THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Lithuania

Ranked 42nd of 149

At a glance

Ranks

42 nd on the Legatum
Prosperity Index™

45th
55th
37th
43rd
80th
45th
41st
125th
33rd

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Lithuania performs best on Natural Environment and Governance and scores lowest on the Social Capital sub-index.

Visit our Rankings table to see how Lithuania compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Lithuania continues to maintain a prosperity deficit, although this has been closing over the past decade. It is held back by poor performance in the Business Environment, Health, and Social Capital sub-indices.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Economic Quality is the only sub-index in which Lithuania has not improved, though it remains in the global top 50: it has fallen 9 ranks to 45th since 2007. Nicknamed a ‘Baltic Tiger,’ Lithuania experienced rapid economic growth in the 2000s and was one of the fastest growing economies in the world. In 2007, annual GDP growth peaked at 11.1%. However, following the global financial crisis of 2008, Lithuania, along with its Baltic peers, entered a deep recession, from which it has now recovered, though as the Index shows, not totally. In the past ten years, the Prosperity Index reports a decline in satisfaction with current incomes and living standards. There has also been a 7% increase in unemployment since 2007: at 11.3%, it is currently the highest unemployment rate in the Baltics, though this has decreased from 17.8% in 2010. Nevertheless, at 4.7%, it has the fastest five-year average GDP per capita growth rate in the EU, while the female labour force participate rate has increased by 6.7% to 71.8%, above the EU average.

Lithuania has made good overall progress in the Business Environment sub-index in the past decade, though it lags behind many of its regional peers including other post-Communist states such as Latvia, Estonia, Poland, Slovakia, and Romania. It has moved up four ranks to 55th. Though it has pursued market liberalisation reforms, it could increase efficiency and competitiveness to further improve its business climate and catch up with its regional peers. Redundancy costs are still high for the region and hiring/firing practices are less flexible. Electricity, however, is the cheapest of the Baltics.

Business Environment (Score) in the Baltics over the past decade.
Lithuania has made good progress in its business environment, but has fallen behind its regional peers.

In the Governance sub-index Lithuania has moved up eight ranks to 37th, outperforming its neighbour Latvia. There is greater confidence in the national government and in the honesty of elections than in 2007. Voter turnout out has also increased during this period which is notable at a time when most of Europe is seeing voter turnout decline.

Lithuania scores particularly low in Social Capital, which is its worst performing sub-index. Ranked at 125th, it is the lowest ranking EU member state, though it has moved up 18 ranks over the decade. The Prosperity Index reports that institutional trust has increased considerably and this can perhaps be correlated with the positive trend in Governance, which has seen corruption decreasing. Meanwhile, Lithuanians are more likely to offer financial help to others in need than they were ten years ago. Lithuania ranks much lower in Social Capital than its Baltic peers, Latvia and Estonia, which rank at 94th and 71st respectively.

Social Capital (Score) in Lithuania compared to the EU and global averages.
Lithuania ranks 125th in the Social Capital sub-index, scoring far below its EU peers and the global average.

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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.