Today marks the 7th day of my visit to Lithuania. I have so far travelled almost the entire length of the country, from east to west. I'm still adjusting my view of Lithuania from my travels here in the 1980's to the present. In the 80's, this country was under Russian communist occupation. Now it is a free democracy with a free market economy. Today I will do my best to discuss the economic changes that have occurred in the transition from communism to capitalism.

In Soviet days, Lithuania's economy was strangled by communist economic insanity. But even under centralized "planning" and "control," Lithuanians were doing business in a thriving black market. This underground industriousness made Lithuania--and its Baltic neighbors of Latvia and Estonia--the crown jewel in the Soviet "Union." But even with a black market, times were pretty tough. In pre-Soviet times, Lithuania's economy had been largely agricultural. The Russians pushed the country's economy towards industrialization after taking over. There were certainly some benefits to industrialization, but Soviet control kept Lithuania's standard of living far below what it could have been (shortages of products, poor quality, etc.).

Where I once saw no shops, or dismal shops with low quality products and/or empty shelves, I see a thriving economy. There are small businesses everywhere, and new ones popping up all the time. Lithuanian supermarkets are now stocked full with both indigenous and imported foods. While under the Soviets, you'd be lcuky to find some bread and potatoes in a state-controlled food store, now you can buy bananas, avocados, fresh meats, and Sprite. Bookstores are everywhere offering reading materials once banned by the Soviets. Auto dealerships, auto repair centers, and cell phone/service stores are plentiful. All the restaurants I've eaten in have served me excellent food, and the bathrooms are clean and have soap to wash your hands. (You don't even want to know what Soviet-era bathrooms were like). I get a real sense of hard-working industriousness from the people here.

Case in point: my cousin. Under the Soviets, he started a black market wicker basket-making business. He covertly sold or bartered his handmade baskets to individuals who wanted high quality shopping baskets, wicker furniture, clothes hampers, baby cribs, etc. People either couldn't buy these things from state stores or the quality of available products was just awful. Under state control, he had to be careful as to how much business he did for fear of being discovered by the communists and punished for engaging in a capitalist venture. Now he is free to do business out in the open.

Now his company, Vytele, has 50 employees and is thriving. He owns 5 trucks, and has customers in France, Germany, Austria, Russia, Poland, Estonia, and Latvia. His family is comfortable and life is good. My cousin has mentioned some cumbersome Lithuanian government regulations, but is otherwise growing and thriving. I've toured his facilities and met some of his customers. I'm quite impressed. But there have been growing pains in the transition from communism to capitalism. For example, some people who were assured an income/pension--even though very minimal--under Soviet rule are unhappy with the prospect of having to be self-sufficient. I will exapnd on these economic topics in future blogs.

Here I want to provide some information on the current state of the Lithuanian economy:

• Economic growth of 6.1% is expected this year.
• Inflation of only 0.1% is predicted for 2003.
• Foreign investment rose 23.7% in 2002, with most of the money going towards manufacturing followed by finance, trade, and telecomm.
• Unemployment officially stands at 10.8%, but I've heard on the street that it is more like 20%.
• The Lithuanian stock market has been on fire, though some think it needs reform.

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