A Baltic Sea region index compiled by Swedbank shows that despite considerable progress, Lithuania is still not as competitive as it could be. Lithuania was placed among the top third of the most competitive countries in the world, which is a better result than last year, but essential progress is still needed.
© DELFI / Karolina Pansevič

Swedbank economists note that there are shortcomings in state governance, tax system, innovation and education policies, which are the main obstacles for a faster economic growth and rise in living standards.

The most important indicators used in the index are business environment, labour market functionality, tax policies, efficiency of financial markets, foreign trade, education system, state governance, infrastructure, logistics, and environment for innovations.

In all the criteria, except business environment, Lihuania is below the region's average. The most important points of underperformance are related to insufficient funding opportunities, weak transport infrastructure and poor environment for innovations.

The chief economist at Swedbank, Nerijus Mačiulis, said that “when thinking about a faster income convergence with the EU average, we need to understand that the main mover of this process is the competitiveness of the state and not short-term economic policy measures, such as regulation of minimum wage. It is especially relevant to Lithuania, because in the nearest five years, the country will have to deal with a triple challenge: the declining size of working-age population, the reduction in EU subsidies and, very likely, a decline in expatriate remittances as well.”

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