Lithuania’s strong growth of knowledge-intensive jobs stops in 2020

#Blockchain by Mantas Bartaševičius

The ECEPR and Nordic Capital Brain Business Jobs Index, measures the share of the working-age population across Europe employed in highly knowledge-intensive enterprises, in 31 countries and 284 regions.

Lithuania’s growth of brain business jobs came to stop in 2020

Before the corona crisis, Lithuania experienced a significant boost in brain business jobs. Between 2012 and 2019, Lithuania added 21 000 jobs in knowledge-intensive companies. However, that trend was reversed in 2020, as Lithuania lost 1 300 brain business jobs during the year. Thus, the concentration of the population employed in knowledge-intensive occupations decreased slightly during the year, from 5.2 percent in 2019 to 5.1 in 2020.

Central and Eastern Europe experienced significant loss of brain business jobs in 2020

In Central and Eastern Europe as a whole, approximately 58 400 brain business jobs were lost between 2019 and 2020. While Estonia and Poland were successful in adding jobs during the turbulent year, the rest of the area suffered significant setbacks. Notably, Romania lost a large amount of brain business jobs during the year.

Fostering brain business jobs important aspect of reducing regional unemployment

The region with the highest concentration of brain business jobs, the Slovakian capital region of Bratislava, has an impressive unemployment rate of 2.4 percent. This does not seem to be a coincidence.  A comparison of 281 European regions shows that a strong link exists between high brain business jobs concentration and low unemployment, and that this link is driven by regions with low brain business jobs concentration. Amongst regions with up to 50 brain business jobs per 1 000 working age population, a straight-forward linear regression shows that 28 percent of the variation of unemployment can be explained by differences of brain business jobs concentration.

Geographical equalization of brain business jobs taking place in Europe

According to Dr. Nima Sanandaji, President of the ECEPR, the overall trend is that Central and Eastern European countries are catching up to Northern and Western Europe. Knowledge-intensive firm occupation is also growing in several Southern European countries, such as Cyprus, Portugal, and Malta:

“Since 2014, Cyprus has had an almost 50 per cent increase in brain business jobs per capita. Slovakia, Hungary, Poland, Latvia, Portugal, and Bulgaria have experienced a growth of a third or more. The cost of labour is the main driving force. Brain business jobs are growing in places which combine an ample supply of talent with lower wage costs”.

Vilnius among top 30 leading knowledge regions of Europe

With a concentration of 11,0 per cent of its working-age population employed in knowledge-intensive firms, Vilnius places within the top 30 of the leading knowledge regions of Europe. With this ranking, it is ahead of regions such as Stuttgart, Lisbon, and Düsseldorf.

Examples of innovative start-up firms in Lithuania are Bankera, a bank for blockchain, and GoRamp, a platform for helping logistics heads and managers manage all transportation orders in one cloud service. Lithuania and the other Baltic nations are rising European stars in terms of knowledge-intensive jobs growth and can take advantage of trade with each other as well as the innovative Nordic region.

Warsaw is the fastest growing region, alongside Bratislava and three German regions

On a regional basis, the most significant increase of brain business jobs has occurred in Warsaw, the Polish capital region, followed by the Slovakian capital region of Bratislava, and the German region of Braunschweig. This German region was an important centre of commerce already in medieval Germany and is one of several strongly growing German regions.

Successful new European firms often combine service innovations with digital platforms for service delivery

A study of 150 innovation companies, founded in the top-30 leading European brain business jobs hubs, finds that the most common forms of innovations are business service innovation, consumer service innovation, and digital infrastructure/platform innovation. Often firms rely on digital platforms for service delivery. The least common form of innovation is manufacturing technology.

Investments in Central and Eastern Europe still lags behind

The average company in Eastern and Central European brain business hubs, founded in 2015, has attracted 10 million Euros in investment, compared to 23 million in Southern Europe, and 35 million in Western Europe. The innovation firms of the Nordic regions on the top-30 regional list have on average attracted 85 million Euros in investments, far outstripping firms in other parts of Europe.

”Knowledge is the foundation for attracting investments and creating value in a long term sustainable way. As a leading investor in Europe it is natural for Nordic Capital to support research on how knowledge strengthens good investment conditions”, says Klas Tikkanen, Chief Operating Officer at Nordic Capital Advisors.

”The study confirms that high knowledge intensity gives resilience in a time of crisis. Sweden and the Nordic countries still stand strong despite the pandemic. But now is the time for reforms and developing the regulatory frameworks in order to get back to the level before Covid-19. That will lead to increased investments, and the increase of brain business jobs again”, Klas Tikkanen adds.

Lithuania’s weaknesses and strengths

Compared to the rest of Europe, Lithuania has several strengths. The main strengths are in advertising and market research and IT services. On the other hand, Lithuania has a lower concentration than the rest of Europe when it comes to areas such as pharmaceuticals and film/TV/music.

Lithuania and the other Baltic nations are rising European stars in terms of knowledge-intensive jobs growth and can take advantage of trade with each other as well as the innovative Nordic region.

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