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Following previous research on management efficiency of state-owned enterprises (SOEs) in Lithuania, this paper continues previous discussion via extension of the observed time period seeking to continuously analyze the impact of corporate governance principles to the management effectiveness of Lithuanian SOEs. For the purpose of this study, elements of corporate governance principles established in the initial reform of the SOEs in Lithuania are used as key dependent variables to measure and quantify the dynamics of corporate governance culture and its impact to the management efficiency of SOEs. Analysis performed is of a special importance as it covers the 10-year period (2010-2020) and could serve as a case study in analyzing practical implications of managerialism principles in public sector and SOEs specifically. New public management paradigm (Politt, 1993) combined with policy learning theory (Bennett, Howlett, 1992) are used as the theoretical background to explain the initiation and logical framework of SOE reform as well as the selection of variables used in this study. Additionally, principles of corporate governance established by OECD and other international organizations (OECD, 2015) are also used to enrich the analytical framework. The results of the analysis do not only prove that the implementation of corporate governance principles has a positive influence on the efficiency of management of SOEs, but also reveals additional factors that were not identified in the previous research - this impact is not static, but rather dynamic changing in accordance with the maturity of managerial practices within SOEs. The revealed dynamic nature of effects of the SOE policy should lead to the continuation of research seeking to expand it both geographically and vertically including other governmental organizations into the scope of future research. [ABSTRACT FROM AUTHOR]

To reduce alcohol consumption, in 2018 the Lithuanian Government introduced new restrictions on alcohol sales time, consumer age, and alcohol advertising. These restrictions apply to the entire population, regardless of alcohol consumption behavior. Such actions of the government were provoked by the scale of the problem; according to the data provided by the World Health Organization and the European Union Commission, Lithuania sits among the leading countries in alcohol consumption. The policies taken by the government to reduce alcohol consumption are described by many economists as paternalistic, as they reduce an individual's freedom of decision. The aim of this paper is to evaluate the changes in alcohol consumption behavior after the regulatory measures entered into force and the public attitude towards these measures based on research results. This article presents the results of a study first conducted in December 2016 by the researchers of the Faculty of Economics of Vilnius University and the representatives of the Lithuanian Business Confederation*. The aim of the study was to distinguish the different groups of alcohol consumers and their alcohol consumption behavior and attitudes towards the alcohol restriction policies. To achieve this aim, an analysis of scientific papers, a population survey, and statistical analysis methods were used. The authors conclude that alcohol restriction policies, met with a relatively favorable public attitude, may have adjusted levels of alcohol consumption and its patterns, but the increase in the number of young people among alcohol consumers is not in line with the expected policy outcomes. The measures adopted did not encourage respondents to give up alcohol in the longer term (12 months). [ABSTRACT FROM AUTHOR]

The Covid-19 pandemic that began in 2020 presented a new challenge for the labor market participants. This paper discusses the Covid-19 pandemic, highlighting the key challenges that older people can face trying to stay in the labor market for longer in the future, especially if such pandemics continue. Binary response models are used to identify the push-and-pull factors determining the impact of the Covid-19 pandemic on the employment of people aged 55--64 during the pandemic in Lithuania. As the Covid-19 pandemic still continues, most of researchers prefer statistical analysis, comparing employment rates with those of the 2009 economic crisis, to determine the potential impact of the pandemic on employment or by only theoretically discussing the potential impact of the pandemic on the elderly. This paper models the impact of the pandemic on the employment of older people in Lithuania using unique administrative micro-data of State social insurance fund (SSIF). This allows to draw deeper conclusions about how the pandemic affects workers aged 55--64 in Lithuania. The results show that the employment of older people has not been disproportionately impacted by the Covid-19 pandemic, and if such pandemics occur in the future, they may present both limitations and opportunities from the point of view of older people. [ABSTRACT FROM AUTHOR]

This paper investigates bridge employment beyond retirement, as nowadays it is one of solutions often mentioned to stabilize pension systems in the context of an aging population. The aim of this paper is to identify individual, financial, and other factors that influence retirees to work beyond retirement in Lithuania. This research was done using unique administrative Lithuanian data, allowing to analyze post-retirement employment in Lithuania for the first time. The sample consists of 26,000 new old-age pension recipients from 2015 to 2017. By applying binary models of the probability of being employed beyond retirement, it is found out that a greater acquired retirement record, a higher average wage before retirement, and living in a bigger city with a higher employment rate were positively associated with accepting bridge employment, while a higher sickness rate, higher old-age pension, and earlier receipt of an unemployment benefit were inversely related to accepting such employment. Moreover, being a professional or manager increases the likelihood of bridge employment in comparison to unskilled workers. This probability increases even more if a person works in the public sector. Finally, some social groups were excluded, finding that widows with disabilities or widowed women with worse health are not likely to work beyond retirement and are consequently under a bigger risk of poverty. To sum up, retirees who should stay in the labor market in their old age because of their bad financial situation are less likely to do it. This suggests that persons with bigger needs, lower-skilled workers, and women deserve particular attention in labor market reforms. [ABSTRACT FROM AUTHOR]

Following the financial crisis of 2009 there was an emergence of macroprudential policy tools, as well as a need to model the macroeconomy and the financial sector in a coherent framework. This paper develops and calibrates a small open economy DSGE model for Lithuania to shed some light on the interactions between the macroeconomy and the banking sector, regulated by macroprudential policy. The model features housing market, and endogenous credit risk a la de Walque et al. (2010), whereby the household can default on mortgage repayments, what leads to housing collateral seizure. Foreign-owned banks, that are subject to risk-sensitive macroprudential capital requirements, take into account not only the mortgage default rate but also the cap on loan to value (LTV) ratio when making lending decisions. Using this mechanism, we show that while a more stringent LTV constraint reduced credit demand, it can also lead to an expansion in credit supply via lower credit risk. Therefore, a tightening of LTV requirement should result in only a slight reduction in mortgage lending, coupled with lower interest rate margins. The article compares the impact of the tightening of three macroprudential tools, namely, bank capital requirements, mortgage risk weights and LTV limit. We find that broad-based capital requirements, such as the counter-cyclical capital buffer, are less efficient in leaning against the housing credit cycle, because of a relatively large cost incurred on the firm sector. [ABSTRACT FROM AUTHOR]

The level of economic interstate competition has been growing significantly in recent decades. Countries are constantly trying to apply lower tax rates to attract large businesses to their territory. They are also trying to improve the efficiency of tax collection on their area of jurisdiction. The paper examines how economic growth affects Lithuania's tax collections. Based on quarterly data of the 2002-2022 period, ARDL models for the main types of taxes were considered. We find that for all types of taxes, the models have the same structure, which allows comparing the impact of gross domestic product on tax collections both in the short term and in the long term. Analysis showed that the largest reserves are in the corporate sector, where the growth in tax revenues exceeds gross domestic product growth by 115%. The long-term effect for general taxes is almost 19% higher than the growth of the tax base, that is, the Lithuanian economy as a whole has a tendency for a reduction of the shadow economy, which means that there are significant opportunities for further growth. [ABSTRACT FROM AUTHOR]

The Lithuanian population is aging, and it causes many difficulties for public finances by increasing expenditures on health care, long-term care, and pensions, and also for the labor market by creating labor shortages. One of the ways to cope with demographic aging is to rise the employment rate of older people. According to Eurostat, the employment rate of the elderly aged 55-64 years increased from 49.6 percent in 2005 to 68.5 percent in 2018 in Lithuania and it is higher than the average employment rate of older workers in European Union, which was 58.7 percent in 2018. This paper focuses on older people in Lithuania, aged 55 and over, trying to answer a question whether the elderly in Lithuania willingly work or try to find alternatives such as receiving long-term social insurance benefits. The research findings show that the activity of older people in the labor market grows, and even the share of people with disabilities staying in the labor market increases. However, this analysis also shows that older people are more under risk to lose their job during an economic crisis, and this suggests that trying to find work alternatives can be closely related to one's economic situation. Moreover, health problems remain one of the main factors limiting the activity of older people in the labor market. It is also noticeable that some labor force reserves exist among people with disabilities and this supposes that creating better adapted working conditions for older and disabled workers in Lithuania could probably contribute to meeting the needs of an aging workforce. [ABSTRACT FROM AUTHOR]

Following previous research on the management efficiency of the state-owned enterprises (SOEs) in Lithuania¹, this paper extends the discussion via analysis of the broader period of time not only focusing on 1 year caption (2012), but trying to identify the impacts (if any) of the corporate governance reform of the SOEs in Lithuania looking at the data of 2012-2014. To ensure the consistency and comparability of the results, the theoretical background is sought to be maintained as similar as in the previous papers, following the paradigms of (post) new public management, principle-agent theory, corporate governance guidelines established by such international organisations as the Organisation for Economic Co-operation and Development (OECD), the World Bank, the International Monetary fund and others. In addition to the quantitative part of the analysis (quantitative analysis of the relationship between management of SOEs and results of its operations as measured by Return on Equity (ROE)), case studies representing biggest Lithuanian SOEs and - accordingly - 3 main sectors Lithuanian SOEs are acting in are analysed to understand if and what (i) actual changes of the corporate governance principles are impacting the management effectiveness of SOEs, as well as (ii) what are the limiting factors (if any) reducing the positive effects of the changes being introduced with the new reform. For both parts of the analysis (quantitative and case studies) we focus on (i) the main elements of corporate governance being introduced by the SOE reform and (ii) the relations of the SOEs and the shareholder of theirs (Government and the society). By applying the above described approach, the paper seeks to (i) understand not only the effects of corporate governance on management and performance of SOEs per se, but also include the time dimension with the purpose to understand (confirm) if previous findings (e.g., the fact that board independence and transparency were the key factors influencing SOEs management efficiency in 2012) are sufficiently sustainable outcomes of the reform, which would still be valid in the 3 year period (2012-2014), as well as (ii) explain the most relevant (in terms of impact on management effectiveness) corporate governance principles that should be applied or be promoted stronger in Lithuanian SOEs. [ABSTRACT FROM AUTHOR]

Using Enterprise Survey data covering the period 2001-2011, the paper investigates the export behavior of Lithuanian firms and changes herein before, during and after the financial crisis. The primary objective is to investigate if there are changes in export behavior such as frequency, intensity, value and structure, hence focus lies on the results obtained with the standard enterprise survey data that is annual and collected before and after the crisis. The findings show that in a quantitative perspective the financial crisis has only a marginal impact on the long run exporting behavior of Lithuanian firms. There are no significant changes in number of exporters and exported percentage and only a small but negative effect on exported value when using simple ANOVA (F-test) analysis or more advanced regression analysis for repeated cross sections and panel data. The impact of the crisis falls more on the qualitative aspects of exporters from Lithuania. Generally do exporters, though affected by the crisis, outperform local market oriented firms in and over the crisis on factors such as productivity, sales growth and quality. Complementary evidence from the more ad-hoc and short-term focused financial crisis surveys corroborates the findings from the standard enterprise surveys. In every aspect investigated did exporters perform at least as well and often much better than firms catering solely to the local market. The financial crisis survey data reveals that exporters had higher capacity utilization, lower levels of indebtedness and recovered generally faster than other firms from the crisis. For the methodology, we conclude with this paper that the usage of repeated cross sections from the standard enterprise surveys is the best way to investigate our research questions. This owes to the large drop in number of observations in the panel dataset published by the World Bank, making those results overtly vulnerable to outliers in the sample and unobservable attrition factors. The financial crisis survey data is mainly useful towards understanding short run adjustments and financial aspects of the crisis, while structural aspects and exporting behavior is better covered with the standard surveys. The main methodology problem of using less than population data (making it sensitive to survey sampling routines) to investigate exporting behavior in general concerns the enormous skewedness that exists within the population of exporting firms. This owes to the phenomena that in most countries a handful of (multinational and locally owned) firms account for more than 50% of total exports. This is also increasingly true for a country such as Lithuania as the transition towards a market and open economy has progressed. [ABSTRACT FROM AUTHOR]

The article concentrates on the main challenge tackled by the state-owned enterprises (SOEs) reform initiated by the 15th government of the Republic of Lithuania - an attempt to improve the corporate governance practices and management efficiency of Lithuanian SOEs. According to the insights offered by the new public management (NPM) paradigm, resource dependency theory (RDT) and principal-agent theory (PAT), the present research seeks to identify a quantifiable relationship between the composition of the board (which is one of the core aspects of the Lithuanian SOE reform) and return on equity (ROE) in Lithuanian SOEs (which is selected to be the key variable defining management efficiency). Based on key relationships among the selected parameters of the board (e.g., size, political independency, gender diversity, other) and SOE management efficiency identified, this paper offers practical public policy recommendations in the field of SOE management efficiency. [ABSTRACT FROM AUTHOR]

The paper analyses the dynamics of unemployment in Lithuania, using a structural vector autoregressive model (sVAR) with long-term restrictions proposed by Fabiani et al. (2001). In accordance with it, the unemployment rate is predetermined by economic shocks, some of them with long-term effects (structural) and some with short-term ones (cyclical). The greater part of changes in unemployment in the period of 2002 to 2014 were predetermined by cyclical shocks (of productivity and labour supply and demand). The cyclical unemployment, peaked in the years 2010 to 2011, amounted to ca. 6%. On the other hand, structural unemployment is slow to change, in the years of the economic boom (2006 to 2007) it amounted to ca. 8% (at the time, the cyclical unemployment was negative and the economy encountered overheating, while in 2014 structural unemployment was slightly higher and amounted to ca. 11%). [ABSTRACT FROM AUTHOR]

This paper deals with the analysis of a relevant issue, regarding the liberalisation of the fixed telephone communication. The paper also deals with the characteristic features of monopoly markets, evaluates market power, both before liberalisation of fixed telephone communication and following the removal of monopoly powers. The paper includes an extensive discussion of the evaluation of barriers preventing entry in the market. It also determines the market power of Lietuvos telekomas (Teo LT AB) fixed telephone communication, based on various market concentration indicators. The purpose of the article is to present the analysis of the liberalization of the fixed telephone communication market in Lithuania and to reveal the inter-coherence of theoretical and practical elements of the liberalization. [ABSTRACT FROM AUTHOR]

Successful activities in a dynamic environment of today's economy largely depend on the skills to have an adequate view of activity environment and its changes. The information activities of business decision makers relate their subjective potential of environment assessment and problem solving to the systems of environment monitoring and early warning, whose relevance is of expressed in various activities both at micro and macro levels. The paper discusses the features of the bank deposit insurance system in the Republic of Lithuania, its information needs and the role of early warning systems in its activities. Also, the paper examines a prototype of an early warning system in the Deposit Insurance Scheme of the Republic of Lithuania and the conditions for its application. There are specific groups of decision-important information and relations between their estimates. The proposed way of applying a composite set of decision criteria can be transferred to similar systems in other fields of activity. [ABSTRACT FROM AUTHOR]

Foreign trade fosters not only companies but national economies to maximize their gains for the benefit of a better living standard. In developing countries, such as Belarus, the volume of foreign trade depends on the path of liberalization and integration into the trade with the EU. This paper analyzes foreign trade and economic relations between the EU, Lithuania and Belarus. [ABSTRACT FROM AUTHOR]

This paper deals with the examination of the rationale for insurance service purchase decision making with a focus on Lithuania and its possible implications for both Lithuania and other developing insurance markets. This work proposes a model that reflects the several stages of the insurance service purchase decision making process, including the time dimension. This model is constructed on the basis of three hypotheses; these hypotheses are tested based on data collected by means of an insurance expert survey. The results confirm the existence of two stages of insurance service purchase decision making, where one's intellect and income determine the inclination towards insurance and where the price and quality of an insurance service determine its purchase decision. The research reveals a relatively equivalent impact of both consumers' intellect and income on their inclination towards insurance in general; however, it strongly indicates the consumers' strong focus on the price of the service as opposed to its quality when deciding to purchase an insurance service. The research also discloses the higher complexity of the decision making process when purchasing life insurance services as compared to non-life insurance services. [ABSTRACT FROM AUTHOR]

The success of managing the activities of organizations is tightly related to solving the problem of effective work motivation. The solution is possible only by implementing an efficient employees' motivation mechanism which is a considerable challenge to business organizations all over the world. The effectiveness of motivational tools created and used by managers is strongly correlated with recognizing the main needs of employees. Therefore, the authors of this paper tried to look at this important aspect of motivation through the prism of managerial attitudes. The empirical study was conducted in Lithuanian and Polish companies in which managers of different management levels took place. The purpose of the study has been to find out whether managers realize which needs are most important for their subordinates and whether they pay attention to these needs while pursuing an effective employee. The concept of this paper is based on the integration of management theory and actual practices.The methods of the study comprise system analysis, meta-analysis, survey, international comparisons. The findings of the study could be useful both for local companies' managers and for foreign companies deciding to enter the Eastern Europe an market as well for researchers interested in CEE countries' management peculiarities. [ABSTRACT FROM AUTHOR]

In this paper, sources of economic growth are analyzed by an empirical investigation based on annual Lithuanian data of sectoral national accounts for the period from 1996 to 2010. The extent to which productivity variations in private Lithuanian economy can be explained by the production factors of physical as well as human capital, and inter-industry productivity spillovers and scale economies, is estimated by a regression analysis, based on the production function approach. The results have revealed that the endogenous growth model, which includes physical and human capital input variables and also variables of inter-sectoral productivity spillovers and scale economies, associated with the sectoral level of human capital, explains a considerable part of productivity growth. The factor of scale economies, related to sectoral capital investment, was not supported by the empirical investigation. [ABSTRACT FROM AUTHOR]

The paper deals with some aspects of sustainability of the government debt of Lithuania for a long, medium and short time horizon. The purpose of the study is to investigate the sustainability of the debt with respect to the nominal GDP growth, the interest rate on the debt, and the primary budget deficit. The differential equations calculus technique is used for the analysis of the debt. A scenario approach is used to simulate the sensitivity of the debt to economic shocks. An inequality for a non-increasing debt over a medium term is applied for the possibility to restore the level of the debt to a pre-crisis level. The sensitivity of the debt to a short movement of interest rate, the GDP growth rate and the primary budget deficit is investigated. A rule of debt change in a short run by one percentage point is formulated. [ABSTRACT FROM AUTHOR]

The paper presents an analysis of the methodological side of assessing the turnover of Lithuanian retail trade enterprises, i.e. the indicators to be employed in assessing changes in the volume and composition of the turnover over a longer term, their relationship with other national economic indicators, as well as their theoretical and practical significance. The analysis of changes in the volume and composition of the turnover of Lithuanian retail enterprises in 2000-2008 has revealed its positive and negative trends and the factors influencing these changes. The period under consideration is remarkable in that the years 2000-2001 marked the recovery of the Lithuanian economy after the financial crisis in Russia, its growth until the third quarter of 2008 and the beginning of its decline. The paper summarizes trends in and problems of changes in the volume and composition of the turnover of the country's retail trade enterprises in the period under consideration and shows the possibilities for its development. [ABSTRACT FROM AUTHOR]

This paper is an attempt to investigate the causes of the recurrent decline in the equity market in the period of the last fifteen years in Lithuania. Empirical methods are used to establish a correlation between such factors as inflation, interest rates, etc. and the equity market decline as well as to determine the most decisive factor that may produce the said result. Major findings of this article are as follows: (1) the Lithuanian equity market decline coincides with the increase in the interest rates and the current account deficit; (2) they can be triggered by financial crises in other countries which maintain close trade relations with Lithuania; (3) movements of the Lithuanian equity market can depend on psychological factors. [ABSTRACT FROM AUTHOR]

The paper is mainly devoted to the bankruptcy prediction models and their ability to assess a bankruptcy probability for Lithuanian companies. The study showed that the most common type of companies in Lithuania is a private limited company, therefore, the main objective was to analyse such companies' financial information and by using these results, create a new bankruptcy prediction model, which would allow to predict the bankruptcy probability as accurately as possible. 145 companies (73 already bankrupt and 72 still operating) were chosen as a primary sample and by using multivariate discriminant analysis stepwise method a linear function ZGS has been created. To achieve that, 156 different financial ratios were selected as a primary input data by using correlation calculation between bankruptcy and still operating companies and Mann - Whitney U test techniques. The results showed that 89% of companies were classified correctly, which states that the model is strong enough to predict bankruptcy probability for private limited companies operating in Lithuania in a sufficient accuracy. [ABSTRACT FROM AUTHOR]

This paper deals with the concept of fairness as it is applied to economic decision making in different cultures. The objective of the research is to determine whether the concept of fairness can be applied universally throughout all cultures by doing a study in Lithuania and comparing it to similar studies done in other countries. Lithuania was chosen because it belongs to the group of the Baltic advanced transition countries with their own unique form of capitalism. We find that Lithuanians are mare apt to consider price or wage changes as fair as long as there is an underlying macroeconomic reasoning for the price change. These effects were found to hold true in spite of the framing effects of loss aversion found in previous studies. [ABSTRACT FROM AUTHOR]

This paper aims to investigate the effects of tax policy on macroeconomic variables in the context of tax competition issues. Incentives to invest in a country are determined by a prospective rate of return, which is partially determined by the level of capital taxation. However, high labour mobility, which is a particular characteristic of the Lithuanian economy, raises the hypothesis that the analysis of the negative aspects of tax competition is important not only for capital taxes, but also for labour taxation. [ABSTRACT FROM AUTHOR]

In this paper we focus on clusterization in Lithuanian wood products manufacturing and in computer, electronic and optical products manufacturing industries. These sectors were chosen upon analyzing Jucevičius (2003) and Jucevičius (2009) who describe them as having undergone a clusterization process. We use graphical and statistical analysis to find that clusterization has had a positive effect on the mentioned industries. Our analysis also covers a brief review of clusterization theory, development and current state. We also note that clusterization is supported in the European Union, which might be one of the major reasons why it has been accepted in Lithuania. Finally, we argue that competent practitioners who focus on clusterization professionally are scarcely available in the labour market, and clusterization theory is far from mature and requires a lot of academic input. [ABSTRACT FROM AUTHOR]

The experience gained during the transition decade and five years of the EU membership by Lithuania could be an insightful contribution to an economic policy debate on managing the transition period driven by the global rebalancing of supply and demand. The purpose of the paper is to define the growth enhancing policy measures that have proven efficient during the transition reform period and could be relevant under the new global setting. Findings. Regulated markets set better conditions for the growth of economy than do self-regulated markets, while the most important problem of economic strategy is to evaluate the degree of impact of each determinant on growth and to set their combination favourable for a long-term growth. The growth-enhancing public policy should be aimed to increase the total factor productivity and to ensure competitiveness in global markets. Policy makers have to focus on facilitating an environment conducive to establishing new SMEs in new sectors of economy, instead of focusing on restructuring the old sectors. Restructuring some loss-making industries takes some time, but the efficiency of investments could be ensured if cost reduction is prioritized and leads to an increase in the total factor productivity. [ABSTRACT FROM AUTHOR]

The paper examines the external factors that influence the internationalization of the Born Global firms in Lithuania. The identification of such factors is based on M. Porter's National Diamond model. Theoretical analysis of the model enabled us to distinguish 23 factors as potentially influencing the internationalization of firms. The impact of these factors on Born Global firms was explored upon performing a survey of 50 Lithuanian firms of this sort. The survey results have revealed seven factors as having a positive effect on the internationalization of Lithuanian Born Global firms. [ABSTRACT FROM AUTHOR]

The scientific problem lies in the fact that consumer needs in the postmodern era, as a response to the growing significance of the socio-emotional values in contemporary society, are stated rather than examined in a specific industry context to identify the feature of the needs which dominates in consumers within a specific industry. The paper presents an analysis of the motivating consumer needs within the Lithuanian mobile telecommunications sector, enabling identification of the prevailing type of consumers (based on the features of motivation needs), which affects consumer commitment to a specific service provider. This work aims at testing the assumption that the socio-emotional feature dominating in the needs of consumers in the postmodern era is characteristic of the consumer needs in the Lithuanian mobile telecommunications sector. The dominating feature of consumer needs was identified on the basis of the scientific literature examining the concept of postmodern marketing, which reveals the system of needs characteristic of contemporary consumers and its features. The analysis of consumer needs, made in the Lithuanian mobile telecommunications sector, is relevant in that motivating consumer needs are differentiated into the notional types depending on the characteristics of those needs. The practical outcome of the analysis is relevant as it explains the basic causes that determine the consumer commitment and/or buying/consumption decisions. [ABSTRACT FROM AUTHOR]

The paper presents results of a field study on the feasibility of applying tradable discharge credits approach to wastewater management. The hypothesis that formed the basis of the present study is that conversion of the existing municipal wastewater discharge management system in Lithuania into the one that uses tradable discharge credits can bring both private and overall (social) economic benefits in the form of increased flexibility of the sewerage subscribers to select the most cost-effective means of compliance with the discharge limits. Research has been conducted in order to determine whether the tradable discharge credits can be employed for municipal wastewater management and, if so, how it can be done. The presented framework of wastewater management, based on tradable discharge credits, can serve as a blueprint for similar applications in other countries or regions, as well as a basis for policy steps. [ABSTRACT FROM AUTHOR]

The author analyses financial ratios of Lithuanian enterprises by economic sectors in the period from 1998 to 2008. During the period in question, which was selected consciously and purposefully, Lithuanian economy experienced two recessions: the first one took place after the Russian crisis 1998 and the second started in 2008, together with the global financial crisis. In the period between the two crises, a rapid economic development was observed. In the paper, the efficiency of the sectors of Lithuanian economy is assessed using various financial ratios, reflecting various aspects of performance of an economic entity: its capability to secure income, to perform profitably, to properly manage liabilities, to make proper use of available potential, to avoid jeopardising its further performance. Since no common methodology for the assessment of economic efficiency has been developed, it is offered to form an integral aggregate ratio to make possible the intercomparison of economic sectors and to determine the level of efficiency based on a set of financial ratios but not on each of them separately. The experiments and calculations performed showed that most suitable is the weighted arithmetic mean method. [ABSTRACT FROM AUTHOR]

What are the unique circumstances that allow innovations in an economy to take hold and mature into productive business sectors? We pose the given question in our discussion of the uncommonly favorable circumstances surrounding the biotechnology sector in Lithuania. The purpose of this paper is to analyze Lithuania's ability to expand its economy during a time of crisis, focusing on its unique ability to innovate in such sectors as biotechnology. Our primary hypothesis is as follows: Lithuanian biotechnology sector is expanding because business clusters have been established. Drawing upon Schumpeter's ideas of innovation and Porter's business cluster theory, we argue that Lithuania is "at the right place and the right time" to make itself a regional leader in biotechnology. We draw upon the world-systems theory to argue that biotechnology is one means whereby Lithuania can rise in the global core-periphery hierarchy. [ABSTRACT FROM AUTHOR]

This article analyses the peculiarities, interrelations and development of two relatively new concepts of organizational development -- socially responsible and sustainable business. Socially responsible business, which adopts the sustainable development concept, more and more often requires than adequate behaviour of the supply chain partners. The complex of tools to achieve socially responsible and sustainable business -- SA 8000 (Social Accountability), Global Compact, OHSAS 18001 (Occupational Health and Safety Assessment Series), ISO 14001, EMAS (Eco-Management and Audit Scheme), FSC (Forest Stewardship Council), eco-labelling, etc. -- can be integrated into one organization. The paper provides an analysis of the development of these systems in Lithuania within the context of the European and global business. The interrelations of different management systems, the links among them, integration possibilities and improvement propositions are described. [ABSTRACT FROM AUTHOR]

The investment portfolio optimization issues have been widely discussed by scholars for more than 60 years. One of the key issues that emerge for researchers is to clarify which optimization approach helps to build the most efficient portfolio (in this case, the efficiency refers to the minimization of the investment risk and the maximization of the return). The objective of the study is to assess the fitness of a genetic algorithm approach in optimizing the investment portfolio. The paper analyzes the theoretical aspects of applying a genetic algorithm-based approach, then it adapts them to practical research. To build an investment portfolio, four Lithuanian enterprises listed on the OMX Baltics Stock Exchange Official List were selected in accordance with the chosen criteria. Then, by applying a genetic algorithm-based approach and using MatLab software, the optimum investment portfolio was constructed from the selected enterprises. The research results showed that the genetic algorithm-based portfolio in 2013 reached a better risk-return ratio than the portfolio optimized by the deterministic and stochastic programing methods. Also, better outcomes were achieved in comparison with the OMX Baltic Market Index. As a result, the hypothesis of the superiority of a portfolio, optimized on the basis of a genetic algorithm, is not rejected. However, it should be noted that in seeking for more reliable conclusions, further research should include more trial periods as the current study examined a period of one year. In this context, the operation of the approach in the context of a market downturn could be of particular interest. [ABSTRACT FROM AUTHOR]

The auditor should use qualitative characteristics, which describe the essence of misstatement, while assessing identified misstatements. Final decision depends on the professional judgment made by the auditor, however, auditors may make erroneous decisions or be biased. Previous theoretical research highlighted problems with the application of qualitative characteristics. However, factual audit data is confidential and usually not available for researchers to examine, therefore previous research mostly relied on surveys or experiments and there is little evidence on how auditors behave during real audits (rather than simulations). One audit company agreed to provide us with factual data for this research. The aim of the research is to examine the application of primary qualitative characteristics based on factual audit data. During the research, the audits performed in one Lithuanian audit company for the financial years 2019--2020 were examined as well as summarized official (publicly available) data about audit companies in Lithuania and audits performed by them for 2018--2020 financial years were examined. Firstly, most important primary qualitative characteristics, as well as secondary commonly used characteristics, were singled out. Our further investigation, based on received 2019--2020 factual audit data revealed that some auditors still do not apply primary qualitative characteristics in all cases. Even though we investigated one company and we cannot directly extrapolate results for the whole audit market, but our results are in line with the official and publicly available information about audit companies in Lithuania. Thus, we conclude that our results partly reflect truthful view of factual behavior of audit companies in Lithuania. These results also confirm theoretical research that qualitative characteristics are not sufficiently appreciated. [ABSTRACT FROM AUTHOR]

This study aims to investigate the effects of tax policy on the macroeconomic variables of Lithuania. Special attention is devoted to conclusions concerning the impact of corporate taxation. The methodological framework is structural vector autoregression models identified using the Cholesky and Blanchard-Perotti approaches. Investigations of the impact of fiscal policy have been scarce in the empirical literature of Lithuania. The authors of this article use the methodology of assessing the impacts of fiscal policy that has not been used in Lithuania so for. [ABSTRACT FROM AUTHOR]

Usually, euroization is connected with the necessity of passing through not easy to fulfil and to maintain the Maastricht Treaty criteria and to accept (à) priori a definite course of resigning from the national currency. Upon fulfilling the required adjustment periods of euro adoption, the European law forces a total departure from the national currency. This process is subjected to a solid supervision and control of the EU organs. Additionally, the Maastricht Treaty obliges to introduce the euro when a country is in a good economic condition, confirmed by the fulfilment of nominal convergence criteria. In such a situation, the common currency adoption must be (or should be) always interpreted as a proof of a stable economic development and abilities of keeping such parameters in the future. However, in case of euroization accomplished with omission (or even with infringing) the Treaty, there is no necessity of complementing any European law duties, and especially there is no obligation of totally resigning the national currency. Such kind of euro adoption means not a full but a partial euroization, which can appear in a very difficult situation in country's economy or when currency independence is not safe and profitable. Resignation from the national currency is like an act of desperation, or at least it is forced by the lack of the abilities to manage the economic problems. The purpose of this publication is to show euroization as state (partly also as process), particularly on the examples of Lithuania and Poland. It obviously it does not seem new, but many changes in the world economy (with special regard to the crisis hurting the European Union) and the lower enthusiasm for joining the Euroland (euro zone) show the need to consider such a problem. [ABSTRACT FROM AUTHOR]

We investigate the structural disturbances underlying the business cycle in Lithuania in the bivariate time series framework. In the structural VAR model constructed productivity, hours of work and output fluctuations over the business cycle are composed of technology and non-technology shocks. We find that a technology shock has a persistent positive effect on all three variables. Non-technology disturbance has a long-term impact on working hours and output, but it has a negligible short-run effect on productivity. Differently from Gali (1999), the study has revealed no significant correlation between productivity and working hours under the effects of technology shocks on Lithuanian data. In contrast with the results of developed countries, non-technology shocks result in a significant negative correlation between the working hours and labour productivity in Lithuania. Historical decomposition of output, productivity and working hours series allows distinguishing four different episodes of Lithuanian economy during the analysed timeline. In 1999, negative technology shocks played the biggest role in pushing the output down. During the period 2001-2004, the real GDP growth was supported by productivity increase due to technology shocks; in 2005-2008, non-technology shocks and the higher working hours were fuelling output growth together with a positive impact of the technology shock on productivity growth. Finally, 2008-2011 is the period of negative technology and non-technology shocks. [ABSTRACT FROM AUTHOR]

This document explores the incidence of the minimum wage in Lithuania. The descriptive analysis exploits high-frequency data on monthly labor income coming from Social Security records between July 2013 and July 2020 to characterize (i) the evolution of the monthly minimum wage, (ii) the percentage of workers who earn the minimum wage, (iii) the bite of the minimum wage in the wage distribution, and (iv) the heterogeneity of the findings with respect to gender and age. The evidence shows that the minimum wage was raised 7 times with an average (real) increase of 7.3% and, on average, less than 10% of the workers earn at most the minimum wage but low-pay incidence is around 20%. In terms of the impact of the wage distribution, the minimum wage relative to the average wage in the economy fluctuates between 45 and 50 percent. Females and young workers exhibit a larger low-pay incidence and minimum wage bite. [ABSTRACT FROM AUTHOR]

This article provides empirical evidence that the demand for ethyl alcohol in Lithuania is price elastic and the root cause of this elasticity is the competition between Lithuanian and Polish sellers. The basis for the emergence of competition lies in the price differences between the countries, which arise as a direct consequence of the Lithuanian government's policy in the alcohol sector, which is directed towards reckless increases in excise duties. The increase in Lithuanian excise duties leads to a wider price gap between countries and in the first months after the increase results increases in prices. In subsequent months, Lithuanian importers and manufacturers tend to revise the assortment and costs, replacing more expensive goods with cheaper ones or slightly alter the markups. These changes are the main reason why demand in the domestic market gradually recovers. The price elasticity of demand predetermines the gradual recovery of the ethyl alcohol market, but each increase in excise duty reduces the manufacturers' markups and (or) leads to the changes in product range, where higher-costs products are displaced by lower-cost products. [ABSTRACT FROM AUTHOR]

The aim of this study is to compare Lithuanian and Swedish pension systems from the point of view of their design and performance in order to elaborate reasonable recommendations to Lithuanian pension policy based on the best Swedish experience. Swedish income, premium and guaranteed old-age pensions system are compared with the analogous Lithuanian system of the "first," "second" pillars and the "social" pensions. The main features of the systems are discussed, and the performance of the systems, mainly from the point of view of adequacy, is compared. The differences in system design and performance are identified, and the possible reasons of these differences are examined. Special attention is paid to differences in financing and the approach to the definition of benefits. The Lithuanian pension points approach is compared to the Swedish Notional Defined Contribution (NDC) approach. Each system is analyzed, and the relevance of transforming the Lithuanian first pillar pensions into a NDC system is examined. [ABSTRACT FROM AUTHOR]

Seeking to contribute to the analysis of anti-crisis economic policy decisions, the authors of the current article have developed an economic analysis modelling system of the main tax rates, which makes it possible to carry out research into modelling economic scenarios in order to determine the variables of optimal tax rates. By applying this modelling system in practice, it is possible to measure the maximum probability rates of Value Added, Profit, and Personal Income Taxes for the collection of necessary revenues to the state budget. This method presents a possibility to accurately evaluate the impact of fiscal policy measures on the state budget as well as to reflect economic processes more comprehensively and model accurate short- and long-term projections. [ABSTRACT FROM AUTHOR]

This article discusses the influence of culture on economic development and its historical significance. It includes the brief historical analysis of this influence, discussion of problems of its scientific evaluation and presentation of relevant theories and hypotheses. Several practical examples are given that indicate the influence of culture on economy and suggest possible solutions to countries seeking to attain economic welfare. The main issues addressed are: the scope of influence of cultural environment on economic development, the extent of its historical determination and the possibilities to modify it by innovative and consistent actions of the state. The Lithuanian cultural environment is evaluated from an emigration perspective following its comparison with several European countries and the presentation of two qualitative researches carried out by Lithuanian scientists aimed at geographical study preferences of young people. [ABSTRACT FROM AUTHOR]

The government, in order to achieve the welfare of the citizens in the retirement age to keep pace with the working people, carried out the various pension systems transformations. The working people's welfare is growing due to the economic progress, so there is a theory of economics, which examines the existing income redistribution in time. It should be noted that in order to ensure the financial well-being in old age it is necessary to efficiently allocate the scarce resources. In Lithuania, the existing three pillar pension system allows each employee to contribute to their own financial well-being in the future. This article aims to assess the second pillar pension fund performance and how fund differences affect the amount of old age pension. The analysis made it possible to determine the correlation between the return generated by the fund and the number of participants in the fund; the spreadsheet is provided, which allows estimating the influence of the choice of different funds on the size of the retirement pension. It was found that fund return and the number of participants in the fund have a negative correlation. This shows that the part of households who raise money in fund with the lowest return will be much poorer, and the corresponding result is a smaller pension. It may be noted that the accumulation of different pension fund reserves have a significant impact on the future pension size (this difference can be as high as 230%). [ABSTRACT FROM AUTHOR]

In Lithuania, bankruptcy of natural persons is a relatively new subject that has been scientifically only randomly dealt with. The bill of Bankruptcy of Natural Persons in Lithuania was proposed as early as in spring 2009 (No.XIP-450, 24.03.2009). The bill met with a considerable amount of criticism and was postponed for further improvement. By decree No. 413 of April 7, 2010, the Government of the Republic of Lithuania approved the concept of the bankruptcy of natural persons of the Republic of Lithuania. The principal goal of the concept was to consolidate the main provisions of the future law. The Law of Bankruptcy of Natural Persons of the Republic of Lithuania has come into effect since March 1, 2013. The authors of the article overview the concept and models of bankruptcy of natural persons and introduce the advantages and shortcomings of the institute of bankruptcy of natural persons. Based on scientific sources of Lithuanian and foreign authors, the article offers a theoretically systemized version of the main reasons determining the bankruptcy of natural persons. The reasons fall into two categories - economic and social. The article is mainly targeted at defining the reasons that determine the bankruptcy of natural persons in Lithuania. To achieve this goal, a quantitative survey of the questionnaires of natural persons affected by bankruptcy has been taken for the basis. In their questionnaires, the natural persons affected by bankruptcy have been asked to evaluate the reasons of bankruptcy. The results have been analyzed with the help of factor analysis and statistically processed using the SPSS statistical software package. [ABSTRACT FROM AUTHOR]

The main goal of the research is to develop monetary policy tools and measures enabling to achieve macroeconomic goals of integration into the euro area in the immediate future. It is noted that until the introduction of the euro Lithuania does not have a monetary policy and applies the currency board regime pegging the litas invariably to the euro (hard peg regime). Therefore, it is not only difficult but also risky to try to achieve financial and economic stability in accordance with the relevant Maastricht criteria through fiscal policy measures alone. Monetary policy instruments are necessary to achieve price stability and the overall financial stability. Currently, Lithuania should address the problem of balancing the currency board regime and the Maastricht criteria as a macroeconomic objective through monetary policy tools and measures. The analysis of monetary policies of advanced economies and, first of all, of the euro area reveals the main features of transmission of the monetary policy to a real economy, which can contribute to the successful integration into the euro area. A systemic analysis of the monetary policy is based on monetary and economic theories, laws and patterns, scientific literature and empirical studies. The method used is the logical analysis and systemising of academic literature and modelling of the monetary policy. Such a methodological position enables the justification of the influence of the euro and monetary policy on the future development of the national economy. [ABSTRACT FROM AUTHOR]

Express credit institutions have started their activities only five years ago when the economic crisis came and increased the borrowing demand. Now, we have the consumer credit law and other legislative acts which aim to ensure this sector regulation. However, there still remain problems that have to be solved. The main of them are inconsistencies in consumers' solvency evaluation in different companies, the lack of financial knowledge in society and its information, the aggressive lending and advertising policy. The increasing demand for this service shows its importance and proves the necessity to maintain it in the market while at the same time ensuring consumer protection. [ABSTRACT FROM AUTHOR]

The aim of the study was is to evaluate the impact of a privately accumulated second pillar component on old-age pension. This evaluation is based on quantitative, statistical data and qualitative analysis of pension accumulation results in second pillar during the years 2004-2072. Three groups of different monthly wage size (low, medium, and high) earners are analyzed by calculating the accumulated amounts and old-age pension values of persons who joined and who did not join the second pillar pension funds in 2004 and who retired in the beginning of 2013. The pension reform success (or failure) is evaluated from the point of view of old age pension beneficiaries by comparison of gain or loss of all three groups of participants due to participation in second pillar pension funds. The results show that due to the longer fife expectancy the capital accumulated by women in the second pillar does not exceed the present value of loss in the pay-as-you-go system. The comparison of "official" annuities exposes a more optimistic result for both genders of participants of fully funded private second pillar pension funds, but is not con firmed by commercial annuities. [ABSTRACT FROM AUTHOR]

The aim of this article is to analyse the application possibilities of the securitisation mechanism in Lithuania. Securitisation has been used for a few decades by banks as an instrument to decrease credit risk and broaden the sources of funding. The increasing demand for asset-backed securities has prompted the development of this mechanism. Nevertheless, despite its benefits, if used irresponsibly, this mechanism can also create risks to financial stability. Foreign capital banks dominate in the Lithuanian banking sector, and their financing structure is highly based on parent bank loans, which is the second largest financing source after deposits. As the recent economic crises have shown, the flow of this resource is unstable and pro-cyclical. Therefore, banks ought to seek additional funding sources. The issue of securities backed by bank loans could be one of those sources. The authors of this article, with the help of regression analysis, have assessed a possible effect of additional credit flow, which could be attracted by banks using securitisation, on country's GDP. The analysis has shown that certain types of loans can significantly impact the country's GDP growth. The most significant effect on GDP would be reached, if banks would securitize new loans issued to households and use the obtained funds to issue more loans to households. [ABSTRACT FROM AUTHOR]

In the face of economic crisis, Baltic governments had to choose between internal and actual devaluation. Eventually, the first path was chosen to tackle the external and domestic macroeconomic instability. The aim of this study was to evaluate the effectiveness of the internal devaluation policy in the Baltic economies. Using qualitative research methods and graphical analysis, we have evaluated whether the choice of internal devaluation or deflation was appropriate in the exceptional recession period and whether it helped to eliminate the imbalances of the boom period. Obviously, fiscal consolidation helped to ease the tensions and restore confidence in the markets. However, we believe that the internal devaluation policy was efficient only temporarily in Latvia and Lithuania. This policy was hampered by the sectorial mismatches between labour demand and supply, which resulted from a strong surge in unemployment. A. detailed cos-benefit analysis of the internal devaluation policy option requires a more formal econometric analysis which will be implemented in the future research. [ABSTRACT FROM AUTHOR]