Foreign direct investment in Lithuania is growing significantly, and Scandinavian countries are making a major contribution to this growth. Over the past five years, direct investment in Lithuania from Scandinavia has doubled, totalling over €5 billion by the middle of this year.
This figure now accounts for around 40% of total foreign direct investment in Lithuania. And whilst Sweden is still the largest Scandinavian presence in the Baltic state, Norway is becoming an increasingly important investment partner for Lithuania.
Despite being a relatively small country in European terms, Norway is now the fifth largest investor in Lithuania after Sweden, the Netherlands, Germany and Poland. By the end of 2015, more that 2,000 new jobs will have been created by Norwegian capital countries, according to the latest forecasts.
Rita Bogužaitė, a representative of Innovation Norway for Lithuania, points out that it is the services sector that is currently proving most attractive for Norwegian investors. “Norway has now invested €850 million in Lithuania, and the trend is for the majority of that money to go into the services sector,” Ms Bogužaitė explains. “We can see that Norway is discovering Lithuania both as a market and as an attractive location for business with a strong pool of skilled potential employees. Norway is interested in the Baltic states, in particular in Lithuania, and we can see this not only in investment, but also in joint projects.”
When the first Norwegian investors came to Lithuania, the situation in the market, according to experts, was favourable because of the cheap labour force. However, the rapidly expanding services sector indicates a positive change for Lithuania, as foreign companies become increasingly interested in the high levels of education and expertise Lithuania has to offer.
The fields of the Lithuanian economy that have seen the highest levels of investment from Scandinavian businesses are the financial, insurance, telecommunications, and real estate sectors. In green field investments, manufacturing projects and services centres have dominated since 2010.
Whilst investments continue to increase from both Scandinavia in general, and specifically from Norway, analysts at Invest Lithuania, an investment development agency, are forecasting an increased diversification in the profile of foreign investors.
“There is growing interest from emerging economies, although for new international companies to set up here they usually need to be strong in their home countries first,” argues Justinas Pagirys, director of the Investment Development Department of Invest Lithuania. “We can see this in examples from China and other emerging economies in Asia. America has always shown great interest.”
Whilst Mr Pagirys and his team are not expecting a revolutionary change, they do anticipate a gradual shift away from the current Europe-centred base. “The market will probably become more diverse and we will have more diverse investors coming to Lithuania,” he forecast.
Analysts at Invest Lithuania also expect the recent rapid growth in the establishment of major service centres in Lithuanian cities to continue into next year.
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