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A Review of Processes in the Development of Lithuanias Knowledge-Based Society

Saul Jokbauskien, Head of Information and EU Issues Division, Information Society Development Committee under the Government of the Republic of Lithuania

Information and communications technologies (ICT) are a powerful factory in economic growth and job creation. One of the most important objectives in policies related to the Information and Knowledge-Based Society is to develop a knowledge-based economy throughout the world, and this is a factor which determines economic development in most of the worlds developed countries.

One of the priorities for i2010 European Information Society for Growth and Employment is an integrated and pan-European Information Society, one which encourages economic growth and job creation in line with sustainable development, giving priority to public services and the quality of life.
Recent technological progress in the Information Society has been particularly significant.  ICT has entered the state of universal application, which changes the way in which we work, live and communicate.  Enormous amounts of information are available in various formats, and this information can be presented irrespective of place and time.  It can also be adapted in accordance with the needs of individuals.  In a technical sense, we are seeing the digital convergence of communications networks, the mass media, content, services and facilities.
The ultimate aim of the Lisbon Strategy is to turn the European Union into the most competitive and dynamic economy in the world, growing on the basis of knowledge.  This refers to such issues as accelerating technological progress, creating a knowledge-based society, implementing the necessary economic reforms, and reducing social exclusion.  Thus the encouraged development of the ICT sector and the continuous implementation of the aims of the Lisbon Strategy reduce the backwardness of any countrys economic development from the overall EU average.
The workforce, capital, knowledge and entrepreneurship these are all considered to be factors in economic growth.  The level of development in all of these factors and their use in economic activity will determine the condition of the long term and sustainable development of a national economy and its competitiveness on the international scale.
ICT is being used widely and is becoming more useful for an increasing range of people.  It is also true, however, that right now more than half of the EUs residents either do not take advantage of these benefits, or find that ICT is inaccessible to them.
E-inclusion is an essential factor in pursuing the goals related to economic and social progress which are defined in i2010 and the Lisbon Agenda.  E-inclusion seeks to create an inclusive Information Society one that is available to everyone.  The goal is to create universal possibilities to take full part in the Information Society, despite any personal or social obstacles that might prevail.  Also, economic factors make it necessary to use the potential of the Information Society in terms of higher efficiency and reduced socioeconomic exclusion.  Finally, the existence of an inclusive Information Society opens up all kinds of market possibilities for the ICT sector.

The use of ICT is of great importance in the knowledge economy.  Innovation in the Information Society depends on infrastructure and the ability of people to use ICT.  Indicators related to Internet access and computer literacy speak to the ability of a countrys residents to make use of the new possibilities.
According to Eurostat, the intensity of ICT research and development accounted for 0.9% of all R&D in Lithuania in 2007 six times below the EU average (6.1%).  This is because the innovation system is fragmented and insufficiently developed, there is a lack of co-operation between the business sector and research organisations, and the use of knowledge and the available human potential for innovations is inadequate.  Adaptability and intellectual property are part of the problem.  ICT research must be focused on increasing interaction among various technologies, which will encourage innovation in the ICT sphere, as well as technological convergence.  Successful use of the results of ICT research requires not just innovative technologies, but also innovative business models.
In 2008, Lithuanian businesses used computers and the Internet more intensively than ever before.  According to the Lithuanian Department of Statistics, an estimated 94.8% of companies in the manufacturing and service sector with 10 or more workers were using computers at the beginning of 2008 (90.5% one year earlier).  Some 92.7% of such companies also used the Internet (up from 88.4% in 2007).  Smaller businesses, with 50 or fewer workers, used computers less than medium (50-250 workers) and large (500+ employees) enterprises 93.4%, as opposed to 99.5% and 100%.  In 2008, all large enterprises, 99.1% of medium enterprises, and 91% of small businesses used the Internet.
There is a lack of public trust in the electronic arena in Lithuania, with people still perceiving it more as a source of information than as a means for carrying out business operations.  Lithuanians have made very little use of E-commerce just 4.1% of people said at the beginning of 2008 that they had ordered goods or services online, which represented only 7.1% of all Internet users.

It should be noted here that Lithuanian businesses use ICT less than is the EU average.  93% of businesses in the EU 27 had Internet access, while in Lithuania the figure stood at 89%, according to a 2007 report on the development of the Information Society in Lithuania.  The percentage has increased in recent years, by as much as 9.9%, as compared to 5.7% in the EU as a whole.
In terms of other indicators which relate to ICT use in business, Lithuania is far behind other EU member states.  Few businesses in Lithuania have their own Websites 48% in 2007, according to Eurostat.  The EU average is 63%, and this shows that businesses are not investing enough in their ICT development.  They are not looking for new ways to provide information about themselves.  The main way to deal with this issue is to create an develop E-business solutions at businesses and to facilitate greater motivation among enterprises to use ICT, thus creating conditions for the provision of public electronic services.

According to a study conducted by the Lithuanian Information Society Development Committee in 2007, 19% of Lithuanians aged 15-74 have at least once contacted public administration institutions online or visited their Websites.  5.5% of Lithuanians have used no less than the third level of public administration services online.  The provision of E-services, of course, depends on the use of ICT by state institutions.

Most Lithuanians who visit the Websites of public administration institutions (67.%) are looking for overall information about the relevant institution and its activities.  36.5% seek information about the institutions E-services, 36% look for legal or administrative information, and 27.8% file forms or other information needed to receive a public E-service.
Lithuanians who use the Internet report that the following online services are the most essential information related to tax returns (40.3%), job searches (31.8%), and health care (23.6%).
In the opinion of a majority of Lithuanians, the online provision of public and administrative service makes it possible to handle relations with public institutions for conveniently (at home or work), at a convenient time, and in a way which makes it possible to receive the services more quickly than by any other means.
In 2007, the Lithuanian Information Society Development Committee conducted a study of basic public administration services which are available online 20 services in all, with 12 meant for local residents, and eight intended for businesses.  Five levels of the transfer of public services to the electronic environment were evaluated, as opposed to only four which were assessed in the past.  The fifth level refers to a situation in which E-services are provided automatically, with registration of past data about the user.  This means that repeated input of data is no longer necessary.
The study found that the overall indicator for public and administrative services which are available online in Lithuania is 63.1% (51.2% for services meant for local residents, and 72% for services used by businesses).  Those public services in Lithuania which are best developed include filing of income, value added and profits taxes, filing of customs declarations, and searching for a job.  These services have been transferred to the virtual environment to a degree of 100%.

One of the most important aspects of a knowledge economy is the communications infrastructure.  According to an EU report, Preparing Europes Digital Future: i2010 Mid-Term Review, the price of broadband communications in Lithuania is the third highest among all EU member states EUR 42/Mb, with the EU average at a level of EUR 33/MB.
According to the Lithuanian Communications Regulatory Authority, 546,200 Lithuanians used broadband technologies in the second quarter of 2008 an increase of 2.9% during the previous three months, and a rise of 26.6% on the year.  Broadband penetration (subscribers per 100 residents) was at a level of 16.3% in Q2 2008.

If people who access broadband services via mobile networks are added, total broadband penetration at the end of Q2 2008 was 18.7%.  This group accounted for 80,200 people at the end of June 2008 people who used the Internet services which relate to mobile telecommunications plans offered by programmes such as Omni Connect and Vodafone Mobile Connect.  Their number increased by as much as 11.6% in comparison to the first quarter of the year.
A company called Point Topics World has conducted a study which shows that broadband penetration differs extensively among EU member states from 8.9 to 37.1 connections per 100 residents.  The greatest broadband penetration in the EU is found in Denmark, the Netherlands, Norway and Switzerland, while the lowest is found in Slovakia, Poland and Romania.  The company reports that in recent years, broadband penetration has increased most substantially in Malta (5.8%) and Greece (5.5%), while the increase has been the smallest in Portugal (0.4%) and the Netherlands (0.4%).
According to an IT report from the World Economic Forum (, Lithuania has risen from 39th to 33rd place in terms of ICT usage.  The report speaks to the readiness of various countries in terms of using ICT, and three dimensions are taken into account the overall business, regulation and infrastructure environment, the readiness of local residents, businesses and government authorities to use ICT, and real use of ICT.  This year the report focused in particular on innovations.
As has been the case for the last several years, Lithuania has posted the best indicators in terms of mobile telephone users it is in second place in the world.  In terms of the E-Participation Index, Lithuania has risen from 68th to 19th place since 2005.  This index shows the quality and usefulness of information and services which are provided by the state so as to bring local residents into the processes of public policy.  In terms of the readiness for E-governance, Lithuania is in 28th place (40th in 2005).  This indicator covers Websites, the telecommunications infrastructure and human resources, revealing the readiness of various countries to make use of the opportunities that are provided by ICT.
Top rankings in the report have been given to Denmark, Sweden and Switzerland in first, second and third place.  Neighbouring Latvia dropped to slots to 44th place, while Estonia remained level at 20th place.
A report related to the development of a unified telecoms market (, the European Commission has declared that Denmark, Finland, the Netherlands and Sweden are leaders in the EU in terms of implementing broadband communications penetration was above 30% in those countries at the end of 2007.  In July 2007, broadband penetration not only in the aforementioned EU member states, but also in the United Kingdom, Belgium, Luxembourg and France, was higher than penetration in the United States (22.1%).  The aforementioned European Commission Report states that eight EU member states are ahead of the US in this regard.
In 2007, nineteen broadband communications lines were installed in the EU, which means that more than 50,000 households could be connected to the broadband network each day.  The broadband sector earned income of around EUR 62 billion, and overall penetration in the EU reached as much as 20%.
The European Commissions telecoms commissioner, Viviane Reding, has said that the European regulatory model has sought to increase competition in the telecommunications market and that this has begun to create substantial benefits.  However, she added, there still exist some unsolved problems in this sphere.  First, competition in the sector of access to the fixed communication network remains small.  Services of this communication are still provided to 86.5% of customers using the infrastructure of historical operators.  Second, though there are no borders for telecommunications technologies, the main EU telecommunications enterprises receive as little as 30% of income from activities carried out in foreign markets.  This shows that we have not created a single market yet, which would be attractive for enterprises to carry out their activities and to provide services on the European scale.  Hence, we have to make greater efforts in ensuring that differences in regulations are reduced in Europe.  Only after it has opened the single market to these enterprises will Europe become competitive, and users will be able to choose more and more various services at reasonable prices.

When Lithuania joined the EU in 2004, it became eligible for Structural fund financing, and one area of assistance has been for Information Society development.
A key objective here is to create the necessary conditions for the Information Society, encouraging the development and growth of national economies, as well as proper conditions for Information Society development so that its members have all relevant opportunities in terms of making efficient use of modern information and telecommunications technologies in all walks of life.
The Lithuanian Information Society Development Committee has a unified programming document, Information Technologies Services and Infrastructure Development, which speaks to Structural Fund financing for 42 projects in the areas of E-government and E-services, E-infrastructure, and preparation of relevant projects.  Total financing from the Structural Funds and the organisers of the relevant projects amounts to LTL 258 million (EUR 75.2 million), and the financing has been made available only to public sector institutions.
A total of 14 E-government and E-services projects have created an opportunity for Lithuanias residents and businesses to use IT in co-operation with the public authorities to receive services and information online.  This represents 53% of the total value of all projects listed in the aforementioned programming document.
Five E-infrastructure projects are helping to develop sustainable E-communications development, focusing on the broadband data network, provision of Internet access in rural areas, and the security of the E-infrastructure of the public sector in terms of dealing with the acute problems of digital exclusion and IT security in the country.  These projects represent another 46% of the aforementioned financing.
Another 23 projects focused on the preparation of project documentation were ready for implementation in 2007.  This involved feasibility studies for projects that were to receive EU Structural Fund financing between 2007 and 2013.  These final projects represented the final 1% of financing in the unified programming document.

The aforementioned i2010 mid-term review makes it clear that digital convergence is a reality and that the Internet is the essential element of economies and everyday lives in the EU.  Broadband communications are becoming essential, too.  Internet content is developing rapidly, mostly in terms of new content, as well as content which is created by users.
In an aging society, it is necessary to focus more on the skills and competence of older employees.  Analysts also call for greater investments in R&D, as well as greater integration among higher educational institutions with research companies and institutions in European and global research networks.  Another proposal is to prepare for the negative economic and social consequences of the aging society.
In summary, it can be said that computer and Internet use in Lithuania is rapidly increasing, and a decrease in the gap between it and the EU average has become readily noticeable.  Most ICT users are young urban residents.  Business use of computers and the Internet, however, is an area in which Lithuania lags well behind the EU average.  The number of broadband subscribers is on the rise, and greater amounts of information and services are being provided via mobile communications networks.  Still, relatively few public services are provided at the highest possible level of interaction, and the low level of public E-service use among Lithuanias residents and businesses can have an effect on this situation.
Considerable aid has been received from the EUs Structural Funds for the development of the Information Society, and these investments will increase ICT use, reduce digital exclusion, and encourage and the development of an economy which is based on the latest technologies.  Priorities in this area cover the development of the E-infrastructure, E-content, and public E-services.

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