Latvia has some cultural similarities to Lithuania and Estonia, but its diverse population makes it distinctive from the other Baltic States. Many Latvians consider themselves to have Germanic and Scandinavian roots. Others, particularly in eastern Latvia, claim Polish and Russian cultural influences.
Latvia is a parliamentary democracy. The supreme legislative body, the Saeima, or parliament, is composed of 100 members elected for a four-year term. The Saeima elects the president, who is the head of state. The president appoints the Prime Minister, who is usually the head of the party or coalition with the majority in the parliament. The Prime Minister has executive power as the head of the Cabinet of Ministers.
Latvia has made good progress in privatizing and reorienting its economy, since formalizing its independence in 1991. Latvia's economy is increasingly oriented toward the service sector, especially finance and retail trade. Agricultural goods such as dairy products, meat and fish, and forestry products are major exports.
Geographic location and developed harbors have always been key to Latvia's economic growth. Its 2004 membership to the European Union (EU) has made Latvia even more attractive to foreign investors. Privatization of industries is nearly complete, and has resulted in a dynamic private sector.
While growth efforts have met with success, Latvia's economy has suffered from bureaucracy, corruption, high unemployment, and budgetary overspending. Continuing to address these issues, as well as maximizing its EU membership, will be critical to the country's future success.