Innovation Europe > News > Innovation EU Vol2-1 > Innovation Lithuania

The Lithuania economy is being put to the test – GDP grew by 3.1% in 2008 but declined in the last quarter of 2008 by 2.0% year-onyear. This will accelerate in 2009 as shrinking internal and external demand limits consumption and exports.

Lithuania faces a deep recession: GDP is expected to decline by 9.0% in 2009 and 3.5% in 2010. Internal demand has imploded since the start of 2009 due to tax reform, sharply rising unemployment, tighter lending conditions and an increase in administratively established prices. Industrial production rose by 2.7% in 2008, but declined by 5.0%.

In 2008, exports grew by 28.4%, but in January they fell by 15% year-on-year. Imports declined by 41%, eliminating the foreign trade deficit. The short period of economic growth did not also become a period of innovation growth, as neither was linked to the innovative growth sources, and it seems that Lithuania has lost its momentum in innovation.

Weak links between business and higher education and R&D communities result not only in obsolete qualifications of the highly educated labour force, but also in low-value-added innovations, inability to develop new-to-market products and internal technological processes. Linking and technology transfer institutions are not able to bring significant changes due to the lack of endogenous R&D capacities both in public and in business sector.

We can expect a more active search for innovations as a source of cost efficiency and also innovation-based competitiveness, and, consequently, an increase in shares of innovating enterprises, though the overall GDP production will shrink significantly.

Main innovation challenges

• Improving skills for innovation and entrepreneurial attitudes.
• Building R&D capabilities in firms and development of sound R&D base.
• Development of knowledge-intensive clusters across public knowledge poles.

Conclusion

Lithuania has made tremendous progress in innovation policy-making and implementation. Although the success and impact rates of the measures are too early to apprise, and nor do new trends in EIS indicators appear, the current state of play gives positive hope for the future.

Innovation policy development in Lithuania has been shifting from the public innovation support infrastructure development to the creation of large business and R&D partnership platforms supported by the development of R&D projects and businesses and systemic upgrade of the highest-level qualifications for S&T.

The technology upgrade and development of entrepreneurial skills among the overall population of business enterprises was also addressed in the current policy implementation round, with a systematic focus on technology transfer facilitation, FDI, development of non-R&D-based innovations, and development of skill