South and East region of Lithuania: regional profile

Lithuania is situated in Northeastern part of Europe, it is one of the three Baltic States along the Baltic Sea. It is the country of nice people, old history, green forests and beautiful lakes.

Lithuanian Fact File: Area: sq km Coastline: 90 km. Land borders: with Belarus 660 km, Latvia 588 km, Poland 103 km, Russia (Kaliningrad) 273 km Population: million Ethnic composition: Lithuanians 83.45%, Poles 6.74 %, Russians 6.31%,, other 3.5% Major cities include Vilnius (the capital has inhabitants), Kaunas and Klaipeda; 68% of the population live in urban areas. Lithuania consists of 10 counties, 60 municipalities and 4 cultural regions, of which Žemaitija (the Lowland), Aukštaitija (the Highland), Suvalkija and Dzūkija.

Lithuanian economy facts (I): 6.7% growth in GDP in 2004 (9% in 2003). The average growth is 7.3% per year from The growth in 2004 was strongest in industry, financial intermediation, wholesale and retail trade. exports growth 21% (11.2% in 2003), and imports 15.8% in 2004 (7.1% in 2003); Inflation is low (0.7% in 2004) Unemployment is relatively low (7.9 in 2004) The share of employees in the private sector is approx. 70%. 89% of Lithuanian banking sector is controlled by foreign capital.

Lithuanian economy facts (II): Since several years the service sector dominates in terms of overall GDP in Lithuania. The most important service sectors include telecommunications, financial services and banking, wholesale and retail trade and transport services. In terms of industrial production the largest sectors are oil refining, food production, textiles, clothing, leather, wood and wood articles. Main industries dominating in the high tech sector today are biotechnologies, laser technologies and IT. A noticeable difference with EU countries is that low- value added sectors and labour intensive technologies are still of major importance.

R&D priorities in Lithuania: (Lithuanian Government, July 2002) Research to ensure quality of life of people. Research to promote a knowledge-based society. Research to create nanotechnologies. R&D activities on nuclear safety of Ignalina nuclear power station in the stages of its operation and closure, and management of radioactive waste. R&D to increase international competitiveness of Lithuanian industries.

Main actors of the Lithuanian innovation system Government of Lithuania Science and Technology Commission Parliament of Lithuania Lithuanian Science Council Academy of Sciences Other ministries Business Development Council Ministry of Economy Industy and Business Department Innovation and Technology Division Other divisions Innovation centres Business information centres Business incubators Science and technology parks Lithuanian SME Development Agency Lithuanian Business Development Agency Private companies Ministry of Education and Science Science and Higher Education Department State research institutes Science and Education bodies Lithuanian State Science and Studies Foundation Agency for International Science and Technology Development Programmes in Lithuania

The Lithuanian Innovation System has quite well developed research and institutions infrastructure. But it is constrained by lack of coordination of activities and underdeveloped science-business interface. Public-private cooperation is limited and examples of networks and clusters especially in emerging sectors have more the result of private initiatives rather than specific policy interventions. Features of Lithuanian Innovation System

Programme for Innovations in Businesses ( ); Conception for Science Technology Parks’ (STP) Development (2003); Programme for High –Tech Development ( ). Financial support regulations for SME innovative projects (2005). The Lithuanian Ministry of Economy is a key policy maker and implementer in the sphere of SMEs and innovation. The most important documents concerning innovation are:

Innovation support infrastructure 2 Innovation Centres (Lithuanian Innovation Centre, Kaunas Regional Innovation Centre); 6 Science & Technology Parks; 7 Business Incubators (Siauliai, Alytus, Kazlu Rudos, Ignalina, Vilnius and Kaunas University of Technology regional business incubator); 42 Business Information Centres

Universities in Lithuania Lithuania has two types of Higher Education Institutions (HEI): universities and colleges. There are 35 HEIs of which 22 (15 universities and 7 colleges) are state owned and 13 are non-state owned institutions (4 universities and 9 colleges). 9 institutions can be considered as a basis for R&D and innovation development.

Research Institutes 46 State research institutes focus on scientific research and applied scientific research. They are established to conduct a long-term research of national importance on an international level: University research institutes manly focus on scientific research, and also participate in teaching activities at university. State research establishments exclusively concentrate on the activities of applied scientific research.

Major problems in innovation development: Lack of communication and co-operation between different innovations supports institutions; Lack of co-operation between Higher Education Institutions (HEI) and research institutes and industry; Lack of knowledge of Innovation Management and Entrepreneurship.

RIS-Lithuania region The RIS-Lithuania region comprises 4 counties (Tauragė, Marijampolė, Alytus and Kaunas) in the West-South part of Lithuania and Utena county in the East. The region has a population of almost 1,365,000 inhabitants. The region shows a very diverse socio-economic structure. It comprises old industrial areas mainly in the south; agricultural, peripheral and weakly industrialised areas in the east; and relatively well developed areas in the centre and near Kaunas county.

Kaunas County (I) Kaunas county is in the centre of the country. It is the third largest region in Lithuania. It is a geographical, educational, as well as an industrial and transportation centre of Lithuania. There are many natural and cultural values, which interest lovers of cognitive tourism. The infrastructure of serving them is being rapidly developed. Cultural life is active. Some of the most significant events are the Pazaislis musical festival, international festival of young musicians, and jazz festivals.

Kaunas County (II) Kaunas county has long-standing traditions as the centre for textile and fibre, electronics and wood processing and furniture industries, and for production of medical, optical and precision instruments, foods, and chemicals. Such industries as production of machines and instruments, metal processing, chemical, building materials, textile and knitwear, paper and printing, furniture, glass and food industries are well developed in the county. There are 13 Higher Education institutions in Kaunas county.

Alytus County Alytus County is the southern-most county. Its territory is situated in the historical region Dzūkija. Within the county, the engineering, textile, chemical, food and construction industries are expanding. There is 1 college in the county. The numerous natural and cultural monuments, places ideal for recreation, soils of average fertility and productive woodlands have guided such activities: County is paying a lot of attention to developing the flow of tourists, tourist facilities, the variety of health institutions, and environmental protection. There is the country's most famous health resort in the county.

Marijampolė County Marijampolė County is in the south of the country in the historical Suvalkija region. The main areas in which businesses in Marijampolė county are engaged are timber processing, transport, yarn manufacturing, the processing of farm products, the production of foodstuffs and construction. Transport services have good prospects. Even though industry has received a lot of attention, the main areas of business are agriculture, the processing of agricultural products, and trade.. There is 1 Higher Education Institution in the county.

Tauragė County Tauragė County is in the west of the country. It is an agricultural area. In terms of the volume of production and exports, the most important branches of industry in Tauragė county are textiles and clothes manufacturing, the food and drinks industry, wood products and timber processing. This area, distinguished by a unique landscape, is especially suitable for tourism. It is an area of majestic castles from the 14th to 19th centuries, ancient settlements, impressive castle mounds, parks, wooded hillsides, marvellous views of the Nemunas valley, and picturesque streams and meadows. Numerous cultural and natural monuments provide an opportunity for the intensive development of tourism.

Utena County Utena County is is the most sparsely-populated county in Lithuania. Utena is located only some 95 km from Vilnius. Main branches of economy are textile, food and timber processing, beer and wine production, power engineering. Outstanding feature of region's economy is Ignalina Nuclear Power Plant. Utena county is the second most popular tourism destination in Lithuania (after seaside). Approximately 31% of territory is covered with forests. There are 1002 lakes in the county. They are connected by rivers and provide good opportunities for water tourism. One of the biggest tourism attractions is Aukstaitija National Park. In addition, county has 6 other regional parks. There is 1 college in the county.

R&D in the region: The region is quite well equipped in terms of RTDI. The major and most important institution of R&D in technical sciences is the Kaunas University of Technology. 80% of industrial engineers in the country are graduates from this university. The university is famous for the accumulation and application of scientific knowledge and experience for practical purposes, through the organization of both technical and intellectual resources. The region has 4 Business incubators (Kaunas University of Technology Regional Business Incubator, Alytus Business Incubator, Kazlu Ruda Business Incubator, Ignalina NP Regional Business Incubator); 19 Business Information Centres; Kaunas High-Tech and IT Park; Recreation, Tourism and Sports Science Park; Kaunas Regional Innovation Centre; Chamber of Commerce, Industry and Crafts.

The region‘s strengths are: macroeconomic stability, growing economic competitiveness, sufficiently well-developed transport and communications infrastructure, well-educated workforce, pockets of well-developed scientific institutions and high potential for applied research in selected areas, established framework for vocational training.

Main weaknesses of the region are: low industrial and agricultural productivity, lack of entrepreneurial and innovation culture and lack of access to capital for SME start-ups and existing SMEs, physical infrastructure is in need of modernization and investment, little private sector involvement in RTD, lack of IT awareness and low level of IT application.