Developing a National Developing a National Knowledge Economy Knowledge Economy Strategy in LithuaniaStrategy in Lithuania

Dr. Renaldas Gudauskas

LithuaniaLithuania

The European Commission report of 8 November 2000 stated, that

Lithuania can be regarded as a functioning market economy and should be able to cope with competitive pressures and market forces within the Union in the medium term.

Real annual GDP growthReal annual GDP growth 1995-2001 1995-2001

3,3

4,7

7,3

5,1

-3,9

3,9

5,1

-5

-3

-1

1

3

5

7

9

%

1995 1996 1997 1998 1999 2000 2001 1sthalf

Source: Ministry of Finance, National Development Plan 2002-2004

• Lithuania has a labour force of around 1,8 million people.

• The skill level of employees is relatively high with 17,9 holding higher degrees and 44,1 having specialised education.

• Research and higher education institutions are concentrated in five largest cities: Vilnius, Kaunas, Klaipėda, Šiauliai, and Panevėžys.

Digital Digital dividedivide

Source: The complex sociological research of Lithuania as an information society

Digital literacyDigital literacy

Source: The complex sociological research of Lithuania as an information society

• Success of the development of knowledge economy in Lithuania traditionally is measured by measuring ITT sector.

• In 2000 ITT sector produced 4,8 of GDP, created in the service sector.

• The major part of ITT added value comes from import of software and hardware.

Telecommunications and ITTelecommunications and IT

It is perhaps the fastest growing sector of the Lithuanian economy.

In 2000, gross turnover in the information technology and telecommunications market (ITT) exceeded four billion Litas. The telecommunications market accounted for around 73 of the ITT turnover, and the information technology market accounted for roughly 27.

Growth of the ITT market accounted for 18 in 2000. The hardware retail market turnover increased by 25.

Continued…

Continued:

In the year 2000 there were 8 computers per 100 inhabitants in Lithuania (the European average is 35). In the 1999 there were 5,9 per 100 inhabitants.

10 of the Lithuanian population have personal computers at home, of which every third is cabled to the Internet.

According to the public opinion research company SIC investigation data, Internet users make 10 of the Lithuanian population. Approximately half of all the Internet users are persons below 30. Of the said number about 50 have university education. About 3,5 of the Lithuanian population have the benefit of the Internet at home.

Continued…

Growth of the Lithuanian Information Technology and Growth of the Lithuanian Information Technology and

Telecommunication Market in 1994-2000, USD m.Telecommunication Market in 1994-2000, USD m.

135.7 259.4 312.3412.4

568.7 546.5

911.2

86.6132.6 167

206.1

239.1 233.7

235.2

0

200

400

600

800

1000

1200

1400

1994 1995 1996 1997 1998 1999 2000

Informationtechnology market

Telecommunication

market

Source: Infobalt

E-Government assessmentE-Government assessment

• Computer Associates International was commissioned by Lithuanian government to perform eGovernment assessment.

• The assessment was conducted in year 2000 and covered thirty ministries and departments, state companies, 12 selected municipalities and the counties.

The key objectives were:The key objectives were:

To understand the current technology environment and to assess the appropriateness of the IT infrastructure, to support the needs of future eGovernment.

To review current IT project in order to critically assess the quality and match of project activity in individual departments against overall goals of the Lithuanian Government.

To develop high level plan to fulfil future IT requirements for Lithuania.

Implementation PhasesImplementation Phases

Phase 0: Create Single Entry Point

Phase 1: Build the Foundations

- Initiate the Intranet and a common messaging system- Centralised web hosting and consistent look and feel

Phase 2: Content Development

- Further development of the Intranet (data communication)- Dynamic website content, based on replicated data

Phase 3: Interactive Government

- Fully operational ”component based" government applications- Interactive government website

In year 2001 the Government of the Republic of Lithuania adopted the Strategic plan for the Development of Information Society for 2001-2004.

TThe main directions highlighted in this Plan arehe main directions highlighted in this Plan are:: skills, public administration, electronic business, culture, cultural heritage language.

The Lithuania’s Conception of Information Society Development was adopted on 28 February 2001.

The objectives emphasised in the Conception are the following: Population will be able to acquire knowledge, change profession,

train more easily; One computer will be set for 10 pupil in every school; Teachers and state officers will be computer literate; Libraries will be connected with the internet, at least two computers

will be located at every library; Students, lecturers, science workers will be able to use modern

information technologies; Conditions of services for population (public administration) will be

improved; Population of city and countryside will have equal possibilities to use

digital technologies and etc.;

Lithuania’s key Lithuania’s key possibilitiespossibilities are: are: • The process of post-industrialisation safeguards new conditions and

agents for country’s economical, social and cultural prosperity.

• In order to develop national economic Lithuania can use a favourable geographical location as a transit country between East and West, and tremendous market for its goods and services in the East.

• Participation of foreign trans-national corporations in Lithuania’s economy empower more rapid development aided by FDI. This process also gives an opportunity to absorb innovative technology, experience of international management, etc.

• Lithuania’s integration into EU expands the market for its products and services, creates premises for revival of foreign trade, reorganization of production of goods and services, encourages investment.

Lithuania has the least urban – rural gap among Baltic countries.

• The country has been developing evenly, rural Lithuania has more or less functioning industry, and if knowledge economy development strategy will be implemented in the same extend, a problem of “digital divide” for the country seems more solvable.

Development of Development of economic-technological formationseconomic-technological formations

This chart visualises, that currently Lithuania vegetates in the periphery of

World highway.

• However, private sector is fairly passive in creation of knowledge base for Lithuanian industry. Analysis made in 2000 shoved, that only 5,9 of Lithuanian industry is oriented to scientific research compared to 20-30 in developed countries.

• This can slow down development of competitiveness of Lithuanian industry, or even endanger retention of current position.

This chart visualises this prospective and encourages Lithuanian government to create a development strategy,

which will accelerate more rapid growth.

The Structure of Interaction of The Structure of Interaction of Information Society Development InstitutionsInformation Society Development Institutions

of the Government of Lithuania of the Government of Lithuania

The Commitee of Information Society of Lithuania

The Ministry of Transport of Lithuania

The Ministry of Justice of Lithuania

The Ministry of Internal Affairs of Lithuania

Other Ministries

The Ministry of Science and Education of

Lithuania

The Commission of Information society development of the Government of Lithuanian

Other State Institutions

The vision of necessary

resources, skills and their utilization

The vision of the strategy

The vision of linking of

present and future

The vision of the future situation

The vision of Lithuania

The Structure of the Vision of The Structure of the Vision of LithuaniaLithuania

The Context of State Strategic ScenariosThe Context of State Strategic Scenarios

Conditions of

actions

Resources and opportunities

Strategic Choices

Current situation

Weaknesses and strenghts

Competition

Users

Tendencies

Markets

Desirable Vision of the State

Users

Business environment

Markets

UncertaintiesPotential Results

The Strategy of the Commission of Information The Strategy of the Commission of Information Society DevelopmentSociety Development

Strategic Direction 2002 - 2004

IntegrationIS Strategy

Context of

Lithuania

Context of EU

Strategic Coordination

Strategic Control