DR. KLAUDIJUS MANIOKAS, Associate Professor at the Institute of International Relations and Political

Science, Vilnius University

SABINA KARMAZINAITĖ, European Social, Legal, and Economic projects (ESTEP)

UNDERSTANDING AND CONCEPTUALIZING 10 YEARS OF LITHUANIA IN THE EU: ELITES,

STATE CAPTURE AND DEVELOPMENT1

Paper for the ECPR Joint Sessions of Workshops

Salamanca, 10-15 April 2014

Vilnius, 2014

1 Authors acknowledge an important contribution of Darius Žeruolis and other members of the project “Lithuania in the EU:

transformation or imitation?“ being implemented by a group of researches from the Institute of International Relations and Political

Science, Vilnius University. This project is funded by a grant (No. MIP-010/2013) from the Research Council of Lithuania.

1

Abstract

The current work in progress deals with (1) the conceptualization of Europeanization through the

developmental approach, (2) assessment of the post-accession change in one of the “new” EU member states

Lithuania, (3) EU contribution analysis through the literature review, impact assessment of the EU structural

funds and a review of the role of the EU in the law-making and policy development in general. Preliminary

results demonstrate a more limited change than during the last years of the pre-accession period in Lithuania,

and that the domestic actors have been slow in replacing the EU as an agenda setter. Put in a conceptual

framework of the development theory of North, Wallis and Weingast, these trends highlight the role of elites

and broader transformation of the society thus focusing and complementing the current theory of

Europeanization. It also provides a framework to analyse the issue of corruption and state capture, which is

becoming the most important yardstick to assess the Europeanization as development.

Introduction

This is a work in progress of a project aiming at assessing Europeanization of one country, which joined the

EU in 2004. This country is Lithuania. Noting limitations of a case study of just one country, this focus allows

for a deeper study of the widest possible spectrum of formal and informal post-accession changes, which

could be attributed to the EU. Moreover, this assessment is carried out in a context of other Central and

Eastern European (CEE) countries, which joined in 2004 and 2007. This context is limited to the available

literature. Primary sources of information such as interviews, surveys and the independent calculation of

different statistical indicators concern only Lithuania.

The aim is to analyse Europeanization of Lithuania across the classical to Europeanization literature

dimensions of polity, politics and policy touching upon the main dimensions of development, namely, changes

related to the quality of democracy, economy in general, public policy and public administration or

governance in a broad sense. Only some of these aspects are taken up in this paper as others are explored by

other members of the project team2. And this version of our paper is still far from polished. It is rather the first

presentation of preliminary conceptualization and empirical data corresponding to it.

This work in progress starts with a conceptual part and supports the claim that Europeanization approach has

to be complemented by additional approaches accounting for a domestic change. This is in line with the recent

best attempts to analyse Europeanization (Featherstone and Papadimitiriou, 2008; Bohle and Greskovits,

20123; Epstein and Jacoby, 2014). All cited approaches employ insights from broader political economy

literature, such as variety of capitalism and Polanyi’s approach to political and economic development. We go

further alongside this road. We place Europeanization into a broader development studies. It is about a

question whether EU contributes, and how, to the deepest possible political, economic, social or institutional

change. One recent notable theory of development produced by Douglass C. North, John Joseph Wallis and

Barry R. Weingast (NWW, 2009) serves as theoretical framework to us. This theory is about a long-term

change based on de-patrimonialization of a given society and move from the so-called natural state

characterized by the use of rents into an open access regime characterized by universal rights, competition,

wide use of public goods and density of organizations.

We ask, therefore, ourselves, whether the EU has contributed to this change and move.

2 A paper by Vitalis Nakrošis and Sabina Bankauskaitė-Grigaliūnienė on the changes in public administration will be presented in the

same ECPR conference panel as well. 3 The latter is really about the comparative political economy of transition, but it provides a specific account on Europeanization.

2

Empirically we start, first, from assessing the level and direction of change in Lithuania in the last 10 years.

We use a number of comparative synthetic and statistical indicators demonstrating the trajectory of change.

Second, then we are trying to understand whether these changes could be attributed to the EU. This can be

called a “bottom-up” approach to Europeanization – we first try to capture the change and then look for its

causes (Exadactylos and Radaelli, 2009). We will use a number of tools to track an EU contribution. An

analysis of the most important policy initiatives is the first. It is based on the evaluation of the main policy

planning documents, such as government programs and legislative development plans as well as actual laws

and other legal acts adopted during the last ten years. It is then calibrated and triangulated through the expert

assessment. Analysis of the structural funds impact complements the assessment of the regulatory impact.

Elite survey will be an additional tool envisaged at a later stage of the project. At a later stage investigation of

comparative trends in CEE countries in the Eastern neighbourhood when necessary and possible will be

conducted.

We also specifically test the nature of change brought by the EU and its sustainability. By the nature of

change we will understand the extent of change and its direction. On top of the relevant literature review, at

the second stage we are going to undertake several case studies in the area of energy, health and safety at

work, waste management and competition.

Current work in progress presented here deals with (1) the conceptualization of Europeanization through the

developmental approach, (2) assessment of the post-accession change in Lithuania, (3) EU contribution

analysis through the literature review, analysis of the contribution of the EU structural funds and preliminary

analysis of the role of the EU in the law-making and policy development in general. Results of the elite survey

and implementation case studies will follow at a later stage of this work. Counterfactual analysis aimed at

comparison of trends with the CEE and former Soviet republics will be also expanded at a later stage.

1. Conceptual framework: Europeanization and development

The tenth anniversary of the EU membership is a good occasion to look into the EU impact on the member

states, which joined in 2004, and to compare it to the expectations. Domestic change, which could be

attributed to the EU, is particularly interesting in the context of the pre-accession change. We should not

forget that these countries were subject to the most sweeping pressure from the EU across the political,

economic and legal dimensions of change embodied by the Copenhagen criteria. Many claimed this has led to

a transformative effect (Grabbe, 2006). Has there been a transformative change? If yes, has it lasted? Has a

comparable change happened in the post-accession phase?

The occasion prompted a numerous studies into the question of Europeanization of Central and Eastern

Europe after accession. We should not forget that this is the most researched region of the EU in this respect.

What are the conclusions? Could they be compared to the conclusions of other Europeanization studies,

especially in Southern Europe?

Many europeanizationists are increasingly critical about the explanatory power of the Europeanization

approach (Graziano and Vink, 2013). Moreover, it does not deal with the domestic determinants of change,

whose importance is growing in the post-accession context. There were attempts to complement it by other,

broader theories, such as political economy in general and the types of capitalisms in particular (Featherstone

and Papadimitriou, 2008), longer-term economic history and political economy and development of the region

(Bohle and Greskovits, 2012; Epstein and Jacoby, 2014), political development and party politics, including

the notions of state capture (Gzymala-Busse, 2007; Innes, 2014). This seems to be a right approach and this

paper will explore further ways of extending the Europeanization approach using the case of post-accession

Europeanization of Lithuania.

3

Development perspective also allows for a wider geographical comparison and makes a concept of progress

more relative. This is particularly important with respect to Europeanization in CEE as the recent literature

(Epstein and Jacoby, 2014; Mueller, 2014) tends to see the progress of these countries as mixed at best,

especially in terms of political development, slower than expected or even as a relative decline. The concept

of state capture becomes recurrent (Innes, 2014). Corruption is recognized as an eminent problem in the whole

region (Mungiu-Pippidi, 2013), but still hardly contained. The fiscal and competitiveness crisis in the

Southern EU member states revealed striking similarities between Central and Southern Europe4, which poses

a question about the limits of Europeanization and makes a link between the EU and development even more

pressing. Comparison between the CEE and Southern Europe is therefore relevant in this context. Greek story

in particular demonstrates the persistency of domestic political arrangements which have rendered the effects

of the EU, including that of structural funds, very shallow.

Persistent corruption, clientelism, low levels of social capital, reflected in low level of trust towards public

institutions point out to certain long-term structural trends, which the EU do not seem able to reverse.

However, to conceptualise this inability as well as factors relating to it is hardly possible while using the

toolbox of the current Europeanization literature, which is mostly about short-term EU centered approach.

Transitology approach based on the perspective of political economy offers a more promising perspective. A

recent study of Bohle and Greskovits (Bohle and Greskovits, 2012) is a good recent example of an attempt to

put Europeanization in a broader context of transition in Central and Eastern Europe5. The authors clearly

distinguish two models of transition from communism and socialism towards democracy and capitalism. One

model is represented by Visegrad countries, and another by the Baltic States6. The whole approach is based

upon the Polanyi paradigm emphasizing the link between democracy, capitalism and social cohesion. In

Polanyi’s account, democracy is hardly possible without certain welfare policies correcting imbalances

created by capitalism. Two models of transition distinguished by Bohle and Greskovits differ in the

relationship between these three dimensions. While all post-communist countries from CEE legitimized their

transition as a strategy of catching up with the West, the Visegrad countries solved a problem of social costs

of transition via social compensation. This is manifested by a higher level of spending on pensions and social

benefits in Visegrad countries. Baltic States dealt with the social costs and problems through the identity

policies. They have not compensated much to the losers and justified transition by using nationalist strategies.

The main role of the EU and other international actors was to stabilize and legitimize the new regimes. It was

particularly important for the neo-liberal regimes of the Baltics states which lacked the glue of social

compensation. This is how the EU became an answer to a puzzle of social and political support to democracy

and capitalism without an adequate social compensation7. The authors also observe “affinity between the

neoliberal regime core institutions and the regulatory state model” embodied by the EU. In line with the

classical Europeanization approach, the authors also claim that the EU provided the reforms with a clear

purpose and empowered reform oriented elites. The EU was also helpful in the catch up efforts of Romania

and Bulgaria by consolidating their reform capacities.

While this broader transition review is bringing a wider and clearer perspective and contextualizes the role

and impact of the EU, post-accession phase is not well covered. It also fails to fully grasp the initial

peculiarities of the Baltic States, especially in terms of their state-building needs and capacities. The Baltic

4 This is particularly evident when comparing such structural features as the level (or rather lack) of social capital in these countries.

See Lyberaki and Paraskevolous, 2002; Sotiroupulos, 2011. 5 Although it is limited to the current members of the EU. Reflection on the developments further East in the post-Soviet countries

could have provided a good contrafactual. 6 Romania and Bulgaria are included into the latter group as well. 7 However, there are longer-term effects of this reflected in the divergence of attitudes of masses and elites towards market economy

and capitalism. See Steen, 2012.

4

countries had to build their states from the scratch and lacked a capable elite to do so. Therefore, the Visegrad

countries are hardly the best counterfactual to the Baltic countries. Other post-Soviet states such as Ukraine

and Belarus look more appropriate as a control group. This comparison could be also helpful to understand the

crucial role that the EU played in preventing state capture and authoritarianism, which occurred in the East8.

Recent NWW approach towards development combines insights from a broad range of social sciences. It is

about distinction of two types of orders as two ways of organizing societies, one referred to as a natural one,

and another one as an open access order. The first benefit of this approach is a right focus on the issue of

normality. It assumes that a high level of corruption and the state of state capture is a natural phenomenon

found in majority of societies turned into states in the world. The whole point of organizing society is seen as

a way for the elites to extract rents from the other members of a given society in exchange for protection from

violence. Control of violence is seen as a fundamental function and organizing principle of all organizations.

Patrimonial relationship characterized by particular privileges enjoyed by elites and regime relying on private

goods are seen as linked organizing principles.

Open access societies have emerged relatively late, most of them in the XVIIIth and XIXth centuries and,

according to the authors, count only more than twenty states in the contemporary world. Other states and most

of the older ways of organizing societies are patrimonial. Some of them might exhibit some features of

transition from natural to open access order.

The whole NWW approach is based on the crucial role that elites play in organizing society. Changing role of

the elites and the broadening of them are two clear features of transition. Open order develops when ruling

elites are threatened by a credible threat to share the “spoils”. It happens through gradual opening up of the

regime through universalizing privileges and turning them into rights. The making of the rule of law is then

accompanied by the second transition important for the accumulation of wealth. This is a gradual move from

the monopolies as an organizing way of economic activity towards competition, which is also made possible

through the institutionalization of property rights. Finally, there is gradual move from private to public goods,

such as basic economic infrastructure, including roads, education and social welfare, which make productivity

and accumulation of wealth accelerate rapidly.

Then de-personalization of the societal bond, making it independent from blood relationship and the triple

transformation 1) from elite privileges into universal rights, 2) from monopoly towards competition and 3)

from public to public goods is crucial in the transition from natural orders towards the open access. One could

also distinguish an accompanying trend in terms of organizational development, which can be observed in

terms of the nature of organizations, their number and longer life cycles of these organizations. The authors

also identify three so-called doorstep conditions, which explain possibilities and timing of transition. One is

the (matured) state of law. The second is the emergence of the so-called perpetually lived organizations9. It

can be companies, charities and other non-profit organizations and the like, which all de-personalize the social

fabric. Finally, the third is the political control of the military.

As these doorstep conditions appear to be rather static, mechanisms of transition complement them. They are

mostly implied by the theory thou. One mechanism implied by the NWW theory is that of a societal pressure

towards the elites, which creates a credible threat to lose the privileges. This mechanism could be called the

mechanism of societal mobilization. The second mechanism is about lowering barriers to entry into the ranks

of elites.

8 See Maniokas, 2003 on the role of the EU in preventing state capture as a single most important result of Europeanization before

accession. 9 They are organizations which are independent from the life cycle of an individual and can outlive him or her.

5

In this developmental approach then the social and economic progress is associated with the level of de-

personalization or a movement from kin towards merit based relationship. This is also seen as a fundamental

shift in the political development by other eminent political theorists, such as Fukuyama10.

1.1. Elites, state capture and development

It is quite obvious that Europeanization is closely related to all three dimensions of transition. Both during

pre-accession and after it the EU has encouraged the rule of law and non-discrimination, put an emphasis on

the protection of competition and has encouraged wider use of more quality public goods. However, the focus

was different during the pre-accession and after it. Before accession two transitions towards the rule of law

and competition, embodied by the Copenhagen criteria of accession, dominated the agenda. After accession a

new emerging factor was the structural funds, which made the shift towards more public goods and better

economic infrastructure possible.

The main question is whether Europeanization is compatible with the trends leading to development

understood as universalization and de-patrimonialization. A preliminary analysis points to a positive link

between the EU’s agenda aimed at spreading rule of law, strengthening competition and providing more

public goods through structural funds in particular. The puzzle is that despite this contribution a public

perception is less optimistic. Could it be related to higher expectations11? Is it an idiosyncratic Lithuanian

feature? Or is it about uneven distribution of benefits stemming of the EU membership and a corresponding

sense of injustice?

Elites, state capture and development seems to be those three missing dimensions, which can make

Europeanization approach more relevant and to respond to the trends of social change in the region.

Why elites? The developmental and transition literature tends to emphasis the role of elites in inducing and

managing social change. The role of elites, in particular administrative elites, tends to grow in times of social

reforms, such as the one which led to the accession to the EU12. The changing role of elites is a dominant

feature of the NWW approach. Has there been a considerable change in the structure and the role of elites in

CEE and in Lithuania in particular? Are they different from their counterparts in other EU member states?

Recent EU-wide comparative projects on elites IntUne has discovered, that in terms of their attitudes towards

Europe, elites in Lithuania and the region in particular are not very different from their counterparts in other

EU member states. In this respect, there is also no significant difference between the attitudes of the elites and

the general public. However, the differences become wider when attitudes towards core issues of democracy

and market economy are concerned (Steen, 2012). In terms of structure and composition, Lithuanian elites are

characterized by a weak union elites and strong media elites (Matonytė and Morkevičius, 2013).

Why state capture? State capture and corruption are increasingly associated with the development of Central

and Eastern Europe after accession to the EU (Mungiu-Pippidi, 2013; Innes, 2014; Mueller, 2014). It affects

the general perception of benefits and costs of Europeanization after accession.

Why development? Development literature provides both a longer-term and wider theoretical context of the

post-accession change. And, the most important, it gives a yardstick to assess the relative value of

Europeanization as both the EU and the change associated with it are put in the context of broader

developmental goals. In this sense, the relationship between the notions of Europeanization and development

can be paralleled with a relationship between means and ends.

10 See his theory of political development in Fukuyama, 2011. 11 And is the situation after the membership as gloomy as put by Mueller, 2014. 12 See Lippert, Umbach and Wessels, 2001 on the role of the so-called core executives during the accession negotiations. It was

explored in the case of Lithuania by Maniokas, Vilpišauskas and Žeruolis, 2005.

6

1.2. Logic and results of change after accession

Most of the Europeanization literature dealing with the pre-accession in CEE focused on the issue of the logic

of change and concluded that it was consequential (Schimmelfennig and Sedelmeier, 2005). It meant that EU

membership related incentives played a major role in bringing economic, political, regulatory and institutional

change. It was also argued that this change was transformational (Grabbe, 2006)13. However, there were few

attempts to conceptualize the pattern of dominant change. Recently it was reflected again in the studies about

Europeanization beyond the EU (Schimmelffennig, 2012) asking about the content of the EU projected

values. The conclusions were that EU is promoting its own image (of itself), that can be characterized with

regionalism, liberal democracy, neoliberal economic market14, which are, however, highly regulated, and as a

certain type of good governance.

There is an increasing number of revisionist authors questioning the seeming success of the Europeanization

in the CEE, which is in such a sharp contrast with failures of Europeanization in Western Balkans and Eastern

neighbourhood. They demonstrate that a real progress of the CEE during the accession years across a wide

range of reform indicators was quite limited (Mungiu-Pippidi, 2008; Börzel and Van Hüllen, 2011; Börzel,

2012). It is particularly evident in the area of quality of democracy. It seems that it has hardly improved

during the accession years (Börzel and Van Hüllen, 2011), and the main transformation happened in the early

years of post-communist transition. Therefore, the EU’s power might have been less ‘transformative’ than

suggested earlier.

Regarding pre-accession, the author of this paper has previously argued (Maniokas, 2003) that the impact of

EU has been particularly visible in Central and Eastern Europe as former candidate countries in few years had

experienced a very concentrated impact of EU, which was almost not resisted by the relatively weak domestic

institutions. He conceptualized the EU impact in terms of a regulatory state and a non-majoritarian

transformation of governance (Maniokas, 2008). Regulatory state describes public policy change from direct

intervention in the economy towards the establishment of rules and their supervision. Non-majoritarian

revolution has referred to the diminishing role of elected bodies and officials, such as national parliaments and

a growing clout of different semi-autonomous agencies, such as regulators and inspections15. Moreover, the

EU has also helped to make public administrations and courts more autonomous. The trend was called a de-

politization of public policy. It was also argued that this helped to prevent the state capture, which was

happening further East, in the countries of former Soviet Union.

What has happened during after accession?

2. Main trends in Lithuania after accession: a limited change

Most relevant indices demonstrate a rather limited change in Lithuania during last eight years, except for

economic convergence, expectancy of healthy life and education (see Table 1 for relevant data).

13 Other literature provides a more nuanced picture. Most of the cases could cluster better around a partial adaption. The ousting of

Meciar government in Slovakia remains probably the only case, which can be unequivocally qualified as a transformational impact of

the EU. 14 There might be an argument whether this image is the same inside the EU. Most of the markets of the EU member states are quite

different from the images projected outside. 15 See Vibert, 2007 for a review and analysis of the rise of the unelected as a global trend. It is featuring in many current debates about

democracy, including a recent essay in The Economist, 2014.

7

Table 1. Indices and indicators of Lithuania in 2004 and 2012

INDICATORS VALUE

2004 2012

Bertelsmann Index 9,02 (7/119) 2006 8,98 (7/129)

2014

Happiness Index

UN World Happiness Report 5,8 5,4 (71/156)

Democracy Index

Economist Intelligence Unit

7,43 (39/167)

2006 7,24 (42/167)

Sustainable Society Index

Sustainable Society Foundation

5,8 (7/EU-27)

2006 5,68 (8/EU-27)

Global Competiveness Index

Global Competiveness Report

4,49 (39/122)

2006

4,41 (48/148)

2013

Globalization Index

KOF Globalization Index 64,94 (46/187)

72,79 (36/187)

2013

SMART SOCIETY VALUE

2004 2012

Bertelsmann Democracy Index 9,25 (8/119)

2006

9,25 (8/129)

2014

Tertiary education attainment among 30-34 year olds

Eurostat 31,1 (11/EU-27) 48,7 (3/EU-27)

Life-long learning among 25-64 year olds, percentage

Eurostat 5,9 (16/EU-27) 5,2 (20/EU-27)

Civic Empowerment Index

Civil Society Institute

33,9

2007 35

Income quintile share ratio (S80/S20)

Eurostat

6,9 (26/27-EU)

2005 5,3 (17/EU-27)

Healthy life years

Eurostat

54,6 (23/EU-27)

2005

51,4 (25/EU-27)

2005 (male)

61,6 (15/EU-27)

56,6 (23/EU-27)

(male

SMART ECONOMY VALUE

2004 2012

Bertelsmann Market Economy Status 8,79 (9/119)

2006

8,71 (8/129)

2014

Summary Innovation Index

Innovation Union Scoreboard

0,24 (25/EU-27)

2008 0,28 (24/EU-27)

Ease of Doing Business Rank

Doing Business

6th place in the EU

2006 9th place in the EU

GDP per capita in Purchasing Power Standard

Eurostat 52 (23/EU-27) 70 (20/EU-27)

Foreign direct investment (GDP %)

Eurostat 2,3 (18/EU-27) 1,3 (17/EU-27)

Research and development expenditure (GDP %)

Eurostat 0,75 (18/EU-27) 0,9 (19/EU-27)

8

University-industry collaboration

Global Competiveness Report

53/134

2008

4,6 (28/148)

2013

SMART GOVERNANCE VALUE

2004 2012

Bertelsmann Management Index 7,15 (9/119)

2006

7,08 (8/129)

2014

Bertelsmann Management Performance Index 8,54 (10/119)

2006

8,67 (6/129)

2014

Government Effectiveness

Worldwide Governance Indicators 0,75 (76/215) 0,83 (74/215)

Regulatory Quality

Worldwide Governance Indicators 1,14 (82/230) 1,1 (83/230)

Trust in state and municipalities institutions

Ministry of the Interior of the Republic of Lithuania

48%

2006 51%

E-government development

UN e-Government Development Database 0,53 (43/193) 0,73 (29/190)

Corruption Perceptions Index

Transparency International 4,6 (44/145)

57 (43/175, 17/EU-27)

2013

Source: compiled by the authors.

Most of the indices provided above on the quality of democracy, governance effectiveness, and corruption

remained quite stable during the period of the EU membership. There was, however, a more marked opening

of the economy, reflected in the index of globalization, a considerable increase in formal level of tertiary

education, a considerable improvement of the e-governance indicators and certain other variations. There were

also two changes in the core indicators. One is the level of (nominal) convergence where Lithuania progressed

from 52 in 2004 to 70 percent of GDP in 2012.

Economic convergence is therefore taking place despite the economic crisis. It seems that Lithuania’s case

confirms that the EU has contributed to the economic boom and property bubble in the EU, but also helped to

soften the impact of the crisis (Epstein and Jacoby, 2014). In Lithuania GDP per capita in PPS during the EU

membership period increased by 20 points and reached its highest peak of 72 in 2012 (see Figure 1).

Figure 1. GDP per capita in purchasing power standard in 2004–2012

Source: compiled by the authors from Eurostat data.

9

Part of convergence is, however, about a statistical effect reflecting a lower EU average than in 2004 (joining

of Romania and Bulgaria, drop in the GDP in Southern Europe) and a considerable emigration from

Lithuania. Since 2004 the official number of Lithuanian emigrants reached more than 440 thousands which

makes nearly 13 per cent of the population in 2004 (see Figure 2).

Figure 2. Emigration from Lithuania in 2004–2013

Source: Statistics Lithuania.

Another more significant change relates to the increase of the average healthy life expectancy. However, this

is significant only among women in Lithuania, of whom healthy life years increased from 55 in 2005 to 62 in

2012 and reached the average EU level. Meanwhile Lithuanian male healthy life years remain below average

and is still one of the lowest in the EU in 2005–2012 period.

Lithuania is also one of the EU leaders having nearly half of 30-34 year-olds with tertiary education16. In 2012

among 20-64 aged persons in Lithuania there were 93 per cent who had at least secondary education (EU

average was 74 per cent). Also, as already mentioned before, the share of persons with tertiary education in

Lithuania increased as well and is the third in the EU. However, the change in the quality and accessibility of

education in Lithuania should be assessed too. The latest results of schoolchildren performance in reading,

mathematics and science show that Lithuanian achievements are lower than those of OECD member states17

(see Table 2). On the other hand, the lowest level of achievements is reached by the majority of pupils

indicating high accessibility of education and its universal nature.

Therefore, the Lithuanian education system is more orientated towards quantitative output and securing

minimal level of achievements among pupils representing all social economic status. The education quality is

still lower than the OECD average and there is a significant gap in education possibilities between pupils with

high and low socioeconomic status.18

Financial allocations for education in Lithuania in the period 2004–2012 were lower than targeted in the

National Education Strategy, that is to be 6 per cent of GDP or more. This result was achieved only in 2009,

and in 2012 was 5.2 per cent.

16 However, its quality is rather poor by most of the assessments. 17 See PISA, 2010. 18 Lietuvos Respublikos švietimo ir mokslo ministerija, 2013.

10

Table 2. OECD PISA results in 2006 and 2009

Source: OECD PISA 2006 and 2009 results.

In the period of 2004–2013 there was a visible decrease in inequality. However, although the numbers of

different inequality indicators are decreasing, Lithuania still remains above the EU average. Income inequality

rate which shows the percentage of at-risk-of-poverty population dropped from 20.5 in 2004 to 18.6 in 2012.

With such result Lithuania ranks 21st among the EU members (see Figure 3).

Figure 3. At-risk-of-poverty rate in 2012

Source: Eurostat.

Scores of other inequality indicators, such as S80/S20 income quintile share ratio or Gini coefficient, are also

showing similar tendency which is that Lithuania is getting closer to the EU average (see Figure 4).

Reading Mathematics Science

2006 2009 2006 2009 2006 2009

Lithuania 470 468 486 477 488 491

OECD average 492 493 498 496 500 501

11

Figure 4. S80/S20 income quintile share ratio* and Gini coeficient in Lithuania in 2005–2012

* ratio of total income received by the 20% of the population with the highest income to that received by the 20% of the

population with the lowest income

Source: Eurostat.

2.1. Perception of change: expectations, distribution of costs and benefits and corruption

Most of the internal self-assessments as drawn from the content of public debates in Lithuania are, however,

rather gloomy. For example, since 2009 consumer confidence index19 in Lithuania remains negative. In 2009

crisis year it peaked to minus 29 per cent meaning that negative perceptions exceeded positive ones by 29 per

cent . In the end of 2012 the index increased by 22 percentage points, but still remains negative. According to

the latest Eurobarometer survey, Lithuanians perceive the national economic situation to be rather bad (69 per

cent) and rank 11th in the EU-27 with this result.20 However, expectations of the economic situation in the

country for the next year among Lithuanians are better than the EU average. 30 per cent of them believe that

situation will be better (EU-27 average 18 percent) and 15 per cent that worse (EU-27 average 34 per cent).

Pessimistic attitudes in the country might be partly related and understood against the level of expectations,

which were very high. In 2004 many expected a rapid breakthrough and catching-up with the EU. These

expectations seemed to be partially fulfilled until the financial crisis hit at the end of 2008 and in 2009 in

particular. This is clearly seen in the fluctuation of personal evaluations of financial situation of households

and general economic situation over next 12 months (see Figure 5). Before crisis, Lithuanians tend to see

general economic situation of the country more positively than their personal. This had changed significantly

in the years of 2008–2012 when personal finances were evaluated to be better than Lithuania’s in general. In

the last two years the situation is again changing, which could be a sign of breakthrough from the crisis years.

19 RAIT, 2012. 20 Standard Eurobarometer 79.

36 36,9 32

30,6 30,6

6,9 7,3 5,3

5 50

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2012

Gini coeficient Lithuania

Gini coeficient EU average

S80/S20 ratio Lithuania

S80/S20 ratio EU average

12

Figure 5. Evaluation of financial situation of households and general economic situation in Lithuania in 2004–2014

Source: compiled by the authors from Economic sentiment indicator data.

The economic crisis also accelerated the level of emigration where Lithuania leads the EU in crude rate terms

(see Table 3).

Table 3. Crude rate of net migration per 1 000 inhabitants in the EU-27 in 2004–2012

2004 2007 2010 2012

Ireland 12,2 16,9 -5,6 -7,6

Lithuania -9,5 -6,7 -25,2 -7,1

Latvia -6,8 -3,6 -17 -5,8

Estonia -0,7 -0,5 -1,2 -5,7

Greece 3,2 3,3 -5,9 -4

Portugal 1,4 2,1 0,4 -3,6

Spain 15,5 17,2 1,6 -3,5

Cyprus 9,7 19,9 19,2 -0,7

Bulgaria 0 -2,3 -2,4 -0,3

Poland -0,2 -0,5 -0,1 -0,2

EU-27 3,8 3,3 1,8 1,8

Source: Eurostat.

And, finally, there is a perception of a persistent corruption. According to Eurobarometer, Lithuania in 2013

had the EU’s highest percentage (29 points) of respondents who said they had been asked or expected to pay a

bribe for services received over the past 12 months (the EU average is 4 percent). Moreover, 95 per cent

Lithuanians think that corruption is widespread, while the EU average is 76 per cent.

Corruption is related to the extent of state capture. This concept and the extent of state capture are difficult to

measure, however. Most studies21 evaluate state capture by using qualitative methods, e.g. interviews with

experts. Worldwide Governance Indicators22 calculate two indices that could be related to state capture

definition. First, control of corruption “reflects perceptions of the extent to which public power is exercised

21 Innes, 2014 is a good example. 22 See The Worldwide Governance Indicators (WGI) project <http://info.worldbank.org/governance/wgi/index.aspx#home>.

13

for private gain, including both petty and grand forms of corruption, as well as “capture” of the state by elites

and private interests”. Second indicator, government effectiveness “reflects perceptions of the quality of

public services, the quality of the civil service and the degree of its independence from political pressures, the

quality of policy”. In Lithuania, according to this data (see Figure 6), since 2004 there was no significant

change, although in both indicators decrease in the crisis year could be noticed.

Figure 6. Control of Corruption and Government Effectiveness in Lithuania in 2004–2012*

* Estimate of governance ranges from approximately -2.5 (weak) to 2.5 (strong) governance performance.

Source: Worldwide Governance Indicators data.

Perception of corruption is also reflected in a frozen level of low trust in the main institutions (see Table 4)

and even much lower voter turnout. The voter turnout in national parliamentary and presidential elections

during the period of independence dropped drastically (see Table 5). The difference between the first and the

last national parliament elections in the period of 1990–2013 in Lithuania is the biggest in the EU.

Table 4. Trust in institutions in Lithuania in 2004 and 2013, per cent

Government Parliament

Lithuania EU average Lithuania EU average

2013

tend to trust 27 25 13 26

tend not to trust 68 71 82 68

2004

tend to trust 31 28 19 35

tend not to trust 59 63 70 54

Source: Standard Eurobarometer 61 and 79.

14

Table 5. Voter turnout difference in national parliamentary and presidential elections in 1990–2013, per cent

National parliamentary elections in 1990–2013

Last election First election Difference

Lithuania 35,9 75,2 -39,3

Slovakia 59,1 96,3 -37,2

Czech Republic 59,5 96,3 -36,8

Romania 41,8 76,3 -34,5

Bulgaria 52,5 83,9 -31,4

Latvia 59,5 81,2 -21,7

Poland 43,2 48,9 5,7

France 68,9 80,4 11,5

National presidential elections in 1990–2013

Last election First election Difference

Slovenia 42,41 85,84 -43,43

Austria 53,57 80,91 -27,34

Bulgaria 48,25 75,17 -26,92

Lithuania 51,76 78,62 -26,86

Slovakia 51,67 75,42 -23,75

Romania 58,02 75,9 -17,88

France 80,35 79,68 0,67

Poland 55,31 53,4 1,91

Source: compiled by the authors from International IDEA data.

2.2. Towards an open access regime? Rule of law, competition and organization density

Rule of law is particularly important in the context of the NWW approach as extension of it is the best proxy

of a transition to an open access regime. However, the measurement and assessment of this transition is

possible only through indirect indicators.

Trust in national legal system in Lithuania is one of the lowest in the EU (see Table 6). Among different legal

institutions Lithuanians trust police the most – almost double in comparison to prosecution service and courts

(see Figure 7). The explanation of it could be the visibility of the police work (public security). The work of

courts and prosecution services is more complex and not so visible. Moreover, current results of researches in

the trust of courts in Lithuania are contradictory: it is not clear, if the persons who had direct experience of

participation in the court proceedings have better or worse opinion about their work.23 However, the latest

findings of the European Union Justice Scoreboard shows that public opinion is not related to the actual

delivery of the service. Lithuania is one of the top leaders in the EU concerning such indicators as time and

rate of resolved cases, and the number of pending.24

23 See Dobryninas, 2012 and Valickas 2013 research results. 24 See European Commission, 2013a.

15

Table 6. Trust in the national legal system in 2004-2010, per cent

2004 2005 2006 2007 2008 2009 2010 average

Denmark 79 80 76 85 83 80 84 81,0

Finland 73 75 75 77 80 74 77 75,9

EU-27 45 47 46 47 46 43 47 45,9

Slovakia 27 31 31 27 31 29 32 29,7

Romunia 26 31 26 26 28 28 23 26,9

Slovenia 27 34 35 26 28 19 22 27,3

Lithuania 28 27 24 25 28 15 22 24,1

Bulgaria 20 20 15 12 13 17 16 16,1

Source: Eurostat.

Figure 7. Trust in legal institutions in Lithuania in 2011-2014, per cent

Source: Vilmorus.

2.3. Monopolies and competition

Monopolies and competition before and after accession is yet another important aspect of the transition to an

open access order as conceptualized by the NWW. Again, the measurement of it is far from obvious. The level

of competition is reflected in the level of prices in the open sectors. It depends much on the regulation of

monopolies such as public utilities (gas, electricity, water, heating). We will take several sectors, electricity

and gas in particular, to assess the level of change after accession.

Electricity market in Lithuania is highly concentrated with four biggest wholesalers representing almost 90

per cent of the market. A commonly accepted measure of market concentration Herfindahl-Hirschman Index

calculated in Lithuanian electricity sector indicated high concentration, especially in the purchasing sector.25

This also seems reflected in the Lithuanian electricity prices for domestic consumers in comparison to other

EU members (see Table 8). Since 2010 Lithuanians pay more than the average price in the EU.

25 See Lietuvos Respublikos energetikos ministerija, 2011 and Directorate-General for Internal Policies, 2010, p. 24.

16

However, the main reason for such situation is country’s isolation – Lithuania still doesn’t have electricity

connections with continental Europe and, after the closure of the Ignalina nuclear power plant, depends on the

electricity import from Russia.

Table 7. Electricity prices for domestic consumers in Purchasing Power Standard, per kilowatt/hour*

2007 2008 2009 2010 2011 2012

Cyprus 0,1802 0,2328 0,1849 0,2277 0,2711 0,3302

Hungary 0,2023 0,2343 0,2702 0,2622 0,265 0,271

Germany 0,2058 0,2114 0,2134 0,2316 0,2422 0,2576

Poland 0,226 0,1926 0,2178 0,2288 0,2369 0,2561

Lithuania 0,1515 0,1375 0,1497 0,2035 0,199 0,2056

Latvia 0,1094 0,1404 0,1544 0,1604 0,2005 0,1985

EU-28 average 0,1563 0,1664 0,1636 0,1727 0,1845 0,1957

Estonia 0,1158 0,1198 0,1314 0,1481 0,148 0,1551

Source: Eurostat.

* All taxes and levies included

Market concentration in gas sector in Lithuania is even higher with 100 per cent dependency on Russian gas

import and two wholesalers representing almost 99 per cent in the market.26 Therefore for long years

Lithuanian consumers are paying one of the highest prices for gas in the EU (see Table 8).

Table 8. Gas prices for domestic consumers in Purchasing Power Standard, per kilowatt/hour*

2007 2008 2009 2010 2011 2012

Bulgaria 0,0806 0,0915 0,0779 0,0964 0,1044 0,1239

Lithuania 0,0409 0,0608 0,0657 0,0758 0,0879 0,0991

Poland 0,0657 0,0765 0,0776 0,0837 0,0877 0,0965

Latvia 0,0467 0,0699 0,0555 0,0622 0,0682 0,0813

Slovakia 0,0612 0,0660 0,0700 0,0657 0,0741 0,0749

Estonia 0,0387 0,0523 0,0518 0,0591 0,0621 0,0715

EU-28 average 0,0514 0,0619 0,0527 0,0567 0,0648 0,0701

Romania 0,0614 0,0608 0,0541 0,0555 0,0539 0,0565

Source: Eurostat.

* All taxes and levies included

Situation in the telecommunications market is different. The latest calculations of the European Commission

revealed that there is 774 per cent difference in phone call prices across the EU with Lithuania paying the

least27 (see Figure 8) indicating a high competition in the market28.

26 Valstybinė kainų ir energetikos komisija, 2014, p. 18.

17

Figure 8. Average cost per minute in mobile communications in 2011, EUR cents

Source: European Commission.

2.4. Organizational density

In the NWW framework organization density is also an important element in the transition towards an open

access. The number of organizations in the last 10 years in Lithuania was increasing in both private and NGO

sectors (see Figure 9). Comparing the percentage of Lithuanian organizations that have “lived” at least 3 and 5

years since they were established, the number is about to stabilize after increase since 2009 (see Figure 10).

Figure 9. Number of organizations in Lithuania in 2004–2014

Source: Statistics Lithuania.

27 European Commission, 2013b. 28 Degutis, 2013. Cheap licences also contributed to the trend. Some fear the competition is too intense and might be detrimental to

along-term investment into a new generation of infrastructure and technological upgrade.

18

Figure 10. “Life” of organizations in Lithuania, per cent

Source: Statistics Lithuania.

3. Public policy development after accession: policy stagnation?

Studies on the EU impact on public policy development in Lithuania mostly analysed sectoral developments,

in the area of agriculture, social policy and higher education. Horizontal reviews and attempts to catch the

general trends are missing. The available reviews are interesting, however, because they cover one area

(agriculture), which is highly europeanized, and two other, which have never been covered by the EU

regulation.

Agricultural and rural development policy is an area where the EU influence was wide and intense due to the

nature of the EU agricultural policy characterized by a high intensity of regulation and big (therefore, very

important) budgetary resources allocated. Studies undertaken (Knudsen, 2013) note the width of the

prescribed policy change, but their main discovery is about the existence of two realities of formal and

informal rules29 and a selective non-implementation of the key provisions of the policy, such as sanitary and

veterinary requirements. Studies on the EU impact on social policy (Aidukaitė, 2014) notice rather limited

impact after EU accession which is in contrast to a still visible legacy of pre-accession impact of international

financial institutions, such as the World Bank and the IMF30. There is a similar assessment in the area of

higher education where a major reform was attempted in 2008–2012. Domestic actors were the main drivers.

The EU structural funds were, however, used to finance the reform (Putinaitė, 2014). It is interesting that a

coexistence of parallel realities as different set of rules were also noted in this area (Martinaitis, 2014).

Aiming at horizontal assessment of the EU impact, we conducted an expert assessment. This review of the

public policy initiatives and the related legislative development in Lithuania revealed a re-politization of

governance31 happened in the context of policy stagnation. Domestic political actors were eager to take

control of increasing state resources (budget) but were hardly interested in the new policy agenda.

29 In contrast to Bohle and Gerskovits, 2012 perception of the Baltic model as neo-liberal, in the post-accession reality of Lithuanian

rural development the author notes visible legacies of the Soviet socialism. 30 But there is an undeniable EU impact on active labour market policies practiced massively after the accession due to the availability

of assistance from the structural funds. 31 The issue of politization of public administration and governance at large will be dealt with in another paper to be presented in the

same ECPR conference panel by Vitalis Nakrošis and Sabina Bankauskaitė-Grigaliūnienė.

19

Reflecting general economic and political trends, the whole accession period could be divided into three main

phases: a) a boom period of 2004–2008, which ended with financial crisis and coincided with the change of

the government in the fall of 2008 when the crisis hit; b) the crisis period of 2009–2012, which also reflects a

four years rule of the center-right coalition in Lithuania, and c) an after-crisis period of 2013–2014, which is

ongoing and related to the return of the Social-democrat led governing coalition.

The first period could be characterised by the economic boom discussed in relation to the economic

convergence fuelled by the EU through structural funds. Public policy thus was dominated by the discussion

of the main investment projects and left-overs of the accession agenda. These left-overs were focused on, in

turn, to the preparation of the introduction of euro together with Slovenia targeted at 2007, which ultimately

failed, and preparation for the closure of the Ignalina nuclear power station in the same year. There was an

attempt of the government to renegotiate the Ignalina closure, which also failed32, but marked a first serious

attempt to take back the policy development initiative.

The whole public policy development in the first post-accession years might be seen from the perspective of

the ownership of the public policy agenda. As the pre-accession agenda was clearly dominated by the EU,

especially during the period of the most intense negotiations in 2000–2002, a partial re-nationalization of the

political agenda could have been anticipated.

This happened, it seems, only partially. Among 40 the most important policy initiatives selected during the

first period of accession, namely, 2004–200833, only around 10 were un-related to the EU. They concern

mostly the energy sector. This first domestic initiative was the sale of the only oil refinery Mažeikių Nafta to

the Polish company Orlen34. The second was privatization of a major part of the electricity distribution

network and a subsequent attempt to create a national champion in energy. The latter could also be regarded

as the first serious post-accession attempt of state capture by powerful business group. It was resisted thou, the

national champion was split and de facto re-nationalized at a later stage.

There were also other national policy initiatives in this period, mainly in the health and social security area,

such as liberalization of the notary services, a ban on smoking in the restaurants, introduction of a new

(universal) child benefit and a steep increase in the length and coverage of the maternity (and parental)

leave35. Level of pensions was also raised signalising an expansion of the welfare state in the context of a

booming economy fuelled by structural funds36.

All other policy initiatives were directly or indirectly related to the EU. Building electricity interconnection

with Poland and Sweden, negotiation and implementation of the services directive, second railway package,

Rail Baltica project and development of the EU neighbourhood and Eastern Partnership policy have all

dominated the public policy agenda. And the role of structural funds discussed above could hardly be

overestimated. A sudden increase in public spending associated with tough requirements in terms of project

and administration quality, has absorbed the energy of public policy makers. They were all busy developing,

implementing projects, and – this brings us back to the state capture – sometimes appropriating them37.

32 See Maniokas, 2009 for an elaboration of this case as an attempt of non-implementation of the EU law. 33 The selection is based on an expert review and analysis of the government programme and policy documents of this period. 34 Triggered by the de facto nationalization of the Yukos company in Russia as Yukos had owned a majority stake in Mažeikių Nafta. 35 The length of the wholly paid maternity leave reached two years, one of the longest in the EU and the world. 36 This seems very familiar to the development of the Southern European states, which had consistently expanded their social

spending, caught-up and even exceeded old EU states in social spending on the eve of the financial and economic crisis of 2008. If not

for the crisis, the development into this direction seemed the most likely option not only to Lithuania but to all other new members of

the EU from Central and Eastern Europe. 37 The stories of corruption were mostly linked to the Labour Party, which was part of the coalition.

20

The years of boom ended abruptly by the crisis, which fell on the shoulders of another government led by the

Conservative party. Before elections it had entertained ambitious new endogenous policy development

plans38, but crisis management inevitably became the dominant focus of their policy agenda. It was about the

internal devaluation through the increase of taxation and cut of public expenditure. Lithuania along with other

Baltic states has become a model of austerity policies, which seemingly worked39. This is a public policy

contribution of the Baltic states on a global scale in the policy debate of austerity versus expansion.

Concentration on crisis also prevented major planned new positive policy initiatives from emerging from the

electoral manifesto. The policy therefore has oscillated around optimization of various existing policies. The

big spenders such as social affairs and health have been naturally the targets. Among the endogenous

initiatives one can mention reform of the higher education, devolution of the responsibility of social assistance

to the municipalities, abolition of counties in the territorial administration, reforms to increase openness of the

government, reform of the governance of state public enterprises, development of the concept of the service

centres as a target for niche foreign direct investment, and on-going reform of the market surveillance

institutions and the inspection methods. Energy continued to be high on the list. Development of the LNG

terminal and a new nuclear power station were two most important policy and public investment initiatives40.

In 2008–2012 the government also stressed the importance of combatting corruption with an emphasis of

transparent public tenders. There were also some failed initiatives, which received a lot of media and public

attention. First of all, there were attempts to introduce legal definition of family and national family policy.

The government also did not succeed in initiating direct elections of the city mayors, and the idea of

reorganizing some ministries failed as well.

Most of the new initiatives have only started when the term of the government had expired. New government

in power since 2012 stopped many of them, such as the development of the new nuclear power plant, reform

of the higher education and reform of the public state enterprises. Others were continued. Preparations for the

introduction of the euro preceded by the strengthened bank supervision started to dominate the public policy

agenda. Preparation for the next financial perspective and the first Lithuanian presidency in the EU in the

second half of 2013 contributed to the trend of more Europeanized and passive public policy agenda during

the third phase of accession.

Rather limited scope of the endogenous policy development is also confirmed by the numbers indicating the

sources of law during the whole period of accession. Calculations of the authors show that in 2004–2010

transposition of the EU law accounted for 36.2 per cent of the whole volume of legislation in Lithuania41. This

is about three times more than comparable figures for the Netherlands (12.6 per cent), Denmark (14 per cent),

the UK (15.6 per cent), all quoted in Bovens and Yesilkagit, 201042.

4. The impact of structural funds: public goods, services and Europeanization

The main instrument of the EU impact in the post-accession period has changed. While the EU single market

and, as a consequence of it, opportunities of open markets, and the foreign investment continued to be an

important dimensions (Epstein, 2014; Medve-Bálint, 2014), their role and effect was more evident before

38 It was contained in a surprisingly wide and well developed government program. 39 Latvia and Estonia are better known for the success of the policy as their austerity governments were re-elected. The Lithuanian

government led by the Prime Minister Kubilius failed to. Our research will develop this case in more detail. A recent effort to account

for this policy could be found in Vilpišauskas, Nakrošis and Kuokštis, 2014. The perspective of all three Baltic states as well as a

wider literature on this policy contribution is provided in the recent publication of the Latvian Institute of International Affairs, 2014. 40 The later was stopped, however, after the change of the government in 2012 the whole nuclear project seems eventually dead. LNG

terminal, on the contrary, seems to be in the final stage. 41 Calculations are based on ESTEP, 2010 which used annual reviews of the Lithuanian EU related activities prepared by the

Government Chancellery of Lithuania until 2010. The publication was discontinued since then. 42 Thou some consider these numbers too low contesting the calculation method.

21

accession. Structural funds were a new factor which has significantly contributed to the level of public

investments.

NWW approach stresses one particular dimension of transition to an open access regime, which is related to

the government’s growth through its expenditure and a wider provision of public goods. “Big government in

open access orders is not an aberration but an integral feature of these societies” (NWW, 122). It is a part of

the principal logic of universalization occurring through the mass citizenry. Extended public goods delivered

on impersonal basis could be extended in the scope and help to sustain open access regimes. They also tend to

increase investments into productivity43.

What has been the EU contribution in terms of public goods delivery before and especially after the

accession? It is high without any doubt, in particular through the structural funds. Total EU financial support

to Lithuania per capita per year since 2004 was increasing44.

Table 9. EU financial and structural funds support to Lithuania, EUR

Financial

framework 2004–2006 2007–2013

10-year-

membership

benefit 2014–2020

Total EU

financial support,

mln. EUR

4421,9 11723,4 16145,3 12881,9

Support per

capita in the

period, EUR

1300 3607 4907 4375

Support per

capita per year,

EUR

434 515 491 625

Total EU

structural funds

support*

1902 8519 8032 8292

* Including support to Rural Development Programme.

Source: compiled by the authors.

Structural funds helped to considerably increase public and private investment in Lithuania and other CEE

countries. In 2004–2012 EU SF made 54 per cent of the total public capital expenditure in Lithuania45. During

the years of financial crises EU SF made even around 80 per cent of it.

Most of the spending went to the public infrastructure, such as transport (26.6 per cent of all SF in 2007–

2013), environment (mostly waste and water infrastructure) and energy (electric and heating networks in

particular) infrastructure (24.9 per cent). High proportion went to the research and development infrastructure

– 23 per cent. 15 per cent were invested in the so called social infrastructure, which includes health and social

care infrastructure in particular. As a result, main achievements are related to the new public infrastructure

created, in terms of new or reconstructed roads, railways, water and waste treatment facilities, better

connectedness to electricity, heating, broadband and other networks, renovated schools, hospitals and social

care institutions.

43 An alternative view would be to see a level of public investment as a proxy of the level of corruption (Mungiu-Pippidi, 2013). 44 But in comparative prices it will drop in the new financial perspective. 45 Calculated on the basis of data from the Ministry of Finance of the Republic of Lithuania.

22

There were only few impact evaluation studies aiming to assess wider effects of interventions. The most

important source in this regard remains impact evaluation based on macroeconomic modelling assessing the

period 2000–2010 undertaken in 2011. The results of this evaluation demonstrate a significant EU impact on

economic growth and job creation in the country46. According to the model, average real GDP growth rate in

2004–2013 (based on the prices of 2005) is estimated to have been 1.6 percentage points higher than without

the support. The unemployment rate is estimated to have been on average 2.4 percentage points lower in

2004–2011 than it would have been without the support from EU structural funds.

EU structural support stimulated private investment47, helping the business sector to adapt to the increased

competition resulting from globalisation. 40 per cent of all private companies which introduced technological

innovations in 2008–2010 used EU funding48. In terms of negative or mixed economic effects, there is a

negative short-term effect of the EU structural support on exports as well, because EU-funded interventions

are estimated to lead to a rise in salaries in certain sectors and thus makes export more expensive49. According

to the estimations, jobs created as a result of ERDF funding account for 8.3 per cent of the net increase in

employment in 2012. Evaluation made with regard to investment related to the development of cities and

small towns in Lithuania also demonstrated an effect on value creation (2.3 per cent of GDP in 2012)50.

In terms of physical achievements, a lot of new infrastructure in road transport, environmental (water

management, waste management), public RTD (buildings and research equipment), ICT (broadband network)

sectors was created. Meanwhile its use is hardly optimal and indicators of residents using modernised

wastewater systems, e-services and enterprises cooperating with public research institutions are lower than

intended. On the other hand, the implementation of these large infrastructure projects had significant short-

term effect on stabilisation of domestic demand during financial and economic crisis, especially on the

construction industry.

Table 10. Main achievements of interventions financed from the SF in Lithuania (end-2012)

Policy area Main indicators Actual outcomes and results

Enterprise

support, including

ICT

Number of direct investment aid

projects to SMEs

1065 projects of direct investment aid to SMEs were launched until the end

of 2012. 292 of them were started in 2012, compared to 229 in 2011. Only

51 such projects were launched until the end of 2006.

Number of start-ups supported 301 start-ups were supported until the end of 2012. The target value for this

indicator was set at 15.

Investment induced (EUR

million)

EUR 668 million of private investment were induced as a result of ERDF-

funded measures (91% of the target value). In 2012, EUR 336 million were

induced, which is 2.3 times more than in 2011 (EUR 151 million).

Increase in the share of

population visiting websites of

public authorities (%)

24 percentage points. The share of population visiting websites of public

authorities increased from 15% in 2005 to 39% in 2012. The increase of 40

percentage points is targeted.

Increase in the share of

population covered by

broadband access (%)

20 percentage points. From 2005 to 2012, the share of population covered

by broadband access increased from 72% to 92%. The increase of 23

percentage points is targeted.

RTDI

Number of RTDI projects

568 RTDI projects received ERDF support since the start of the

programming period (the target value of 260 was set). Most of these

projects are small-scale private sector initiatives. 101 projects were started

in 2012.

Number of cooperation

agreements between private

24 cooperation agreements between SMEs and research institutions were

signed as a result of the implementation of the public RTDI projects (24%

46 See ESTEP, 2011. 47 See Dumčiuvienė and Stravinskas, 2012, p. 1355. 48 Data from Statistics Lithuania. 49 ESTEP, 2011. 50 See BGI Consulting, 2013.

23

Policy area Main indicators Actual outcomes and results

enterprises and research

institutions

of the target). 6 of them were signed in 2012 (9 in 2011).

Research jobs created

202 research jobs were created in the public and private sector. In total,

there were 5893 research jobs in 2005. 69 research jobs were created in

2012 (6 in 2011).

Transport

Km of reconstructed and built

roads

1,369 km (113% of the target value). It represents 6.4% of all state roads in

Lithuania.

Km of reconstructed and built

railway lines

1.13 km (0.5% of the target value). Most of the railway projects are yet to

be implemented due to the complexity of planning procedures.

Environment and

energy

Increase in percentage of

residents who use centralized

wastewater collection and

management services (%)

1.4 percentage points. The target value of 8 percentage points was set for

this indicator, although in 2012 the proposal was made to the EC to lower it

to 4%.

Number of closed and adapted

landfill sites

198 landfill sites were closed and adapted (79.5% of the target), most of

them (106) in 2012. By comparison, 587 landfill sites were in the phase of

adaptation or had been closed or adapted until that year as a result of ISPA

and Cohesion Fund funding.

The amount of energy saved in

modernized public buildings

(GWh)

138.38 GWh (138% of the target value). 122.32 GWh of energy was saved

in 2012. By comparison, 40 GWh of energy was saved as a consequence of

the modernisation of public buildings in the previous programming period.

Additional capacity of renewable

energy production (MW)

173 MW. This additional capacity was caused by the wider use of biomass.

Most of the increase came in 2012 (134 MW). However, these additional

capacities were only a small fraction of the total electricity and heating

energy consumption in 2012 (19.4 TWh).

Territorial

development

(urban areas,

tourism, rural

development,

cultural heritage,

health, public

security, local

development)

Number of jobs created in

tourism

461 (92.2% of the target value). Most of these jobs (375) were created in

2012.

Number of education projects

282 (282% of the target value). These projects were aimed at the

development of education infrastructure. Not all of them were finished until

the end of 2012 (projects under implementation were included in the figure

above).

Number of health projects

245 (30.6% of the target value). These projects were aimed at the

development of healthcare infrastructure. Projects under implementation

were included in this figure. By comparison, 122 healthcare projects

received EU financial support in the previous programming period.

Source: compiled by the authors.

This new infrastructure alongside investments in administrative capacity created preconditions for better and

wider accessible public services.

There is a lack of data concerning the public services quality in Lithuania. The available evaluation of specific

services indicate, however, that public service quality, regardless of the current EU Structural Funds

investments and ongoing public service reforms, is not considered as good or there is no considerable change

with regard to evaluation of quality. Cases studies performed as part of thematic evaluations of SF

interventions51 indicate three types of factors, which might explain this puzzle. This first is systemic problems

associated with sub-optimal network of bodies (this is particularly relevant in the provision of social services).

Secondly, it is the quality problem caused by the sub-optimal use of infrastructure due to a lack of client

orientation, competence and motivation of staff and other issues related to service delivery. Finally, the

relevance and accessibility of services (both geographical and information) is a problem. Moreover, this new

infrastructure has to be maintained, and this creates a higher pressure on public budgets. This infrastructure

has to be also optimised taking due regard to the changing demographics.

51 See in particular evaluations on investment in e-government services, education, and innovation.

24

Wider SF impact on public policy is more difficult to assess. First, the SFs have contributed to the quality of

public investment policy a dimension of a longer-term strategic planning. However, until recently this system

was isolated from the overall system of strategic planning in Lithuania. The SF centred investment policy also

partially replaced other public policy measures, such as regulations, taxation, communication and others, and

was not integrated in a wider policy circle. Lack of an integrated policy is also often cited reason for a sub-

optimal use of structural funds52.

Also a simple impact of the SF on the scope of the budget has to be noted. This, altogether with the NATO

membership, which enabled savings in the area of defence, enabled Lithuania to maintain a rather limited

scope of public expenditures focused on social needs (Norkus, 2014).

Finally, the most controversial impact of the SF on the public policy and wider governance was an additional

motivation for the state capture. The emergence of new types of political parties in Lithuania is closely related

to this phenomenon. While emergence of new populist parties has started earlier and is a feature of all CEE

region (Innes, 2014), structural funds increased the available state resources. It motivated some of these

parties to become a kind of business organizations with a sole aim to capture newly available resources53.

Preliminary conclusions

We have started from presenting a very wide picture of post-accession changes in Lithuania. It was based

mostly on various statistical and synthetic indicators indicating trends in political, economic, social and

institutional development. While this picture is far from being complete, it is possible to see a certain

trajectory of change. While it was not always possible to compare the post-accession trends with the pre-

accession period, available data demonstrates a slower change. As economy, despite the enormous economic

crisis, continued to converge, there was almost no progress in the quality of democracy, governance and with

regard to almost all other dimensions. But there was hardly any marked decline as assumed in many recent

evaluations of the post-accession climate in Central and Eastern Europe.

In line with the previous accounts of the EU economic contribution (Epstein and Jacoby, 2014), we can also

attest that the EU has contributed to the economic boom in 2004–2008, and, correspondingly, made a crisis in

Lithuania and other Baltic states the deepest in the EU. But the EU has also smoothened the effects of it,

mostly through stabilizing demand using the structural funds.

The quality of life, as demonstrated by the increase in a number of healthy life expectancy, is rising, and it can

be associated with the EU and its structural assistance in particular. It is, however, hardly reflected in the

public perception. While the pessimistic outlook might be an idiosyncratic trace of historic legacies, it is

related to a level of expectations and to the economic crisis in particular. As the economic situation is

improving, so is the perception of the general situation.

We have put it in a context of very broad developmental theory (NWW, 2009) to see whether EU continues to

contribute to wider developmental goals. Contribution of the EU, both in the pre-accession and post-accession

phase, to the threefold transformation essential according to this developmental framework (universalization

of the rule of law, de-monopolization and move from private to public goods), is obvious. Focus of this

contribution has changed thou after the accession. As an emphasis towards the universal rule of law and

protection of competition dominated during the pre-accession, the pressure of the EU in this area had eased

52 The vast majority of all recent evaluation are published in <http://www.esparama.lt/vertinimo-ataskaitos>. 53 Labour Party in Lithuania could be an example of this kind of party behaviour similar to the behaviour documented in Innes, 2014 in

the Check Republic. The case of corruption against this party is currently in the Lithuanian courts, but it remains in the ruling

coalition. Recent attempts of the same party to capture major SF management agencies are also widely reported in the Lithuanian

media. There are also media reports on involvement of other political parties in the micro-management of SF.

25

since. In the accession phase structural funds in particular contributed to a wider dissemination of public

goods. It is well demonstrated in the results and impact of the structural funds.

This developmental approach puts an emphasis on the role of elites, state capture and broader transformation

of the society and thus focuses and complements the current theory of Europeanization. It also provides a

framework to analyse the issue of corruption and state capture, which is no longer considered as a deviation,

but rather as a norm in many Eastern and Southern EU member states (Mungiu-Pippidi, 2013).

State capture is particularly important as prevention of it during the pre-accession could be regarded as one of

the most important impacts of the EU, especially comparing Lithuania with other post-Soviet countries. We

have registered more visible attempts to capture the Lithuanian state after accession. Structural funds provided

an additional incentive for it by increasing the available resources and the size of the state. However, it is

questionable whether it has become an entrenched element of the Lithuanian polity.

But the attempts of state capture seemingly stopped short at capturing public policy agenda. Analysis of the

public policy demonstrated that after the accession domestic actors did not produce a powerful domestic

agenda comparable with the pre-accession EU dominated agenda. While there were attempts to initiate

endogenous reforms, the EU issues still occupied more important place than in the best governed old EU

member states. The endogenous reforms were clearly facilitated by the structural funds, but without the EU it

was difficult to ensure their continuity.

Thus the need for the EU to support genuine endogenous efforts instead of forcing to everybody the same

template of structural reforms as it is the current practice. Investment funded from structural funds had to be

better linked with regulatory issues and structural reforms. Moreover, there is no focused attempt to address

the major structural issue in Lithuania and many other CEE and Southern European countries, namely the lack

of social capital and trust.

This is a work in progress and other data will contribute and test these preliminary conclusions. The most

important new data set will be an elite survey of the perception of post-accession change and the EU role in it.

Another set will come out of several implementation case studies. Current public policy review reveals several

instances where formal and informal set of rules coexist in parallel realities, as documented in the area of

veterinary and sanitary rules and education.

Comparison with Central and Eastern Europe is also a matter of further research. Preliminary results suggest

that Lithuania’s post-accession development does not represent any of the extremes. There was no clear

progress or even post-accession breakthrough, as some expected, and which is embodied by Estonia and, to a

lesser extent, Poland. Also, there was no decline as it is registered on some important dimensions of political

development, as in Romania, Bulgaria or Hungary.

26

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