ABSTRACT
The methods of economic influence on entrepreneurial activity used by the Latvian state create equal terms for the development of all types of businesses. But this causes unequal opportunities for an entrepreneur in trading and in production; for large and small companies; for beginners and experienced businessmen, and so on to run their business. The problems of small business development and the urgency of solving them make research into small and medium sized enterprises in Latvia particularly important and relevant. The role of small business in the area of social and regional development has not been sufficiently evaluated in Latvia. The reasons for the low economic activity of small enterprises were investigated therefore. The investigation revealed the following major factors restricted the development of Latvian enterprises: lack of financial resources; unsteady tax legislation; inefficient credit policy; small local market; lack of business skills, experience and knowledge about market economy; and incomplete legal framework.
