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Investing out of the crisis.

Though the crisis has had a significant effect on the economic development of Lithuania, there are many things that work to the benefit of a small and open country. Mantas Nocius, the head of the Lithuanian Development agency, spoke to The Baltic Times about the recent issues Lithuania faces while fostering economic development, the formation of an economic image, as well as its recent achievements.

How do you see the flow of investment at the moment?

We are of course not happy with current investments. Lithuania attracts much less investments than most neighboring countries. However, investments had been in fact changed by cheap and easily accessible credits from commercial banks. It resulted in rapid growth and there were not many investments. However, currently the times of cheap and easy credits are over and probably are not coming back in the near future, thus it is necessary to turn towards investments. Another thing is that while dealing with the current economic crisis, it is very important to be oriented towards exports, because Lithuania is a very small economy, and measures for internal market promotion would have a small and short-term effect. Thus we can expect to cope with the economic crisis effectively only if we strengthen the export.

During the last quarter exports decreased by 20 percent. I think this is a fair achievement, considering exports of countries like Japan fell by half, and Germany's exports have also fallen significantly. We can be happy about this and confirm that our exports are diversified both according to countries and sectors. The fact that Lithuania is a very small and very open state is helping us, because due to its size Lithuania cannot produce the so-called commodities and compete in this regard. Thus our exporters must be flexible and turn to small niche sectors--and at the moment, working in niche sectors it is more realistic and much easier to survive.

However, it is not easy to increase exports at the moment, because as I mentioned, it is difficult to receive a credit from a bank and also Lithuanian businessmen and companies that have enough money, do not want to part with them and risk. The fact that they still have some money shows that they are very conservative. They see that this tactic has worked and they have won, and therefore they now invest their money very unwillingly.

Thus, investments from abroad are very important to promote exports.

How has the recent economic crisis affected development?

It has of course had a significant effect because it has a global effect. I think that this is a bigger challenge to the country's economy than the crisis of 1995-96 and the problems of 1999-2000 that came together with the crisis of Russia.

Nowadays, it is difficult for everyone and all countries deal with smaller or bigger challenges, thus much bigger efforts and inventiveness are needed to find a way for export. Nevertheless, we see that Lithuanian businessmen often adapt rather successfully. For instance I could mention the company Alginta, a producer of metal wares that are rather complicated, but they do what others cannot do for a reasonable price. It is interesting that they have recently got an order from Delhi metro, to supply metal wares for the construction of Delhi metro.

If you can compete in India, a country with a very cheap workforce and rather old traditions of metal processing, then it is really very good. I think that many other businessmen will find such niche sectors and possibilities to use to their advantage.

The Swiss IMD business school World Competitiveness Yearbook for 2009 shows that Lithuania has risen five places in the global list of competitiveness, leaving Estonia and Latvia behind. How do you explain this positive change?

Well, it is great when Lithuania finally rises in various tables of important ratings. For a number of years we had been observing a contrary phenomenon. I think we have come to an understanding that raising the competitiveness and improving the business conditions is needed, and this is important. Of course, [people] living in Lithuania would like the changes to come faster and more radically, but we shouldn't forget the achievements.

If we are moving upwards, we really should be happy about it, and I hope we can continue to move in that direction. And if we manage to adopt decisions improving the field of business and investments, which are presently being considered by the government or the parliament, then our ratings should rise not only according to this but also other researches. I am referring to legislative projects related to the detailed land planning and simplification of the Labor code, which would allow more possibilities for the employers and employees to agree.
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Title Annotation:Special
Author:Vaige, Laima
Publication:The Baltic Times (Riga, Latvia)
Article Type:Interview
Date:May 27, 2009
Previous Article:Minu Eesti findings.
Next Article:Surviving the tough times.

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