RESTRUCTURING THE LITHUANIAN FOOD INDUSTRY: PROBLEMS AND PERSPECTIVES

Vilija Girgzdiene, Monika Hartmann, Arvydas Kuodys, Dirk W. Rudolph, Viktoras Vaikutis and Jürgen Wandel

No 14867, IAMO Discussion Papers from Institute of Agricultural Development in Transition Economies (IAMO)

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

Keywords: Agribusiness; Industrial Organization (search for similar items in EconPapers)
Pages: 47
Date: 1998
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:iamodp:14867

DOI: 10.22004/ag.econ.14867

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