The Design Economy – Latvia’s Invisible Economic Infrastructure
Ieva Zemīte, Baiba Tjarve, researchers at the Latvian Academy of Culture
Is a blood donation campaign design? What about a biometric wallet? And what about chairs, lamps and posters? The debate over what constitutes design resurfaces in Latvia almost every year following the presentation of the Latvian Design Awards and the announcement of its nominees. The 2026 finalists once again vividly demonstrate just how diverse the field has become. They include product design, which is still most commonly associated with design in the traditional sense, as well as a campaign commissioned by the State Blood Donor Centre (created by McCann Riga), nominated in the communication design category, and Handwave, a biometric wallet (created by Handwave and Cube), which won in the service design category.[1]
The question of where design begins and ends is not new. Several years ago, in the discussion “What Is Design in Latvia?”, design experts debated whether design processes could be captured within a single definition at all, and whether the sector itself shared a common understanding of what design actually is.[2] During the discussion, design thinker, lecturer and publicist Jeļena Solovjova emphasised that the scope of design is expanding far beyond what was once considered a relatively narrow field: “The public sector is one example. Another is interdisciplinary collaboration, (...) where you have to work with programmers, engineers, marketing managers and other specialists. Whether we are talking about the Apollo spacecraft or a digital product, both require working with a large team, and in my view, these are the areas where the power of design is currently most evident.”[3]
This broader interpretation of design – one in which design is not merely a tool for improving the appearance of a product, but something that shapes people’s everyday experiences, helps businesses create competitive products and services, and enables the public sector to respond more effectively to the needs of different groups in society – provided the basis for the study Identifying the Design Economy and Its Role in the Latvian Economy, conducted by researchers at the Latvian Academy of Culture.[4] The study aims to identify the scale of the design economy within Latvia’s economy, characterise its economic activity and assess the added value it generates. From a broader perspective, the design economy is a cross-cutting system that affects almost every area of the economy. It fosters innovation, competitiveness and value creation, while also constituting a significant part of Latvia’s cultural and creative industries.
The Role of the Design Economy in Latvia Is Growing
The study shows that the importance of the design economy has increased rapidly over the past decade. This growth is driven by design’s ability to create high-value-added products and services, strengthen business competitiveness, and help companies distinguish themselves in both domestic and international markets.
The study focuses on the design economy as reflected in the performance of design-related businesses – including turnover and employment – as well as the added value they generate and labour productivity within the broader context of Latvia’s economy. Using data on occupations associated with the design economy, the researchers also identified the sectors in which people directly and indirectly employed in the design economy most commonly work.
Overall, activity within Latvia’s design economy grew steadily between 2013 and 2023. In 2023, there were 44% more economically active businesses in the design economy than in 2013, while employment increased by 30% over the same period. Other indicators confirm this growth: the added value generated in 2023 was 186% higher than in 2013, while turnover increased by 123%. These figures demonstrate that the design economy is not a marginal part of Latvia’s economy, but one of its significant drivers of added value and growth.
One of the largest segments of Latvia’s design economy is computer programming and data processing. In this field, design is not simply about visual appearance. It determines how intuitive a programme is to use, how smoothly digital services function, and how easy a mobile application or website is for users to understand. This is a good example of how design can generate direct economic value: the quality of the user experience often determines a product’s competitiveness and market demand.
Small and Flexible Businesses Form the Foundation of the Design Economy
The study shows that Latvia’s design economy is largely made up of micro-enterprises, sole proprietors and self-employed professionals. It also found that businesses within the design economy often employ fewer than ten people. This means that the design economy is not built around a handful of large market players, but rather around a broad, diverse and interconnected ecosystem of small businesses and creative professionals.
It is precisely this structure that makes the sector flexible: small businesses are more likely to experiment, adapt more quickly to changing market needs and conditions, and collaborate with partners from different sectors. At the same time, this advantage also creates challenges. The design economy functions as an interconnected network rather than a single, clearly delineated sector, and therefore requires support instruments and policy solutions that take the specific characteristics of this type of economic activity into account.
Alongside the broad base of small businesses, the design economy also includes a number of large companies, particularly in manufacturing and technology. This confirms that design plays an important role both in small creative enterprises and in large organisations.
Design as a Strategic Development Process
It is important to understand that design is not only a visible end result, but also a purposeful development process. It is a way of thinking that begins with a question: what do people actually need? This understanding gives rise to ideas that are tested, developed and adapted until they become practical solutions.
This approach is used not only in product development, but also in the improvement of services, digital solutions and public administration. It is precisely this ability to guide development processes that gives design its distinctive place in the economy. Design does not belong to a single sector; it functions as a horizontal competence required across many areas of the economy, often remaining almost invisible to the user – an unseen player in the background. As designer Holgers Elers aptly observed in the aforementioned Satori discussion: “the less we notice the presence of design in our everyday lives, the better it is.”[5]
Design thinking and the increasingly common concept of a design approach describe some of the less visible yet most influential practices of design. They involve the ability to identify and formulate problems, develop possible solutions, test ideas and continuously adapt them in response to user experience and changing circumstances.
However, these skills are difficult to quantify and express through economic indicators because they are often embedded throughout the entire development process rather than being visible only in the final product. Moreover, design as a process is becoming increasingly difficult to separate from other activities. Work takes place in interdisciplinary teams, where the role and contribution of each individual professional to the final outcome cannot always be clearly distinguished.
A design approach is used in information technology, manufacturing, healthcare, education and even areas such as financial services and forestry. This means that the impact of design cannot be fully measured solely as the contribution of a single sector, because the value created by design manifests itself simultaneously across many different industries.
This broad and multifaceted presence also helps explain the considerable scale of Latvia’s design economy. The study indicates that the design economy accounts for approximately one tenth of Latvia’s economic activity and represents the largest part of the creative economy: on average, 70% of all economically active businesses in the creative economy are connected to the design economy. Furthermore, 10% of all people employed in Latvia’s economy work within the design economy, demonstrating its role as one of the pillars of Latvia’s competitiveness in knowledge-intensive and interdisciplinary sectors.
Labour Productivity – One of the Key Benefits of the Design Economy
Latvia’s design economy stands out not only because of its broad presence across different sectors of the economy, but also because of its high labour productivity.
The study shows that, over the longer term, labour productivity in the design economy has grown faster than in Latvia’s economy as a whole and, in many years, has exceeded the average productivity level of other sectors. This means that the design economy is capable of generating greater added value per employee – creating more economic value with comparatively fewer resources.
This is where the strategic importance of design becomes particularly clear. Design helps improve products, make services more efficient and develop solutions that respond more precisely to user needs and market demand. This is particularly evident in sectors where design is closely intertwined with technology, knowledge and innovation, such as information technology, consultancy services and manufacturing.
The Role and Impact of the Design Economy Continue to Expand
The data analysis shows that design skills are used in almost every sector of Latvia’s economy. According to data provided by the State Revenue Service, in 2023 more than 60,000 people per month, on average, were employed in the design economy in occupations requiring design skills.
The more extensively design becomes integrated into different areas of the economy, the less it corresponds to the traditional idea of a single, clearly defined sector. Today, a designer is no longer simply someone who shapes the external form of an object. A designer may also develop digital services, improve customer experience, map user journeys or help organisations transform complex processes.
International research points to similar trends, showing that the significance of design extends beyond the economic dimension to encompass social, environmental and societal development. Climate change, the development of artificial intelligence, threats to democratic processes, inclusion and accessibility are just some of the issues in which a design approach will play an increasingly important role, demonstrating that design has become one of the key instruments of development.
This also means that the boundaries of the design economy will become even more dynamic, creating new challenges for researchers and policymakers. Design helps businesses better understand people’s needs, adapt to change and create new solutions. The design economy can therefore be described as a form of “invisible infrastructure”: it may not always be visible, but the modern economy could not function without it. Design connects ideas with practical solutions, innovation with users, and creativity with economic and societal value. It not only helps create new products and services, but also shapes the environment in which we live.
The research report is available on the website of the Latvian Academy of Culture:
https://ej.uz/dizaina_ekonomika
This publication was produced within the framework of the project Cultural and creative ecosystem of Latvia as a resource of resilience and sustainability”/CERS (No. VPP-MM-LKRVA-2023/1-0001), implemented under the State Research Programme Latvian Culture – a Resource for National Development. The project is funded by the Ministry of Culture of the Republic of Latvia within the framework of the State Research Programme Latvian Culture – a Resource for National Development (2023–2026). The State Research Programme is administered by the Latvian Council of Science.
References
[1] https://dizainabalva.lv/zinami-latvijas-dizaina-gada-balvas-2026-finalisti/
[2] https://satori.lv/article/satori-diskusija-dizains-latvija
[3] https://satori.lv/article/satori-diskusija-dizains-latvija
[5] https://satori.lv/article/satori-diskusija-dizains-latvija