Enlarged European Union and its Eastern neighbours. Initial experience of co-operation

Abstract

Current situation could not be positively evaluated. To sustain export growth, Lithuania has to reorient itself to skilled-labor and capital-intensive goods. Hence, implications of the EU accession requires to undertake active state policy aimed to enhancing export potential and through reorientation to skilled-labor and capital-intensive goods. Keeping in mind that prices, including prices of production factors, such as labor, in the long term tend to converge, we can claim that inappropriate state policy in the field can finally lead to losing comparative advantage of industrial exports. The common agreement is that exports initiate productivity growth; exporting firms outperform non-exporters in terms of productivity levels and changes. Analysis of FDI flows into Lithuania revealed that Lithuania has to exploit this factor more in the future. The necessity to compete with high-skilled intensive European goods in short-term requires appropriate policy towards improving skills of labor force. Despite the fact that Lithuania nears the average of EU-15, in percentage terms, real spending on education, measured in absolute figures, remains rather low and not sufficient. Evaluation of level of spending on research and development is not so straightforward.