Lithuania

The Republic of Lithuania (Lithuanian: Lietuva; full - Lietuvos Respublika) is a republic in northeastern Europe. One of the three Baltic States along the Baltic Sea, it shares borders with Latvia to the north, Belarus to the southeast, Poland to the south, and the Kaliningrad Oblast of Russia to the southwest.

Economy

Main article: Economy of Lithuania

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In 2003, prior to joining the European Union, Lithuania had the highest economic growth rate amongst all candidate and member countries, reaching 8.8% in the third quarter. In 2004, a 6.6% growth in GDP reflected impressive economic development. Prior to 1998, Lithuania was the Baltic state that conducted the most trade with Russia; however, the 1998 Russian financial crisis forced the country to orient toward the West.

Related Topics:
Baltic state - Russia

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Lithuania has since gained membership of the World Trade Organization, and joined the European Union on May 1, 2004. According to officially published figures, accession to the EU reduced previously high unemployment to 10.6% in 2004, although some argue that this has been prompted by the high rate of emigration from Lithuania that has occurred since it joined the EU. Lithuania has nearly completed the privatization of its large, state-owned utilities. The Litas, the national currency, has been pegged to the Euro since February 2, 2002 at the rate of EUR 1.00 = LTL 3.4528, and Lithuania is expected to switch to the Euro in 2006, thus becoming one of the first of the new EU members to do so.

Related Topics:
World Trade Organization - European Union - May 1 - Unemployment - Emigration - Privatization - Litas - Euro - 2006

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Although Lithuania's economy is undoubtedly growing, many people still live in abject poverty and the situation does not appear to be improving. An urban elite is now highly visible, whilst little seems to have changed for the country's poor. According to a report published by the US Department of State in June 2005, the minimum wage has not changed since June 1998 and stands at $107.50 per month, well below the poverty threshold. The average wage stands at $336.8 per month 1. Like other countries in the region (Estonia, Latvia and Russia) Lithuania has also adopted a flat rate of tax rather than a progressive scheme. However, at 33% of income, the tax rate is considerably higher than that of its neighbours and some suggest that this may be another factor influencing emigration 2.

Related Topics:
US Department of State - Estonia - Latvia - Russia - Flat rate of tax - Progressive scheme

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