Regional development in Lithuania: A tale of two economies
Regional differences in GDP per capita, productivity, employment and poverty in Lithuania
are among the largest in the OECD, and they have increased over the last decade. The
country still recovers from the legacy of the Soviet planning system which aimed at
balanced geographical distribution of industrial activity and left many unviable firms
and jobs particularly in rural areas. Unemployment is high in many regions, while
mobility of excess labour towards economically stronger areas remains insufficient.
Some regions feature "surplus infrastructure", while others lack investment. This
paper looks at potential reasons for persisting disparities and assesses recent policy
initiatives to reduce them. Stark gaps in education outcomes between rural and urban
areas should be addressed, mainly by reorganising the municipal school network and
by fostering firm-based learning, i.e. apprenticeships. The digital infrastructure
is weak in rural regions and should be strengthened to allow access to high-quality
jobs in all parts of the country, including through teleworking. Housing supply in
economically strong areas should be increased, while urban sprawl should be avoided.
Finally, municipal governments should be given more fiscal power, while the planned
functional regions should help foster inter-municipal coordination.
Published on December 22, 2020
In series:OECD Economics Department Working Papersview more titles