Young Writers Society

Economic Indicators of Lithuania

Introduction

Despite its roots under Communist rule, Lithuania has made major strides to become a capitalist democracy in the last three decades. Economics is the condition of a region as it relates to economic prosperity. Indicators of an economy’s prosperity include the Gross Domestic Product (GDP), unemployment rate, inflation rate, per capita income, life expectancy, and literacy rate. Lithuania has an educated workforce whose citizens contribute to the national GDP. Specifically, over 99% of Lithuanians are literate, 91.3% have obtained college degrees, and over 95% of its adult population is employed. Although Lithuania’s democracy is still in its infancy, Lithuania boasts a robust economy and that is driven by its innovative, literate and happy people.

Lithuanian History Since 1915

Until 1915, Lithuania was part of the Russian Empire. In 1915, Germany conquered Lithuania as part of its quest to gain territory in World War I. At the conclusion of the war and Germany’s defeat, Lithuania signed the Act of Independence creating the republic of Lithuania in 1918. Lithuania would remain independent until August 1940, when it was occupied by the Soviet Union, resulting in mass execution and deportation of its people. In June 1941, Lithuania was again invaded by the Germans, who practically exterminated the entire Jewish population. At the conclusion of World War II, the USSR once again claimed Lithuania as part of the Soviet Union. For nearly fifty years, Lithuania remained under communist control until the Soviet Union’s collapse in 1991. In September 1991, Lithuania finally gained independence from Russia and joined the United Nations. However, Moscow did not recognize Lithuania’s independence and there were many Russian soldiers living in and monitoring the country until 1993. Since 1993, Lithuania has been transitioning to a free market economy. Since the 1990s, Lithuania has been a representative democratic republic with popular elections of the country’s president every five years. In 2004, Lithuania joined the European Union (EU) and North Atlantic Treaty Organization (NATO). Lithuania’s people self-identify as over 75% Catholic. The native language of the country Lithuanian but most citizens speak English. Lithuania’s independence and its people’s ability to vote for its leaders factor tremendously into its citizens’ happiness.

Lithuania’s Economy at a Glance

Lithuania is an advanced high-income economy, which is defined as a developed country by the World Bank. Lithuania has the largest economy of the three Baltic countries (Latvia, Estonia, Lithuania), but is only one-tenth of the size of Poland's economy. On January 1, 2015, the euro became the national currency of Lithuania replacing the “litas.” Lithuania has a Gross Domestic Product (GDP) of $582 billion and the average income for each citizen is $34,597. Lithuania exports $30.4 billion in products and services annually. Lithuania's exports include mineral products, machinery and equipment, chemicals, textiles, foodstuffs, and plastics. 68.3% of Lithuania's population works in the service industry, 28.5% works in general industry, and 3.3% works in agriculture. Lithuania’s unemployment rate is 3%. The inflation rate in Lithuania has been increasing since 1999 and is currently at 2.5%. Lithuanian GDP experienced high growth rates in the 2000s giving the country the name “Baltic Tiger”. However, since 2009 and the global financial crisis, the country’s GDP contracted by 14.9%. The life expectancy for an average Lithuanian is 74.3 years which is slightly above the international average. The country’s literacy rate is at a staggering 99.8%.

Lithuania’s Rise as an Economic Force in Europe

In light of Lithuania’s transition to a democracy, the average Gross National Happiness (GNH) has increased because its citizens are able to exert self-control over their leaders through open elections. All eleven of Lithuania’s presidential elections since 1990 have been considered “free and fair.” The GNH has also increased due to Lithuania’s highly educated workforce. Lithuania is among the top five countries in the world by post-secondary educational attainment and the EU’s most educated country. Due to Lithuania’s educated workforce, it is able to attract many foreign investments, particularly in the information technology sector. Lithuania seeks to become an innovation hub by 2020. To do so, Lithuanian municipalities have created special incentives for investors to create jobs or invest in local infrastructure. Lithuanian household debt is among the lowest of all EU countries, which demonstrates that Lithuanian people are fiscally conservative. Lithuanian citizens are the happiest people in the Baltic States due to the low unemployment rate, the job opportunities for its workforce, high literacy rates and high per capita income. In sum, the economic indicators of Lithuania demonstrate a high quality of life.

Conclusion

Even though Lithuania only became an independent country in 1991, it has not taken long for the free market economy to gain a foothold in the country. The economic indicators show a citizenry that is highly literate, employed, and earning a per capita income that is above average. Lithuania attracts investments from abroad which contributes to its economic growth and GNH. Lithuania’s self-government contributes to its overall economic well being because its citizens can elect their leaders. A thorough analysis of the economic indicators demonstrate that Lithuania’s citizens enjoy a high quality of life.

856 Words

Annotated Bibliography

Secondary Sources

Websites

"Countries of the World: Lithuania." Infoplease, Sandbox Networks, 4 June 2018.

Google, www.infoplease.com/world/countries/lithuania. Accessed 31 Oct.

2019.

This source is owned by Sandbox Networks. It contains all of Lithuania's statistics and information about money. This website helped add statistics on life expectancy and GNH.

"Economy of Lithuania." Wikipedia, Wikipedia Inc., 4 Oct. 2018. Google,

en.m.wikipedia.org/wiki/Economy_of_Lithuania?scrlybrkr=0ca1d8eb.

Accessed 31 Oct. 2019.

This website is owned and operated by Wikipedia Inc. The source covers everything from Lithuania's economy to most popular food. This page provided me with information about Lithuania's economy and GDP.

"Fall of the Soviet Union." History, A&E Television Networks, 22 Feb. 2019. Google,

www.history.com/topics/cold-war/fall-of-soviet-union. Accessed 31 Oct. 2019.

This page is operated by A&E television Networks. It contains information about the rise and fall of the Soviet Union. It provided all the information needed to write about the history of Lithuania.

"Lithuania." 2019 Index of Economic Freedom, The Heritage Foundation, 7 July

2019, www.heritage.org/index/country/lithuania. Accessed 5 Nov. 2019.

This website is owned and operated by The Heritage Foundation. It gives all the current facts about Lithuania's economy and democracy. This site provided a lot of information for the second paragraph.

"Post-Soviet world: what you need to know about the 15 states." The Guardian, The

Guardian, 9 June 2014. Google, www.theguardian.com/world/2014/jun/09/

-sp-profiles-post-soviet-states. Accessed 6 Nov. 2019.

This website is owned and operated by The Guardian Magazine. It describes the economic state of each Post-Soviet country. This site benefited the first and second paragraphs.