Benchmarking Latvia’s economy: a new estimate of gross domestic product in the 1930s

The interwar independent Republic of Latvia was among the first ten pioneering states, where a national statistical office published official estimates of total output (1934–1936). Paradoxically, however, Latvia is the Baltic country with the most disputed interwar economic growth performance. According to the authoritative account of Roses and Wolf in The Cambridge Economic History of Modern History (2010), Latvia‘s GDP per capita growth rate was the highest among European countries in 1929–1938. It impressively ranked number ten according to GDP per capita next to Sweden, France, and Norway. However, according to Norkus and Markevičiūtė (in Cliometrica 15:565–674, 2021. https://doi.org/10.1007/s11698-020-00216-z ), it only surpassed Southern European countries, and its growth performance was mediocre. Both these contradictory estimates are derived by indirect methods. This paper contributes to the resolution of this controversy, directly estimating Latvia’s GDP in 1935 within the SNA 2008 framework, providing gross value-added calculation for 20 ISIC industries at basic and at market (purchasers’) prices. It provides a more fine-grained analysis of the composition of Latvia’s total output in comparison with interwar historical national accounts, where only 11 industries were distinguished. This estimate provides the benchmark for future research on Latvia’s interwar economic growth performance. Converting our estimates into monetary units, used in the Maddison Project Database, we assess Latvia’s position in the international GDPpc ranking, coming to conclusions that dovetail with Norkus and Markevičiūtė (2021) findings.