Key developments and challenges

With the establishment of the new Baltic Power Exchange in Lithuania, an important first step has been taken towards the regional integration of national power markets. The authorities could also improve the security of energy supplies by developing alternative sources of energy and promoting energy efficiency.

The extent of the grey economy remains an impediment to investment. Strengthening the enforcement of existing tax laws and other regulations as well as expanding the incentives for adherence could contribute to a reduction in the size of the informal sector and encourage sustainable growth in the formal economy.

Lithuania will need to develop more technology-intensive sectors, especially to increase the share of these goods in exports. This will require a tax regime that favours research and development and innovation and also discourages the outward migration of skilled workers. Over the longer term it requires an education system that ensures human capital has the appropriate skills.