Topic: Sustainable Economic Policy
Country: Lithuania
Delegate Name: Oscar Luna
School: Instituto Educativo Olinca
Topic page: background guide and all position papers All Lithuania position papers GLIMUN 2015 committees
Nowadays Lithuania is a country with an open growing economy. Although Lithuania was part of the URSS, since 1990, when Lithuania recovered its independence, it started a process to open the economy to private investment. This process has proved successful, since in 2015 the World Bank Group´s Doing Business classified Lithuania as the twenty-first best country in the world to start and make businesses and its GDP grew 3% that same year. Despite the good results is true that now the main problem in Lithuania is unemployment.
In order to keep a sustainable economy Lithuania has ensured the quality of the public services such as electricity and water. The electricity and water supply infrastructure in Lithuania, according to World Bank data, is one of the best ones in all of the eastern European countries. With this good infrastructure it is possible for Lithuania to efficiently connect firms to their customers and suppliers, and allows the use of modern production technologies.
Even though in 2009 Lithuania suffered an economic crisis, in 2010 the country started to grow again thanks to the austerity measures that consisted on reducing the public spending, the government salaries and the minimum wage up to 25%.
This policies are based on the principle of a balanced budget. That means that the government must not spend more money than that levied by taxes. By doing so, the government reduces its reliance on both foreign and domestic debt. On the opposite, a government that heavily depends on foreign or domestic debt will face rising interest rates because investors will consider that country as a riskier investment demanding a premium on the interest rate. That in turn will increase the cost of capital reducing investment.
http://www.doingbusiness.org/data/exploreeconomies/lithuania/#close
http://www.enterprisesurveys.org/~/media/GIAWB/EnterpriseSurveys/Documents/Profiles/English/lithuania-2013.pdf
http://economia.elpais.com/economia/2013/08/02/actualidad/1375453151_179987.html
http://www.datosmacro.com/negocios/doing-business/lituania
http://www.upv.es/contenidos/ORI/info/U0649425.pdf
