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The largest of the three Baltic countries, Lithuania has braved many ‘lows’ to reach several ‘highs’ on its way to its current state of economic development and prosperity. Sometime during the latter half of the 20th century, the economy of this ex-soviet nation witnessed many elementary changes with the most of them being not for the better.
When the control of the region passed into Soviet hands way back during 1940, it underwent speedy industrialization even as the nation also witnessed positive changes on its economic front.
But its overall levels of technical know-how and performances on the crucial issues of environment, healthcare, and labor were not something to go to town with -- especially when one compared the same with the prevailing levels in the West, even though on the front of urbanization, the picture gradually became rosier. While during the year of 1959, it was just 39%, during the year of 1989 it stood at 68%.
Between 1949 and 1952, the USSR ended private ownership in the sector of agriculture even as it set-up mammoth state run farms perhaps to increase the country’s outputs and compete with the West, especially the US. The levels of production also declined even while it failed to reach what it was before the two world wars until the initial years of the 1960s. However, the growth of agricultural production, via heavy chemical usage and mass mechanization, did wonders even while it increased production making it 200%. Additional ecological issues though also came to the front with this development.
The drawbacks of a centrally run economy became visible soon following the disintegration of the USSR even as with this in 1991 the biggest of the three Baltic States, Lithuania started its gradual shift to a free market economy. Courtesy the wide and easy existence of cheap natural resources, its industrial domain had become highly energy driven, pretty inefficient in its usage of resources, and unable to produce products which could easily compete with what one got from competitor nations.
Over 90% of the trade of Lithuania was with the rest of the USSR, even as the latter supplied the industry of the nation with raw materials for production purposes and also a market for its finished goods. The requirement to snap-off these trading associations and to control the not too good industrial sector invited serious economic difficulties.
With rapid privatization and the emergence of new firms on the national scene slowly inched Lithuania from a state-run economy to a free market economy. By 1998, its economy had survived the ravages of insecurity and certain difficulties, and appeared well set for robust growth.
But as ill luck would have it, the USSR disintegrated even as this proved to be a big blow and it invited off-putting growth for the nation’s economy. That this also made those who mattered in the Baltic nation to have a re-think of the nation’s trade relations with Russia in favor of the West cannot be ruled out.
Lithuania has privatized almost all ex state-owned companies. More than 79% of its economy's output is thanks to its private sector even while the contribution of the workers from this field surpasses 65%. This Baltic Nation privatized its banking sector in 2001. Presently, Post and Railways are the only state-owned firms in the country which still have to be privatized.
The nation’s transportation infrastructure acquired from the USSR is pretty sufficient and it has been usually well maintained since Lithuania broke free from the Soviet Union. The country also has a reasonable good international seaport. It also boasts of some quality commercial airports. Its road system is also not bad. Thanks to heavy investments made in the field, the nation’s telecommunication sector is also reasonably okay and becoming better with each passing year.
Much like other countries of the European Union (EU), Lithuania has also much benefited from its association with it. Post becoming a part of the EU during 2004, the country saw its economy add teeth, reaching a historical 8.9% GDP growth during 2007. Although robust growth continued unabated through much of 2008, a not too impressive 4th quarter, even while Europe plunged neck deep into financial mess, almost cut down the speed of development bringing it down to just 3.0% for the involved year.
During 2009, the global downturn hit the Lithuanian economy pretty seriously. In the most horrible performance registered since similar records started during 1995, unemployment also soared. Employees’ salaries also saw a huge jump. The worsening of the situation on the unemployment front and lower income led to some social disturbances during 2009 even as the government tried to revive the economy by making heavy budget cuts and introducing a new economic proposal.
During 2010, the Lithuanian economy was rapidly growing. Even though its people did not seem in a rush to let their wallet talk, the country registered positive growth on the crucial exports front. Business made the most of the improvements registered in the economies across the nations of Europe, located new markets, while stumbling across new purchasers. Overall, the whole Lithuanian industry that was tailored for foreign trade developed. The GDP was also on the increase.
Experts forecast an impressive GDP increase of 4.7% for 2012 for Lithuania – not bad considering few European nations have really braved so many economic storms and uncertainties over the years.