The Tendencies of Strategic Industry Development in Lithuania

Abstract

The article analyzes the changing tendencies and caries out the comparative analysis of Lithuania’s two major – milk and textile – industries. It is essential for Lithuania to maintain the competitiveness of these two industries in both domestic and foreign markets, promote production growth, and solve the problem of raw material shortages. The milk industry is one of the most important agricultural and food industry sectors producing about 18% of total agricultural output; milk-processing plants employ about ¼ of the total number of employees of the food sector. The textile industry is the 1st largest employer and is the 2nd largest according to the sales volume in the whole of processing industry, with a positive trade balance. This sector is in the leading position of export – makes up about 20% of total exports of Lithuania. The milk sector is traditionally very important in Lithuania’s economy – it employs a large number of people and adds a large value. Lithuania’s membership in the EU is going to make a positive impact on this industry. Firstly, it is related to the support for agriculture – the cost of raw materials for the milk industry may go down. Secondly, there are better opportunities for foreign trade – sales barriers within the EU countries have been reduced and opportunities for the export to the third parties increase in connection with export finance. Finally, this industry enjoys a strong position in Lithuania’s market. The SWOT analysis of Lithuania’s milk and textile industries demonstrated that they have favourable conditions for development, increase of the markets, but it is essential to pay attention to the arising threats in order to compete in the foreign markets and attract maximum investment. It is also important to compare the import and export change trends of these two industries and foresee the prospects of future development. While carrying out the import-export analysis of the abovementioned industries, it is obvious that both textile and milk industries remain traditional, with most priorities and being one of the most prospective in Lithuania. Both industries enjoy favourable natural conditions, big experience, well-qualified and inexpensive workforce. As the whole of industry in Lithuania, they are facing a number of difficulties. One of textile industry branches – flax textile is facing a shortage of raw-materials. The amount of flax grown in Lithuania cannot satisfy the needs of textile producers. They are forced to import the necessary amount of flax, and thus they have to deal with the imposed import tariffs. However, the enterprises manage to get the import quotas. The problems of Lithuanian milk industy also start with raw-material production, which is closely related to the quality and output of milk and its products. Relatively low productivity of Lithuanian cows is one of thse problems. Milk production is also seasonal. While evaluating the export possibilities for different industries, it was noticed that the attractiveness of milk industry largely depends on the possibility to get adequate raw material supplies, while that of garment and textile industries depends on the possibility to compete with the products from the cheap labour countries. The decreasing exports of the recent years demonstrate the inability of the textile industry to compete in the international markets. Regarding export possibilities milk product manufacture looks attractive. Although the export sales of the milk processors are relatively low, Lithuania’s membership in the EU increased the industry’s possibilities to sell its products in those markets. Besides, milk export subsidies opened new possibilities regarding third countries.