Are Lithuania’s regions benefiting from economic growth?

Despite the Lithuanian economy growing for six consecutive years, the gap between regions in the country is not decreasing, according to the Swedbank Finance Institute’s annual comparative analysis of municipalities.

“Along with economic exclusion, social exclusion is also visible. It is not only difficult to expect larger salaries in shrinking regions, but also to find forms of leisure and youth education opportunities. The quality of life in the regions is insufficient to retain a local competitive working-age population. Therefore, they often choose to look for better life chances elsewhere,” said Odeta Bložienė, the head of Swedbank Finance Institute in Lithuania.

“Comparing the highest-earning Vilnius municipality residents to the least-earning Šalčininkai residents, the latter have fewer opportunities to catch up with the living quality in the capital every year. At the end of 2013 the income gap was €211, in 2014 – €231, and last year it reached €237. Calculating the average annual salary Šalčininkai residents earn €2,849 less a year than the a resident of Vilnius,” said the head of Swedbank Finance Institute.

In line with global trends Lithuania’s big cities are expanding and prospering but Swedbank found that a key challenge is regional disparities and uneven economic growth.

According to Ministry of Economy data, with the allocation of funds provided by the 2014-2020 EU investment program, the objective is that in 2020 the regions should generate 40% of the state’s GDP.

The Ministry is also targeting raising the level of entrepreneurship in the regions while the goal for exports of goods from Lithuania’s regions is that they would make up 40% of total exports of goods from Lithuania.

“The objectives are ambitious, but do not seem so distant or insurmountable if regional development challenges are addressed in a systematic and comprehensive manner. This should be done at a national level, and through cooperation of local government, business, and public institutions. Initiatives in municipalities are also important,” said Bložienė.

LRT