Structural changes of economies: Lithuania in the global context.
Dudzeviciute, Gitana ; Maciulis, Alminas ; Tvaronaviciene, Manuela 等
Reference to this paper should be made as follows: Dudzeviciute,
G.; Maciulis, A.; Tvaronaviciene, M. 2014. Structural changes of
economies: Lithuania in the global context, Technological and Economic
Development of Economy 20(2): 353-370.
JEL Classification: L16, L6, 013, 014.
Introduction
Economic theory has given significant attention to structural
change. Theoretical elaborations of structural transformation by Nobel
laureate W. Arthur Lewis later in the mid-1950s were modified by John
Fei and Guatav Ranis (Todaro, Smith 2009: 115). Attention to sectorial
changes does not diminish in contemporary economic literature. Latest
strand of scientific literature on economic development is devoted to
interrelation of structural changes within economies of countries and
their capacity to enhance their economic growth (Borsekova et al. 2012;
Lankauskiene, Tvaronaviciene 2012; Dudzeviciute 2013; Karnitis 2011;
Tvaronaviciene, Lankauskiene 2013; Balkyte, Tvaronaviciene 2010;
Vosylius et al. 2013; Miskinis et al. 2013). The term "structural
change" has become widely used in economic research with variety of
meanings and interpretations (Dudzeviciute 2013; Vosylius et al. 2013;
Miskinis et al. 2013). In economic development, structural change is
commonly understood as the different arrangements of productive activity
in the economy and different distributions of productive factors among
various sectors (Memedovic, Iapadre 2010; Dudzeviciute 2013; Vosylius et
al. 2013). The most common meaning refers to long-term and persistent
shifts in the sectoral composition of economic systems (Syrquin 2007;
Memedovic, Iapadre 2010; Dudzeviciute 2013). Moreover, structural change
is associated with the importance of different economic sectors over
time (Karnitis 2011, Smaliukiene et al. 2012; Miskinis et al. 2013)
measured by their share of output or employment. Sectoral changes
support economic development and allow adjustment with the requirements
of globalization processes (Smaliukiene et al. 2012; Tvaronaviciene et
al. 2013; Karnitis 2011; Vosylius et al. 2013). Despite plethora of
approaches towards understanding of structural changes in country's
economy (e.g. Dudzeviciute 2013; Lankauskiene, Tvaronaviciene 2012;
Vosylius et al. 2013) in the article we admit that "structural
change can be a narrow definition limited to a change in input-output
structure of production, or it can encompass a broader definition of a
change in the industry composition of total production or final
demand" (Kamaruddin, Masron 2010: 101).
The paper aims to overview and assess the Lithuanian economy's
structural changes in the global context. The analysis bases on United
Nations (UN) Statistics data (United Nations database 2013).
The paper is organized as follows. Section 1 gives a short summary
of the relevant empirical literature on structural changes and research
methodology. The studies of different researchers are summarized and the
main research aspects are highlighted. Section 2 describes the main
structural changes and their tendencies in Lithuania and in global
economy as well; focuses on the structural shifts assessment, applying
the absolute structural changes rate and the intensity coefficient of
structural changes. The final section concludes summarizing of the main
trends observed.
1. Theories and patterns of structural changes
1.1. Empirical studies' review
In scientific studies, sector changes have been analyzed from
different angles and using several methodological approaches (Havlik
2004, 2007; Burda 2006; Bachmann, Burda 2008; Tvaronaviciene,
Kalasinskaite 2010; Karnitis 2011; Travkina, Tvaronaviciene 2011;
Smaliukiene et al. 2012; Dudzeviciute 2012, 2013; Tvaronaviciene et al.
2013; Miskinis et al. 2013; Vosylius et al. 2013; Lankauskiene,
Tvaronaviciene 2011; Borsekova et al. 2012; Korsakiene, Baranauskiene
2011; Dudzeviciute, Tvaronaviciene 2011).
The overview of recent researches shows that some of the authors
analyze structural changes in the economies of different countries in
the context of a three main sectors such as agriculture, industry and
services (Teigeiro, Solis 2007; Albu 2010; Gil' Mundinov 2011;
Jiang 2011; Jorgenson, Timmer 2011; Mao, Yao 2012); others do researches
in-depth of particular sector by commodities or types of services
(Tanuwidjaja, Thangavelu 2007; Sharma, S., Sharma, J. 2007; Matsuyama
2009; Thomas et al. 2009; Kamaruddin, Masron 2010; Woodall et al. 2011;
Noland et al. 2012; Vosylius et al. 2013).
Gil' Mundinov (2011) has analyzed changes in the sector
structure of the Russian economy in the period of 1991-2009. The paper
aims to determine the role of structural changes of internal factors.
The analysis makes it possible to distinguish three basic factors that
affect the sector structure of the Russian economy: the exchange rate,
the interest rate and wages.
Jiang (2011) in the paper has empirically investigated the
patterns, causes and implications of China's structural change and
its contributions to regional growth. The author reveals that a Chinese
region will generally rely on the structural change for its overall
labor productivity growth more and more as the regional economy
progresses. However, it tends to become harder for the region to take an
advantage of structural change when achieving regional labor
productivity growth. According to the author, the results of research
have significant implications. The author has concluded, if structural
change promotes regional labor productivity and at the same time
interregional income, then it is important that this dual effect would
be properly measured.
Mao and Yao (2012) have developed a dynamic general equilibrium
model and studies structural change in a small open economy, South
Korea, with two tradable sectors such as agriculture and manufacturing,
and non-tradable sector, services. The authors have revealed falling
employment share of agriculture and a rising share of services. Two
countervailing effects have been identified: the productivity effect and
the Balassa-Samuelson effect According to the authors, the first effect
has arisen from differential rates of productivity growth among sectors
and has increased the share of manufacturing; the second one has
enhanced the service sector and eventually has drawn labor from the
manufacturing sector. The authors have calibrated the model and have
found that the calibration fits the country's historical path of
structural change.
Jorgenson and Timmer (2011) have concluded that "the classical
trichotomy among agriculture, manufacturing, and services has lost most
of its relevance" (26 p.). According to authors, services now
contribute for about three-quarters to total value added and
productivity growth in services predominate over productivity growth in
goods production in Japan and the US, although not in Europe.
Kamaruddin and Masron (2010) have examined the structural changes
and the sources of growth in the manufacturing sector in Malaysia. As
the results have showed, most of the industries were non-resource based
such as textiles, electrical and electronic products. The research has
revealed that export is an increasingly important factor of change in
the industrial growth patterns for the Malaysian economy. The authors
have concluded that the structural changes in Malaysian economy are
mainly caused by the reorientation of industrialization strategies as
well as by variations in the composition of domestic demand.
Matsuyama (2009) has presented "a simple model of the world
economy, in which productivity gains in manufacturing are responsible
for the global trend of manufacturing decline, and yet, in a
cross-section of countries, faster productivity gains in manufacturing
do not necessarily imply faster declines in manufacturing" (478
p.).
Tanuwidjaja and Thangavelu (2007) in their paper have analyzed the
relationship between structural changes and productivity of the
manufacturing sector in the Japanese economy. The authors have
decomposed the total labor productivity growth in Japan into labor
productivity growth and structural change across in the manufacturing
sector and have assessed the interaction between them. The manufacturing
industries have been classified into four sectors according to the
technological degree. The paper has revealed that the productivity is
most notably in the medium-high-technology sector and this is a result
of structural change occurred in the late 1990s.
The researchers have analyzed the services sector development in
Asia and have assessed its potential for economic growth (Noland et al.
2012). The survey has indicated that services are an important source of
output, growth and jobs, "however, its productivity greatly lags
that of the advanced economies, which implies ample room for further
growth" (12 p.). The study has concluded that the most important
key challenge for all Asian countries is to improve the quality of
services sector and to create more competitive services markets by
removing a wide range of distortions.
According to Gawlikowska-Hueckel and Uminski (2008), structural
change of economy is a result of the process of the adjustment of the
national economy to a changing global market. These adjustments are
related to the international specialization and competitiveness.
An overview of theoretical and empirical studies has showed that
the analysis of economic structure and its dynamics is a research topic
that continuously attracts researchers from different countries. The
structural changes of economy can be analyzed on the basis of a wide
range of indicators such as income-elasticity, productivity growth,
employment concentration, share of output in GDP, contribution to total
value added, total spending cross-sectors and others. Most of the
studies have described the long-run evolution of economies from
agricultural to industrial and then to service-based economic structure.
1.2. Research methodology
The analysis of economic structure started already in the first
half of the 20th century and is associated with Fisher (1935), Clark
(1940) and Fourastie (1954) works (Gawlikowska-Hueckel, Uminski 2008).
They summarized the structural changes of the economy by using
three-sector hypothesis that describes the long-run development of
economies from agricultural to industrial and then to service-based
economic structure.
The primary sector involves agriculture, forestry, hunting and
fishing. It is based on the direct utilisation of natural resources.
This sector is characterized by the law of diminishing returns. The
secondary sector encompasses manufacturing. It is characterised by a big
scale of production, which implies that considerable amount of capital
is needed and that production process has to be efficiently organised.
The tertiary sector involves services, where employment increases as
economies grow. Workforce transfers from one sector to another are
caused by changes in real income per capita as well as by changes in the
demand structure (Gawlikowska-Hueckel, Uminski 2008; Clark 1957). The
division of the economy into three sectors is the result of the
technological progress. The primary economic sector is characterised by
moderate technological progress, the secondary by fast, while the
tertiary by slow. The author concluded, that an increase in the offer of
the tertiary sector can happen almost only through a growth in
employment.
Later, structural change theories were developed by Lewis (1954),
Myint (1958), Todaro (1969), Ishikawa (1987), Syrquin (1988).
Lewis' dual sector theory (1954) was based on the assumption that
many developing countries had dual economies with both a traditional
agricultural sector and a modern industrial sector. The traditional
agricultural sector was characterized by low productivity, low income
and savings and significant underemployment The industrial sector was
defined as technologically advanced with high levels of investment
operating in an urban environment. Syrquin (1988) identified three
stages of structural transformation in the evolution of economies: the
first stage focuses on primary production; the second stage focuses on
shifts towards the manufacturing sector, and during the third stage the
share of service sector increases along with exports (Thakur 2008).
The research was guided by three-sector model provided in the works
of Fisher (1935), Clark (1940), Fourastie (1954) and
Gawlikowska-Hueckel, Uminski (2008). The comparative statistical
analysis of the regions and countries was based on the economic logic of
the primary-secondary-tertiary sector. The author refers to
Syrquin's and Chenery's (1989) approach when structural change
is studied in the process of economic growth. This allows to identify
statistically certain change in economic structure using regional and
the Lithuanian cross-sectoral data.
In order to evaluate sectoral shifts, the author uses structural
changes assessment methods, such as the the absolute structural changes
rate and the intensity rate of structural change, which are provided in
the works of Domingo, Tonella (2000), Cortuk, Singh (2010), Memedovic,
Iapadre (2010), Vitas (2012).
The absolute structural changes rate shows economic structural
change and its impact on economic growth. Positive rate value means that
structural change accelerates economic growth; and negative rate
diminishes economic growth. The absolute structural changes rate is
calculated as follows:
M = [D.sub.i] - [D.sub.0];
[M.sub.sum] = [n.summation over (i=1)] [M.sub.i], (1)
where: M - the absolute structural change rate; [D.sub.i] -
economic activity share, %; [D.sub.0]-economic activity share, % in the
basic year; [M.sub.sum]-sum of the absolute structural change rate.
The intensity coefficient of structural changes shows the economic
changes intensity in time [t.sub.i], compared with basic period. The
bigger is the coefficient value, the more intensive structural changes
of economy are going, and conversely. The intensity coefficient of
structural changes is calculated as follows:
K = [square root of [n.summation over (t=2) [([S.sub.ti]] -
[S.sub.t0]).sup.2]/m, (2)
where: K - the intensity rate of structural changes;
[S.sub.ti]--economic activity share; ti, to--current and basic time; n -
economic activity quantity; m - year.
The main advantages of these indicators could be named as follows:
they are easy to calculate, they are informative for interpretation of
their impact on economic development. However, they give only general
information and do not reveal the reasons for structural changes.
2. Lithuanian structural changes in the global context
2.1. Movement to service based economy
The investigations of structural changes started in the first half
of the 20th century. "Three-sector hypothesis" has described
the long-run evolution of economies from agricultural to industrial and
then to service-based economic structure defined as the process of
tertiarization (Bachman, Burda 2008).
In terms of value added at current prices, the service sector was
already dominant in 1970, making 52 % of world production and 66 % in
2011 (Fig. 1).
[FIGURE 1 OMITTED]
Industry made 38% in 1970 and 30% in 2011, agriculture was 10% and
4% respectively. The most recent trends had not entirely correspond to
the previous period. In a period of 2000-2011 the growth of world value
added has been slower in the service sector than in agriculture and
industry. This change can partly be explained by the recent increases in
the relative prices of agricultural and mineral products, which have
sustained their share of world value added (Memedovic, Iapadre 2010).
Lithuania, as independent country, has the short-run sector
evolution. The main structural changes in a period of 1990-2011 support
the view that tertiarization was the dominant feature of structural
change in Lithuania as in global economy as well. The service sector was
dominant in 1990, making 46% of the production and 65% in 2011. The
respective shares of industry was 29% in 1990 and 31% in 2011, and those
of agriculture made from 25% to 4%. An unabated development of the
Lithuanian service sector is visible until 2000, mainly because of the
detriment of agriculture.
In a period of 2000-2011, the share of service sector has increased
by 1.1 percentage points in Lithuania and the industry has grown nearly
by 1.6 percentage points. Since 2000, the structure of Lithuanian
economy was close to the world economic structure and it leads to the
conclusion that the Lithuanian economy has been integrated and
significantly impacted by the developments in the world economy.
According to the United Nations statistics data, the Asian and the
European economies are dominant in the world. The Asian agriculture
sector produced more than 50% of world value added at current prices in
2011, the European share made about 20%. Manufacturing produced about
40% of world value added in Asia and 30% in Europe; service sector
created about 25% and 35% of world value added respectively.
In Fig. 2 the main tendencies are shown of sector distribution of
total value added by region.
[FIGURE 2 OMITTED]
Taking into account structural transformation patterns in different
regions of the world economy between 1970 and 2011, the tendencies may
be summarized as follows:
--The development of the service sector was impacted mainly by the
detriment of agriculture. It happened in Asia, Latin America and the
Caribbean. The same shifts happened in Lithuania as well;
--The development of the service sector was influenced by the
detriment of industry mainly. It happened in Europe, North America and
Oceania;
--The African shifts of service sector were impacted by agriculture
as well as by industry. The economy of this region is characterized by a
fairly strong specialization in agriculture.
--In the period of 2000-2011, tertiarization process slightly
receded in Europe. The African and Asian service sector kept decreasing
in the same period of time. Africa and Asia reported the most
significant decrease of service sector by 2.4 and 4.8 percentage points
respectively. Only in North America a process of tertiarization is
visible from 1970 to 2011.
--In 2011, service sector took the biggest part in North America
(78%), Europe (71%) and Oceania (69%).
The structural changes' intensity by regions is summarized in
Table 1.
Having evaluated structural economic changes in 1990-2011 by
applying intensity coefficient, it can be stated that the Lithuanian
structural changes' intensity was the highest all over the world in
1990-2011. It shows that the Lithuanian economic pattern just was in the
process of its formation after the collapse of the Soviet Union and it
is sensitive to external and internal factors as well.
A more detailed analysis is needed to explain structural shifts of
the global economy. Next part presents in-depth analysis of the industry
and service sector distribution of total value added.
2.2. Industry and service sectors distribution: structural analysis
In part 2, three-sectors structural analysis showed the decrease of
agricultural sector in all regions between 1970 and 2011 and in
Lithuania between 1990 and 2011 as well. In some regions industry sector
share of total value added decreased (Europe, Latin America and the
Caribbean, North America and Oceania), other regions (Asia and Africa)
reported growth of industry share if 1970 to compare wuth 2011 (Fig. 2).
The share of industry sector increased in Lithuania between 1990 and
2011 (Fig. 3).
[FIGURE 3 OMITTED]
Lithuanian industry sector's share kept increasing over a
period of 1990-2011. It is different from the tendencies in Europe and
in the World, where industry's share decreased. In 2011, the Asian
economy reported the share of industry relatively higher than the
Lithuanian, European and World average (Fig. 3), however Lithuania has
industry with higher share of total value added than Europe and World
average.
To understand the changes better, a more detailed structural
analysis of the industry sector structure of total value added is
presented in Table 2, Table 3 and Table 4.
On the basis of the industry sector's structure and its
dynamics at global level, the main tendencies can be distinguished as
follows:
--Mining and utilities dominate in industry sector with a
significant share amounted to 20% of total value added in Africa. Over a
period of 2000-2011, mining and utilities in Africa increased by more
than 3 percentage points. It can be described by the decline of the
service sectors' share in this region.
--In other regions (Europe, Asia, Latin America & Caribbean,
North America and Oceania) mining and utilities have made 4-11% of total
value added. Lithuania belongs to this group of countries as well.
--Lithuanian mining and utilities share increased from 3% in 1990
to 4% in 2011. Lithuanian mining and utilities share of total value
added was less than World and Europe average.
The overview of the manufacturing sector's dynamic at global
level revealed the following aspects (Table 3):
--Manufacturing sector dominates in Europe, Asia, Latin America
& Caribbean and Lithuania making the share of total value added of
16-23%. Over a period of 1970-2011, all regions reported decrease of
manufacturing sector, except Oceania. This decrease was entirely offset
by service sector development
--In 2000-2011, the decrease of manufacturing sector was recorded
also in all regions, except Oceania and Lithuania, where manufacturing
growth was amounted to 2 percentage points.
--Lithuanian manufacturing sector made 21% of total value added in
2011. It has increased by 4 percentage point from 1990.
Over a period of 1970-2011, construction sector's share made
of 4-8% of total value added (Table 4). In this period more notable
structural changes happened in Europe, where the share of construction
declined by 2 percentage points. Lithuanian construction sector's
share decreased from 9% in 1990 to 7% in 2011.
Service sector kept increasing in all regions during a period of
1970-2011. Lithuania has reported service sector's growth as well
in 1990-2011 (Fig. 4, Table 5).
[FIGURE 4 OMITTED]
In 1990, Lithuania had the lower services' sector share of
total value added than World, Europe and Asia average. It made 46% of
total value added. During a period of five years Lithuanian
services' sector growth rate was twice higher comparing to Europe,
World and Asia average. In 1995 Lithuania reached Asian service sector
level and exceeded it in 2000. In 2011 Lithuania with service sector
share was very close to the World average; however it did not reach the
Europe average. The structure of service sector by regions is shown in
the Table 5.
Wholesale and retail trade, restaurants and hotels, transport,
storage and communications made the biggest part in the service sector.
These sub-sectors have produced over 20% of total value added. Between
1970 and 2011, Europe and North America reported greater structural
shifts of wholesale and retail trade, restaurants and hotels. The
contribution of this sub-sector to total European value added increased
by 5 percentage points; the same indicator in North America decreased by
more than 4 percentage points. Over a period of 1990-2011, the
Lithuanian wholesale and retail trade, restaurants and hotels
services' contribution to total value added rose until 2011 when it
reached almost 20%. In 1990-2011, the Lithuanian transport, service and
communications' share increased by more than 7 percentage points
and made 15% in 2011. Lithuanian specialization is fairly strong in
wholesale and retail trade and transport and communication. The shares
of these sub-sectors were higher than World and Europe average.
In 1990, Lithuania had the lower services' sector share of
total value added than World, Europe and Asia average. It made 46% of
total value added. During a period of five years Lithuanian
services' sector growth rate was twice higher comparing to Europe,
World and Asia average. In 1995 Lithuania reached Asian service sector
level and exceeded it in 2000. In 2011 Lithuania with service sector
share was very close to the World average; however it did not reach the
Europe average. The structure of service sector by regions is shown in
the Table 5.
Wholesale and retail trade, restaurants and hotels, transport,
storage and communications made the biggest part in the service sector.
These sub-sectors have produced over 20% of total value added. Between
1970 and 2011, Europe and North America reported greater structural
shifts of wholesale and retail trade, restaurants and hotels. The
contribution of this sub-sector to total European value added increased
by 5 percentage points; the same indicator in North America decreased by
more than 4 percentage points. Over a period of 1990-2011, the
Lithuanian wholesale and retail trade, restaurants and hotels
services' contribution to total value added rose until 2011 when it
reached almost 20%. In 1990-2011, the Lithuanian transport, service and
communications' share increased by more than 7 percentage points
and made 15% in 2011. Lithuanian specialization is fairly strong in
wholesale and retail trade and transport and communication. The shares
of these sub-sectors were higher than World and Europe average.
Other services include the activities such as financial
intermediation, real estate and business activities, public
administration, education, and health and social work. In 1970-2011, the
most important changes of other services happened in Europe, North
America and Oceania, where the growth of other services in total value
added was higher than the World average and made 16-20 percentage
points. In Lithuania the share of other services has remained stable
since 1990.
2.3. Lithuania in the context of the Scandinavian countries
In the previous sections the authors have described the Lithuanian
sectoral shifts in the global context. In this one, the Lithuanian
economy's structure has been overviewed in comparison with the
average of the Scandinavian counties (Sweden, Denmark, Finland and
Norway). The Scandinavian countries have been chosen due to their
advanced economies and their successful development in the global
context. The structural comparison has been based on the latest UN
Statistics data for the period of 1990-2011.
In 1990, the share of the Lithuanian agriculture in total value
added was more sizeable than in the Scandinavian countries (Fig. 5). In
1990, the Lithuanian industries share was very similar to the
Scandinavian countries average. It made about 29% in total value added
in Lithuania and 31% in the Scandinavian countries. From all industrial
activities only construction had bigger share in total value added in
Lithuania than in the Scandinavian countries. The most visible gap was
between the Lithuanian service sector contribution to total value added
and the Scandinavian countries. In 1990 it made 46% and 65%
respectively.
Over a period of twenty years, the significant fall in the
Lithuanian agricultural activity was entirely offset by the development
of the services' sector. The Lithuanian agricultural contribution
to total value added decreased by more than 20 percentage points and
made 3.5% in 2011, service sector increased by 19 percentage points and
amounted to 65% in 2011 (Fig. 5).
[FIGURE 5 OMITTED]
In 2011, the Lithuanian economic structure can be characterized by
greater contribution of agricultural and manufacturing activities to
total value added and less share of mining and utilities and
services' sector comparing with the average of the Scandinavian
countries.
Structural changes of economy can have positive or negative effect
to economic development. The authors evaluate structural changes impact
on the Lithuanian economy as well as the Scandinavian countries,
applying the absolute structural changes rate and the intensity
coefficient of structural changes. The results are summarized in Table
6.
Having evaluated structural changes of economies applying suggested
methods and based on data over 1990-2011, it can be stated, that the
economic growth was mainly negatively resulted by construction sector in
Lithuania; and manufacturing as well as construction activities in the
Scandinavian countries. Absolute rate of structural changes shows the
decrease of agricultural sector in total value added in Lithuania and
the Scandinavian countries as well. It could be treated as positive
change in respect that its impact on social development has been
considered as negative factor. Service sector development in Lithuania
and the Scandinavian economies sustained economic growth. The intensity
coefficient of the structural changes showed, that structural changes in
the Lithuanian economy were significantly more intensive than in the
Scandinavian countries. It means that the Lithuanian economic structure
was more sensitive and was easily affected by external and internal
factors over 1990-2011.
Conclusions
The research was guided by three- sector model provided in the
works of Fisher (1935), Clark (1940), Fourastie (1954) and
Gawlikowska-Hueckel, Uminski (2008). The comparative statistical
analysis of the regions was based on the economic logic of the
primary-secondary-tertiary sector. The assessment of the structural
changes based on the absolute structural changes rate and the intensity
coefficient of structural changes.
The research results mainly confirmed, that in the last decade
agricultural as well as industrial sectors were growing more slowly; and
the structure of the global economy has changed to service based
economic structure.
In 1990, the Lithuanian economic structure was close to the African
economic structure with relatively high agricultural sector contribution
(more than 20%) to total value added and relatively low share of service
sector (about 46%).
In 1990, the Lithuanian industry sector was at least developed
comparing with the average of Asia, Europe and the World. It was close
to the North American and Oceania average by the contribution to total
value added. Over a period of 1990-1995, the Lithuanian industry sector
contribution to total economy was growing, while it was decreasing in
Europe, Asia and the World regions. At the same period of time, the
process of tertiarization was apparent in global economy and the
Lithuanian service sector growth was twice faster than the European and
Asian countries average.
Over a period of 1990-2011, more intensive structural changes have
occurred in Lithuania. It was assessed by structural changes intensity
coefficient value, which was twice greater than in Europe, more than
three times greater than in America and Africa; and ten times greater
than in Asia and Oceania. It shows that the Lithuanian economic
structure just was in the process of its formation after the collapse of
the Soviet Union, when Lithuania became independent country; and it was
sensitive to external and internal factors as well.
In 2000-2011, the Lithuanian economic structure was very close to
the global economic structure, however, by the services sector's
contribution to total value added, the Lithuanian economy was behind the
European economy.
In 2011, the Lithuanian economic structure can be characterized by
greater contribution of the agricultural and manufacturing activities to
total value added and less share of services' sector comparing with
the average of the Scandinavian countries.
Over a period of 1990-2011, the most significant structural
changes, which negatively impacted on economic growth, have occurred in
the Lithuanian construction sector, and manufacturing sector in the
Scandinavian countries. Significant service sector development in
Lithuania sustained economic growth. Mining and utilities sector changes
had positive effect to the Scandinavian countries economic development.
The structural changes of the Lithuanian economy were three times more
intensive than in the Scandinavian countries in 1990-2011.
Observations provided above lead to general conclusion: provided
evidences suggest that the Lithuanian sectorial shifts are leading to
economy structure, which is rather typical for developed countries. On
the other hand, the path of structural change suggests that observed
Lithuania's structural shifts are more intensive than structural
changes in other considered countries. That peculiarity leads to idea
that economies of different countries can be characterized by different
dynamic irrespective to their development level. It means that some
countries are plausibly more sensitive to economic policies, others less
sensitive. Lithuania in that context reveals it as country susceptible
to economic conditions which could be restructured further by
purposefully selected means of economic policy.
doi:10.3846/20294913.2014.915597
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Gitana DUDZEVICIUTE [a,b], Alminas MACIULIS [c], Manuela
TVARONAVICIENE [a,b]
[a] The General Jonas Zemaitis Military Academy of Lithuania, Silo
g. 5A, 10322 Vilnius, Lithuania
[b] Vilnius Gediminas Technical University, Sauletekio al. 11,
10223 Vilnius, Lithuania
[c] Government of the Republic of Lithuania, Gedimino al. 11, 01103
Vilnius, Lithuania
Corresponding author Gitana Dudzeviciute
E-mail: gitana.dudzeviciute@vgtu.lt
Received 12 July 2013; accepted 02 January 2014
(1) Research prepared within framework of Long-term Economic
Research Program, topic "Energetically secure and sustainable
restructuring of Lithuanian industry sectors in the context of world
economy development tendencies" confirmed by Research Council of
Lithuania, (IEP-01/2012).
Gitana DUDZEVICIUTE. Asssociate Professor, Dr. Works at the General
Jonas Zemaitis Military Academy of Lithuania and Vilnius Gediminas
Technical University. Research interests: economic growth, sustainable
development, banking.
Alminas MACIULIS. Chancellor of the Government of the Republic of
Lithuania, Dr. Research interests: transport, communication sector of
Lithuania, investments, innovations, economics and politics of the
European Union.
Manuela TVARONAVICIENE. Professor, Dr. Works at Vilnius Gediminas
Technical University and the General Jonas Zemaitis Military Academy of
Lithuania. Research interests: economic growth, sustainable development,
innovations, investments, economic restructuring.
Table 1. Intensity coefficient of the structural changes by regions
Country/region Intensity coefficient of the
structural changes in 1990-2011
Lithuania 2.0
World 0.6
Europe 0.9
Asia 0.2
Africa 0.5
Latin America and the Caribbean 0.6
North America 0.6
Oceania 0.2
Source: authors' calculations based on the UN Statistics data.
Table 2. Mining and utilities share of total value added, in percent
Regions 1970 1980 1990 2000 2011
Europe 2.5 3.5 4.3 3.6 5.4
Asia 4.8 10.6 4.9 4.8 9.2
Latin America & 5.9 8.0 7.5 7.2 10.0
Carribean
North America 4.5 7.3 5.1 3.6 4.4
Oceania 6.6 9.8 8.8 7.8 10.8
Africa 11.7 23.9 15.2 18.4 22.0
World 4.0 7.1 5.2 4.5 7.4
Lithuania N/A N/A 2.8 4.8 4.1
Absolute rate of Absolute rate of
Regions structural changes structural changes
in 1970-2011, in 2000-2011,
percentage points percentage points
Europe 2.9 1.8
Asia 4.4 4.4
Latin America & 4.1 2.8
Carribean
North America -0.1 0.8
Oceania 4.2 3.0
Africa 10.3 3.6
World 3.4 2.9
Lithuania 1.3 * -0.7
* The change in 1990-2011.
Source: authors' calculations based on the UN Statistics data.
Table 3. Manufacturing share of total value added, in percent
Regions 1970 1980 1990 2000 2011
Europe 32.4 28.5 13.0 19.3 15.6
Asia 27.5 23.8 24.8 23.4 22.7
Latin America & 23.3 24.2 23.7 19.3 16.3
Carribean
North America 24.2 21.0 18.1 16.0 12.4
Oceania 6.1 9.2 8.3 7.6 9.3
Africa 15.2 14.8 15.4 12.8 9.6
World 27.7 24.6 21.7 19.2 16.9
Lithuania N/A N/A 16.5 18.8 20.6
Regions Absolute rate of Absolute rate of
structural changes structural changes
in 1970-2011, in 2000-2011,
percentage points percentage points
Europe -16.8 -3.7
Asia -4.8 -0.7
Latin America & -7.0 -3.0
Carribean
North America -11.8 -3.6
Oceania 3.2 1.7
Africa -5.6 -3.2
World -10.8 -2.3
Lithuania 4.1 * 1.8
* The change in 1990-2011.
Source: authors' calculations based on the UN Statistics data.
Table 4. Construction share of total value added, in percent
Regions 1970 1980 1990 2000 2011
Europe 8.1 7.4 6.8 5.6 6.2
Asia 5.7 7.2 8.0 6.3 6.2
Latin America & 6.3 7.9 5.7 5.8 6.5
Carribean
North America 5.2 4.9 4.6 4.5 4.4
Oceania 8.3 7.4 6.2 5.3 7.7
Africa 5.0 5.5 4.8 4.3 5.4
World 6.5 6.7 6.3 6.4 5.8
Lithuania N/A N/A 9.2 6.0 6.5
Regions Absolute rate of Absolute rate of
structural changes structural changes
in 1970-2011, in 2000-2011,
percentage points percentage points
Europe -1.9 0.6
Asia 0.5 -0.1
Latin America & 0.2 0.7
Carribean
North America -0.8 -0.1
Oceania -0.6 2.4
Africa 0.4 1.1
World -0.7 -0.6
Lithuania -2.7 * 0.5
* The change in 1990-2011.
Source: authors' calculations based on the UN Statistics data.
Table 5. Service sector structure by regions of total value added,
in percent
Service sector 1970 1980 1990 2000 2011
structure
by regions
Wholesale and retail trade, restaurant and hotels
Europe 11.5 13.2 13.5 14.9 16.4
Asia 12.2 12.2 12.9 13.5 14.0
Latin America & 18.4 14.9 13.7 17.4 18.1
Carribean
North America 18.7 17.8 17.2 15.4 14.3
Oceania 13.7 11.9 14.2 14.1 11.8
Africa 14.5 12.5 14.3 14.2 14.1
World 14.6 14.3 14.5 14.8 15.0
Lithuania N/A N/A 8.5 18.1 19.9
Transports, storage and communications
Europe 5.9 6.2 7.0 7.0 8.0
Asia 5.9 5.6 6.7 7.0 6.9
Latin America & 6.1 6.6 6.0 8.6 8.1
Carribean
North America 7.2 7.1 6.5 6.5 5.7
Oceania 8.3 7.7 8.6 8.0 8.7
Africa 6.5 6.2 6.7 7.2 7.9
World 6.4 6.4 6.7 7.0 7.1
Lithuania N/A N/A 7.5 13.2 14.9
Other services
Europe 29.3 34.9 40.3 47.0 46.4
Asia 22.4 28.0 34.0 38.8 33.6
Latin America & 27.7 29.6 34.4 36.2 35.4
Carribean
North America 37.2 39.3 46.6 52.9 57.6
Oceania 32.6 37.9 44.1 47.2 48.6
Africa 22.5 19.1 25.1 27.7 24.8
World 30.7 33.6 39.9 45.5 43.5
Lithuania N/A N/A 30.3 32.8 30.4
Service sector Absolute rate of Absolute rate of
structure structural changes structural changes
by regions in 1970-2011, in 2000-2011,
percentage points percentage points
Wholesale and retail trade, restaurant and hotels
Europe 4.9 1.5
Asia 1.8 0.5
Latin America & -0.3 0.7
Carribean
North America -4.4 -1.1
Oceania -1.9 -2.3
Africa -0.4 -0.1
World 0.4 0.2
Lithuania 11.4 * 1.8
Transports, storage and communications
Europe 2.1 1.0
Asia 1.0 -0.1
Latin America & 2.0 -0.5
Carribean
North America -1.5 -0.8
Oceania 0.4 0.7
Africa 1.4 0.7
World 0.7 0.1
Lithuania 7.4 * 1.8
Other services
Europe 17.1 -0.6
Asia 11.2 -5.2
Latin America & 7.7 -0.8
Carribean
North America 20.4 4.7
Oceania 16.0 1.4
Africa 2.3 -2.9
World 12.8 -2.0
Lithuania 0.1 * -2.4
* The change in 1990-2011.
Source: authors' calculations based on theUN Statistics data.
Table 6. The coefficients of structural changes
Country / 1990 2011 Absolute rate Intensity
sectors of structural coefficient of
changes, structural changes
percentage points
Lithuania
Agriculture 25.1 3.5 -21.6 1.0
Mining and 2.8 4.1 1.3 0.1
utilities
Manufacturing 16.5 20.6 4.1 0.2
Construction 9.2 6.5 -2.7 0.1
Services 46.3 65.2 18.9 0.9
Total 100 100 -- 2.3
Scandinavian countries
Agriculture 4.3 1.8 -2.5 0.1
Mining and 6.2 12.1 5.9 0.3
utilities
Manufacturing 18.1 12.9 -5.2 0.2
Construction 6.4 5.7 -0.7 0.0
Services 65 67.5 2.5 0.1
Total 100 100 -- 0.7
Source: authors' calculations based on the UN Statistics data.
