Danish FDI in Lithuania

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Danish FDI in Lithuania

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Title: Danish FDI in Lithuania
Author: Barsauskaite, Akvile
Abstract: For many years Denmark has been one of the leading foreign investors in Lithuania and it continues to be amongst the key countries that Lithuania is willing to cooperate with going forward, by supporting the existing MNEs and attracting new FDI. Sadly, very few researchers have been interested in analysing the patterns of FDI in Lithuania. For this reason there is little knowledge on how foreign investors perceive Lithuania, why they choose to invest there and what problems they face in this country. The aim of this paper is to analyse the patterns of Danish FDI in Lithuania and answer a question: “why do Danish companies choose Lithuania for their foreign direct investment projects and what are the main problems that Danish firms come across when doing business in this country?” This research analyses survey results of 55 Danish companies in 10 different industries, which have engaged in foreign direct investment projects in Lithuania during the period of 1990-2009. The theoretical background behind this research includes the Transaction Cost Theory, Resource Based View, OLI Paradigm, Porter‟s Diamond model and the Network Perspective. The research analyses both firm-specific and location-specific FDI determinants as well as barriers that prohibit Danish companies from carrying on a successful business in Lithuania. The findings suggest that Lithuania has been and remains attractive because of the skilled and cost effective labour, excellent geographic location, good infrastructure, cheap land, real estate and low operating costs, also unmatched demand for high quality, innovative products and services in the local and neighbouring markets. Lithuania‟s innovative and knowledge potential has been recognized by fewer Danish companies than one would expect based on the Lithuanian development and investment promotion strategies. However, the country is slowly improving in its value proposition and there are lots of growth and development opportunities for both existing and new foreign investors. The research concludes that in order to attract more foreign direct investment and more importantly – to retain the existing investors and provide them with opportunities to upgrade and develop their operations in Lithuania, the country needs to focus on eliminating several business barriers. These are: lack of transparency, high bureaucracy, inflexible and frequently changing regulations, poor public service, uncompetitive education system, language barriers, high taxes and the present economic instability caused by the recent global financial crisis.
URI: http://hdl.handle.net/10417/2533
Date: 2011-10-18
Pages: 98 s.
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