Future Prospects For Foreign Investment In Lithuania: Does This Baltic Tiger Still Have Teeth?

Abstract

Lithuania’s economy has gone through stages of feudal system, serfdom, centrally planned command economy and market-based economy. After its liberation at the end of the last century, Lithuania’s transition is in process, as evidenced by the development of economic frameworks. Radical reforms, including the opening of markets, implementation of flat tax rates, rapid privatization of businesses, and efforts to maintain a stable currency, set the tone for phenomenal economic growth, not only in Lithuania, but in neighboring Estonia and Latvia as well. The Baltic Region experienced monumental growth in the mid to late 1990s, which accelerated through the early 21st century. Sweeping reforms and growth culminated with the accession of Lithuania into the European Union in 2004. The combined economic story of Lithuania, Estonia and Latvia is quite comparable to that of the Asian Tigers of South Korea, Hong Kong, Singapore, and Taiwan. The three countries have thus earned the title of The Baltic Tigers. Lithuania’s accession into the EU fostered further development of the country and its economy on both the financial and political fronts.