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Restructuring the Lithuanian food industry: problems and perspectives

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  • Girgzdiene, Vilija

Abstract

Part of Lithuania's inheritance from the centrally planned economy of the former Soviet Union is its inefficient food processing sector, which bears much responsibility for the low competitiveness of domestic vis-à-vis imported food products. This harms the food industry itself as well as the entire agricultural sector. Consequently improvements in agriculture will only occur when efforts to increase the efficiency and technological performance of food processing bring significant results. Based on the structure-conduct-performance framework developed by the economic theory of industrial organisation, the objective of the present discussion paper is to identify those economic conditions that are giving rise to the low degree of competitiveness of Lithuania´s food industry. The analysis shows that, although major progress has been made in macroeconomic stabilisation, privatisation and institution building, the efficiency and performance of this important part of the Lithuanian agro-food chain are far from perfect. Current problems of the Lithuanian food industry that result in low profitability in the food industry are increasing input costs, low labour productivity, low investment activities, excess capacities and a lack of market orientation. The main causes for these are unfavourable interest rates on bank loans, an inadeqate tax regime, ineffective corporate governance in privatised firms, and deficiencies in institution-building and implementation of institutions.

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  • Girgzdiene, Vilija, 1998. "Restructuring the Lithuanian food industry: problems and perspectives," IAMO Discussion Papers 9, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
  • Handle: RePEc:zbw:iamodp:14867
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    References listed on IDEAS

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    1. Frohberg, Klaus & Hartmann, Monika, 1997. "Comparing measures of competitiveness," IAMO Discussion Papers 2, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    2. Brooks, Karen M. & Guasch, Jose Luis & Braverman, Avishay & Csaki, Csaba, 1991. "Agriculture and the transition to the market," Policy Research Working Paper Series 666, The World Bank.
    3. Frohberg, Klaus & Hartmann, Monika, 1997. "Promoting CEA agricultural exports through association agreements with the EU: why it is not working," IAMO Discussion Papers 1, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    4. Weingarten, Peter, 1997. "Agri-environmental policy in Germany: soil and water conservation," IAMO Discussion Papers 4, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    5. Karen Brooks, 1991. "Agriculture and the Transition to the Market," Journal of Economic Perspectives, American Economic Association, vol. 5(4), pages 149-161, Fall.
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    1. Girgzdiene, Vilija & Hartmann, Monika & Kuodys, Arvydas & Vaikutis, Viktoras & Wandel, Jurgen, 1999. "Industrial Organisation Of The Food Industry In Lithuania: Results Of An Expert Survey In The Dairy And Sugar Branch," IAMO Discussion Papers 14904, Institute of Agricultural Development in Transition Economies (IAMO).
    2. Girgzdiene, Vilija, 1999. "Industrial organisation of the food industry in Lithuania: results of an expert survey in the dairy and sugar branch," IAMO Discussion Papers 21, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).
    3. Hartmann, Monika, 2001. "The Dairy Sector in the Central European Candidate (CEC) Countries - The Status of Restructuring and Future Challenges," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 50(6), pages 342-353.
    4. Kedaitiene, Angele & Hockmann, Heinrich, 2002. "Milk and milk processing industry in Lithuania: an analysis of horizontal and vertical integration," IAMO Discussion Papers 44, Leibniz Institute of Agricultural Development in Transition Economies (IAMO).

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