Regional FDI Growth in Lithuania, 1996-2003

Foreign Direct Investment (FDI) in to the 10 counties of Lithuania is analyzed for the first time using new regional data now available for this small transition economy. At the county level, Lithuania appears to be exhibiting export led growth which is increasing business and household incomes despite a substantial number of workers leaving the country. As Lithuania’s cheap labor advantage disappears because of competition to the south and east, laws and institutional reforms driven by EU accession will be key to retaining FDI inflow momentum. New proposals from Brussels such as a European “green card” may allow Lithuanian workers to more easily return home as well.