The location of settlements and cities in the territory of modern Latvia has not developed by accident. The people who lived here over many thousands of years well acquainted with the local geographical and climatic conditions knew how to install inhabitations using terrain features and natural resources. Representatives of different ethnic communities developed cultural traditions and building skills, promoted trade links through waterways. Gradually, the representatives of Finno-Ugric and Baltic tribes, under the influence of various natural processes and historical events, developed the location of population centres and set up earth road tracing for traffic. In the territory of Latvia, until the entry of German crusaders, the basis for a modern population system was created. Aim of paper: analyzing an impact of the ancient location of population centres and road tracing on the economic growth and local people’s well-being today. Methodology: analysis of archive documents and cartographic materials, published information, photo fixations. Research problem: today, various territorial development projects are being developed, ignoring the evolution of settlement development and cultural identity, the historically established hierarchy of population centres that was influenced by economic activities of local people and traffic routes for communication; unsuccessful and ill-considered solutions cause significant damage to the economy. Research novelty: analysis of the ancient Livonian and Latgalian settlements and traffic for trade relations and its early development created opportunities for the basis of the modern population system in North-central and Eastern Latvia. Applications to practice: research will help to find successful solutions for quality improvement of urban spaces and promoting the economic activities of people.