Transformation of Higher Education as the Precondition for Competitive Development in Estonia and Latvia

This paper outlines the main trends in higher education in the Baltic States and in particular in Estonia and Latvia, on the basis of the European Union concept of competitiveness and knowledge-based society development. Using the World Bank system of knowledge-based indicators, the position of the Baltic States is discussed and compared with international competitiveness ratings. We illustrate higher education systems in Estonia and Latvia by providing information on present institutional structures and by analyzing the key issues that contributed to their adaptation to a market economy in the 1990s until they became members of the EU. The study suggests that the educational systems in Estonia and Latvia are rather similar and that they have been restructured in accordance with western educational requirements and quality standards. They have greatly benefited from international efforts to professionalize the faculty in these institutions. At the same time, the educational system is not yet fully adjusted to the dynamic needs of the labor market. In order to meet the needs of competitive development, the education systems of the Baltic States, as small open countries and new EU members, should focus on increasing the functional flexibility of the labor force.