Commissioned by Ministry of Foreign Affairs, BGI Consulting has carried out the research “Assessment of Lithuania‘s effective participation in the European Research Area: Study on private sector investment in R&D potential and promotion measures in Lithuania”. Taking into account the target of Europe 2020 strategy to increase R&D investment to 3% of GDP and Lithuania's commitment to reach 1.9% value of the equivalent indicator (such value constituted 0.8% of GDP in 2008), the aim of the study was to provide reasoned proposals on the measures fostering such investment, based on analysis of private sector investment in R&D in Lithuania.
In order to reach the aim of the study, the influence of economic structure and investment conditions regarding the lag of Lithuania’s private sector investment in R&D in comparison to the EU-27 average was analysed, the proposals on the measures promoting private sector investment in Lithuania have been prepared, the projections of private sector investment in R&D for Lithuania up to 2020 have been drawn, and the assessment of public sector investment in R&D needed to achieve an overall 1.9% of GDP investment in R&D has been done. Evaluation of the impact of the proposed measures fostering private sector investment in R&D on Lithuania’s economy and preparation of the projections of private sector investment in R&D for Lithuania up to 2020 involved the method of macro-econometric modelling based on HERMIN model. HERMIN model examines all the major mechanisms in the economy within a single system. According to the logics of HERMIN models the reaction of the economy to the financial public policy interventions can be split into two parts: 1) implementation effects on economy and separate sectors and 2) long lasting positive effects on growth and competitiveness of economy due to the improved stocks of physical infrastructure, human capital and R&D.
Proposed package of measures for R&D and innovation promotion in Lithuania during the period of 2014-2020 report includes measures that have both direct and indirect effects on increasing private sector investment in R&D. The proposed package falls into the area of responsibility of two appropriation managers – Ministry of Education and Science of Lithuania (supply side) and the Ministry of Economy of Lithuania (demand side).
The proposed investment package is recommended to be strengthened by the non-investment measures listed in the study report. The package offered together with the non-investment measures and with the other recommendations provided in the report should contribute to the effective participation of Lithuania in the European Research Area, to the implementation of Europe 2020 strategy priorities through the national strategic agenda, as well as to the implementation of the Lithuanian Innovation Strategy for the year 2010-2020 and the achievement of the objectives of future state progress strategy "Lithuania 2030".
The final study report (in Lithuanian) is available here.