25 years on the way to market economy: progress or regression. The case of Lithuania

Abstract

After the collapse of central planned economy in Central and Eastern Europe, all affected countries experienced dramatic change towards the market economy. Seemingly market economy could bring prosperity and plant “american dream” in Central and Eastern Europe. However, the way towards market economy of every country became not that easy as was thought primarily. Different models of transition period did not bring rapid results, however. “Shock Therapy” or gradualist approach was the central pillar of debates of economists and politicians. However, none of them could predict the exact consequences to the development of economies. The official approach to market economy was considered liberalization. The creation of extremely important preconditions for transitions was lacking. The most important market institutes such as social capital, human resources were not created timely which caused long social economic consequences to countries’ development. Lithuanian experience of transforming economy and integration to EU is analyzed in the paper. Lithuanian experience might be applicable to other potential candidate countries. In order to identify the level of development such indicators were selected: competitiveness index, rate of social exclusion and at risk of poverty, GDP growth rate, minimum wage and others.