Impact Assessment of 2014-2020 EU Funds on Lithuania’s Economy and Development Priorities for 2021-2027

Client: The Ministry of Finance, 2017/02 – 2017/05

This evaluation was the first study not only to analyse the impact of the 2014-2020 EU funds investment on the growth of the country’s economy, but also evaluated the trends of Lithuania’s economic and social development until 2027 and provided recommendations on the investment directions of EU funds in Lithuania after 2020. The analysis confirmed that the investments of the EU funds significantly contribute to the growth of the country’s gross domestic product (GDP) in the period of 2015-2020. The assessment estimated that GDP growth per year will be 0.9% higher that it would have been without EU interventions. In addition, it was estimated that by 2023 each euro invested during the period of 2014-2020 will bring a nominal return on GDP of EUR 1.88 and generate EUR 12.6 billion of additional GDP. The data of the assessment also show that EU investments will have a significant impact on the promotion of employment – the largest impact in Lithuania is expected in 2021, when it is estimated that more than 50 thousand of additional jobs will be created or preserved. This will lead to about 3.4% lower unemployment rate than would have been without EU investment. Most additional jobs will be created in industry, private services and construction. During the evaluation, the development trends of the Lithuanian economy after 2020 were analysed, long-term development priorities and possible areas of investment after 2020 were identified. In order for Lithuania to be competitive after 2020, it will be relevant to invest in economic infrastructure (especially in the connection with the EU energy, transport and information infrastructure networks) and in the quality of basic public services (health, basic education). However, infrastructure investments need to be kept under review in the light of development potential, the results of cost-benefit analyses and compatibility with similar projects. On the other hand, Lithuania’s transition from middle-income to higher-income country can be ensured only by the transition to a higher value-added economy. It will be vital to improve the indicators that determine the efficiency and innovation of the Lithuanian economy (teaching and lifelong learning, labour market efficiency, technological readiness, innovation).