I. Šimonytė: Competitiveness based on low costs cannot be sustainable

"Lithuanian prime Minister Ingrida Šimonytė takes the position that as Lithuania becomes closer to the markets of other European countries, it is no longer possible to base its production on low costs and cheap labor, therefore in the long run Lithuania should base its competitive advantage on innovation.

 

    However, the Prime Minister emphasized that Lithuania can already be considered an advanced economy. "If our economy per capita was less than half the EU average before joining the European Union, it has grown quite close to 100%. According to the classification of the International Monetary Fund, we are considered to be an "advanced economy", and that categorization and evaluation are apparently not given for nothing. Not all countries deserve this assessment,” - said I. Šimonytė at the Economic Forum of the Lithuanian Confederation of Industrialists (LPK) on Tuesday.

 

    Nevertheless, the head of government emphasized that with the growing ties with the Western markets, it is no longer possible to rely on the principles of cheap labor or economies of scale, as in her opinion it is impossible to win the competition in these ways.

 

    "As we continue to converge with Western Europe, it is clear that the foundations of competitiveness we have built on in the past simply need to change, because no one wants to get caught up in what economists call a middle-income trap.

 

    Therefore, competitiveness based on low costs (which usually means low wages in itself) cannot be sustainable, because then we will lose the competition for workers, for the minds.

 

    "As we are not a very large country and territory at the same time, it is known, that economies of scale are not what can save us," said the Prime Minister.

 

    According to I. Šimonytė, in the near future Lithuania should base its competitiveness on the speed and flexibility of the industry. She stressed that the government has also taken appropriate action to reap these competitive economic advantages. "Therefore, in the short to medium term, what we are trying to rely on most now, or what is realistically simplest to rely on now, is speed and flexibility. Of course, for speed and flexibility to give us a competitive advantage, we need strong and competent institutions. Here, the government is moving forward with public administration reform,” - she assured.

 

    In the long run, we will have to base our competitiveness on innovation and the quality that is inextricably linked to it. According to the Prime Minister, in the long run, Lithuania can remain competitive if its economy is based on innovation and the production of quality products. 

 

"In the long run, we will have to base our competitiveness on innovation and the quality that is inextricably linked to it. That is why we are laying the foundations very seriously, making additional investments in education, science and innovation.

 

    The Seimas is already considering changes to the innovation reform, which are related to the so-called business part. This is applied research and its application to the provision of products and services, "said the Prime Minister, emphasizing that the authorities have taken appropriate steps to tilt the economy in this direction. "The second part of the innovation reform, which concerns scientific institutions and our universities, will reach the Seimas in the near future.

 

    All of this will probably have some important gains if we succeed in implementing these reforms. "Perhaps the main thing is that we will finally move from languages ​​to real synergies between business and science, and at the same time we will have a real opportunity to stop the brain drain, which we so often regret, in Lithuania," - I. Šimonytė is convinced."

 

You're late. All this had to be done thirty years ago. Now it’s not just minds that have leaked. The traditions and values ​​they need are gone. The minds cannot compete with the rich and the stupid in modern Lithuania. We are an "advanced economy" with African salaries. How are you going to compete for the brains with everybody else in the world who also want innovation  and quality, but have less nepotism and are stealing less?