Patterns of inequality of Lithuanian regions
Abstract
Though a country᾽s economy is growing, separate regional development disparities could be even more significant. This paper aims to identify the situation of inequality of Lithuania᾽s regions, taking into consideration the most important factors of regional economic growth and investments. Evaluation of regions by 15 criteria is carried out by a ranking method. Results show a big disparity between regions. Significant Spearman correlation is found between FDI and total investment with all investigated group of factors of economic growth in the group of City Municipalities, but in the group of District Municipalities, it differs. Four scenarios for regional policy formation were distinguished.
Keyword : regions, municipality, inequality, ranking, FDI, factors of economic growth, convergence
How to Cite
Maknickienė, N., Lapinskaitė, I., Miečinskienė, A., & Skačkauskienė, I. (2018). Patterns of inequality of Lithuanian regions. Journal of Business Economics and Management, 19(2), 323-342. https://doi.org/10.3846/jbem.2018.5574
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Batabyal, A. A., & Nijkamp, P. (2013). A multi-region model of economic growth with human capital and negative externalities in innovation. Journal of Evolutionary Economics, 23, 909-924. https://doi.org/10.1007/s00191-012-0293-1
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Bertola, G., Foellmi, R., & Zweimüller, J. (2006). Income distribution in macroeconomic models. Princeton: Princeton University Press.
Bilan, Y., Mishchuk, H., & Dzhyhar, T. (2017). Human capital factors and remuneration: analysis of relations, modelling of influence. Business: Theory and Practice, 18, 208-214.
Blaževic, B., & Jelušic, A. (2006). Modelling regional economic development. Kybernetes, 35(7/8), 1190-1202. https://doi.org/10.1108/03684920610675265
Blien, U., Suedekum, J., & Wolf, K. (2006). Local employment growth in West Germany: a dynamic panel approach. Labour Economics, 13(4), 445-458. https://doi.org/10.1016/j.labeco.2006.02.004
Bode, E., & Villar, L. P. (2017). Creativity, education or what? On the measurement of regional human capital. Papers in Regional Science, 96(S1), S51-S61. https://doi.org/10.1111/pirs.12180
Brauers, W. K. M., Ginevičius, R., & Podvezko, V. (2010). Regional development in Lithuania considering multiple objectives by the MOORA method. Technological and Economic Development of Economy, 16(4), 613-640. https://doi.org/10.3846/tede.2010.38
Bucci, A., & La Torre, D. (2009). Population and economic growth with human and physical capital investments. International Review of Economics, 56(1), 17-27. https://doi.org/10.1007/s12232-008-0054-5
Burns, T. R., & DeVillé, P. (2017). Socio-economics: the approach of social systems theory in a forty year perspective. Economics and Sociology, 10(2), 11-20. https://doi.org/10.14254/2071-789X.2017/10-2/1
Casi, L., & Resmini, L. (2017). Foreign direct investment and growth: can different regional identities shape the returns to foreign capital investments? Environment and Planning C: Politics and Space, 35(8), 1483-1508.
Cuaresma, J. C., Doppelhofer, G., & Feldkircher, M. (2014). The determinants of economic growth in European regions. Regional Studies, 48(1), 44-67. https://doi.org/10.1080/00343404.2012.678824
Czaller, L. (2017). Increasing social returns to human capital: evidence from Hungarian regions. Journal of Regional Studies, 51(3), 467-477. https://doi.org/10.1080/00343404.2015.1112898
Dollar, D., & Kraay, A. (2002). Growth is good for the poor. Journal of Economic Growth, 7(3), 195-225. https://doi.org/10.1023/A:1020139631000
Easterly, W. R. (2001). The middle class consensus and economic development. Journal of Economic Growth, 6(4), 317-335. https://doi.org/10.1023/A:1012786330095
Ehrlich, I., & Lui, F. (1997). The problem of population and growth: a review of the literature from Malthus to contemporary models of endogenous population and endogenous growth. Journal of Economic Dynamics & Control, 21(1), 205-242. https://doi.org/10.1016/0165-1889(95)00930-2
Florida, R., Mellander, C., & Stolarick, K. (2008) Inside the black box of regional development−human capital, the creative class, and tolerance. Journal of Economic Geography, 8(5), 615-649. https://doi.org/10.1093/jeg/lbn023
Galor, O. (2000). Income distribution and the process of development. European Economic Review, 44(4-6), 706-712. https://doi.org/10.1016/S0014-2921(99)00039-2
Gimenez-Nadal, J. I., & Molina, J. A. (2014). Regional unemployment, gender, and time allocation of the unemployed. Review of Economics of the Household, 12(1), 105-127. https://doi.org/10.1007/s11150-013-9186-9
Guerrero, M., Urbano, D., & Fayolle, A. (2016). Entrepreneurial activity and regional competitiveness: evidence from European entrepreneurial universities. The Journal of Technology Transfer, 41(1), 105-131. https://doi.org/10.1007/s10961-014-9377-4
Iwasaki, I., & Suganuma, K. (2015). Foreign direct investment and regional economic development in Russia: an econometric assessment. Economic Change and Restructuring, 48(3-4), 209-255. https://doi.org/10.1007/s10644-015-9161-y
Kelley, A. C. (1988). Economic consequences of population change in the Third World. Journal Economic Literature, 26(4), 1685-1728.
Kersan-Skabic, I., & Tijanic, L. (2014). Regional determinants of foreign direct investments in Croatia. In Transylvanian review of administrative sciences SI (pp. 70-89). Retrieved from https://apps.webofknowledge.com/full_record.do?product=WOS&search_mode=GeneralSearch&qid=1&SID=Z2kCMhxz8h934FxJShj&page=7&doc=66
Kilijoniene, A., Simanaviciene, Z., & Simanavicius, A. (2010). The evaluation of social and economic development of the region. Inzinerine Ekonomika-Engineering Economics, 21(1), 68-79.
Melo, P. C. (2017). People, places and earnings differentials in Scotland. Journal of Regional Studies, 51(3), 389-403. https://doi.org/10.1080/00343404.2015.1100286
Ministry of Finance of the Republic of Lithuania. (2017a). Forecasting of budgets for municipalities and state budget grands.
Ministry of Finance of the Republic of Lithuania. (2017b). Debt of municipalities. Retrieved from http://finmin.lrv.lt/lt/veiklos-sritys/biudzetas/biudzeto-vykdymas/savivaldybiu-biudzetai/savivaldybiu-skolinimosi-limitai/2016-m-3/2016-m-rugsejo-30-d
Mirrlees, J. A. (1971). Exploration in theory of optimum income taxation. Review of Economic Studies, 38(114), 175-208. https://doi.org/10.2307/2296779
Moretti, E. (2004). Human capital externalities in cities. Handbook of Regional and Urban Economics, 4, 2243-2291. https://doi.org/10.1016/S1574-0080(04)80008-7
National Land Service under the Ministry of Agriculture of the Republic of Lithuania. (2017). Retrieved from http://www.nzt.lt/
Nowak, A., & Wójcik, E. (2015). Regional differentiation of production factors productivity in rural farms of Poland. Zagadnienia Doradztwa Rolniczego, 2, 43-55.
Pede, V. O., Florax, R. J., & De Groot, H. L. (2007). Growth and technological leadership in US industries: a spatial econometric analysis at the state level. In 2007 Annual Meeting, July 29-August 1 (pp. 1963-1997). Portland, Oregon TN, 9691.
Pelkonen, A., & Nieminen, M. (2016). How beneficial is a knowledge-based development strategy for peripheral regions? A case study. European Planning Studies, 24(2), 364-386. https://doi.org/10.1080/09654313.2015.1047740
Perotti, R. (1996). Growth, income distribution, and democracy: what the data say. Journal of Economic Growth, 1(2), 149-187. https://doi.org/10.1007/BF00138861
Picci, L. (1999). Productivity and infrastructure in the Italian regions. Giornale Degli Economisti e Annali di Economia, 58(3-4), 329-353.
Pompili, T. (1994). Structure and performance of less developed regions in the EC. Regional Studies, 28(7), 679-694. https://doi.org/10.1080/00343409412331348576
Quah, D. T. (1996). Twin peaks: growth and convergence in models of distribution dynamics. Economic Journal, 106(437), 1045-1055. https://doi.org/10.2307/2235377
Rakauskiene, O. G., & Strunz, H. (2016). Approach to reduction of socioeconomic inequality: decrease of vulnerability and strengthening resilience. Economics and Sociology, 9(4), 243-258. https://doi.org/10.14254/2071-789X.2016/9-4/15
Rebelo, S. T. (1991). Long-run policy analysis and long-run growth. Journal of Political Economy, 99(3), 500-521. https://doi.org/10.1086/261764
Simionescu, M. (2016). Competitiveness and economic growth in Romanian regions. Journal of Competitiveness, 8(4), 46-60.
Simionescu, M., Lazányi, K., Sopková, G., Dobeš, K., & Balcerzak, A. P. (2017). Determinants of economic growth in V4 countries and Romania. Journal of Competitiveness, 9(1), 103-116. https://doi.org/10.7441/joc.2016.04.03
Statistics Lithuania. (2017). Retrieved from https://osp.stat.gov.lt/statistiniu-rodikliu-analize?region=all#/Statistics. (2017). Spearmans rank order correlation. Retrieved from https://statistics.laerd.com/statistical-guides/spearmans-rank-order-correlation-statistical-guide-2.php
Tournemaine, F. (2007). Can population promote income per-capita growth? A balanced perspective. Economics Bulletin, 15(8), 1-7.
Tselios, V. (2009). Growth and convergence in income per capita and income inequality in the regions of the EU. Spatial Economic Analysis, 4(3), 343-370. https://doi.org/10.1080/17421770903114711
Włodarczyk, J. (2017). Innovations and income inequalities − a comparative study. Journal of International Studies, 10(4), 166-178. https://doi.org/10.14254/2071-8330.2017/10-4/13
Arratibel, O., Heinz, F. F., Martin, R., Przybyla, M., Serafini, R., Zumer, T., & Rawdanowicz, L. (2007). Determinants of growth in the central and eastern European EU member states-a production function approach. Retrieved from https://www.ecb.europa.eu/pub/pdf/scpops/ecbocp61.pdf?f431c86b389e0f7e42ed1990150a60e1
Asian economic integration report. (2016). What drives foreign direct investment in Asia and the Pacific? Asian development bank. Retrieved from https://www.adb.org/sites/default/files/publication/214136/aeir-2016.pdf
Atkočiūnienė, Z. O., Gineitienė, Z., & Žiogelytė, L. (2010). Regionų plėtra: žmogiškųjų išteklių potencialas [Regional development: the potential of human resources]. Viešasis administravimas, 1(2), 44-52.
Bajo-Rubio, O., Díaz-Mora, & C., Díaz-Roldán, C. (2010). Foreign direct investment and regional growth: an analysis of the Spanish Case. Regional Studies, 44(3), 373-382. https://doi.org/10.1080/00343400802508844
Batabyal, A. A., & Nijkamp, P. (2013). A multi-region model of economic growth with human capital and negative externalities in innovation. Journal of Evolutionary Economics, 23, 909-924. https://doi.org/10.1007/s00191-012-0293-1
Berger, T., & Frey, C. B. (2017). Industrial renewal in the 21st century: evidence from US cities. Journal of Regional Studies, 51(3), 404-413. https://doi.org/10.1080/00343404.2015.1100288
Bertola, G., Foellmi, R., & Zweimüller, J. (2006). Income distribution in macroeconomic models. Princeton: Princeton University Press.
Bilan, Y., Mishchuk, H., & Dzhyhar, T. (2017). Human capital factors and remuneration: analysis of relations, modelling of influence. Business: Theory and Practice, 18, 208-214.
Blaževic, B., & Jelušic, A. (2006). Modelling regional economic development. Kybernetes, 35(7/8), 1190-1202. https://doi.org/10.1108/03684920610675265
Blien, U., Suedekum, J., & Wolf, K. (2006). Local employment growth in West Germany: a dynamic panel approach. Labour Economics, 13(4), 445-458. https://doi.org/10.1016/j.labeco.2006.02.004
Bode, E., & Villar, L. P. (2017). Creativity, education or what? On the measurement of regional human capital. Papers in Regional Science, 96(S1), S51-S61. https://doi.org/10.1111/pirs.12180
Brauers, W. K. M., Ginevičius, R., & Podvezko, V. (2010). Regional development in Lithuania considering multiple objectives by the MOORA method. Technological and Economic Development of Economy, 16(4), 613-640. https://doi.org/10.3846/tede.2010.38
Bucci, A., & La Torre, D. (2009). Population and economic growth with human and physical capital investments. International Review of Economics, 56(1), 17-27. https://doi.org/10.1007/s12232-008-0054-5
Burns, T. R., & DeVillé, P. (2017). Socio-economics: the approach of social systems theory in a forty year perspective. Economics and Sociology, 10(2), 11-20. https://doi.org/10.14254/2071-789X.2017/10-2/1
Casi, L., & Resmini, L. (2017). Foreign direct investment and growth: can different regional identities shape the returns to foreign capital investments? Environment and Planning C: Politics and Space, 35(8), 1483-1508.
Cuaresma, J. C., Doppelhofer, G., & Feldkircher, M. (2014). The determinants of economic growth in European regions. Regional Studies, 48(1), 44-67. https://doi.org/10.1080/00343404.2012.678824
Czaller, L. (2017). Increasing social returns to human capital: evidence from Hungarian regions. Journal of Regional Studies, 51(3), 467-477. https://doi.org/10.1080/00343404.2015.1112898
Dollar, D., & Kraay, A. (2002). Growth is good for the poor. Journal of Economic Growth, 7(3), 195-225. https://doi.org/10.1023/A:1020139631000
Easterly, W. R. (2001). The middle class consensus and economic development. Journal of Economic Growth, 6(4), 317-335. https://doi.org/10.1023/A:1012786330095
Ehrlich, I., & Lui, F. (1997). The problem of population and growth: a review of the literature from Malthus to contemporary models of endogenous population and endogenous growth. Journal of Economic Dynamics & Control, 21(1), 205-242. https://doi.org/10.1016/0165-1889(95)00930-2
Florida, R., Mellander, C., & Stolarick, K. (2008) Inside the black box of regional development−human capital, the creative class, and tolerance. Journal of Economic Geography, 8(5), 615-649. https://doi.org/10.1093/jeg/lbn023
Galor, O. (2000). Income distribution and the process of development. European Economic Review, 44(4-6), 706-712. https://doi.org/10.1016/S0014-2921(99)00039-2
Gimenez-Nadal, J. I., & Molina, J. A. (2014). Regional unemployment, gender, and time allocation of the unemployed. Review of Economics of the Household, 12(1), 105-127. https://doi.org/10.1007/s11150-013-9186-9
Guerrero, M., Urbano, D., & Fayolle, A. (2016). Entrepreneurial activity and regional competitiveness: evidence from European entrepreneurial universities. The Journal of Technology Transfer, 41(1), 105-131. https://doi.org/10.1007/s10961-014-9377-4
Iwasaki, I., & Suganuma, K. (2015). Foreign direct investment and regional economic development in Russia: an econometric assessment. Economic Change and Restructuring, 48(3-4), 209-255. https://doi.org/10.1007/s10644-015-9161-y
Kelley, A. C. (1988). Economic consequences of population change in the Third World. Journal Economic Literature, 26(4), 1685-1728.
Kersan-Skabic, I., & Tijanic, L. (2014). Regional determinants of foreign direct investments in Croatia. In Transylvanian review of administrative sciences SI (pp. 70-89). Retrieved from https://apps.webofknowledge.com/full_record.do?product=WOS&search_mode=GeneralSearch&qid=1&SID=Z2kCMhxz8h934FxJShj&page=7&doc=66
Kilijoniene, A., Simanaviciene, Z., & Simanavicius, A. (2010). The evaluation of social and economic development of the region. Inzinerine Ekonomika-Engineering Economics, 21(1), 68-79.
Melo, P. C. (2017). People, places and earnings differentials in Scotland. Journal of Regional Studies, 51(3), 389-403. https://doi.org/10.1080/00343404.2015.1100286
Ministry of Finance of the Republic of Lithuania. (2017a). Forecasting of budgets for municipalities and state budget grands.
Ministry of Finance of the Republic of Lithuania. (2017b). Debt of municipalities. Retrieved from http://finmin.lrv.lt/lt/veiklos-sritys/biudzetas/biudzeto-vykdymas/savivaldybiu-biudzetai/savivaldybiu-skolinimosi-limitai/2016-m-3/2016-m-rugsejo-30-d
Mirrlees, J. A. (1971). Exploration in theory of optimum income taxation. Review of Economic Studies, 38(114), 175-208. https://doi.org/10.2307/2296779
Moretti, E. (2004). Human capital externalities in cities. Handbook of Regional and Urban Economics, 4, 2243-2291. https://doi.org/10.1016/S1574-0080(04)80008-7
National Land Service under the Ministry of Agriculture of the Republic of Lithuania. (2017). Retrieved from http://www.nzt.lt/
Nowak, A., & Wójcik, E. (2015). Regional differentiation of production factors productivity in rural farms of Poland. Zagadnienia Doradztwa Rolniczego, 2, 43-55.
Pede, V. O., Florax, R. J., & De Groot, H. L. (2007). Growth and technological leadership in US industries: a spatial econometric analysis at the state level. In 2007 Annual Meeting, July 29-August 1 (pp. 1963-1997). Portland, Oregon TN, 9691.
Pelkonen, A., & Nieminen, M. (2016). How beneficial is a knowledge-based development strategy for peripheral regions? A case study. European Planning Studies, 24(2), 364-386. https://doi.org/10.1080/09654313.2015.1047740
Perotti, R. (1996). Growth, income distribution, and democracy: what the data say. Journal of Economic Growth, 1(2), 149-187. https://doi.org/10.1007/BF00138861
Picci, L. (1999). Productivity and infrastructure in the Italian regions. Giornale Degli Economisti e Annali di Economia, 58(3-4), 329-353.
Pompili, T. (1994). Structure and performance of less developed regions in the EC. Regional Studies, 28(7), 679-694. https://doi.org/10.1080/00343409412331348576
Quah, D. T. (1996). Twin peaks: growth and convergence in models of distribution dynamics. Economic Journal, 106(437), 1045-1055. https://doi.org/10.2307/2235377
Rakauskiene, O. G., & Strunz, H. (2016). Approach to reduction of socioeconomic inequality: decrease of vulnerability and strengthening resilience. Economics and Sociology, 9(4), 243-258. https://doi.org/10.14254/2071-789X.2016/9-4/15
Rebelo, S. T. (1991). Long-run policy analysis and long-run growth. Journal of Political Economy, 99(3), 500-521. https://doi.org/10.1086/261764
Simionescu, M. (2016). Competitiveness and economic growth in Romanian regions. Journal of Competitiveness, 8(4), 46-60.
Simionescu, M., Lazányi, K., Sopková, G., Dobeš, K., & Balcerzak, A. P. (2017). Determinants of economic growth in V4 countries and Romania. Journal of Competitiveness, 9(1), 103-116. https://doi.org/10.7441/joc.2016.04.03
Statistics Lithuania. (2017). Retrieved from https://osp.stat.gov.lt/statistiniu-rodikliu-analize?region=all#/Statistics. (2017). Spearmans rank order correlation. Retrieved from https://statistics.laerd.com/statistical-guides/spearmans-rank-order-correlation-statistical-guide-2.php
Tournemaine, F. (2007). Can population promote income per-capita growth? A balanced perspective. Economics Bulletin, 15(8), 1-7.
Tselios, V. (2009). Growth and convergence in income per capita and income inequality in the regions of the EU. Spatial Economic Analysis, 4(3), 343-370. https://doi.org/10.1080/17421770903114711
Włodarczyk, J. (2017). Innovations and income inequalities − a comparative study. Journal of International Studies, 10(4), 166-178. https://doi.org/10.14254/2071-8330.2017/10-4/13