Official translation

Official translation Official translation SEIMAS OF THE REPUBLIC OF LITHUANIA RESOLUTION LONG-TERM DEVELOPMENT STRATEGY OF THE STATE 12 November 2002 No. IX-1187 The Seimas of the Republic of Lithuania, seeking to create an open, just and harmonious civil society based on the rule of law; asserting that the state regulates its economy to make it serve for the common good of the nation and that the state supports economic efforts and initiatives which are of benefit to society; having regard to the Presidency Conclusions of the Lisbon European  Council; having regard to the fact  that the formulation of the Long-Term Development Strategy of the State is essential in the implementation of the strategic management of the country as a function of the state and in defining the key targets in the long-term perspective of the development of the country; mindful of the fact that strategic management of the country’s development is  viewed as a function of the state in the formulation, implementation and analysis of the strategy, h a s   r e s o l v e d   a s   f o l l  o w s : Article 1. The Long-Term Development Strategy of the State (appended) shall be hereby approved. Article 2. To recommend to the Government: 1) to establish a system of strategic analysis and monitoring by attracting to it state and research institutions and to record periodically the results of the implementation of the strategy and market changes; 2) to revise the national strategies and programmes which have been approved to date; to develop new programmes and conceptions necessary for the implementation of the strategy, make them mutually consistent, taking into account the Presidency Conclusions  of the Lisbon European Council; 3) to have regard to the provisions of this Strategy when reviewing and approving the strategic action plans and other documents relating to planning of state institutions. CHAIRMAN OF THE SEIMAS OF THE REPUBLIC OF LITHUANIA                   ARTŪRAS PAULAUSKAS APPROVED by Resolution No. IX-1187 of 12 November 2002 of the Seimas of the Republic of Lithuania LONG-TERM DEVELOPMENT STRATEGY OF THE STATE Vilnius 2002 STRUCTURE OF THE LONG-TERM DEVELOPMENT STRATEGY OF THE STATE SITUATION ANALYSIS 1.   Environmental factors 2.   SWOT analysis 3.   Macro-economic situation PRIORITIES OF THE LONG-TERM DEVELOPMENT OF THE STATE DIRECTIONS IN THE IMPLEMENTATION OF THE PRIORITIES -------------------------------------------------------------------------------------- Since 11 March 1990 when Lithuania re-established its statehood, the country has lived through a daunting period of transition from a planned to a market economy, overcoming on its way many obstacles, difficulties and crises. The reforms that have been implemented in all spheres of life afforded Lithuania an opportunity to change fundamentally its legal foundations, to implement the decisions which laid the basis for the functioning of the market. Major changes have occurred in the society and public life. The Lithuanian society realized its strategic goals and set them out in the 1992 Constitution. The Constitution of the Republic of Lithuania which was adopted by a referendum has laid down unequivocally provisions to create an open, just and civil  society based on the rule of law, to contribute to the establishment of the international order based on law and justice, to join international organisations unless this contradicts the interests and independence of the State. The people of Lithuania  enshrined in their Constitution the  fundamentals for the relations between the individual and the state and between the society and the State  based on the principles  of democracy, the rule of law, respect for human rights and the ethnic minority rights. Lithuania has resolved that the State should regulate economic life in a way that would best serve the welfare of the nation. In this way prerequisites were laid for Lithuania to formulate its strategic goals, above all, its accession to the European Union as a community of nations and states founded on democracy, respect for human rights and rights of ethnic minorities, a community where a welfare state and the European model of social and economic market have been established, where competition and solidarity, equality and justice are finely balanced.  As a result, in 1995, Lithuania signed and in 1996 ratified the Europe Agreement establishing an association between the European Communities and their Member States, on the one part, and the Republic of Lithuania, on the other part. In 2002 Lithuania is about to complete the process of accession negotiations with the European Union. The European Union, too, has witnessed momentous changes. The European Council meetings kept formulating long-term goals for the development of the European Union. An example of this was the Presidency Conclusions of the Lisbon European Council on 23-24 March, 2000 stating that by the year 2010 economy of the European Union must become the most competitive and dynamic knowledge-based economy in the world and must achieve full employment: “The European social model must be modernised by investing in people and building an active welfare state. People are Europe’s main asset and should be the focal point of the Union’s policies. Investing in people and developing an active and dynamic welfare state will be crucial both to Europe’s place in the knowledge economy and for ensuring that the emergence of this new economy does not compound the existing social problems of unemployment, social exclusion and poverty”. The Presidency Conclusions of the Lisbon European Council were adjusted in March 2002 during the European Union Barcelona Summit. The guidelines for social, economic and environment protection policies adopted in Lisbon and adjusted in Barcelona also set the targets for the long-term development strategy of the State of Lithuania by envisaging the immediate goals as well as the goals for the coming decade. In the Regular Report on Lithuania’s  Progress Towards Accession announced by the European Commission on 9 October 2002,  Lithuania is rated as a country which meets the Copenhagen criteria, is a functioning market economy and is capable of coping  with competitive pressure within the European Union. The above assessment allows us to assume that the provisions formulated in the documents of the Lisbon and Barcelona European Councils are acceptable to us and set to us a target - to formulate a long-term development strategy for the State, giving an assessment of the current situation in the country, outlining a vision of the State and setting the priorities of the long-term development of the State and their direction. It is the only way to create the prerequisites for the successful participation of Lithuania in the social model of Europe and to realise the fundamental aspirations of our people to live in a secure society, to create a knowledge-based economy, to live in a clean and healthy environment, to have a competitive economy and to make it all serve our aspiration which is enshrined in the Constitution – the common good of the people. THE ULTIMATE GOAL OF THE LONG-TERM DEVELOPMENT STRATEGY OF THE STATE The ultimate goal of the Long-Term Development Strategy of the State is to provide an environment for the development of the country’s material and spiritual wealth which can be best defined as a knowledge society, a secure society and a competitive economy. This would allow us to create the conditions for the development of a person’s possibilities of choice in all spheres of his life – economic, social, cultural and political;  and, by investing into  education,  training and health care,  to reinforce the human potential/human capital. Such an approach must apply to all the people of the country and provide conditions under which an individual could make use of his abilities for taking part in economic and creative activities, politics, public life and recreation. I. SITUATION ANALYSIS 1.   Environment Factors In the coming fifteen years the following factors shall have the greatest impact on the international situation of Lithuania: consolidation and effective use of Lithuania’s membership in the European Union and NATO for securing the national interests; a consistent transformation of these organisations and their role in world politics; the success of the policy of good neighbourhood pursued by Lithuania and its ability to exploit  the opportunities offered by the expanding co-operation in the Baltic Sea Area; the further development of  the partnership between the USA and the European Union; the future reform processes in Russia and its vision of the Kaliningrad  District; the processes of globalisation and its corollary - the development of  international economic relations as well the variety of factors determining the security and stability of the world,   diversity of cultures and the capacity of the world community to overcome non-traditional and transnational threats. 2. Analysis of Strengths, Weaknesses, Opportunities and Threats (SWOT) Strengths Lithuania has lived through a very complicated period of transition to a market economy and is at present a country with a functioning market and an open economy. Democracy has taken root, the political situation is stable, the key market institutions and prerequisites for the economic development have been established and the capacities for delivering a consistent economic, financial, social and employment policy have increased considerably. Lithuania’s geographical position in the region gives it a possibility to be active in both North-South and East-West directions and to make the most of the advantages afforded by its geographical position - the Baltic Sea region is an important hub of transport and trade routes in the centre of Europe. Lithuania’s geographical position is convenient for transit; two transport corridors of continental significance cross its territory. The development of transit is significantly aided by the fact that Lithuania is a maritime state with an ice-free sea port of Klaipėda having a modern container terminal. The country has a modern road network and a high quality system for their maintenance and repair. The processes of integration continue to play a dominant role in Europe. This  is best evidenced by the development of the EU and NATO. Consolidation of the irreversibility of the advances of independence is Lithuania’s strategic objective and it is for this reason that  membership in the European Union and NATO is regarded as the most effective and reliable way for the consolidation of  these historic achievements. During the current decade Lithuania will continue to strengthen its role as one of the leaders in the Baltic Sea region, especially in assisting the European Union and NATO to develop their policy towards its neighbours in the East which will, in its turn, contribute to the security and stability of the whole region. Targeted and balanced policy pursued by Lithuania towards Byeloruss, the Russian Federation and the Ukraine, the readiness of Lithuania to share its experience in establishing democracy and integration with the Trans-Caucasian and Central Asian countries by encouraging their relations with the democratic world will be a steady and continuous contribution of Lithuania to the enhancement of stability and Central and Eastern Europe. At present Lithuania does not see any direct military threats to its national security; it does not hold any foreign country as its enemy, its security policy is open, transparent and non-confrontational and is not directed against the lawful interests of any other state. Its work force has sufficient education and qualifications; it has greater capacities to meet the requirements of market economy and enterpreneurship. An even distribution of major cities and smaller towns is favourable for a smooth economic, social and cultural development. Forests cover one-third of the territory of the country. 12 per cent of Lithuania’s territory are protected areas where landscape sites, nature species and habitats, rare or endangered in the region of the European Union, are under conservation. Lithuania has a relatively well-developed network of educational and research institutions boasting a strong scientific potential. Foundations have been laid for the system of regulation, codification and oversight of the state language. The sector of information technologies and telecommunications (ITT) is growing rapidly. The country has a rich historical and cultural heritage, living ethnic and cultural traditions, historical and cultural relations with Western and Eastern Europe, professional arts of a superior quality and a dense network of cultural institutions. Weaknesses In its economic development Lithuania is far behind the Member States of the European Union; according to realistic estimates, it will need about thirty years for bridging this gap. Lithuania is a small country which re-established its independence not long ago. It still lacks adequate administrative and economic capacities in order to be able promote its interests actively in the world.   The economy of the country does not yet provide  adequate conditions for social development and employment. Social differentiation between the regions, differences in health and health care between social and economic groups of people have grown; the level of employment is low and unemployment is high and structurally unfavourable; territorial and professional mobility of its work force, job quality and flexibility of the labour market are inadequate; the unofficial labour market is quite large; shadow employment thrives; the country is losing a portion of its work force owing to migration; education and employment of juveniles receives too little attention; there is no system for the social integration of persons after release from penal institutions. The work force is not able to adjust to the market needs; the physical capital in many places is technologically obsolete; introduction of innovations proceeds slowly, the level of enterpreneurship is low. The system for interface between research and industry based on the contemporary model of introduction of innovations is non-existent. Lithuania is far behind the Member States of the European Union in the sphere of computerisation and the use of information technologies. The introduction of the Lithuanian language into the electronic media is too slow. The structure of industry is outdated. Production of high technologies is minimal.  The infrastructure of business services is still in its infancy. Competitiveness in agriculture is insufficient. Manufacturing and social infrastructure in the countryside are underdeveloped.   The potential of the energy sector is used inefficiently.  The electricity and gas networks of Lithuania have no direct connection to the energy systems of Western Europe.  The consumption of energy in all sectors of economy is not rational. The infrastructure of transport and the fleet of the rolling stock, especially  in the railway system, are obsolete. Lithuania lacks experience in the state strategic management of the development  of economy and competitiveness on a national scale.   The area of natural and semi-natural territories is shrinking in the zones of intensive economic activity; the natural landscape is disappearing, its structure is changing; the development of information systems and recreational infrastructure is insufficient in the most widely visited territories; there are many old, small and polluting landfills and polluted areas; the system of waste collection and management is functioning unsatisfactorily. The infrastructure of cultural property is outdated; cultural heritage has not been properly systematised and protected. Little attention is given to the fostering of living ethnic culture in its natural surroundings. Opportunities Membership in the European Union will enable Lithuania to  implement the EU social market model, to raise the levels of economic prosperity, quality of life and non-military security guarantees. Over the coming decade Lithuania will adjust itself to the economic order of the European Union and will have a smoothly operating system of market mechanisms. The EU aid funds will allow Lithuania to modernise its infrastructure. Improvements in the economic situation, more efficient administrative capacities as well as curbing of negative tendencies will create possibilities to secure a stable system of social protection and health care, and the development of national culture. When Lithuania becomes a member of the EU it will be able: to make use of the vast market of the EU, to take over its institutional and administrative experience, to get integrated into the technological and digital area of Europe,  to prepare its state language for functioning on equal rights in  the multilingual information area of Europe and the world, to receive solid financial and technological aid, to protect its economic interests while  influencing the economic policy of the EU, to have a stable currency and a stable macroeconomic environment, to  join, in the immediate future, the Schengen area which shall be assisted by the enhancement of the security of the eastern borders of  Lithuania and the European Union; to modernise and expand, through the use of the funds of the EU and other international institutions, the infrastructure of transport, energy and environmental protection (improvement of water  quality and supply, collection and treatment of waste, waste management etc.). Lithuania’s membership in the EU shall have a positive effect on the stimulation of employment and the development of the quality of labour and life and civilised labour relations. Lithuania’s membership in NATO shall create conditions for the creation of an effective and reliable defence system in line with NATO standards.     By a rational use of the processes of globalisation and internationalisation of economy, Lithuania will be able to expand production co-operation of industry and services, to adopt new technologies and experience, to develop successfully the possibilities of e-business, to receive  financial services of good quality and at a reasonable price. Lithuania will secure for itself a niche in the European market of transport services. The overall growth of the demand for food, organic food products and advances in biotechnology will open up new possibilities for agriculture and the food industry. Planning and making use of the structural aid from the European Union which will make up the major part of all the investments in the country (up to 4 per cent of the GDP) will improve the management of national resources. Continuity of fiscal policy and fiscal discipline will allow to finance the demand for loans at minimum costs and risk, while the development of  the internal financial market will guarantee a source of funds alternative to foreign markets.     An active promotion of the positive image of Lithuania in the world and its use for securing the interests of Lithuania. A vigorous and open culture of Lithuania cherishing the traditional values and the Lithuanian language contributing to the linguistic and cultural diversity of Europe and the  world; an successful development of professional art and regional culture. Threats Dissemination of weapons of mass destruction, their components and manufacturing technologies still remains a universal threat. The development of science and technology makes chemical, biological and bacteriological weapons more accessible. The spread of information technologies creates cyber threats.  The democratic community of the world, including Lithuania will have to give a great deal of attention to transnational threats, international terrorism above all. The likelihood of a direct military confrontation in the region is small , however, the danger of demonstration of military might, provocations and threats of use of force remain dangerous for the security of the Republic of Lithuania. Political, economic and social tensions and the likelihood of conflicts in the neighbouring states and regions. International economic and financial crises and international threats such as  international organised crime, corruption, illegal trafficking in arms, narcotic drugs and people, illegal migration, violation of human rights and the rights of ethnic minorities etc. definitely deserve  more attention. With the changing geopolitical environment of Lithuania, the increasing domination of the English language on the material and intellectual market in the economic and social life of the country, the shrinking of the spheres of use of the state language  weaken the motivation for  acquiring  a professional training and employment in the state language. In international relations the impact of energy and natural resources remains highly important.  The major part of oil and natural gas is produced in the world regions where stability, as a rule, is weak. Their instability , the likelihood of military conflicts through the prices of  raw materials causes fluctuations in the economic growth  of world nations and their blocks, including Lithuania as a constituent part of the international economic system. The need for diversification in the supply of energy resources for Lithuania remains of primary importance. Excessive dependence of Lithuania on the strategic raw materials of one country or the concentration of foreign capital representing individual economies whose markets are not yet fully operational in the economic sectors, strategically vital for Lithuania, poses risks not only for the country’s economic welfare but also for the overall security of the country. The continuing ageing of the population in the West, the rapid growth of population in the third-world countries and fluctuations in the development of whole regions will continue to be cause for the growing rate of migration. This will eventually result in additional  problems of  equality and accessibility to health care services, the spread of dangerous contagious diseases and drug addiction. Uncontrollable  waves of migration stemming from regional or ethnic conflicts may become a destabilising factor for Europe on the whole and may pose a threat to the interests of Lithuania. The demographic situation in Lithuania is deteriorating owing to the ageing of the population; demographic problems will in their turn have a direct affect upon  the  development of the country’s economic, scientific and technological potential. Insufficient flexibility and mobility of the labour market will further exacerbate the problems of unemployment, will be an obstacle for innovations and development of modern technologies; the irregularities in the regional development will lead to a growing differentiation in employment and the level of social development, the emergence of marginal regions and emigration of the work force; owing to  the insufficient economic  and regional development the number living in poverty may remain unchanged, social exclusion and social differentiation  will grow, posing a threat to the stability of democracy and society. The social differentiation of the population will also be affected by such new factors as ability to use modern information technologies and information resources. After  accession to the EU, the sectors of the country’s economy which  at present are protected by import duties will find themselves in the environment of a fiercer competition as the import duties in the EU are lower in comparison with some of the import duties which used in Lithuania at present. On the other hand,  imports from third countries shall become much more expensive for both the consumers and producers. The growing number of motor vehicles and unsatisfactory repairs of road surface may  have  a negative impact on the road traffic security. Inconsistencies in the lawmaking process, insufficient planning and legal regulation may have unexpected and unwanted consequences on public life, which, in its turn,  will add to the growing social nihilism, disrespect for law and the state under the rule of law. Globalisation not only promotes integration of people and cultures; it also   results in their  uniformity/homogenisation.  The criterion of functionalism becomes dominant on the scale of values; as a result, the language is increasingly viewed as an instrument of communication rather than one of the most essential instruments of culture and identity; in this way, the language is set apart from culture and the people who create and consume it. A universal language - lingua franca is gaining dominance, bringing along a single culture. Under such circumstances, the Lithuanian language will hardly be able to retain its present role both in the state and public life.  The individual character of Lithuanian culture can is longer given its full expression; artists, professionals working in the sphere of culture are emigrating from Lithuania which results in the loss of  the unprotected cultural values. The living tradition of ethnic culture, experiencing an ever stronger negative impact of accelerating globalisation, is losing its ability to compete with commercialised mass culture.  National self-awareness – the foundation for the development of the living tradition, is weakening relentlessly in the absence of the necessary means for the promotion of ethnic culture, fostering of its values, and the retention of national self-awareness. 3. The Macroeconomic Situation The aim of the economic policy of Lithuania is a stable macroeconomic environment – a competitive economy, a fast economic growth, a low level of unemployment and price stability. The implementation of Lithuania’s economic policy is closely linked with the changes in the external environment. Sudden changes of the external macroeconomic conditions would affect the implementation of economic policy the timely delivery of which is vital for Lithuania as a small country with an open economy. A tight fiscal policy which is being implemented in Lithuania at present allows to reduce the fiscal deficit, to seek a balanced budget, to lay the foundations for a long-term policy of the fixed exchange rate of foreign currency and to enhance the resistance of economy to various external effects. As a result, borrowing expensess of both the state and  private sectors has been reduced, a cyclically balanced budget may be achieved  and the requirements of the Economic and Monetary Union are met.  In future, the budget deficit rate will be brought in line with the criteria laid down in the Maastricht Treaty and the policy pursued by the EU. Owing to the budget deficit, over the last ten years the external debt has reached nearly 30 per cent of the GDP. Though, according to the standards of industrial countries, such  a rate is not excessively high, yet it is in need of  a tight regulation in order not to overstep the mark which could pose a threat to a stable development of economy. In comparison with the industrial countries and the Member States of the EU,  the basic tax tariffs in Lithuania are fairly moderate. Yet the overall tax burden which  may be measured  by the ratio of all the state revenue to the GDP in Lithuania is markedly  lighter (less than 30 per cent)  in comparison with the above countries. For example, this ratio reaches about 41 per cent in the acceeding countries and as many as 44 per cent in Germany.   The tax reform covering the major taxes approved at the end of 2001 reflected the international trends directed at reducing the tax burden, ironing out the differences in taxation, enhancing investment attractiveness of a country and competitiveness of its economy, ensuring total  alignment of national law with acquis in the fields which are regulated by it as well as ensuring effective tax administration. One of the steps towards the reform of the tax system is changing the attitudes to the tax system – tightening of the conditions for the activities of economic undertakings which avoid taxes. The state’s response to negative tax planning schemes in the private sector must be prompt. The major portion of state expenditure goes for the provision of  public services (state defence, public order, state administration) as well as for education and health care. Yet, during the strategy time frame it is essential to ensure  financing  other needs as well.  Financing of the measures relating to the integration in the EU and NATO, to the  land, including land restitution, health care, education and pension  system reforms should be singled out.  Moreover, the state has committed itself to undertake two large-scale projects – co-financing for the restoration of deposits and the decommissng of the Ignalina Nuclear  Power Plant. The state budget deficit is covered by loans, therefore the state must carry out a targeted and sound borrowing policy by ensuring a complete and timely financing of the borrowing need, by minimising the costs and  exposing itself only to acceptable risks without exceeding the state debt and borrowing limits. Until now the monetary policy of the Republic of Lithuania has been determined by the Law on the Credibility of the Litas which helped to stabilise and sustain a predictable situation in the country.  Currently the  Law on the Credibility of the Litas has been hampering the actions of the Bank of Lithuania in the sphere of the classical monetary policy.  The  future monetary policy will be conditioned by the process of integration into the EU and its key objective will be  to guarantee a smooth entry of Lithuania into the EURO zone and integration of the Bank of Lithuania into the of the European System of Central Banks (ESCB). This will require a preparation of the legal and organisational infrastructure for the application of the ECB monetary policy in the domestic monetary market, to bring the standards of the banking market  in line with  analogous standards of the EU market. In order to ensure a long-term and stable economic growth, it is essential to create a favourable investment and business environment. Efforts are made to continue the restructuring and privatisation of energy and transport undertakings, to encourage “green field” investments, to introduce the measures for improving the business environment and to attract direct foreign investments. With a view to ensuring an effective use of labour resources, it is planned to pursue a policy promoting economic viability and employment. Structural policy will be used to provide more favourable conditions for the creation of new jobs, to orient the system of vocational education towards meeting the needs of the market, and to set up and implement a competition-based system of retraining.  The major spheres targeted for the promotion of economic viability and employment will be creation of new jobs in order to promote enterpreneurship, reforming improvement of the forms to support employment, increased adjustment to the structural changes and ensuring equal opportunities in the labour market. II. VISION OF THE STATE OF LITHUANIA In 2015 Lithuania will be an active member of the European Union and NATO, fostering the Euro-Atlantic values and a civil society, contributing to maintaining peace and stability in the region and beyond its borders. As a participant of the effectively integrated market of the European Union, Lithuania will be successfully applying the most advanced scientific technology and drawing on the developed intellectual co-operation both in the EU and beyond its borders. By 2015, after modernising its strategy of the state and the state economic policy, making use of the financial and technological assistance of the EU, Lithuania will increase its GDP by 2-2.5 times. According to a per capita GDP, it will have reached over 50 per cent of the EU average instead of the present 30 per cent. This would allow to bring about a radical implementation of the social economic model of the EU – a welfare state with a low level of unemployment, high-priced labour, strong social guarantees, a minimal number of  poor families and a high level of social cohesion.  In ten years Lithuania will be adjusted to the economic order of the EU and will have a smoothly functioning system of market mechanisms. The recovering economic situation and the improving administrative capacities of the state will curtail the rate of corruption and the influence of the criminal world on businesses. The work force, capital, knowledge and enterpreneurship – the factors of economic growth will be developed sufficiently.  The use of work force will grow at least by 10 per cent with the reduction of unemployment, a later retirement age and the influx of a new generation of people into the labour market. Yet the main achievement will be a higher degree of education of the work force which will result from a reformed education system and the introduction of in-service training and retraining.   The physical infrastructure will be modernised. Technological backwardness will be practically  non-existent in the sphere of communications. The power system will be completely overhauled. The energy source supply networks will be fully integrated into the EU networks. The technological level of manufacturing will in many cases be equal to European or will lag behind it insignificantly. The state will seek to meet the information needs of society and to ensure above all accessibility to the information networks in the state language on the whole territory. However, this will not ensure the efficiency of Western economy since value-added inputs (knowledge and science) will be still lower and the expenses of entry into the world market will be high. Knowledge-based economy is becoming a priority target of Lithuania. The EU is determined to create a knowledge-based society during the coming decade: in 2015 Lithuania expects to reach a similar level in this sphere. However, a knowledge-based society is a challenging objective for Lithuania which may be difficult to deliver unless a high degree of consensus between the widest circles of society can be achieved and unless there is a strong intellectual political will. (Long-Term Economic Development Strategy of Lithuania until 2015 approved by  Resolution No. 853 of the Government of the Republic of 12 June 2002)  Science and education will continue to be a priority sphere in the development of the country; a harmonised and effective education system will be created, accessible to all categories of the population, providing conditions for life-long learning for the people of Lithuania, acquisition of social and professional competence, cherishing of community awareness and culture,  making use of scientific knowledge for a sustainable development of the country, providing the highest growth of the national product and ensuring the optimal development of the country under the conditions of the toughening  competition on the world stage. The labour market will be dominated by a demand for qualified specialists able to use modern information technologies. The Internet will provide, among other things, conditions for distance learning at the best universities of the world.  The level of qualifications in Lithuania will not differ markedly from Western standards. The structure and content of  education  will better serve the needs of economy; the mobility of the  work force will increase. A state is better able to deliver its functions through enhanced administrative capacities. Transparent and effective administration is a prerequisite for speedy progress of the country. Drawing on the institutional, administrative and political experience of the EU by direct participation in its institutions and the development of its policy, the administrative capacities of Lithuania will improve. The strategy targets will be towards smaller costs of government, better services and rapid response to the public. Confidence of the public in the government shall largely depend on the quality of life. The sector of information technologies and telecommunications will take one of the key places in the economic structure of the state and will greatly influence the development of other economic sectors of Lithuania. Manufacture and sale of the sectoral products may reach 25 per cent of Lithuania’s GDP  and no less than 50 per cent of these products will be exported. Non-paper information resources have become common practice in state administration, businesses, trading, services, finance and other sectors.  State regulation shall insure a safe use of documents, while the information network of the country (the registers, cadastres and information systems) will be integrated and open.  Enterpreneurship in the country will spread through the acquisition of economic experience and closer co-operation between our economic undertakings and their partners abroad. During the coming fifteen years a large number of graduates from schools of economics and management at the universities both in Lithuania and abroad will come to work in the sector of public administration and the private sector. Business consultancy services will expand. Attitude of the  public to business will  become more positive. All the above developments will contribute to the scope of the resources of enterpreneurship and  will upgrade their quality in Lithuania. The economy of Lithuania will be integrated in the economic, digital and knowledge area of the EU which are increasingly being affected by the globalisation processes, and will develop by both adjusting itself to these processes and benefiting from them. Lithuanian culture – an expression of the creative potential of an individual and the nation, a guarantee of their identity and survival. Culture will both reveal and foster moral and material values of the individual groups of society and ethnic communities, will contribute to the development and promotion of a democratic, free and open  society, cherishing of ethno-cultural traditions, development of  national self-awareness and patriotism, stimulation of  the social and economic development of the country  and reinforcement of its security. In the face of the threats of globalisation nothing is more rational for a small country than its integration into an economic area with a stable environment and extensive financial and technological resources. By drawing on the modern institutional experience of such an area, Lithuania will be able to reduce its backwardness  from the old-timers of the EU. (The White Paper of Lithuania’s Science and Technology) Factors of environmental protection will ensure a harmonious and sustainable development of Lithuania in line with the objectives of air, water and biological diversity programmes  as well as the programmes for the protection of the Baltic Sea and the Curonian Lagoon, waste management, international commitments and EU standards as well as with the economic capabilities of the country. An integrated system of economic, administrative and legal levers for the protection of the environment is being implemented. The system will have the following constituent parts: the highest permissible levels for environmental pollution in accordance with the EU standards and the systems of environment management and auditing; a flexible pollution tax system incorporating economic and environmental  objectives, embracing taxes for emissions and the product and user taxes; a system of deposits and return, supplementing the product taxes applied to  the reused waste;  tradable emission licenses applied to emissions of one category and local emissions; the structure of the state budget revenue having the features of the “green budget”. Efforts will be made to co-ordinate the development of all sectors of economy with the preservation of a clean and healthy environment. National defence. An effective and reliable defence system will ensure security of the nation and the state, its independence, territorial integrity and constitutional order. Public security. The system of public security will be developed where public bodies responsible for public security and/or public order, by a targeted, effective and rational use of the  funds of the tax payers, will guarantee public security  when solving the problems of the population and providing high-quality services.      Social development.   The structure of the national economy will guarantee a relatively high level of employment. Unemployment will not exceed reasonable levels. Measures for an active labour market will be implemented, the labour market will become flexible, the system of  life-long education will function successfully, regional differences will be reduced. The labour force will be sufficiently mobile and competitive in the EU and will be provided incentives to seek jobs in its own country. The quality of jobs  approaching the EU standards will be achieved in terms of pay, labour relations, safety at work etc. The principle of equal opportunities will be observed consistently. Well–coordinated systems of social insurance and social assistance will be in place, providing coverage for all the population and all risk groups.  Income in old age will be guaranteed by combination of the mechanisms of current financing and  accumulation. The purchasing power of the pay-as-you-go pensions will grow at the same rate as the purchasing power of the average wage. Social assistance will be oriented towards the persons who are really in need of such assistance; assistance aimed at inclusion of the able-bodied recipients of assistance benefits to economic activities. More attention will be given to the improvement of the demographic situation, prevention of disability, poverty and social exclusion. Severe poverty will be eliminated. Social assistance will be carried out by co-ordinated efforts of the state, local authorities and non-governmental organisations. The continuing growth of people’s income will allow to seek a universally  accepted  modern consumption structure. Conditions will be provided for all families to get housing; to this end, the adequate legal, economic and administrative measures will be used. Health of the country’s population which depends upon social and economic conditions determines the economic prosperity of the state. By implementing and developing reforms, health education and disease prevention will become priorities of the health system.  Lithuanian people will be guaranteed an accessible, timely, safe and effective health care based on real health insurance and fairness. The ultimate objective of health care is to improve public health, to provide high quality medical assistance and to promote a healthier life style; to increase life expectancy, reduce mortality of the population, improve the system of health care institutions, to ensure fairness in health relations and the right of choice of the patient; to  prevent dependence diseases, to ensure that the medicines and medical equipment on the Lithuanian market  are safe, high quality and effective and meet the standards of the Member States of the European Union; to develop a system of public health education, health improvement and health care; to improve the quality of health care services by introducing new medical technologies, improving the qualifications of the personnel, to ensure conformity of the health care institutions with the prescribed requirements.  The development  of the health care system in Lithuania, improvement of the network of health care institutions  will be in line with the  standards and principles of the World Health Organisation and the European Union. In the sphere of foreign policy Lithuania will have secured its role as an active member of the EU and NATO. Seeking to ensure its interests within these organisations Lithuania will maintain relations of close co-operation with the Member States of the EU and NATO, will consolidate its role in the Baltic Sea Area and, through  sharing its experience of membership in the EU and NATO and promoting the EU initiative of “Wider Europe” will develop relations with its eastern and southern neighbours. The relations with other states will be developed with due regard to Lithuania’s political and economic interests. Within the EU, Lithuania will consult all the countries whose views on the issues to be solved are closest in their relevance to the Lithuania and its welfare. Rather than  automatically  affiliating itself with any of the groupings of states,  Lithuania will seek  allies  according to its own interests. At the same time traditional measures of enhanced consultation will be used  with the other two Baltic States, Nordic Countries and Poland. Lithuania will take an active part in formulating and implementing the policy of the three pillars of the EU. Along with the national foreign trade policy, Lithuania will also pursue and contribute to the development of the common foreign trade policy of the EU. In the matters of common foreign and security policy and common European Union security and defence policy Lithuania will seek to maintain a balance between Atlantism and Europeism, emphasising the importance of the future presence of the USA in Europe. After becoming a member of NATO, Lithuania will be active in voicing its  opinion on the issues of further development of the relations by the Alliance with Russia, Ukraine, Byeloruss and will seek to keep the attention of the Alliance on the regions of Caucasus and Central Asia.  The spirit of the Vilnius Ten will be sustained; Lithuania will share its experience of integration into NATO with the candidate countries which have not been invited to join the Alliance. Lithuania will take an active part in NATO missions, according to its capabilities, above all in the better known regions, where Lithuania has experience in the activities of this  kind.  In the sphere of economic diplomacy Lithuania will make use of its position as one of the easternmost states of the EU by expanding its diplomatic representation and actively promoting economic and trade interests in this vast region. Efforts will be made to retain CIS markets. Lithuania will actively use international organisations as forums for the promotion of human and civil rights and freedoms, for solution of universal, international problems having an impact on the well-being of Lithuania and its citizens. An effective mechanism for the co-ordination of foreign policy institutions will be created  in Lithuania. A better understanding between the public and the diplomatic service will be promoted; an open dialogue with the public on the key issues of foreign policy will be held. In accordance with the strategic priorities of the Government of the Republic of Lithuania and with regard to the international commitments, a national legal system will  be developed aimed at the protection of human rights and freedoms. In compliance with the Constitution of the Republic of Lithuania, the provisions of laws and international agreements of the Republic of Lithuania, guidelines of other legal instruments and the legal system reform, measures will be implemented in the sphere of personal safety and rights, law making aimed at ensuring human rights, protection of human rights and interests, legal protection, and state administration and information society. The state must orient  the economy of Lithuania in the direction of intellectual production and provision of service: generating the income, it would remain a fully fledged, co-operative and competitive participant of the world market. Information technologies based on a consistent upgrading of telecommunications and information technologies must be developed. (Long-Term Economic Development Strategy of Lithuania until 2015 approved by  Resolution No. 853 of the Government of the Republic of 12 June 2002) The structure of industry and the strategies of enterprises adequately reflect of the ever-changing impact of the global competition forces. Lithuania will become an attractive country for offices estblished  by manufacturing and service businesses, of both local and foreign capital, competitive on international markets, prioritising high technologies and science-intensive resources.  Industry will function in an environment favourable for innovations and delivery of the intended quality, encouraging high qualifications, fair competition and an infrastructure geared to the reduction of  operational costs. The development of industry will be stimulated by a favourable legal environment, guaranteeing stability and credibility.  The sector of small and medium enterprises will have an advanced infrastructure and will function in an open and steadily developing economy; with the help of modern technologies and qualified labour force it will produce competitive, innovation-intensive products and provide services to local and international markets, creating the major share of the GDP.  Small and medium businesses will adjust to the market changes, will rationally use the resources and create new jobs. The energy sector will provide  cheap, reliable and safe power for all branches of the economy, create favourable conditions for future progress of the country; integrated into the energy systems of the West and the East, it will be able to compete on an open international energy market.  The future energy sector will be sustainable and will not pose any threats to the environment. The key objectives in the sector of energy and the trends in the state policy  will be the formulation of the energy policy with regard to the basic principles of the EU energy policy and the dominant trends in the world energy development, drafting of the appropriate legal framework, establishment of the energy management and regulatory institutions, planning of the measures for the implementation of energy policy on the basis  of a detailed analysis of the sustainable development of the energy sectors of the country, optimisation estimates and the  systematised available statistical information, in order to guarantee the viability of Lithuania’s energy,  its economic competitiveness, reliability, effectiveness of energy consumption and minimal damage to the environment. The infrastructure of transport will be modernised and integrated into the  network of major motorways and TINA and through them into the Trans-European Networks. A safe and environmentally friendly system of transport has been built. Multimodal transport has been developed, the logistics centres have been founded in Kaunas, Klaipėda and Vilnius. The use of the potential of the I and IX European transport corridors will allow to extend transit capacities and the integration of  Lithuania’s carriers  into the market of transport  services of the Baltic Sea Area and the continental Europe. Knowledge economics and e-business. All residents of Lithuania, both in towns and rural areas, will be provided equal opportunities for continuing education and improvement of their qualifications by means of information technologies. Incentives will be offered for investment into the improved computer network facilities, traditional and mobile, and their use. The state and municipal institutions will be restructured with the help of the possibilities offered by  information technologies, conditions will be provided to speed up the development of e-economics and the use of electronic documents. The telecommunications market has been liberalised, competition is being encouraged. Incentives will be given for the establishment of  new and the development of the existing  profit-making businesses which  are based on knowledge and information technologies.  Support and incentives are provided for the integration of business, science and studies in the production of competitive products and provision of competitive services. The residents in outlying regions and persons with disabilities have been provided conditions for being reintegrated into employment with the help of information technologies. Measures have been designed and implemented to curb the brain drain of information technology professionals abroad  and to stimulate repatriation of those who have left the country. Efforts will be made to encourage  manufacturing of demonstration samples, and focus will be given to the importance  of visual communications and information technologies for economic development. Legislation protecting information security and privacy of persons will be improved. In the sector of rural development and agriculture, the state policy will be targeted towards sustainable economic, environmental and social development; a favourable legal and economic environment for an independent functioning of farmers’ farms, agro-businesses and other rural enterprises on a competitive market, able to earn incomes sufficient for self-support and business development. Incentives will be provided for innovations, the production of  competitive goods and provision of services with a higher added value; the infrastructure of intellectual, technological, technical, financial and information supply will be developed.  Legal and economic preconditions are in place for a more effective use of financial and fixed assets of economic undertakings for investment intended for modernising agricultural production and development of non-traditional and alternative businesses. Restitution of the residents’ ownership of land, forest and water bodies will be completed, and legal and economic preconditions will be created for the consolidation of areas of land used and a rational use of natural resources. Stability of rural development and agriculture will be guaranteed. The Lithuanian countryside, a place attractive for work, life and leisure, will have production and social infrastructures, a community of educated and enterprising people, a healthy environment and a landscape of great scenic value. Production, processing and marketing of agricultural products will form a modern and environmentally friendly integrated system, having a developed infrastructure, modern technologies and a qualified work force; it will be receptive to the changing business environment and will seek to place on the market competitive and high quality products and services. Two trends in the development of farms will emerge: one will be specialised farms producing traditional products, competitive on the EU market, supplying production to processing and trade businesses; the second – farms producing organic products engaged in non-traditional activities and having their own market niches. Smaller, co-operative farms will exist along large agribusinesses. The areas of intensive agriculture will be dominated by grain, pig and dairy farms. Large specialised farms with vast areas under grain, rape and flax will grow in number. More products with a higher added value (meat, dairy) will be produced. Production of fruit and vegetables is expected to grow. More meat cattle and sheep will be grown, especially on infertile lands.  Natural and organic products will be a priority. Fishing, the fish processing industry and fish trade, fish breeding and fish farming will be a modern sustainable sector integrated into the national economy, having a developed infrastructure and effective technologies, qualified work force and a system of their training, placing on the market high quality and competitive products. Non-traditional and small agricultural businesses such as farming of medicinal herbs, mushrooms, apiculture, internal water fisheries and alternative activities such as rural tourism, crafts, services and other small businesses will be developed. Environmental protection measures in agriculture, in compliance with the EU regulations, will ensure the development of environment friendly agriculture, the  preservation and increasing of natural resources. The state will implement the common fisheries policy of the EU aimed at balancing fishing with the fish resources, regulation of the competition relations between countries having fishing fleets, softening of the social consequences of structural changes. The policy will be made up of the following components: the management of fish resources, the structural, market, pricing and social policy. The mission of the state is to create a favourable legal, economic and institutional environment for the implementation of this policy.  Since the development of the financial sector will be faster than that of the manufacturing branches of economy, the contribution of the sector of financial mediation to the GDP will reach 7-10 per cent in 2015.   Membership in the Euro zone will facilitate a fast acquisition of the know-how of financial technologies. Growing living standards will contribute to a greater role of the manufacturing branches of economy as the consumers of  financial services. Over 5 – 10 years the major part of the population will purchase durable and semi-durable goods and services (cars, housing, furniture, home furnishings and appliances as well as goods and services intended for leisure) by taking out loans or availing themselves of other financial services (leasing etc.). By the end of the period Lithuania will have various types of financial institutions (commercial, investment banks, private pension funds, collective investment enterprises, mortgage banks, non-bank financial institutions etc.) with a well regulated legal framework and a clearly segmented market. However, the nucleus of the financial system will belong to commercial banks of a universal character, combining provision of a wide spectrum of financial services with the function of retail banking. E-banking and other services of financial mediation based on modern information technologies will out-rival “live” financial services and will become the dominant form of  payment and other financial operations. On the other hand, longing for direct communication with people will  remain; priority clients will gladly avail themselves of direct communication. Eventually, the role of financial institutions of  local origin or of only Lithuanian capital will diminish or these institutions will disappear altogether giving place to international companies or their structures and alliances. The national names of financial institutions as a business value will lose their significance. The state will provide favourable legal conditions in the sector of finances for the development of investment culture and the integration of the capital market into foreign markets, above all the EU market; the possibilities of the market will be developed for the attraction of capital, for safe and effective investment and liberalisation of the finance market will be continued. Regional development. The economy of regions will be developed and their competitiveness will be increased based on the available resources and priority development trends. Transport, communications and other physical infrastructure will be developed as an integrated network, seeking rational use of the EU and national resources. Dynamic rural settlements, increased mobility of the population will link the town and the countryside. By developing tourism and recreation, a proper environment will be created for the  preservation of nature and cultural heritage. Regional institutions will co-operate on the international level while implementing the EU and national policy goals. The goals of the regional development policy are as follo …