Even though the largest share of Lithuanian foreign trade is going to its traditional directions, the globalized economy’s geographical location is not the determinant factor any longer. Already businesses are using their advantages in order to seize better positions in the market.
A bridge between East and West – this is how Lithuanian geographical location is often described. However, this posture is not acceptable to SEB bank economist Gitanas Nausėda and political scientist Mindaugas Jurkynas, according to them, this metaphor was fashionable in the last decade of XX century, and now is unfounded.
G. Nauseda opposes government’s pushing to work in one or another direction and says that state does not have a function of finding trade partners. In addition, M. Jurkynas suggests forgetting the goal of becoming a regional center, because for Lithuania it is better to be dynamic and work more actively in less exploited Northern region markets.
But Finance Minister Ingrida Šimonytė does not agree with them, according to her, the way Lithuanian businesses are using the so called midway between East and West is the proof that our geographical location is as important as ever.
Minister says that Lithuanian business is smart enough to earn from its geographical location. She argues that Lithuanians know the inner workings of Commonwealth of Independent States (CIS) and Western Europe (WE) – British archipelago, Benelux states, France, Monaco, Germany, Switzerland and Austria – markets.
According to Lithuania’s Statistics Department, CIS states get around 18.3 billion Lt, and WE – 17.7 billion Lt of whole 2011 Lithuanian export. This constitutes about a quarter of total 69.3 billion Lt export pie for each, whereof biggest shares go to Russia’s (from CIS) and Germany’s (from WE) markets.
“Such diversification of export directions proves that Lithuanian geographical location is simply and inevitably damned to be a factor in economy’s growth,” – says I. Šimonytė. She also remarks the importance of logistics and transport sector to our economy.
Lithuania’s advantages
Logistics, traditional industry, biotechnologies, financial facilities, dynamism – these are Lithuania’s strengths recites Prime Ministers adviser for economics and finance Mykolas Majauskas. However, according to him, now business environment and opportunities around the world are getting more and more similar, globalization is underway and belonging to various international organizations becomes more important than the geographical location. “For example, an investor can choose between Trinidad and Tobago and Lithuania,” – says M. Majauskas.
The president of Lithuanian Free Market Institute (LFMI) Žilvinas Šilėnas, as Lithuanian advantages sees flexibility and speed. According to Ž. Šilėnas, it must be understood that we cannot outrival Far East with our production quantity and expenditure, and also we cannot outstrip, excluding several examples, West with our quality and technologies.
Therefore “we have to produce flexibly, fast and when is needed. Cheaper than in the West and with a better quality than in the East,” – explains Ž. Šilėnas. LFMI president notices that to accomplish this we have to get rid of various restrictions and administrative barriers, for example, in the field of labor code.
Ž. Šilėnas, as well as M. Majauskas do not put significance in the geographical location of Lithuania. According him, a lot of countries present themselves as various midways – between cultures, regimes, but it is not impellent.
For future businesses place is not important
For businesses working in the virtual environment location plays almost no role. Venture capital “Practica capital” partner Donatas Keras says that an internet product can conquer the whole world in a matter of five years.
He thinks that in this field Lithuania does not have inaccessible markets. As an example D. Keras proposes a Lithuanian social network “Eskimi” which in Nigeria has over 7 million users and is even more popular than “Facebook”. “It’s creators are in Vilnius and don’t even understand what has happened – now they are opening an office in Nigeria, so there are no geographical restrictions and Lithuanians follow the money,” explains the investor.
Another big potential in foreign markets can produce the business branch of biotechnologies. The former “Sicor Biotech” chief Vladas Bumelis says that European Union, United States of America and China – all of them have demand for Lithuanian biotechnological products, and by 2020 their turnover can reach 2 billion Lt.
President of Lithuanian Confederation of Industrialists Robertas Dargis thinks that in the future Lithuanian competitive ability will be increased not by traditional industries, but by finance and other, maybe not even known by today. “Overall, it is hard to say which areas will be the most competitive in ten years,” – contemplates R. Dargis.
The article was written at the “European Business Reporter” camp financed by European Commision.
EBN reporter Edgaras Savickas