GENERAL OVERVIEW OF THE LITHUANIAN ECONOMY/ PRODUCTION SECTOR
Lithuania's economy is experiencing significant growth, primarily driven by the expansion of European markets and strong domestic consumption and borrowing However, without focusing on internal strategies to enhance competitiveness, this growth may eventually decelerate.
The Lithuanian economy is dominated by low and medium-low technology sectors, which generate limited value added This lack of advancement hinders the country's ability to achieve strong competitive positions in global markets.
Despite the increasing trend of technological innovation in the economy, Lithuania's rates remain significantly lower compared to rapidly developing countries and those of similar size As a result, the Lithuanian economy exhibits low productivity across all sectors, even in areas demonstrating satisfactory growth performance.
Lithuania as an open economy with a small domestic market has insufficient levels of export of Lithuanian goods.
The rates of attraction of direct foreign investments is very low, while accrued FDI per capita is the lowest among European countries.
The development of information and communications technologies infrastructure is uneven across the country, leading to inadequate access to public services in the digital realm This disparity hinders the optimization of business processes, highlighting the need for a more balanced technological advancement.
There are almost no strategic investors whose business strategy in Lithuania is based on investments in the development of intellectual capital rather than lower operating costs.
The infrastructure of public services for business is in the initial stage of development The intensity of provision and quality of services to businesses are insufficient.
Clusterisation and partnership networks are underdeveloped.
Industry is the sector of the Lithuanian economy characterized by highest energy- consumption rates.
General economic situation in Lithuania and analysis of key economic sectors
Lithuania's economy is experiencing rapid growth, outpacing the European Union's overall economic performance Between 2001 and 2005, Lithuania's GDP growth averaged 7.6%, making it one of the highest among EU Member States.
Table 1 Growth of GDP in Lithuania in 2001–2005.
Growth in Lithuania’s GDP, % (at comparative prices of 2000)
Source: Department of Statistics under the Government of the Republic of Lithuania.
Lithuania's macroeconomic environment is stable, with a macroeconomic stability index of 90.4% compared to the EU-15 in 2004 This stability contributes to relatively high international competitiveness ratings, serving as a prerequisite for competitiveness rather than a direct factor While a stable macroeconomic position is essential for fostering and sustaining competitiveness, it does not inherently enhance businesses' ability to compete in rapidly changing conditions.
In 2004, Lithuania's GDP per capita was only 48% of the EU average, despite experiencing rapid growth Economists predict that from 2006 to 2008, GDP growth will decelerate due to several factors, including the cyclical nature of economic development and anticipated increases in interest rates.
The current rapid economic growth in the domestic market can be attributed to its significant lag behind European countries in development, leading to natural and inevitable integration processes.
Between 2000 and 2004, a significant analysis of GDP per capita across Lithuanian counties revealed persistent economic disparities, with the gap between the highest (Vilnius county) and lowest (Tauragė county) GDP per capita increasing from 2.16 to 2.65 A minor decrease to 2.62 occurred in 2004 Throughout this period, only Vilnius and Klaipėda counties surpassed the national GDP per capita average, while other counties, particularly Tauragė and Marijampolė, fell significantly below it In 2000, Vilnius county's GDP per capita was 33.4% above the national average, whereas Tauragė county's was only 61.7% of that average, highlighting the growing economic inequality in Lithuania.
2004, GDP/cap in Vilnius county was already 44.3% above national average, while in Tauragė county in 2004 DGP/cap it still accounted for only 55% of the average.
Table 2 GDP per capita by counties
GDP per capita, LTL’000 Compared to national average, %
In 2004, the EU-15 macroeconomic stability index stood at 4.93, while Lithuania's index was slightly lower at 4.46, as reported in The Global Competitiveness Report and detailed in the Comprehensive Study of Sources of Growth and Competitiveness of the Lithuanian Economy published in Vilnius in 2006.
2 Comprehensive Study of Sources (Factors) of Growth and Competitiveness of the Lithuanian Economy, Vilnius, 2006, p 253, 247.
3 AB SEB Vilniaus Bankas Lithuanian Macroeconomic Overview, 4 (24), March 2006.
Source: Department of Statistics under the Government of the Republic of Lithuania.
Labour productivity in Lithuania is on the rise, yet the growth rate remains inadequate, with productivity in 2004 reaching only 41.7% of that in older EU Member States While Lithuania outperforms its immediate neighbors, Latvia and Estonia, it falls short compared to other new EU Member States, such as the Czech Republic (49.9%), Poland (47.6%), Slovenia (66%), and Slovakia (52.8%) The country's economic growth faces challenges due to minimal improvements in overall labour productivity in recent years, with only 2.6% growth in 2004 and 3% in 2005, alongside a decline in productivity in certain sectors.
Figure 1 Labour productivity by sectors of the economy in 2002–2005, LTL/hour
Source: Calculated according to data provided by Department of Statistics under the Government of the Republic of Lithuania.
The manufacturing industry is a crucial sector of the Lithuanian economy, generating significant value added and representing the largest portion of the country's exports, with 60% of its products being sold abroad.
Figure 2 Structure of value added created by industries in 2005,
4 EUROSTAT, Labour productivity per hour worked.
5 Average value added created by a worker during 1 hour.
Supply of power, gas and water
Building Domest.trade Transport, warehousing
Financial intermediation Real estate etc.
L ab o u r p ro d u ct iv it y , L T L /h o u r
Source: Department of Statistics under the Government of the Republic of Lithuania.
The decline in labor productivity growth within Lithuania's manufacturing sector highlights the urgent need for industry modernization and investment in new technologies As reported by EUROSTAT, Lithuania's productivity remains significantly behind that of EU Member States, with the value added per worker in manufacturing in 2003 being approximately seven times lower than the EU-25 average Furthermore, productivity levels in Lithuania are 7–9 times lower than those in the United Kingdom and Germany, and about twice as low as those in Estonia and the Czech Republic, even in the traditionally strong wood processing industry.
Real estate ad other activities
Power, gas and water supply 4%
Figure 3 Labour productivity in sectors of manufacturing industry by countries in 2003, by countries, EUR’000
Unsatisfactory labour productivity rates are partially determined by a small share of the product created by high and medium-high technology sectors 6 in the country’s industry as a whole
In 2005, high and medium-high technology sectors contributed only 16.1% to the industrial products sold in Lithuania, as reported by the Lithuanian Department of Statistics This low percentage highlights a significant challenge in the country's economy, where traditional sectors dominate and result in low value added, ultimately leading to reduced labor productivity.
6 According to NAC classification defined by EUROSTAT and OECD This term is used further in this document:
The high and medium-high technology sectors encompass a variety of industries, including the pharmaceuticals and medical chemical products sector, the production of chemicals, office equipment, and computers, as well as radio, television, and communications devices Additionally, this sector includes the manufacturing of high-precision medical and optical devices, electric machinery, motor vehicles, railway locomotives, aircraft, motorcycles, and other transport equipment Furthermore, knowledge-intensive high-technology service sectors such as post and telecommunications, computer-related activities, and research and development play a crucial role in driving innovation and technological advancement.
Wood and wood products industry
Furniture industry Textile industry Chemicals industry
Belgium Denmark G.Britain Germany Czech R Estonia Latvia Poland Lithuania
L ab ou r p ro d u ct iv ity , t h ou sa n d s E U R
Figure 4 Structure of products sold by high and medium-high technology industries (share in total sales: 16.1%).
Source: Department of Statistics under the Government of the Republic of Lithuania, 2005
Figure 5 Structure of products sold by low and medium-low technology industries (share in total sales: 83.9%).
Source: Department of Statistics under the Government of the Republic of Lithuania, 2005
RESEARCH AND DEVELOPMENT INNOVATIONS 29 1.3 DEVELOPMENT OF INFORMATION SOCIETY 39 1.4 TRANSPORT NETWORK 43 1.5 ENERGY SUPPLY NETWORKS 54 1.6 SWOT ANALYSIS 59 2 OPERATIONAL PROGRAMME STRATEGY 62 2.1 VISIONS AND OBJECTIVES 62 2.2 PRIORITY 1: RESEARCH AND DEVELOPMENT FOR COMPETITIVENESS AND GROWTH OF THE
Lithuanian businesses face challenges with competitiveness, primarily due to a lack of innovation International innovation rankings indicate that Lithuania significantly trails behind the EU-15 average and ranks among the lowest of the new EU Member States.
The level of investment in research and development is low in Lithuania, in particular in terms of Lithuanian businesses’ investments in R&D.
Lithuania's public sector expenditure on research aligns closely with the EU average; however, the research conducted by universities and institutes often fails to meet the needs of businesses, resulting in a lack of commercially viable outcomes.
Research facilities do not meet modern standards; insufficient capacities limit the performance results and effectiveness of research.
Most investments made by businesses do not result in long-term advantages or technological dominance in the market.
Underdevelopment of the system of financial support instruments, in particular for SMEs and higher-risk projects.
International Rating of Lithuania’s Innovativeness
The European Commission's "European Innovation Scoreboard 2005" reveals that Sweden leads in innovation with a score of 0.72, while Turkey ranks lowest at 0.06 Lithuania's innovation performance is rated at 0.27, placing it 24th out of 33 countries, trailing behind nations such as the Czech Republic, Poland, and Slovakia Notably, Lithuania's score is significantly below the EU-25 average of 0.42 and the EU-15 average of 0.46.
Lithuania's innovation gap compared to EU leaders is primarily attributed to insufficient investments in research and development (R&D) The country ranks low in various innovativeness indicators, including overall technological advancement, patent registrations, internet usage, and foreign technology licensing According to the World Economic Forum's Network Readiness Index, Lithuania was positioned 43rd out of 102 countries in the 2004-2005 period, trailing behind most EU Member States, with only Latvia, Poland, and Slovakia performing worse, while the EU-25 average stood at 29th place.
Lithuanian businesses lag behind the EU-25 average in innovation performance indicators In 2004, their expenditure on innovations was only 81% of the EU-25 average, placing Lithuania in 12th position Additionally, less than one-third (31%) of Lithuanian businesses adopted non-technological innovations, which represents just 63% of the EU-25 average, ranking Lithuania 16th in this category.
Lithuania's business sector has a limited number of researchers, as highlighted by the Department of Statistics to the Government of the Republic of Lithuania, which reported a notably low figure in 2004.
589 25 , including only 103 persons with a degree Compared with the total number of researchers in
The 2005 European Innovation Scoreboard presents a comparative analysis of innovation performance across countries, utilizing the Summary Innovation Index (SII) This index is derived from recalibrating 18 key statistical indicators that assess the innovation status of various nations Based on the established methodology, the SII for the EU-25 group ranges from a minimum score of 0 to a maximum score of 1, providing a clear benchmark for evaluating innovation capabilities.
In Lithuania, only 6.7% of employees are engaged in research roles within businesses, positioning the country at the lowest tier among EU Member States in this regard With a total of 25 employees working for the primary employer, this statistic highlights the need for increased investment in research and development to enhance Lithuania's competitive standing in the European Union.
Lithuania excels in innovation performance, particularly in the area of business cooperation for innovation activities The country ranks 4th among the EU-25, significantly surpassing the EU-25 average by 34%, highlighting its strong collaborative efforts among businesses in fostering innovation.
In 1999, the initial innovation support instruments, specifically subsidies, were introduced on a limited scale, with only LTL 89,000 allocated for this purpose This marked the beginning of establishing a public infrastructure of business services through a network of entities.
A 2005 survey revealed that only 10.1% of innovation businesses received public financial support between 2002 and 2004, including tax credits, grants, and subsidized loans Specifically, 6% of these businesses benefited from state budget funding, while 4.4% received assistance from EU programs The survey indicated that nearly half (47.7%) of the businesses sourced valuable information for new innovation projects from internal channels, with 29.2% relying on customers and consumers, and 26.9% on equipment or materials suppliers Additionally, 18.4% gathered insights from fairs and exhibitions, and 12.9% from competitors Notably, only 2.9% of businesses obtained information from state research institutes, universities, or higher education institutions.
A 2004 survey conducted by the PHARE 2001 Economic and Social Cohesion Twinning Project revealed significant gaps in innovation knowledge among Lithuanian businesses, with nearly 90% lacking information on innovations Furthermore, approximately 83% of respondents expressed unfamiliarity with the process of writing an innovation project to secure EU funding.
Investment in Research and Development and Innovations in Lithuania
In recent years, Lithuania has seen a significant rise in research expenditure, both in absolute figures and as a percentage of GDP In 2004, research funding reached LTL 472.7 million, representing 0.76% of the country's GDP Despite this growth, Lithuania's research funding remains considerably lower compared to the European Union average.
25) on average 27 and is among the smallest both among all the EU Member States and the new Member States
26 Development of Innovations Department of Statistics under RL Government, 2006.
27 According to EIS (European Innovation Scoreboard) 2005 Database, in 2003 EU-25 countries alloted on average1.95 of GDP as public investments in research (in both public and business sector), Lithuania - 0.68 of GDP.
Figure 16 Ratio between expenditure for RD and GDP in Lithuania,
Source: Department of Statistics under the Government of the Republic of Lithuania.
Insufficient funding for research and development (R&D) significantly hampers performance in innovation activities For instance, Lithuania's output of publications in journals indexed by the Institute of Scientific Information is four times lower than the EU average per million population.
Lithuania has a relatively small number of inventions or technological solutions to be patented: in
In 2002, Lithuania's patent application rates were significantly lower than the EU-25 averages, with only 2.6 applications per 1,000,000 population to the European Patent Office and 0.5 to the US Patent and Trademark Office, compared to the EU-25 averages of 133.6 and 71.3, respectively Additionally, Lithuanian inventors submitted just 1.3 high-technology patent applications per 1,000,000 population to the European Patent Office, and none to the US Patent and Trademark Office, while the EU-25 averages stood at 26 and 9.4, highlighting a considerable gap in innovation output.
As regards public sector expenditure for R&D, Lithuania’s indicators are not very different from the
2.4 PRIORITY 3: INFORMATION SOCIETY FOR ALL 82 2.5 PRIORITY 4: BASIC ECONOMIC INFRASTRUCTURE 87 2.6 PRIORITY 5: DEVELOPMENT OF TRANS-EUROPEAN TRANSPORT NETWORKS 92 2.7 PRIORITY 6: TECHNICAL ASSISTANCE FOR THE IMPLEMENTATION OF THE OPERATIONAL
CORRESPONDENCE TO HORIZONTAL THEMES AND THEIR IMPLEMENTATION 98 3 FINANCIAL PLAN 101 4 QUANTIFICATION OF OBJECTIVES 102 5 PREPARATION OF THE OPERATIONAL PROGRAMME 112 5.1 PARTNERSHIP 112 5.2 EX-ANTE EVALUATION 114 5.3 STRATEGIC ENVIRONMENTAL IMPACT ASSESSMENT 116 6 IMPLEMENTING PROVISIONS 119
The growing integration of IT in businesses and households paves the way for innovative advancements Under Priority 1, "Research and Development for Competitiveness and Economic Growth," IT will play a crucial role in collaborative projects between businesses and research organizations Enhanced IT utilization in business support organizations, driven by Priority 2, "Increasing Business Productivity and Improving the Business Environment," will lead to more effective public R&D and innovation services, facilitating cooperation, particularly in international projects Additionally, the Operational Programme on Economic Growth aims to foster innovation and collaboration between business and research by developing innovation-friendly infrastructure and supporting projects that enhance service quality and accessibility, significantly increasing IT adoption in the business sector.
All action groups of the Information Society for All Priority are directly intended for the promotion of the information society development processes in the country.
The implementation of advanced IT technologies and the modernization of energy facilities will enhance the investment in "Energy supply networks" under the "Basic Economic Infrastructure" priority This includes projects focused on SCADA systems, automated electricity accounting, and power demand forecasting, all of which will significantly contribute to the development of an information society.
Direct support for R&D and innovation projects will be rendered without violating the principle of equal opportunities.
To promote women's entrepreneurship, the initiative aims to enhance the quality and accessibility of public services for businesses, implement entrepreneurship promotion programs, and improve access to financing options, particularly microcredits.
The Information Society for All Priority aims to create equal opportunities for all citizens in Lithuania, enabling everyone to benefit from various ICT advantages, including public electronic services, e-health, intelligent transport systems, and rich digital content in the Lithuanian language This initiative will prioritize the principles of electronic inclusion, ensuring that the use of ICT is accessible and facilitated for all social groups.
To enhance business productivity and create a better environment for enterprises, the focus is on decreasing the prevalence of energy-intensive and polluting industries This will be achieved by promoting the development of advanced technologies and encouraging traditional sectors to adopt innovations The integration of eco-innovations in businesses is anticipated to significantly contribute to sustainable development.
Creating a business-friendly environment that fosters innovation will indirectly support sustainable development by promoting the growth of less energy-intensive industries and encouraging companies to adopt energy-efficient and clean technologies.
The investment measures for "Energy Supply Networks" under the Priority of "Basic Economic Infrastructure" align with the long-term goals set forth in the National Sustainable Development Strategy This strategy aims to establish a sustainable energy sector that can compete in the global market while ensuring reliable and safe energy supply for all Lithuanian industries Additionally, the identified investment areas for 2007–2013 are consistent with the long- and medium-term objectives of the National Sustainable Strategy, focusing on enhancing the efficiency of energy generation and distribution.
modernise and develop district heating systems, renovate heat supply networks, create conditions for heat producers to compete and for consumers to regulate heat consumption;
renovate the power supply infrastructure (modernise substations, partially renovate power transmission and distribution networks);
extent natural gas distribution networks;
prepare and launch long-term municipal heat facilities plans.
The Priority Information Society for All will significantly advance the National Sustainable Development Strategy by enhancing ICT infrastructure in rural areas and transitioning public services to an electronic format, thereby reducing socio-economic disparities and social exclusion The digitalisation of cultural heritage will aid in its preservation and broader dissemination Additionally, e-health services will improve public health, while intelligent management systems will facilitate the sustainable use of natural resources, minimize environmental pollution, promote rational urbanization, and enhance emergency management These initiatives will be executed using the latest technologies to ensure effective implementation.
The integration of advanced systems and tools such as IT, GIS, GPS, and Galileo, along with national resources in science, technology, and business, will significantly enhance various industries and promote sustainable development in the country.
The reconstruction and development of regional transport network components, as part of the "Transport Network" Action Group under the "Basic Economic Infrastructure" priority, will enhance traffic safety, lower transportation costs, and improve infrastructure technical parameters This initiative aims to reduce environmental pollution and noise levels while simultaneously fostering better conditions for local businesses and promoting labor mobility.
Reconstruction and development of TEN network under the Operational Programme Priority
“Development of trans-European transport networks” will help increase traffic safety, reduce transport operation costs and environmental pollution and noise levels.
To enhance the integration of sustainable development as a horizontal priority, monitoring will be conducted using indicators outlined in the Operation Programme on Economic Growth The Monitoring Committee will evaluate these sustainable development indicators, ensuring that environmental considerations are incorporated into the decision-making process by establishing specific environmental criteria for project selection.
As a rule and following the recommendation of the SEIA report all investment projects will be assessed in respect of impact on environment
The Lithuanian Strategy for Regional Policy, established by 2013, aims to achieve uniform territorial economic development across the country This involves the coordinated promotion of long-term economic growth and competitiveness in regional centers, particularly those surrounded by areas with lower living standards The goal is for these centers, which possess economic potential and infrastructure, to function as regional growth hubs, thereby enhancing social cohesion both locally and nationally To implement this strategy, development efforts are focused on five key regional centers: Alytus, Marijampolė, Tauragė, Telšiai, and Utena, with initiatives planned through 2013.
The Ignalina Nuclear Power Plant region requires special consideration due to anticipated negative social and economic impacts stemming from the decommissioning of Units I and II, with Unit II scheduled for decommissioning in 2009.
The implementation of the Operational Programme will facilitate direct investment support, enhance technology transfer, and promote innovation through improved infrastructure and services By increasing access to diverse business financing sources and developing public investment areas, this initiative aims to reduce development disparities across counties, prioritizing projects in less developed regions and regional centers designated for growth.
The implementation of the "Energy Supply Networks" intervention under the "Basic Economic Infrastructure" priority of the Operational Programme for Economic Growth emphasizes the regional significance of district heating networks, which are inherently local Upgrading these systems with advanced technologies can enhance efficiency and reliability while lowering heat energy costs for consumers Furthermore, the versatility in fuel types used by district heating systems contributes to a more dependable energy supply.
BREAKDOWN OF EXPENDITURE BY CATEGORIES
OPERATIONAL PROGRAMME ON ECONOMIC GROWTH – breakdown of expenditure by categories
Breakdown of expenditure by priority themes
01 R&TD activities in research centres 74.327.186
RTD infrastructure (including enterprise itself, equipment and high-speed computer network, connecting research centers) and centers competent in a particular technology 241.562.993
Technology transfer and improvement of cooperation network among small and medium-sized enterprises
Small and medium-sized enterprises (SMEs), universities, and various higher education institutions collaborate with regional administrative bodies, research centers, and science and technology parks to foster innovation and growth.
Support to R&D, first of all to SME (including possibility to use R&D services in the research centers) 70.487.695
05 Quality services to businesses or groups thereof 39.284.215
Investments in businesses directly related to RTD and innovations (innovative technologies, founding new companies at the universities, existing R&D centers and companies, etc.) 128.156.812
Other investments to promote RD, innovations and entrepreneurship 234.868.118
Information and communications technologies (access, security, compatibility, risk prevention, research, innovations, e-content etc.) 55.219.981
Services and content to citizens (e-health, e-government, e-learning, e-inclusion etc.) 100.836.487
Services and content to SMEs (e-commerce, education and training, networking etc.) 40.814.769
43 Energy efficiency, co-generation, energy management 73.346.296
68 Support for self-employment and business start-up 41.595.051
85 Preparation, implementation, monitoring and inspection 35.859.836
86 Studies and evaluation, information and publicity 8.964.959
Breakdown of expenditure by financing method
02 Aid (loan, interest subsidy, guarantees) 97.055.119
03 Venture capital (participation, risk capital fund) 25.419.198
Distribution of expenditure by types of territories
Code Title Financial proportion (EUR)
Rural areas (excluding mountains, islands, and rarely or extremely rarely populated areas) 43.215.638
INDICATIVE LIST OF MAJOR PROJECTS
Preliminary, the following transport projects of transeuropean significance of big value (with a project value more than 50 million Euros) are planned to be implemented during 2007 – 2013:
Fund responsible for general financing of the project
Preliminary value of the projects (million Euros)
Kaunas railway section of IXB
Transport Corridor for a speed of
Upgrading of alarm equipment of the Vilnius – Kaunas railway section of IXB Transport Corridor
Design and construction of the railway Rail Baltica
Development of rural area information technology broadband network RAIN
FINANCIAL FLOWS
State Treasury Department of the Ministry of Finance
National Fund Department of the Ministry of Finance
Payment claims, documents for justification of expenditure
Responsible public administration institutions – intermediate bodies
Payment application to responsible ministry for fund transfer
Payment request to State Treasury Department
Transfers of EU structural assistance
Bank payment order to transfer EU structural assistance and national cofinancing
Information about received payments from EC
(Operational Programmes Management Department of the Ministry of Finance)
Delegating tasks of verification of the eligibility of expenditure to implementing agencies
Information on the procedures and verifications carried out in relation to expenditure
Verification of the eligibility of expenditure
Information about supplied payment declarations Certified statements of expenditure
Verification of the eligibility of expenditure
Information on carried out audits
EX-ANTE RECOMMENDATIONS – OPERATIONAL PROGRAMME ON
The table below presents the final recommendations from the ex-ante evaluation of the Economic Growth Operational Programme, emphasizing potential improvements to the programme documentation.
We have categorised actions taken using the following key:
No Recommendations Taken/not taken into account
Lithuania's economic growth has been driven not just by affordable resources and market adjustments, but also by effective macroeconomic management Key factors contributing to this growth include robust domestic consumption and elevated borrowing rates.
To sustain rapid growth, it is essential to foster business competitiveness, primarily by enhancing labor productivity.
2 It is important to pay attention to the fact that in addition to the domination of low technologies in Lithuania and bad situation with
To enhance labor productivity in traditional sectors such as timber and food industries, it is crucial to address their current lag compared to other EU countries Improving productivity in these key sectors is essential for boosting overall GDP and achieving the productivity levels of EU-15 nations.
3 We advice to mark in the SWOT analysis that the public sector in
Lithuania is weakening partially due to the emigration of the personnel and due to the poor implementation of reforms in this
N Education and health care systems are not supported under this
140 sphere, especially in health care and education systems
Lithuania is experiencing a decline in its ability to attract foreign capital, alongside a troubling trend of capital flight, as local industrialists are choosing not to invest or reinvest within the country.
Lithuania choose other EU countries, including neighbouring countries and the new EU member states
√ This is described in situation analysis
To enhance economic growth, it is crucial to prioritize short-term business productivity objectives that can quickly improve labor productivity indicators Following this, emphasis should be placed on research and development, as well as a focus on the high-technology sector, which will contribute to long-term productivity improvements Although priorities have not been officially reshuffled, the importance of addressing low business productivity has been highlighted, with incentives put in place to encourage its increase.
√ The objectives of the programme are formulated /stated in consideration of the recommendations of the experts
To minimize competitive distortions, state intervention should focus on enhancing the business environment rather than directly allocating budget resources to specific businesses When providing direct assistance, it is recommended to tie support to firms' export capabilities, which can help improve Lithuania's export indicators, ultimately benefiting the country's economy.
√ Investments supporting growth of export amounts is foreseen in the page
No 73 Furthermore, this will be addressed in setting selection criteria.
7 Having purpose to achieve that businesses would start the innovations in their activity at first it is important to strengthen
A cohesive R&D infrastructure serves as a foundational platform for advancing scientific research and engineering initiatives We advocate for the integration of R&D facilities to foster collaboration, rather than confining them to individual departments or organizations.
Establishing joint science research centers for specialized training can enhance investigative engineering studies, leading to impactful results that benefit multiple business sectors This collaborative approach not only increases effectiveness but also ensures sustainability beyond the duration of EU assistance.
8 We recommend paying attention to the increased risk of absorption √ In the past period very limited assistance for investments in R&D sector
Research and development (R&D) in the private sector is currently underdeveloped, with a limited number of firms investing in key areas such as biotechnology and laser technology Despite some preparatory work for national R&D programs, investment priorities remain undefined However, firms are actively applying for assistance, and contracts have been established to support these initiatives Moving forward, new measures will be introduced for both soft and hard projects, along with an expanded list of eligible applicants and partners to enhance the R&D landscape.
In February 2007, the Government of Lithuania identified key priority areas in the research and development (R&D) sector To support these priorities, national programs will be developed in scientific research, including a researcher career program, a joint national integrated program, and a collaborative research and business cooperation initiative These programs are scheduled for completion by July 2007, as directed by the Minister of Education and Science.
Considering the seven-year programming period, it is essential to discuss the anticipated absorption of LTL 442 million in investments for firms in the R&D sector, especially given that the previous period required only LTL 60 million.
Recently, there has been minimal support for investments in the R&D sector and technological infrastructure Despite this, companies have actively submitted applications, leading to contracts for the total amount of available assistance In the upcoming period, new initiatives are planned for both soft and hard R&D projects, along with an expanded list of eligible applicants and partners.
Key indicators of the strategic context include export metrics, labor productivity rates, investment levels, the availability of public electronic services, total research and development expenditure, and the number of business research initiatives.
Key indicators for assessing program implementation include the number of parks and zones established, the level of private investments attracted, the number of integrated technological businesses, and the establishment of research and study centers such as poles and valleys Additionally, the count of operational scientific research centers and other relevant metrics specific to various activity groups also play a crucial role in evaluating progress.
COMPATIBILITY OF ASSISTANCE WITH OTHER OPERATIONAL PROGRAMMES
PRIORITY/OBJECTIVE COMPATIBILITY WITH OTHER
COMPATIBILITY WITH OTHER EU FINANCIAL INSTRUMENTS
Priority 1: Research and Development for Competitiveness and Growth of the Economy
- activities of scientific research centres;
- centres of sciences-business interaction;
- the research of centres of excellence in state scientific institutions and universities in the fields of high and medium high technologies (by global grant schemes, including scientific equipment);
- the researches of state scientific institutions and universities in the fields of high and medium high technologies;
- centres, existing under public science and study institutions, implementing the functions of technology transfer.
Only “hard” investments will be financed under this priority, while “soft” investments will be supported under priority 3 of Human Resources Development
Human Resources Development Operational Programme (Priority 3 Increase of the capacity of researchers)
Support for scientists and researchers, including students, is facilitated through global grant schemes that promote employment in public sectors and high to medium-high technology enterprises This includes opportunities for scientific internships, scholarships for PhD students, and initiatives aimed at enhancing regional and sectoral mobility through study visits Additionally, the focus is on disseminating R&D results, boosting innovative capacity, and effectively managing intellectual property.
Only “soft” investments will be financed under this priority, while “hard” investments will be supported under priority 1 of OP on Economy Growth
- transnational mobility and continuous upgrading of professional skills of scientists and researchers in EU scientific centres of excellence
- Measure „Vocational training and information actions“ (vocational training and information actions, including dissemination of scientific knowledge and innovative practices, for persons engaged in agricultural and forestry sectors).
Demarcation criterion – range of activity: training in agriculture and forestry.
- Measure “Modernisation of agricultural holdings”, Activity “Investments into agricultural production and / or services to agricultural sector” (purchase of new agricultural machinery and equipment, computer hardware and software).
Applicants: natural or legal person engaged in agricultural activity, science and education institutions, possessing experimental, demonstration, training and test farms and engaging in agricultural production
Demarcation criteria: range of activity: spreading of science and technology in agriculture
- Support for promotion of partnership of scientists and operators in the fisheries sector, pilot projects for
Applicants: non-governmental organisations or public legal persons representing interests of fisheries sector.
- Support for construction, extension, equipment and modernization of fish processing enterprises when seeking to produce or to market new fish products, applying new technologies or developing innovative production methods.
Applicants: fish processing enterprises with less than
750 employees or with a turnover of less than EUR
Priority 2: Increasing business productivity and improving environment for business
Objective 1: Increasing of productivity of businesses
Investing in advanced production equipment and innovative technologies, along with e-business solutions, enhances quality and optimizes production processes Conducting energy audits in enterprises is essential for boosting productivity and improving overall operational quality.
Human Resources Development Operational Programme (Priority 1 High-quality employment and social inclusion)
- Development of human resources in enterprises:
Training and upgrading the qualifications of workers, executives, and personnel managers is essential for developing both general and specific skills Implementing modern personnel management systems in enterprises ensures that the training provided to managers and workers aligns with current industry needs.
The "Modernisation of Agricultural Holdings" measure supports the acquisition of new agricultural machinery and equipment, as well as computer hardware and software essential for project implementation It also focuses on enhancing the holding's infrastructure in relation to agricultural production, processing, and services, while preparing for effective marketing within the agriculture sector.
Eligible applicants include farmers or legal entities involved in agricultural production and services, who have registered their holdings in accordance with national laws This also extends to cooperatives and educational institutions that operate experimental, demonstration, training, and test farms while participating in agricultural production.
-Measure “Processing of agricultural products and increasing of added value” (support for new equipment and machinery, including computer software)
Applicants: micro-enterprises operating in urban area, small and medium-sized enterprises processing
Eligible enterprises for the scheme include those involved in the marketing of agricultural products, with a minimum of two years of prior business experience This encompasses businesses employing between 250 to 750 employees or generating an annual turnover of EUR 50 million to EUR 200 million that process agricultural products Additionally, agricultural cooperatives are also considered eligible.
Demarcation criteria - range of activity: investments in new production equipment and technologies in agriculture and production of agricultural products
- Aquaculture: measures associated with the industrial investment in aquaculture.
- support to founding, development, equipping, and modernizing of fish processing enterprises, aiming to produce and provide new fish products, apply new technologies, or develop progressive production methods
Applicants: fish processing enterprises that employ no less than 750 people, or with an annual turnover from EUR 200 m.
Objective 2: Increase viability of businesses and promote entrepreneurship
- infrastructure for business environment: development of business incubators and information centres in places not belonging to rural areas), etc
To enhance the business environment, it is essential to establish comprehensive databases and conduct thorough market assessments Effective information dissemination through seminars and conferences will support businesses in making informed decisions Additionally, fostering cooperation among business associations, information centers, and relevant institutions can facilitate valuable experience exchange and collaboration, ultimately driving growth and innovation in the sector.
- projects for competitiveness growth: preparation, various sectorial and overall competitiveness studies, activities for improvement of Lithuanian business environment image, etc.
Human Resources Development Operational Programme (Priority 1 High-quality employment and social inclusion)
- Training of people’s entrepreneurship skills in connection with establishment of business
Applicants: Business information centres, business incubators, non-governmental organizations.
Operational Programme for Promotion of Cohesion,
2 priority (Local and urban development, conservation of cultural heritage and nature and adaptation for tourism development)
- improvement of community urban infrastructure (Renovation and development of public leisure, sport and cultural, urban transport infrastructure important for business) Complex development projects exceeding 200 000 euros will be financed.
Applicants: municipalities or their institutions
- Measure „Vocational training and information actions“ (vocational training and information actions, including dissemination of scientific knowledge and innovative practices, for persons engaged in agricultural and forestry sectors).
Demarcation criterion – range of training: agriculture and forestry.
- Measure “Use of advisory services“
We offer expert advisory services for individuals and legal entities, including forest owners involved in agriculture and forestry Our services encompass guidance on statutory management requirements, good agricultural practices, environmental stewardship, agri-environmental strategies, bookkeeping, and forestry-related issues.
Demarcation criterion: advisory services in fields of agriculture and forestry
Objective 3: improve access to financing sources for SMEs
- financial engineering measures (micro credits, guarantees, risk capital funds) EAFRD:
Measure “Support for business creation and development” (support for establishment and development of micro-enterprises in rural areas).
Demarcation criteria - type of support: investment support (the support is not refunded by applicant)
- Aquaculture: investments to construction, development and modernization of production equipments;
- Processing and marketing of fishery products.
Priority 3 Information society for all
- distant learning: measures of informal education for all people of the country via internet (e-content will not be created)
- development of interactive eGovernment services
(no less than 3 th level of online sophistication) for citizens and business.
Human Resources Development Operational Programme (Priority 2 Lifelong learning)
- distant learning (creation of e-content of informal learning and measures of formal learning).
Applicants: providers of formal and informal education services.
Human Resources Development Operational Programme, 4 priority (Administrative capacity building and increase of efficiency of public administration)
- distant learning and e-content: creation of training measures for civil servants.
Human Resources Development Operational Programme, 4 priority (Administrative capacity building and increase of efficiency of public administration)
The development of information systems and databases within public administration institutions is complemented by efforts to enhance the legal framework and provide training These IT initiatives focus primarily on optimizing internal procedures for national and municipal institutions, as well as facilitating electronic services between government entities (GOV-to-GOV).
Building and reconstruction of regional roads
(including paving of gravel roads)
Investing in deepening of ports, construction and reconstruction of docks, improvement of interaction between ports and rail and road transport, development of inland waterways
Measure „Modernisation of agricultural holdings“ (support for building farm roads)
- applicant: natural or legal person engaged in agricultural activity;
- location of project implementation (farm area).
Support for investments in existing public and private fishing ports, for reconstruction of landing sites and for investments in modernization and reconstruction of small fishing shelters.
Priority 6 Technical assistance for the implementation of the operational programme on Economy Growth
The primary goal is to guarantee the efficient operation of the management and control system for EU structural assistance allocated under the Convergence Objective, while implementing the Operational Programme for Economic Growth.
The technical assistance will be provided under this priority to the activities of all institutions involved in the implementation of the Economy Growth
Operational Programme related exclusively to the implementation of this Operational Programme
Operational Programme for Technical Assistance
In case the same institution will be involved in the implementation of more than one Operational Programmes, its activities could be financed from the Technical Assistance Operational Programme.
Objective 2 aims to enhance awareness among potential beneficiaries, current beneficiaries, and partners regarding the support offered by the Cohesion Promotion Operational Programme and the outcomes of its implementation, while also conducting evaluation activities related to Economic Growth.
The publicity and evaluation activities related exceptionally to Economy Growth Operational
Programme will be financed under this priority
Operational Programme for Technical Assistance
The publicity and evaluation activities related to more than one Operational Programmes will be financed from the Technical Assistance Operational Programme.
STATE AID CLAUSE
Any public support under this programme must comply with the procedural and material State aid rules applicable at the point of time when the public support is granted.
PUBLIC PROCUREMENT
Member state ensures that public procurement carried out implementing projects under this Programme complies with provisions of Directives 2004/17 /EC and 2004/18/EC or respective principles of the Treaty.
REGIONS FOR ECONOMIC CHANGE INITIATIVE
The Coordinator or Managing Authority may invite a representative from the Regions for Economic Change initiative to observe the Monitoring Committee, allowing them to report on network activities related to the Operational Programme on Economic Growth Additionally, the agenda will include a discussion point for reviewing the network's activities and suggestions pertinent to the programme Furthermore, the Annual Report will detail the implementation of regional actions associated with the initiative and the Operational Programme on Economic Growth.
COOPERATION WITH THE BALTIC SEA COUNTRIES
In light of the national market's size, collaboration with other Baltic Sea countries will be pursued in shared areas of interest This partnership aims to leverage economies of scale and achieve critical mass, creating opportunities that would be challenging to accomplish alone.
RECOMMENDATIONS ON STRATEGIC ENVIRONMENTAL IMPACT ASSESSMENT OF
EUROPEAN UNION STRUCTURAL ASSISTANCE FOR 2007–2013
No Recommendation Taken into account/not taken into account Comments
1 We propose to add provisions in the OPs which would obligate the County
Governors and municipalities are urged to promptly revise their strategic documents to align with the priorities, goals, and objectives outlined in the programming documents It is essential that these revisions are clearly emphasized within the programming documents to ensure coherence between municipal and county strategies.
Governor’s Administrations play a major role in implementing the measures of environment protection and improving its state
The Ministry of Interior will notify all County Governor Administrations and municipalities to revise their regional strategic documents in alignment with the goals, priorities, and objectives outlined in the Operational Programmes.
To maximize the benefits of investments in environmental protection, it is essential to adhere to the principle of environmental conservation This principle should be highlighted in operational policies, particularly in the economic operational policies, to ensure sustainable and effective outcomes.
Sustainable growth is essential for a country's economy, emphasizing the need for solutions that prioritize environmental protection It is crucial to explore various strategies that harmonize economic development with ecological preservation, ensuring that the quality of the environment is not compromised By integrating environmentally-friendly practices into economic planning, we can achieve a balance that supports both prosperity and sustainability.
Taken into account All investment projects will be assessed in respect of impact on environment
As EU countries prioritize waste prevention, recycling, and biological decomposition over dumping and incineration due to their cost-effectiveness and job creation potential, it is crucial for Lithuania to align its future investment strategies with EU policies To enhance the Operational Program on Economic Growth, it is important to incorporate trends in recycling and innovative waste management practices, as seen in China's "waste recycling economy," the U.S states prohibiting certain waste from landfills, and Japan's "3R" approach of reducing, reusing, and recycling By emphasizing these aspects, Lithuania can contribute to Europe's goal of becoming more competitive and environmentally sustainable.
The proposal by experts to establish a distinct waste management sector under the Operational Programme on Economy Growth is deemed unacceptable, as the primary objective of this program is to enhance competitiveness across various economic sectors Instead, waste management initiatives are addressed within the Operational Programme on Promotion of Cohesion.
Analyzing the current social and economic conditions of the environment necessitates significant time for data collection and verification This challenge is not unique to Lithuania; it is also prevalent in various EU countries Therefore, we recommend highlighting the importance of monitoring outcomes in the assessment of the Operational Program's implementation.
Moreover, we propose that in the future in monitoring the after-effects for
Partly taken into account Monitoring arrangements are thoroughly described in chapter 6 (Implementing provisions).
It is foreseen that Monitoring Committee will be involved in the monitoring of the horizontal
To effectively evaluate environmental progress, EU countries utilize specific indicators that assess their performance in environmental protection These indicators are outlined in the European Environment: State and Outlook report, providing a framework for measuring advancements in sustainability across the region.
In 2005, nine indicators were identified, each with two states: fixed and progress To enhance the monitoring system, we propose the formation of a permanent group of independent experts to oversee and coordinate these efforts Additionally, the Environmental Protection Agency, currently responsible for environmental monitoring in Lithuania, should be integrated into the administration framework for implementing operational priorities.
5 The aspects of the better use and increase in the competitive ability of
Klaipėda Seaport should be better described in the OP on Economic
Experts in Strategic Environmental Impact Assessment have faced challenges in drawing conclusions due to insufficient data, leading them to only estimate potential outcomes for individual environmental components To address this issue, we suggest exploring how enhancing the capabilities of Klaipėda Seaport could effectively resolve various environmental problems at the national level.
To enhance the capacity and competitiveness of Klaipėda Seaport from 2007 to 2013, plans include developing passenger and cargo terminal infrastructure, improving safety, and reducing environmental impacts such as noise and exhaust emissions Additionally, access roads to multimodal cargo terminals in the southern part of the Seaport will be upgraded, and a wharf for boats and small ships will be constructed However, the development plans do not address national-level environmental issues, such as creating infrastructure for exporting non-burnable waste, as there is currently no demand for such exports Consequently, loader companies in Klaipėda Seaport do not intend to invest in this infrastructure, although state-dependent facilities could potentially fulfill future needs.
6 Low interest of the public in the results of the report of Strategic
Incorporating an Environmental Impact Assessment (EIA) is crucial for the successful implementation of Operational Plans (OPs) Therefore, it is essential to include a provision in the OPs that mandates public disclosure following the completion of the Strategic Environmental Impact Assessment This transparency ensures that stakeholders are informed and engaged in the environmental decision-making process.
Taken into account Information actions will be continued In line with SEIA Directive, once the OPs are approved the consulted institutions and partners are informed on how
166 the SEIA recommendations are taken into account.
7 In the OPs we recommend to pay specific attention to the Regulation concerning the Registration, Evaluation, Authorization and Restriction of
The REACH regulation, effective from January 1, 2007, aims to promote sustainable development by introducing innovative measures that may influence the objectives outlined in Operational Programs (OPs) Evidence from EU countries indicates a significant rise in unemployment, adversely affecting the growth of small and medium enterprises This regulatory framework operates on the principle that without sufficient data on a chemical, it cannot be marketed.
The lack of regulation surrounding waste management poses significant risks to environmental protection, public health, and market integrity When waste is misclassified as a production resource, it can lead to fraudulent practices that circumvent procedural expenses, ultimately undermining competitiveness within the country.
Not taken into account The measures of the OP on
Economic growth initiatives for businesses are not focused on the chemical sector, making the assertion that the REACH regulation will affect the achievement of Operational Program (OP) goals unfounded The Strategic Environmental Impact Assessment report lacks supporting reasoning for this claim We believe that the OP's implementation will foster the growth of small and medium enterprises and increase employment, thereby mitigating some of the negative effects associated with the EU directives highlighted by experts.
Questions directly related to enactment of the system of REACH will be solved by using the funds of national programmes
8 As the conclusions about the possible outcomes of implementation of the