The Baltic states possess the ingredients needed to become a leading innovation hub in Northern Europe, but fragmented policies, limited access to growth capital and weak links between business and research continue to hold the region back, according to participants at a major investment and innovation forum in Riga on May 29, Labs of Latvia, the country’s investment promotion agency, announced on June 1.

The Beyond Borders conference brought together investors, policymakers, academics and business leaders from across the region. Despite examining different sectors and datasets, speakers reached a similar conclusion: the Baltics have strong foundations but are struggling to convert potential into faster economic growth.

Research presented at the event suggested Latvia remains an attractive destination for foreign investment, although investor confidence has become more cautious amid geopolitical uncertainty and domestic political concerns. Less than half of foreign investors surveyed said they planned to increase investments, while a growing share preferred to wait before making new commitments.

Business surveys nevertheless pointed to continued optimism. Most companies expect revenue growth this year, while investors highlighted Latvia's competitive tax environment and skilled workforce as key advantages.

A recurring theme throughout the forum was the need to strengthen cooperation between researchers and industry. Participants argued that scientific expertise across the Baltics often remains disconnected from commercial opportunities, limiting the region's ability to transform research into marketable products and high-growth companies.

The challenge is particularly visible in the startup sector. While Latvia has developed recognised strengths in fintech, deep technology and artificial intelligence, many promising firms struggle to secure financing as they expand. A significant share of scaleups eventually relocate abroad, reflecting difficulties in accessing growth capital at home.

Speakers also stressed that international investors increasingly view Estonia, Latvia and Lithuania as a single market. Yet despite this external perception, the three countries continue to compete for investment and talent rather than coordinate more closely.

Forum participants argued that stronger regional cooperation could help attract funding, improve innovation performance and raise the Baltics' profile internationally.

The event concluded that the region already has many of the assets required for long-term success, including talent, infrastructure and entrepreneurial capacity. What remains missing is more effective policy implementation, stronger business-research partnerships and a coordinated Baltic strategy capable of turning innovation into sustainable growth.