Maximize your understanding of the country with our detailed PESTEL analysis of Lithuania, designed to reveal the key drivers of success and failure
Lithuania shares its border with Russia, Belarus, Poland and Latvia in the north European region. The economy is private sector oriented and has a very strong business environment for the IT firms. Following Pestle analysis describes the macroeconomic factors of the country.
Political Factors
A democratic country since 1990 has its President directly elected through the elections between the political parties. The political situation is quite stable. The foreign policy aims on keeping the sound relations with USA and bring the central and eastern Europe together. The country has adequate public finance and can access the developed capital markets. The tax system is strict imposing various taxes like VAT, income tax, excise duties and labor taxes on companies. However overall political environment is very strong for the enterprises.
Economic Factors
The economy was basically agricultural but due to the government reforms regarding the exports to European countries, the commercial activity has increased. The GDP growth has remained the strongest over last three years. The credit conditions are favorable and the wages have seen remarkable growth. The labor market is also developing positively. The economic problems as unemployment, insufficient job security and poor labor protection rights can be seen. The country has a very high external debt burden and the imports are largely dependent on Russia like the crude oil products.
Social Factors
In Lithuania, one can practice any religion, he wants in public. Lithuanian is the official language however the minority languages are also spoken broadly. The media is given a freedom of speech but promotion of hatred and negativity is considered as crime. The ethics and culture has an impression of the Christianity and western norms. The women have a prominent place in society and the country has more women in its workforce than men. The public violence and corruption are common social problems.
Technological Factors
The technological infrastructure at Lithuania is evolving. The business friendly environment and skilled people in the country have attracted the foreign investment over the years. The country has the fastest internet service while the high ICT skills of people make the country stand at the 16th position in the world. The IT giants as Google and Nasdaq have opened their offices in Lithuania as well. The opportunities are immense and will grow over time as the IT sector is getting adequate support from the government and state authorities.
Legal Factors
This country has roman legal system which has been remodeled after the Soviet shackles. The enterprise remains legal as long as it is paying taxes. One can open up a business startup within three days due to the government and legal support. Due to this ease of doing business, the Lithuania is ranked third in the Europe. The foreign investment is regulated by the national law and has a free access to all the sectors of the economy. However the licensing requirement exists for all the domestic and foreign investors.
Environmental Factors
The government in Lithuania is not very active regarding the environmental concerns. The natural resources need to be preserved while the waste management and air and water pollution needs to be controlled. Now many agreements are taking place between the ministry and NGOs and the environmental regulations have passed. Lithuania is looking forward to improve the environmental condition by the reforestation of plants, proper disposal of waste and industry chemicals, avoiding excessive use of the agricultural fertilizers and overgrazing by the animals.