified national AI strategy, limited capacity to evaluate AI-related costs and impacts, insufficient inter-agency coordination, and a notable shortage of qualified AI professionals in the public sector. Implementation is further hindered by the absence of a comprehensive data strategy.

Approximately 55% of EU member states have incorporated AI into at least one major area of governance (OECD Report, 2024), covering sectors such as healthcare, public safety, and multilingual public services.

Latvia’s efforts-although still developing-place it among a growing group of EU nations actively pursuing AI adoption. Partnerships with private sector leaders like Microsoft and platforms such as Hugo.lv demonstrate innovation tailored to Latvia’s specific linguistic and administrative needs (Tilde AI Overview, 2021).

AI has shown capabilities in reducing time spent on tasks by up to 100%, particularly in areas such as anti-money laundering (AML), know-your-customer (KYC) compliance, and operational management including finance and supply chains. In healthcare, AI-assisted tools have achieved diagnostic accuracy exceeding that of human specialists, such as in the early detection of skin cancer (Cornell University, 2020). As Jensen Huang, CEO of NVIDIA, said, "You are not going to lose your job to an AI, but somebody who is using AI will."

Compared to EU frontrunners, Latvia continues to face systemic challenges, including limited funding, a lack of centralized governance, and the absence of a transparent AI monitoring framework. However, the establishment of the National Artificial Intelligence Center (NAIC) and alignment with EU regulations represent important milestones.

Various organizations, including MILA, LIAA, and LTKR, are advocating for AI integration across sectors. Private firms like Meritelium SWD, Venture Faculty, and Asya AI are helping SMEs implement AI in their operations. For example, Meritelium SWD has developed an innovative solution that leverages AI to scan and match procurement tenders and grant opportunities tailored to any organization’s unique profile. This solution has already helped companies apply for projects worth a combined €7 million, with access to an active EU grant pool of €50 million. Despite these efforts, the environment still requires significant improvements to close the gap with EU and global leaders.

To close the gap, coordinated efforts from both the public and private sectors are essential. Public institutions need to lead with a clear national AI strategy, supported by measurable goals, consistent funding, and stronger collaboration across agencies. Focusing on key sectors like healthcare, education, and public services can produce quick, visible benefits. For example, AI education initiatives could start early in the school system, as seen in countries like China (Reuters, 2025), which introduces AI topics from the first grade. In Latvia, universities such as RTU, RBS, and SSE Riga are already offering AI-related courses, which are open to the wider public and represent a solid foundation for growing domestic expertise.

AI also presents an opportunity to meet budgetary goals. With the government aiming to reduce public spending by 450 million euros (LSM, 2025), strategic implementation of AI could contribute by streamlining operations and reducing redundant roles - freeing up skilled workers to move into the private sector where talent is in high demand.

LIAA is already implementing digitization grants that support AI adoption in business (LIAA, 2023). These include grants of up to 10,000 euros for small enterprises (covering 100% of project costs) and up to 100,000 euros for larger companies (covering 30–60%). These initiatives, funded by EU recovery funds, allocate 37.5 million euros to be distributed across 200 entities by June 2026. While promising, these programs need more proactive support—faster application processes and flexibility to expand if demand exceeds supply.

At the same time, the private sector must become more open to exploring AI technologies. This means investing in internal capabilities, trying out real-world applications, and building knowledge-sharing partnerships. As Satya Nadella, CEO of Microsoft, aptly put it, "AI is not only for engineers. It brings changes in the dynamic of business, and we have to adapt or die." Encouragingly, companies are already offering support to help other businesses understand and adopt AI. Their experience and resources could be vital for getting more businesses involved and moving forward together.

To make real progress, the public sector must work hand in hand with private innovators and AI leaders. The government committed to reducing bureaucracy by 40 million euros (LSM, 2025). While this is a step in the right direction, it is concerning that no immediate focus has been placed on AI integration, with plans deferred to an unspecified future. Moreover, the current working group lacks AI experts who should be engaged from the start. Latvia is fortunate to have a growing community of experts, including Edgars Poga, Armands Broks, Evalds Urtāns, and Edvīns Elferts, whose practical knowledge and leadership could help shape effective national AI policy. By building strong partnerships between tech firms, government bodies, and academic institutions, Latvia can develop a more skilled workforce and create an innovation environment where AI becomes both usable and scalable.

Latvia is indeed making meaningful strides in both public and private sector AI adoption - but progress must accelerate. The EU’s frontrunners are pulling ahead, supported by clear strategies, significant investments, and integrated governance. For Latvia to remain competitive and avoid falling further behind, it must intensify its AI efforts through faster implementation, strategic public-private partnerships, and a unified national approach. The race is on - and Latvia can still catch up, but only if it moves with urgency and clarity.

Learning from global AI leaders, Latvia has a chance not just to catch up, but to lead. Our small size can be an advantage - allowing us to move quickly, implement changes efficiently, and scale successful pilots. Faced with demographic challenges and a competitive global market, Latvia has little choice but to use AI as a strategic tool for sustainable growth.

Author: Tomass Vilks, Analyst at SIA “Venture Faculty”