The study “Review of Vilnius Knowledge Economy Foundation” was developed within the framework of the project “Developing the Knowledge economy: How Cities Help National Programs in Three EU Accession Countries and an ECA Country” initiated by the World Bank.

The main goal of the study was to make an analysis of the foundations of knowledge economy in the city of Vilnius by assessing four key aspects that determine the competitiveness of city knowledge economy: economic development strategy with respect to knowledge economy; effectiveness of local institutions; formation of knowledge society through the focus on life-long education and accessibility of knowledge; environment conductive to innovation and enabling access to information and communication infrastructure.

The study made use of the material from the latest sociological surveys analyzing various aspects of knowledge society (the survey of the company SIC Market Research “Study of Information Technology and Internet Market: Company Survey” (2001); the study financed by Open Society Fund – Lithuania “Digital Lithuania 2001” done by Vilnius University Information Society Study Center and the Polling and Market Study Center Vilmorus); studies focusing on the development of various social and economic areas in Vilnius and the current situation (“Knowledge economy in the city of Vilnius” (2002); “Analysis of the social and economic situation in the city of Vilnius” (2001), etc.); documents on the strategic development of the economy of Lithuania and Vilnius related to the development of knowledge economy: the National Development Plan for 2002-2004, “High tech industry development program” (2001) drawn up by the National Development Institute, long- and mid-term development plans of Vilnius adopted by Vilnius City Municipality (1998-2002), “Survey of medium and small business development opportunities in the city of Vilnius” (2000) financed by the local government of Vilnius and carried out by Vilnius Business Consulting Center, and others. The data used in the study were also provided by the Lithuanian Department of Statistics, Vilnius City Municipality, associations (Infobalt, Knowledge Economy Forum, etc.), individual companies and organizations.

1. Development of Knowledge Economy of Vilnius: Policy Trends

It is universally recognized that knowledge economy, merging the achievements in business, research and education, ensures long-term progress of the country. Cities and their development policies play the key role in creating knowledge economy in the country. The development of knowledge economy Vilnius, capital of Lithuania, accounting for 16 per cent of the country’s population, 25 per cent of the GDP, the country’s center of business, research and education, is of major importance for the development of knowledge economy in the country.

1.1. Main Strategic Decisions/Documents Related to the Development of Knowledge Economy

The municipality of the city of Vilnius has over the recent five years adopted several important strategic documents promoting economic and social development of the city. At present Vilnius City Municipality has created a comprehensive system of short-, mid- and long-term city’s development plans, closely related to budget and recourse planning. Part of the decisions presented in these documents is directly or indirectly related to the development of knowledge economy.

Vilnius City Master Plan

In this respect an important document is Vilnius City Master Plan – the first long-term development plan of Vilnius – that was prepared in accordance with urban strategic development methodology and has integrated territorial development of the city and its social and economic development. The Master Plan was approved by the Vilnius City Council in late 1998 and valid until 2005. While it does not set the term “knowledge economy”, what is important is that Vilnius City Master Plan set the goals whose implementation helped the formation of an environment conductive to economic development of the city of Vilnius in general and knowledge economy in particular, namely:

joining the efforts of the municipality, the government, private sector and the public for a balanced development of the city;
formation of regulatory and economic environment conductive to the conversion and modernization of the city’s economy, introduction of new technologies, attracting investment (including foreign), development of small and medium business, development of the real estate market (including land market);
encouraging the development of institutions of university and college education.

Strategic Action Plan of Vilnius City Municipality

The policy of the city’s government on the development of knowledge economy was later specified in two other documents: the Strategic Action Plan of Vilnius City Municipality for 2002–2004 and the Strategic Plan of Vilnius City that is currently close to completion.

The Strategic Action Plan of Vilnius City Municipality for 2002–2004 (SAPVM) was approved on 1 March 2002 by resolution of Vilnius City Council (No. 506).

One of the advantages of the Plan is that it is organically related to the Strategic Plan of Vilnius City for 2002–2011. Regardless of the fact that the development of the SAPVM went in parallel with the development of the Strategic Plan of Vilnius City and was approved while the latter was still in the drafting process, the programs of the SAPVM were co-coordinated with the specified vision of the city of Vilnius that had already emerged by then and the distinguished development priorities.

The plan includes 24 programs that span the key operational directions of the municipality for the coming three years. Part of these programs are directed towards the development of Vilnius economy, including knowledge economy, and improvement of business environment. The following programs should be mentioned here:

q “Improvement of management through computerization of the Municipality, creation of data bases, their administration and maintenance (e-Municipality)”.

The program provides for the creation of all data bases of the Municipality and their maintenance. Integration of information will be done by linking all existing data bases and information units into a joint system, developing server software and providing the necessary licenses for local accumulation of information. The task involves both internal and external sources of information. The result of the task will be integration of numerous projects (e-City, WWW, specialized data bases) and their publication, co-ordination of information flows, fast exchange of information between the public and municipal information system. In addition, the implementation of the program provides for the creation of a favorable information and consulting system for potential foreign and domestic investors.

The program is also aimed at the modernization of information and consulting in the areas of city development and investment; development of the GIS (Geographic Information System); development of the functions of the Department of City Development in the areas of land management, granting construction permissions and maintenance of buildings.

The program provides for the creation of data bases on the basis of geo information system and the use of such data bases for the management of the city’s objects of the infrastructure.

q “Promotion of job creation, creation of conditions for business development in the city of Vilnius”.

The key strategic goals of the program are as follows:

removing the negative consequences of the structural economic reform and external factors on employment and the labor market;
promoting employment, reducing unemployment and balancing the labor market;
contributing to the co-ordination of EU employment strategy.

q “Attracting investment for the development of the city”.

Within the framework of this program, the municipality seeks to promote the process of the city’s development and raising investment by providing measures to make better use of land available within the territory of the city for the purposes specified in the Master Plan. The main among these measures are preparation of investment projects and auction documents, organization of the development of detailed plans of territories.

q “Implementation of the education plan, education of young persons”.

While social in nature, this program is important for knowledge economy, where the abilities of human resources and qualifications are a key condition in ensuring the development of knowledge economy. It is expected, within the framework of the program, that in implementing the education plan a certain level of knowledge will be provided, good quality of education will be ensured and conditions for life-long education will be created.

Within consistent implementation of the Education and Science Reform, the focus, among other things, will be put on the expansion of the use of information technology by students, aiming at the acquisition of the established knowledge certificate by schoolchildren. The program also provides for strengthening and renewing the material facilities of educational institutions, improving provision of technical equipment for the educational process and raising the qualifications of teachers.

Strategic Plan of Vilnius City

The preparation of Strategic Plan of Vilnius City for 2002–2011 was started in March 2001 jointly by Vilnius City Municipality and the partners from the private and public sectors. The Plan has been developed in relation with the above strategic documents: Vilnius City Master Plan and the Strategic Action Plan of Vilnius City Municipality. The Plan is close to completion and should be approved in early June this year.

During the early stages of the development of the Plan, the specified vision of the city of Vilnius (until 2020) was extensively discussed and approved on 28 November 2001 by resolution of Vilnius City Council (No. 434), as were long-term priorities of the city’s development:

Raising international competitiveness of Vilnius,
Development of the new economy,
Creation of a progressive society,
Development of communication and engineering infrastructure.

Within the framework of each priority, key goals with specific tasks and particular actions for each task were set. Development of knowledge economy in Vilnius is mostly within the scope of the second priority (development of the new economy), where one of the two goals (i.e. “Creating the environment conductive to the development of knowledge economy”) is specifically oriented towards knowledge economy in the city. To achieve this goal, the following tasks were set:

Creating opportunities for the partnerships and joint projects of institutions of higher education, scientific research and businesses,
Creating conditions for raising business orientation of scientific research institutions working in the are of knowledge economy,
Creating the prerequisites for the formation and development of clusters of knowledge economy.

In addition, it should be noted that other priorities set in the Strategic Plan of Vilnius City contain goals and tasks closely related to knowledge economy in Vilnius. For instance, one of the goals in the first priority (raising international competitiveness of Vilnius) is “formation of the image of Vilnius as a city of knowledge economy”, the third priority (development of a progressive society) raises the goal of “Promoting the formation of knowledge society”.

Compliance of Vilnius development plans with national development strategy

In general, development of knowledge economy and the closely related formation of a knowledge society are increasingly stressed in the strategic documents of the city of Vilnius.

This stance also complies with the goals and tasks of the long-term strategy of the country.

National Development Plan

The principal long-term objective of the National Development Plan of 2002 –2004 has been formulated as follows: “Growing competitiveness of the national economy determining a rapid development of the knowledge-based economy, expressed first of all by the real growth of the GDP and employment rate, and resulting in the growing welfare and higher living standards for the whole country and all its citizens.”

Among the main goals the NDP industrial and business strategy is striving to achieve are the following:

Strengthened business environment stipulating business sustainability and business support infrastructure
Greater co-operation between business entities resulting in the increased productivity
Increased introduction of innovations in the field of business and strengthened relationship between scientific research and industry.

One of the measures targeted at the development of economic infrastructure is the development of information technologies and telecommunications. According to the NDP, the measure will be implemented in the following directions:

- Integration of unused resources into the state telecommunications networks;

- Development of e-governmental services for citizens and business companies.

The development of human resources strategy of the National Development Plan includes such measures as:

§ implementation of targeted programmes for vocational training and increase of employment;

§ improvement of accessibility to vocational training and improvement of the quality;

§ integration of the socially vulnerable groups of society into job activities.

Activities under first measure are associated with the training of the working people and the unemployed: development of employability capacities and entrepreneurship, increase the ability of the labor force to adapt to the rapid change of technologies and economic activities. A special attention is paid to the development of the information (ICT) literacy and vocational training services, facilitating development of the sector of small- and medium- size enterprises by way of providing to the working people necessary vocational qualification. In order to improve accessibility to and quality of vocational training, the priority will be given to the use of information technologies for the development of training in the field of vocational guidance and counseling and vocational training, to the improvement of the practical training and assessment of knowledge and skills acquired by way of formal and informal training.

Long-term development strategy of Lithuania

Development of information and knowledge society has been recognized as a strategic goal (priority) and direction of economic development of the Government of the Republic of Lithuania. The draft concept for the development of the communications and information sector sets strategic goals, or development directions, including the following:

Competence and social cohesion of the Lithuanian population.
Modernization of public administration through IT.
Knowledge economy and e-business.

Among the key tasks that are to be implemented on the national scale in the development of industry are the following:

Developing an effective National Innovation System that should provide favorable conditions for the integration of research and production, creation and spread of new technologies and operational methods.
Developing and implementing a targeted industry clustering strategy of the country.
Using economic and other measures to encourage the improvement of competence of company managers and specialists.
Improving corporate governance, encouraging co-operation between companies and various interest groups.
Creating a favorable legal framework and infrastructure for the development of small and medium enterprises.

The following strategic goals have been set in the area of education and research, seeking widely recognized values – accessibility, continuity, consistency, quality and contextuality:

Creating an effective and coherent, accessible and continuous education system on all levels, providing the conditions for life-long learning for all Lithuanian population.
Ensuring the necessary competence for each individual, seeking to achieve the quality of education and research that would be in line with the latest achievements in science and technology and global and national cultural orientation of values with Lithuania integrating in the common European space of education and research.
Training specialists of the highest qualifications and ensuring the necessary scientific and technological competence in the country.
Carrying out scientific research oriented towards a balanced development of the nation and in tune with the needs of the economy, promoting interaction between science and business and ensuring faster progress of the country.

1.2. Involvement in Decision Making Process

A very important aspect in planning city development, especially with regard to long-term plans, is the involvement of the public in the preparation of plans and decision making process. It is only through the co-ordination of the interests between various interest groups of the community with regard to strategic decisions that effective implementation of such decisions may be expected.

The stance of Vilnius City Municipality is that city development plans should be based on society’s social, economic and cultural values. Involvement of society in the preparation of these plans influences both principal decisions and particular measures set in the plans, and guarantees that society will control their implementation.

In developing the most important strategic development documents, they are put up for public debate, various means targeted at the involvement of society in their preparation are used. The intensive activity of Vilnius City Municipality related to involvement process has started in 1997, when it was decided to begin preparation of Vilnius City Master Plan. Even then such means as surveys of citizens and specialists’ opinion, seminars, information in mass media and others were applied. It should be noted, however, that while developing the Master Plan, the degree of public involvement was not as high as in the case of the Strategic Plan of Vilnius City.

The development of the Master Plan and the SAPVCM, apart from the staff of the municipality and designers of the Plan, involved a relatively limited number of experts and representatives of the business community of the city. Only after the draft plans had been prepared, they were released for public consideration through the traditional medial channels. Whereas with regard to the Strategic Plan of Vilnius City, from the very start of its development various groups of city community and numerous interest groups, such as national public institutions, representatives of other Lithuanian city and regional governments, were involved in the discussion of the key provisions, visions, priorities and actions. The discussions, some of which were held in the form of seminars and conferences, involved foreign experts working in the area of strategic city planning. Vilnius citizens expressed their opinion during several surveys, organized in the framework of Vilnius Strategic Plan’s development.

In involving the public in the discussion on the Strategic Plan of Vilnius City, new forms of establishing direct contact with representatives of city community played an important role. Some of such forms that found justification were regular (monthly) business breakfasts of the mayor and his team for meeting representatives of interest groups and discussing a particular subject decided in advance.

The discussion of solutions under the Strategic Plan of Vilnius City also involved the Trilateral Council at Vilnius City Municipality whose members represented such important interest groups in the city as city government, employers and trade unions. Active participation of the public in the discussion on the Strategic Plan of Vilnius City was also determined by high accessibility of the materials under development (both proposals and interim results) that was ensured through regular presentation of these materials through the traditional channels (press, television, radio) and electronic information channels. Since the start of the development of the Strategic Plan of Vilnius City until now, residents of the city have presented several hundred comments and proposals. Most of them were received through the internet site where the material on the Strategic Plan was placed.

Taking into account public involvement in the development of the Strategic Plan of Vilnius City, it may be considered that this strategic document has been developed fully in the spirit of democracy and will establish the traditions of openness in adopting all strategic decisions important for the city.

2. Economic Development of Vilnius

2.1. General Tendencies of Economic Development

After the economic decline in 1999, the economy of Lithuania, including Vilnius, has recovered noticeably. This is best reflected in the growth of the Gross Domestic Product (GDP). In 2000, compared to 1999, the real GDP reached 3.3 per cent, accelerating to 5.9 per cent in 2001. The economy of Vilnius, generating approximately 25 per cent of the national GDP, showed a similar rate of growth.

Foreign Direct Investment

One of the major factors of economic growth in Vilnius has been both domestic and foreign investment. Vilnius is the national leader in attracting foreign investment. By early 2002, foreign investment in Vilnius stood at USD 6830 million, i.e. 64 per cent of the total FDI in the country. During the recent six years the volume of foreign investment in Vilnius increased by a factor of six. Vilnius ranks first in the country on the basis of FDI per capita (LTL 12 312 per capita). The major part of FDI in Vilnius has been channeled to the services sector, with telecommunications accounting for the largest share of foreign capital. Industry accounts for over 20 per cent of FDI in the city. Swedish and Danish capital ranked first, accounting for 40 per cent of total FDI in Vilnius in early 2002. Other major investors included USA, Germany, Finland and Norway.

Service Sector

The status of capital determines increased significance of Vilnius as a business center, more intense international economic and cultural relations and concentration of financial institutions. Owing to the above circumstances, the services sector is developed more compared to other Lithuanian cities. The growth of the services sector is reflected in the fact that nearly 70 per cent of the employed population of the city work in services, while in 1991 the figure stood at only 45 per cent.

During the recent years, the services provided by Vilnius companies working in services (whose number accounts for one third of services companies in Lithuania) accounted for 45 per cent of the volume of services provided nationally. Most of the revenues are generated from the organization of gambling games and lotteries, radio and television services, architectural and engineering activities, rent of real estate, advertising, provision of computer equipment and consultations, and working with data bases. It should be noted that Vilnius companies provide over 80 per cent of computer related services in the country.

The services sector in Vilnius also stands out owing to a large volume of financial services. The majority of banks, insurance and securities institutions have head offices in Vilnius and provide services to the businesses and the population of the nation as a whole. The central bank of the country, the Bank of Lithuania, supervising the operations of 10 commercial banks, is located in Vilnius, branches of the Polish Kredyt Bank S.A., German Norddeutsche Landesbank Girozentrale, VEREINS- UND WESTBANK AG and the Finnish Merita Bank Plc as well as 4 foreign bank representative offices operate here as well. Apart from traditional services, banks provide insurance and leasing services. Internet banking has been undergoing fast development, allowing customers to perform numerous banking operations through the internet. It should be noted that the venture capital market has been underdeveloped. This is one of the major shortcomings of the financial sector in Vilnius (and Lithuania on the whole) with respect to knowledge economy, as limited access to venture capital is one of impediments to the development of innovative activities.

Industrial Sector

While the services sector has been characterized by rapid development, the significance of the industrial sector in Vilnius has remained comparatively high. Compared to the capital cities of industrial countries, the number of the population employed in industry is higher in Vilnius accounting for 20 per cent of the total employed population, while in European capitals this number accounts for approximately 10–15 per cent.

The sectors of industry that determine the key industrial areas in Vilnius or will do so in the near future because of the fast utilization of the potential are the garment industry, chemical and biochemical industry, high technology based production of instruments and other industrial sectors providing services to the service industry.

Vilnius high tech sector is among those that have especially high development potential. So far it makes up just about 6% of city’s output. However, due to both national and local government’s policy targeted to creation of favorable conditions for high tech sector development, it is expected that the contribution of this sector into Vilnius economy would increase considerably and in long-term would reach 30%.

2.2. Development and Prospects of Vilnius High Tech Sectors

Innovation has a large influence on the economic growth of any country. Therefore, innovation development gets much attention all over the world. Promotion of the use of technical and scientific knowledge and the establishment of the European network of innovation transmission centers is one of the major EU goals in the area of scientific research and technology. Development of innovation activity, use of modern technology for the modernization of production, development of new technologies and products will become the strongest engine of economic growth in the future. The most important innovations in the future will lie at the intersection of information technology, electronics, biology and precision mechanics. It is in these areas that Lithuania has a sizeable potential, although high tech industry in the country accounts for only 4.4 per cent, and scientific research (technology) oriented industry for 5.9 per cent.

Of all Lithuanian cities, Vilnius has the largest experience and potential in the area of high tech. In this respect, only Kaunas could compete with the capital city. A number of high tech sectors could be distinguished in the economy of Vilnius. However, Vilnius is specifically characterized by biotechnology and laser technology. In addition, Vilnius stands out for the scale and rate of development in information technology and telecommunications. Therefore, in discussing high tech sectors in Vilnius, three specific sectors are described below.

Biotechnology

Modern biotechnology is universally recognized as one of the major areas of high tech development. The modern biotechnology sector in Lithuania, according to the estimates of international experts (Ernst and Young), stands out among other Central and East European countries and has good development prospects.

Vilnius has the largest concentration of the biotechnology potential in the country. Modern biotechnology is represented by three Vilnius companies: AB Fermentas, UAB Biotechna and UAB Biocentras.

Table 1

Modern biotechnological companies in Vilnius

Name of company	Turnover, USD million 2001	Number of employees 2001	Area of activity
AB Fermentas	5,7	150	Development, production and distribution of biochemical and chemical agents for genetic engineering, molecular biology and biotechnology
UAB Biotechna	5,1	125	Development, production and distribution of medicines produced using the methods of genetic engineering
UAB Biocentras	0,4	25	Development and application of technology for utilization of organic pollutants

Sources: AB Fermentas, UAB Biotechna, UAB Biocentras

These companies are engaged in genetic engineering and production of biotechnological medicines and removal of chemical pollutants with the help of biotechnological methods. The major part of the production of these companies is exported. Export income makes up approximately 80 per cent of their total income.

The major are of AB Fermentas is development and production of biochemical and chemical agents. The company’s distribution network covers 42 countries. Branches of the company have been established in the US, Canada and Germany. UAB Biotechna produces the growth hormone and interferon and exports its products to 16 countries. Its products enjoy the highest demand in East European and Far Eastern markets. One of the major areas of activity of UAB Biocentras is selection and production of biologically active materials, their use in cleaning the environment from carbohydrate pollutants. The experts of the company have created a bacteria-based oil-degrading agent “Degradoil” patented in Lithuania and the USA. The company provides its technology and services to customers in Lithuania, Latvia, Russia and Belarus.

Recently, biotechnology companies have been developing and implementing expansion plans. Using the financing of the strategic investor Gatio Investment (USD 20 million), in 2000 UAB Biotechna built a modern pharmaceutical facility that meets EU and US standards. It is the only such company in Central and Eastern Europe producing pharmaceuticals for genetic engineering. The company is aiming to market its products in EU and US markets. New directions have also been planned by AB Fermentas.

Taking into account the fact that the competitiveness of modern biotechnological industry is largely dependent on the achievements in biology and related sciences, further development of modern biotechnology in Vilnius and Lithuania will mostly depend on the scale of support to scientific research and training of highly qualified specialists in this field.

Laser technology

Laser technology industry emerged in Lithuania two decades ago when the Experimental Laser and Electronic Technology Company under the Institute of Physics of the Lithuanian Academy of Sciences was established. At present, there are more than ten laser technology companies in Lithuania, most of them based in Vilnius.

What is characteristic of these companies is that they export nearly all of their products (over 90%). Lithuanian lasers are sold in the EU, Switzerland, Japan and the USA. Some of the laser instruments are sold to the Pentagon and military research laboratories. The total sales network covers nearly 100 countries.

Lithuanian lasers are known for their high quality. Some of them, to have received international recognition, were developed by the companies that, apart from production and service provision, are also engaged in applied research work.

Table 2

Vilnius laser technology companies

Name of company	Turnover, USD million 2001	Number of employees 2001	Area of activity
UAB Eksma	4,9	92	Production of scientific equipment, laser machines for the industry, medical measuring equipment, optical components and provision of laser related services, production of laboratory equipment and materials
UAB Ekspla	1,6	35	Production of lasers and laser accessories for research application and industry, production of optical detectors and provision of laser related services
UAB Šviesos konversija	1,4	27	Design, manufacture and sale of parametric light generators, solid state lasers and optical correlators. Design and manufacture of optical coherence distance, surface, profile and transparent layer thickness meters.
UAB Standa	0,8	40	Manufacture of precision mechanics and opto-mechanical instruments
UAB Geola	0,6	19	Manufacture of impulse holographic studios, lasers, trade in holographic materials, large format decoration holograms, security holograms
Rimkevičius and Gintautas Company	0,4	27	Production of precision optics and opto-mechanic components for laser systems, scientific research and industry
UAB Optida	0,2	14	Production of lasers for dielectric interference layers, laser systems for optical elements, interference optical filters
UAB Aštuonetas	0,1	8	Laser engraving and cutting

Sources: UAB Eksma, UAB Ekspla, UAB Šviesos konversija, UAB Standa, UAB Geola, Rimkevičius and Gintautas Company, AB Optida, UAB Aštuonetas.

The largest laser technology company in Vilnius and Lithuania, UAB Eksma (created on the basis of the Experimental Laser Electronic Technology Company mentioned above) produces laser equipment for research and industry, medical measuring equipment and other products. It exports its products to 17 countries. At present the company has a network of sales representatives in Western Europe, Japan and the USA. Eksma has also established joint companies with German and Austrian agent production firms and Russian growers of non-linear optical crystals.

Other companies that are well-known in the global laser technology markets, such as UAB Ekspla, UAB Šviesos konversija, UAB Standa. The picoseconds lasers produced by UAB Ekspla have had approximately 50 per cent of the global market for a number of years. Another company, UAB Šviesos konversija, has been the initiator and global leader in the production of ultra fast parametric light generators. These products of the company have a 60 per cent share of the global market. They are exported to a number of countries, and the largest part is sold in Germany and the USA. UAB Standa manufactures precision mechanic and opto-mechanical instruments. Together with German partners, the company designs technological equipment for industry and medicine. The main users of the company’s products are laser technology companies and research institutions in Western and Central European and some other countries.

As is noted in the “High Technology Industry Development Program”, regardless of significant achievements in the sector of laser technology, it is quite difficult for laser technology companies to introduce new products to the market that could change market distribution. The solution to the problem should be facilitated by the research and technology development program supported by the Government, which would establish business and financial links among research institutes, universities and high technology companies and would channel their joint actions towards the production of new knowledge and new products.

Information technology and telecommunications

Information technology and telecommunications (ITT) sector in Lithuania has been characterized by rapid growth and the emergence of new opportunities for global communication and interaction. Digital communications bring changes to the mode of life, the conditions of work and economic activity. Since 1993 the Lithuanian ITT market has seen an annual growth of approximately 30 per cent. In 2000, the total annual turnover of ITT companies operating in Lithuania exceeded USD 1 billion. During the past 6 years the telecommunications sector grew by a factor of 6 (from USD 136 million in 1994 to USD 756 million in 2000), and the information technology sector by a factor of 3 (from USD 87 to USD 268 million, respectively).

Information technology

The biggest share of the IT market consists of computer equipment (67%), software (16%) and IT services (17%). Software and IT services are the key exports of the Lithuanian IT sector.

Most of the largest IT companies are based in Vilnius. Many of them also have branches in other Lithuanian cities. Taking into account global trends reflecting the prospects of the provision of intellectual products, these companies have increasingly reduced their sales activities and shifted towards the provision of IT solutions.

Table 3

10 largest IT retail companies in Lithuania and Vilnius

Name of company	Turnover, USD million 2001
UAB Sonex Group	25,5
UAB Elsis	23,9
AB Alna	21,5
UAB Penki kontinentai	12,2
UAB Blue Bridge	12,2
UAB Varos Group	9,9
UAB Fima	9,0
UAB Minolta Baltia	6,9
UAB Baltic Amadeus	6,8
UAB CompServis	6,3

Source: Verslo žinios

The development of internet services has been fast in Lithuania. The majority of users currently use dial-up connections. The connection to the internet through ISDN offered by the Telecom, cable and radio is less spread. In the near future, internet will be available through optical cables and joint broadband wireless networks. The largest internet service providers are Lithuanian Telecom, Omnitel, Delfi and Infostruktūra.

The number of companies offering services on the internet has also been growing fast. There are several professional job search internet sites in the market. Cultural events get a wide coverage on the internet sites of theatres and cinemas, there is a museum portal, festivals held in Vilnius also have their own internet sites. There are over 100 electronic periodicals present on the internet, of which two thirds are published in Vilnius. A project of interactive television has been launched. The use of internet services will be promoted by the expanding application of the e-business (B2B) model among Lithuanian companies.

In January 2002, the Municipality of Vilnius set up the first information kiosk at the Tourist Information Centre as part of the e-city project based on modern information technology. With its help, tourists visiting Vilnius can get basic information about the capital in as many as five languages. Several more of such kiosks will be installed in Vilnius in the nearest future. Within further implementation of the idea of e-city, computer centres will be established in the future to enable access to internet for a symbolic fee. To improve access to information and communication with the population and to provide information to foreign investors and tourists, the Municipality launched a new portal where information is now presented in Lithuanian and English, and will later be available in six languages.

Wider use of the internet has been slowed down by high prices for the service. Lower prices for information (communication) services are especially important for the fast introduction and development of high speed multimedia internet, which will be enabled by the use of cable television networks, optical cables, digital TV and radio, second and third generation mobile telecommunications networks and systems for direct satellite reception and broadcasting.

Within the EU program “Europe +” for candidate countries they are encouraged to lay the foundations for the development of cheap, fast and safe internet, promote increasing use of internet and ensure investment in education and training.

Highly qualified specialists, relatively low labor costs and the growing experience in developing complex software make it possible for Vilnius IT companies to expand their exports. One of the companies that is among the most active in implementing software export strategies is UAB Alna. In 2000 the company concluded a USD 5 million contract with Bentley Systems on the development and testing of software. A significant number of IT companies have been active in the Baltic and CIS countries. UAB Elsis provides integrated IT solutions in energy and telecommunications in Latvia, Russia and other CIS countries. Varos Group, which is a group of Baltic companies, is the only one in the Baltic region to implement specialized information technologies in trade and industry in all three Baltic States, which is especially attractive for local and foreign investors that are developing their activities in Estonia, Latvia and Lithuania and want to have one partner to provide the same high quality services throughout the region.

The IT sector has for the last five years attracted a growing interest from international investors. Among the most active and strongest domestic IT companies are those that have managed to attract foreign investment, such as Alna (investors include Baltic Republic Fund and EBRD Post-privatization Fund), Sonex (EBRD Post-privatization Fund), Information Technologies (Baltic Investment Funds and Equitec). The companies that get most of foreign investor attention are large diversified companies and niche companies working in specialized segments of the market.

Telecommunications

The major telecommunication companies working in the whole country are based in Vilnius. AB Lithuanian Telecom is the largest telecommunications company in Lithuania. It provides fixed telephone communication and internet services. In 1998 the company was privatized by Amber Mobile Teleholding, consisting of Telia (Sweden) and Sonera (Finland), which acquired a 60 per cent interest. The company has a monopoly on fixed telephone communications until 2003.

Chart 1

Distribution of fixed communication among the Lithuanian population (%)

Source: Lithuanian Telecom

Mobile communication services are provided by three companies: Omnitel (55% of shares are held by Amber Mobile Teleholding, 35% by Motorola Inc), UAB Bitė GSM (owned by TDC Mobile International) and a new provider that started in 1999, UAB TELE2 (owned by Tele2AB).

The first company to offer mobile communication services was Comliet started in 1991. At the moment three companies hold GSM licenses and provide mobile communication services: Omnitel (55% of shares are held by Amber Mobile Teleholding, 35% by Motorola Inc), UAB Bitė GSM (owned by Tele Danmark) and TELE2 (owned by Tele2AB). The entry of the third provider TELE2 in 1999, economic recovery and growing prices for fixed telephone communication accelerated mobile telecommunications market expansion and reduced prices. In early 2000 Omnitel introduced WAP services. At present, Omnitel has 57% of the mobile market, Bitė GSM 28% and TELE2 15%.

Chart 2

Source: Infobalt

Chart 3

Source: Infobalt *forecast for end-of-year

During the past several years the telecommunications sector saw a fast introduction of new technologies and expansion of the services market. Telecommunications is among the largest sectors in Vilnius to attract foreign investment.

2.3. Business-Enabling Environment

Development of Business: Tendencies and Main Barriers

Privatization and restructuring of public companies and energetic activity of businessmen determined a fast development of private companies in the city of Vilnius. Small and medium enterprises have been gaining weight in the private sector.

As is pointed out in the “Survey of medium and small business development opportunities in the city of Vilnius”, the development of business in Vilnius has been characterized by the following:

Division of large companies into smaller ones. Development of independent businesses by divisions breaking away from large public companies.
Establishment of small enterprises in the market.
Fast growth of the number of personal companies.

Personal companies without the rights of a legal person account for the largest share (approx. 55%) of companies in Vilnius. Their growth was influenced by the introduction of the compulsory patent fee for personal companies involved in certain activities.

Among the companies with the rights of a legal person, private companies of the closed type dominate in Vilnius (about one third of all companies registered in Vilnius). The number of companies with a different legal status (stock companies, state and municipal enterprises, real economic communities, public institutions) is relatively small.

By the number of employees, small companies dominate in Vilnius, and in Lithuania in general. Most companies (approx. 45%) in Vilnius have from 1 to 9 employees. Over 20 per cent of companies have 10 to 19 employees. Approximately 25 per cent of companies employ 20 to 100 persons in Vilnius. Medium size enterprises (100 to 500 employees) account for only 7 per cent, while large enterprises (more than 500 employees) account for slightly over 1 per cent.

Vilnius businessmen face a number of problems that are common to business throughout Lithuania. The legal framework and the economic environment has not been stable enough. The business environment has been influenced to a significant extent by the delayed legal regulation of new economic processes related to the transition to market economy and frequent changes in the legislation. The tax policies have also had a large influence of the development of small and medium business. Lithuanian does not yet have a Tax Code specifying all taxes to be paid so that a businessman could plan business activities. According to businessmen, the tax burden on small businesses at present makes up approximately 60–80 per cent of revenues, which decreases incentives.

The “Survey of medium and small business development opportunities in the city of Vilnius” points out the following major obstacles for the development of small and medium business in the local market: shortage of turnover capital, deficiencies of the financial system and low market capacity. The development of business is also limited by insufficient demand for industrial output and services, high taxes and unfavorable crediting terms.

One of the obstacles to the development of small and medium enterprise (SME) sector in Vilnius and Lithuania in general is a lack of business information determined by dispersed and insufficiently computerized information sources and poor co-ordination of co-operation between institutions providing business information in the accumulation and exchange of information. Small companies that want to expand beyond the local market face the following problems:

lack of cheap and detailed information about domestic and foreign markets and trade conditions;
insufficient support in searching for foreign trade and co-operation partners;
insufficient support to small and medium regional businessmen from public institutions responsible for the promotion of exports;
frequent shortage of knowledge and skills in international trade, marketing, management and finance among the employees of small and medium enterprises.

It should also be noted that the SME sector in Vilnius enjoys more favorable conditions compared to other Lithuanian cities: Vilnius has the largest industrial territory reserves in the country, the highest concentration of associated business structures, the highest number of private business training and consulting institutions, a research and technology park, the Lithuanian Innovation Center and the Business Incubator of Vilnius Region.

One of the recent favorable tendencies of the business environment of Lithuania in general and Vilnius in particular is growing attention to development of e-business. E-business has been getting increased attention in Lithuania. The Law on Digital Signature has been adopted (2000), the Concept of Electronic Business has been developed and approved (2001). However, to create a favorable environment for e-business, changes in related legislation still have to be made and the digital signature certification infrastructure has to be set up. At present, oversight of the digital signature is within the Information Society Development Committee under the Government of the Republic of Lithuania. Development of the digital signature infrastructure is one of the key projects of the Committee in 2002.

One of the largest projects in developing the environment conductive to e-business was the “Electronic Commerce Promotion Program” financed by PHARE in 2000. Within the program, introductory material on e-business was developed; an internet site and an electronic commerce training model were designed. During the program, 42 presentations of e-commerce for SME representatives and 4 specialized seminars to representatives of institutions providing support to SMEs were organized, 88 consulting experts in e-commerce were trained.

At the moment there are approximately 30 larger Lithuanian internet shops in the country. Nearly all banks have introduced internet banking schemes or are planning to do so in the nearest future. According to bank data, by early 2001 the number of users of internet banking services increased four-fold in the course of one year and now amounts to 63 thousand.

Activities of Vilnius City Municipality on Improvement of Business Environment

The government of the city of Vilnius is always looking for ways to help businessmen within its possibilities. Small and medium business is among the priorities in the development of the city, and gets a lot of attention and efforts in improving business environment.

The Strategic Plan of Vilnius City provides for a number of measures to develop a system of incentives for business development, including the following:

establishment of the Municipal Small and Medium Business Support Fund, giving the priority to knowledge economy companies and annually allocating funds from the budget for the activities of the Fund;
providing partial subsidies for consulting services (legal and business) to newly established companies, ensuring efficiency and quality of such consulting;
supporting business initiatives in drafting legal proposals to encourage training of employees and raising their qualifications.

The Strategic Plan focuses a lot of attention on the issues of providing information to business. The following measures are planned in this area:

§ compilation and provision of information about business financing opportunities;

§ setting up a one-stop-shop municipal system for the provision of services to individuals and companies;

§ developing a city business information system (including information about the activities of companies in the city, prices of business premises, plots of land and other real estate, etc.), ongoing renewal and distribution of this information through mass media.

The spheres of Municipality’s activities that are also important for improvement of business environment in the city, first of all in terms of transparency, are public procurement and privatization. Public procurement procedures of Vilnius City Municipality are performed according to the Law on public procurement. Municipality has established two commissions: Commission on Public Procurement of Goods and Services and Commission on Public Procurement of Works. According to the law, information about planned purchasing is being announced in the attachment “Announcements” of official issue “Valstybės žinios” (“State news”), and in some cases – in popular and specialized issues (newspapers, magazines, etc.). The procedure on opening of envelopes containing proposals and on announcement of price is being performed only when all participants of tender are present. A winner of tender is identified after examination of all the participants of a tender and analysis of complaints. After purchasing contract is concluded, the Municipality presents report on the procedure of public procurement to the Public Procurement Council under the Government, which is the main governmental institution in Lithuania controlling the implementation of the requirements of Law on public procurement.

Privatization of the municipal property is being performed according to the Law on privatization of state and municipal property. Municipality provides information about the entities to be privatized to the State Property Fund (SPF), which forms the draft list of entities to be privatized and provides it to the Government for adoption. After the list is adopted by the Government, the Municipality prepares privatization program every month and presents it in the “Bulletin of information on privatization”, issued by SPF. Along with it, information on privatization tenders is being provided through other channels (city bulletin boards, newspapers, website of the Municipality). A winner of a tender is being identified by means of public auction.

2.4. Accessibility of Qualified and Skilled Labor Force

General background

Fast technological development and increasing significance of knowledge economy to the overall economic development bring increasing demand for highly qualified staff capable of creating, applying and using modern technology. Accessibility of human resources with necessary knowledge and skills is the decisive factor with respect to a country’s development and competitiveness prospects.

Lithuania is characterized by a high level of education among the population inherited from the previous system. The level of education of labor force is also comparatively high. Based on labor survey data, approximately 18 per cent of the employed and unemployed population in the country have higher education, 23 per cent have college education and 40 per cent secondary education, nearly a half of which have finished vocational schools. 15 per cent of the labor force consists of the employed and unemployed population with nine-year (or eight-year) education, one third of which has vocational education. The proportion of the population with primary education (or no primary education at all) accounts for only 4 per cent.

There is not data currently about the structure of Vilnius population by education, including labor force[1] (which makes up 360 000 people in Vilnius, including 30 000 unemployed). However, there are obvious reasons to assume that educational characteristics of labor in Vilnius are higher than the country average (concentration of public and other institutions requiring high qualifications; accessibility of higher schools of education and colleges; higher teacher qualifications and better teaching at secondary schools, etc.).

The accessibility of labor force with necessary qualifications can be defined on the basis of qualification characteristics of labor supply, i.e. both employed and unemployed population (including frictional unemployment). However, statistical data are insufficient here as well. The basic problem in this respect is that a significant proportion of the population in search of a job to not register at the labor exchange but rather prefer looking for a job in other ways, i.e. through private employment agencies, acquaintances, information in the media, etc. However, following the opinion of experts of employment agencies, the proportion of the population looking for a job but not registered at the labor exchange in Vilnius makes up approximately 30 per cent of the total number of people looking for a job, also taking into consideration the fact that a certain percentage of people (approx. 20–25%) register at the labor exchange mostly because of the opportunity of getting the benefit while in fact they are not looking for a job, one may assume that the real labor supply in Vilnius makes up about 45 000 people per year.

The data of the labor exchange and other employment agencies about the education of their applicants and clients show that of these 45 000 people 12 to 13 thousand (28%) have higher education, 7 000 (16%) have college education, and the remaining 25 thousand (55%) have either general secondary or vocational, or lower (nine/eight-year or primary) education.

Judging from such data, Vilnius seems to have a high level of accessibility of highly qualified labor

Yet, it should be taken into account that a university or college diploma is usually a necessary but insufficient criterion for getting a job and working successfully in a position with high qualification requirements. On the other hand, the shared view of most employers is that the labor supply and demand ratio in Vilnius is not balanced enough in terms of quality, i.e. characteristics of qualifications often do not match the requirements raised for available jobs.

According to the data of both public and private employment agencies, experienced highly qualified specialists capable of accepting responsible positions are in greatest demand from large companies, including foreign capital companies and international organizations; next are marketing and advertising experts capable of working with large complex projects; logistics managers and programmers.

Vilnius employment agencies assert that the following skills and abilities are increasingly stressed along with tighter requirements for qualifications (education), instead of knowledge only: receptiveness to work-related information, ability to adapt to innovation and specific characteristics of the work; good IT skills; ability to work independently and make decisions in indefinite or ambiguous situation; organizational and planning skills; good communication skills, ability to formulate insufficiently clear requirements of the user; ability to work in a team and related skills.

Therefore the current problem is not a lack of education but a lack of necessary skills among people with higher or college education. The education system does not take proper account of the necessity of developing the above skills that get increasing demand in the labor market.

One of the most frequent requirements for applicants is the possession of computer skills. Yet, only a small proportion of young people acquire these skills at school. According to the data of the study “Digital Lithuania 2001”, only slightly over 20 per cent of the population in Vilnius learn computer skills at school, and a slightly smaller proportion do that at the university or college. Others acquire computer skills in special courses, independently, at work or in other ways (see Table 4).

Table 4

Acquisition of computer literacy (15 years and older, %)

	Secondary schools	Work	Independently	University/college, etc.	Courses	Other
Vilnius	20,3	22,3	37,1	19,5	38,3	3,1
Kaunas	13,1	20,5	31,8	19,3	44,3	2,8
Other cities	29,3	19,3	33,6	15,7	29,6	1,1
Country side	30,1	16,0	23,7	16,0	28,8	2,6

Source: “Digital Lithuania 2001”

The latter aspect serves as the major reason why computer literacy in Lithuania and Vilnius is not high enough. According to the latter study, only 32 per cent of the Lithuanian population over 15 years of age can use a computer, and even fewer (24%) can use the internet. In Vilnius these figures are significantly higher (48% and 36%, respectively), yet they are much lower than the same figures in many industrial countries (Western Europe, Scandinavia, etc.).

Chart 4

Computer literacy in Lithuania in 2001 (population of 15 years and older, %)

Source: “Digital Lithuania 2001”

Qualification and demand of specialists in Vilnius high tech sectors

Biotechnology[2]

Most of specialists working in the biotechnology industry and involved in related research are graduates of the Natural (genetics, microbiology) and Chemistry (biochemistry and some other fields in chemistry) faculties of Vilnius University. The level of qualifications in the industry was influenced by the fact that prior to the emergence of this industry most of them were involved in scientific research and acquired scientific degrees (at least a part of them). There are two constituent parts in biotechnology: biology and technological engineering. The training of the latter specialists was introduced recently through the joint effort of the Institute of Biotechnology and Vilnius Gediminas Technical University (VGTU) at VGTU.

The biotechnology industry already faces a shortage of highly qualified staff. In defining further development of the industry, it may be projected that a shortage of qualified labour may become a large obstacle to its development. With no available pool of university graduates, the industry may attract the personnel of scientific research institutions and the level of such personnel may decline below the critical level. This would inevitably cause a decline in the level and scope of scientific research. Finally, bearing in mind the importance of research institutions in training highly qualified specialists for biotechnology and the significance of research for long-term development of industry, this would have negative consequences for the development of this industry itself.

In considering the supply of qualified personnel to the science and industry of biotechnology in Lithuania, measures have to be taken to bring back specialists working abroad. In this respect, the model applied in Estonia deserves attention, when the returning personnel get exceptional financial and working conditions that allow them to join productive activity at once.

Laser technology

Laser technology industry also faces a shortage of qualified staff. With no available pool of university graduates (a large proportion of which go to the West), the industry attracts the personnel of scientific research institutions thus weakening the level and scope of research needed by the industry. There is a real threat that some perspective research fields will decline in time as most experts move to industry or leave to Western countries.

The training of specialists in laser physics and optical technology should be conducted in two directions: training of young specialists in bachelor, master and doctoral programs and raising the qualifications of the existing graduates, especially those working in laser industry.

Information technology

The information technology sector involves several levels of personnel, from technical staff to experts of the highest qualifications involved in the development of new products. The IT sector in Vilnius is at present characterized by the fact that there is no shortage of lower level staff, but there is a shortage of highly qualified specialists, especially in certain IT fields.

There is not shortage of technical staff and middle level specialists involved in equipment, network repair and maintenance. There is a grave shortage however of highly qualified specialists capable of not only providing routine maintenance but also optimizing computer network facilities, managing complex networks, etc. This causes problems to large companies, such as banks, the Lithuanian Telecom, large industrial companies.

There is a sufficient supply of medium level programmers (involved in coding but not software development), but there is a grave shortage of high level programmers capable of using modern methods. Larger companies compete for such specialists. The situation is aggravated by the fact that quite a few highly qualified programmers leave to work abroad (mostly in the USA, Sweden, Norway, Germany, France and the United Kingdom) where they are offered much better working and living conditions than in Lithuania. In addition, there is a shortage of IT managers with good product knowledge and sales skills in Vilnius and generally in Lithuania. To a large extent this is related to the difficulty in retaining the necessary qualifications in this area as IT products change very rapidly (approximately once every three months), therefore specialists in this field have to be trained on an ongoing basis. Another category of IT specialists where the demand is large but the supply is minimal is project managers. One could say that there are hardly any well-trained IT managers in the market.

The above situation in relation to highly qualified IT specialists has emerged because while a relatively high number of IT specialists graduate from Lithuanian, including Vilnius, universities, their training in many ways does not meet the requirements of today. The graduates are incapable of doing the job requiring high qualifications. This situation can be partly alleviated by specialized IT courses, yet that translates into additional costs for companies wishing to have good specialists.

3. Environment for the Development of Knowledge Society in Vilnius

One of the major prerequisites in developing knowledge economy successfully and ensuring the necessary access to high quality labor capable of working effectively in the different sectors of knowledge economy is provision of education to all groups of the society, consolidation and improvement of the ability to use modern information technology, formation of the culture of knowledge, in other words, creation of a knowledge society oriented towards the current as well as future needs. Accessibility of all levels of education and quality of education is of utmost importance in this respect.

3.1. Enrolment in All Levels of Education

Enrolment in all levels of education is one of the major indicators of the education system. It is especially important in stressing the formation of knowledge society and the ideas of life-long education, openness and accessibility of the education system and readiness of this system to satisfy the needs of various age groups.

As the education system in Vilnius is not a closed one limited to its own resources (i.e. its educational institutions, and, first of all, post-secondary education institutions, do not train the residents of Vilnius only and not only for Vilnius), the enrolment of education should be defined on the national scale.

Lithuanian is characterized by high enrolment at the primary and basic level of education (98.7% and 93.4%, respectively). Enrolment at the secondary level is also comparatively high (82.8%). By the number of students of the compulsory schooling age (16–18 years) compared to the total number of schoolchildren and students Lithuania exceeds the European Union average (75% and 57%, respectively). However, enrolment in college and university education in Lithuania is not high (30.5%) and is lower than OECD average. Lithuania also falls behind by the number of students at universities compared to the percentage of the overall target group of comprehensive education (ISED O-7): in Lithuania this proportion is 12%, while the EU average is 14%.

It should therefore be concluded that successful development of knowledge economy both in Lithuania and Vilnius should be related to the measures allowing to increase the enrolment in university education.

3.2. Information Technology in Secondary Education

Introduction of information technology in the education process has become one of the major issues in Lithuanian educational policies. Efforts have recently been undertaken to reduce the gap between Lithuanian educational institutions (first of all, in secondary education) and developed countries in the use of computers. However, the situation is far from satisfactory, both with respect to the number of teachers and the level of provision of computer equipment. While the situation in Vilnius is slightly better than elsewhere in Lithuania, it is not satisfactory either.

Regardless of the fact that the level of education among the teachers in schools of general education in Vilnius is relatively high and is growing further (in 1995, 88% of such teachers had university education, 92% in 2000), there still is a shortage of qualified teachers of information science. The problem partly arises due to the gaps in the systems of teacher training. Another reason is worse financing of teachers of information science in comparison with other specialists in this field working in other areas.

IT provision for schools, while gradually improving, has so far been inadequate. Survey data show that in 1996 there was one computer in Lithuanian secondary schools per 99 schoolchildren, and 72 schoolchildren in 1998 (in Estonia and Latvia theses figures stood at 28 and 47 schoolchildren, respectively). Meanwhile in many other countries of the world (e.g. Singapore, Japan, Canada, France, Norway) the average ratio of the number of schoolchildren per the number of computers was lower than 10 in 1998.

Provision of computers for secondary schools in Vilnius is better than the country average (expert assessment puts this ratio at fewer than 70 schoolchildren per one computer). Yet the very fact that only approximately 20 per cent of Vilnius residents acquire computer skills at school shows that the situation is bad. Following the assessment of specialists from various countries, schools should provide one computer for 5 schoolchildren at most. The planned target in the Nordic countries and the USA is one computer per 2–4 schoolchildren in each school in the period from 3 to 4 years. In the view of Lithuanian experts, there should be at least one computer per 15 schoolchildren to ensure adequate quality of training.

The Strategic Plan of Vilnius City provides for a large increase in the number of computers at the institutions of general education until it reaches prescribed levels, establishment of computer classrooms with adequate equipment, computerizing school libraries, etc. These measures should help significantly improve the IT base at schools and consequently increase computer literacy among Vilnius population.

3.3. Accessibility to and Quality of Tertiary Education

Accessibility to college and university education

There are 18 colleges and 8 universities in Vilnius, with the total of 55 thousand students.

Colleges in Vilnius have 10.4 thousand students. In 2000/2001, 2.6 thousand students graduated from these schools. Until 1998, admission to the colleges of Vilnius was increasing, yet later both admission and the number of students started declining significantly. In 2000 only 2.9 thousand students were admitted, while in 1998 this figure was 4.2 thousand. The number of students declined by 9 per cent over the past two years.

Such developments were determined by the fact that more young people seek university education. That is related to a number of reasons, of which the following could be mentioned:

§ Growing education requirements in the labor market. University degree requirement to get better paid positions.

§ The wish on the part of young people to get university education and start a career in the shortest possible time, while studies at college (two to three years) and later universities (4 years of bachelor studies) last up to six or seven years, extending to 9 years including master studies.

§ Compared to colleges, university studies open much wider opportunities for continuing studies abroad.

§ The level of training at universities, regardless of some shortcomings, is much higher than in colleges.

During the study year of 2000/2001 there were 44.6 thousand students at universities in Vilnius, i.e. 4.3 times more than at city colleges. Compared to 1995, the number of students increased nearly twice. Especially fast growth was characteristic of the Law University of Lithuania, Vilnius Pedagogical University and Vilnius Gediminas Technical University. Consequently, Vilnius universities have had a increasing number of graduates (6.7 thousand in 1999, 7.7 thousand in 2000).

The largest number of students in Vilnius study at Vilnius University (nearly 17.7 thousand), Vilnius Gediminas Technical University (10.4 thousand), Vilnius Pedagogical University (9.8 thousand) and Law University of Lithuania (6.6 thousand) (see Table 5).

Table 5

Number of students at Vilnius universities

	Year of establish-ment	Number of students
	(reopening)	1995/1996	1998/1999	1999/2000	2000/2001
Vilnius University	1579	10425	14069	16223	17710
Vilnius Gediminas Technical University	1956	5740	8472	9469	10362
Vilnius Pedagogical University	1935	4686	7485	8279	9761
Lithuanian Academy of Music	1933	936	1072	1108	1111
Vilnius Academy of Arts	1941	973	1256	1357	1514
Law University of Lithuania	1990	1958	3222	4364	6514
General Jonas Žemaitis Military Academy of Lithuania	1994	350	550	650	674
International School of Management	2000	-	-	-	182
Vilnius St. Joseph Seminary	1999	-	-	-	75
Total		25068*	36126*	41450*	47903*

*Including the number of students in the faculties located in other Lithuanian cities.

Source: Study “Analysis of the Social and Economic Situation in Vilnius”.

Vilnius is a clear leader by the proportion of the student body among all Lithuanian universities (47% of the total number of students) leaving behind such an academic city as Kaunas with 32 per cent of the total number of students in the country. Vilnius has 76 university students per 1000 residents in the city, while the average in Lithuania is 26. However, in this respect Vilnius is behind the capital cities of the region: in Tallinn the number of students per 1000 residents is 78, in Riga 101, in Warsaw 140 and in Helsinki 110.

The level of training at Vilnius universities can be defined as sufficiently high. Following the data of the sociological survey “Assessment of Educational Situation in Lithuania” done in 1998, nearly 70 per cent of respondents held the opinion that young people acquire sufficient knowledge and skills at Vilnius universities.

Anther positive development has been the increasing number of Vilnius university students studying at educational institutions abroad during the period of their studies. While in 1995 the number of such students at Vilnius universities was 318, by 2000 it had risen to 700. Most of them (23%) studied at German universities.

It should be noted, however, that Vilnius universities (similar to those in other Lithuanian cities) face problems that impose restrictions on improving training quality and growth of accessibility of university education. Such problems are mostly related to the lack of financing.

One of the major problems is integration of research and study activities. The unity of research and study is recorded in the Law of the Republic of Lithuania on Science and Studies. However, due to the shortage of financing, research activities play only a minor role at most universities. That has negative consequences on training quality. Another important problem is the emergence of study fees. As early as in 1991 university education became partially paid. The provision of the Constitution about the guarantee of free university education for good students became subjective. Students that fail to get a financed place at the university conclude agreements with universities and pay a study fee. Such study fees are charged due to the lack of public financing. The state has so far been unable to meet the financing needs of universities. That is why quite a few gifted young people are forced to give up studies if they do not get state financing. The situation has been partly improved by the opportunity to get a study credit. However, study credits are helpful only when a young person has enough funds for living during the studies. Earning such a living is rather difficult. The problem is becoming worse because of the indefinite status of study fees in the future. As a consequence, many people, wishing to study at universities, are not able to assess their financial ability and make the decisions with regard to university studies.

Training of high tech specialists at Vilnius colleges and universities

This section reviews the training of specialists for those sectors that are specific to the economy of Vilnius. The assessment of the training of specialists in biotechnology and laser technology is based on the material of the “Program for the Development of High Technology Production”.

Biotechnology

Specialists in biotechnology are trained at Vilnius University and VGTU. Geneticists and microbiologists are trained at the Faculty of Natural Sciences of Vilnius University, and biochemists and specialists in certain fields of chemistry at the Faculty of Chemistry. VGTU has started training bioengineers. In most cases the level of training is satisfactory, yet there are a number of problems with respect to syllabi.

The training in biochemistry has so far been satisfactory. However, the recent trends of reducing the number of teaching hours in sciences (e.g. mathematics and physics) are incompatible with the development of high-level biochemists, capable of competing in the labor market.

While the training of geneticists has been viewed as satisfactory as well, the syllabi should be significantly adjusted with respect to the fact that the weight of biological methodological components has been decreasing in the methodology of genetic research, while the weight of physical and chemical components has been growing fast. In addition, genetic research loses long-term prospects if methods of bio-informatics are left out.

The level of training in microbiology has not satisfied the needs of biotechnology industry. Lithuania does not have a school or traditions of microbiological research of international level. While Vilnius University has recently been making efforts in this field, it is doubtful whether it can markedly improve the level of graduates on its own. Special measures should be taken in training microbiologists under a long-term plan. It should include training of high-level microbiologists abroad (bachelor, master and doctoral studies) and guaranteed jobs in the leading positions at the University’s Department of Microbiology.

The training of the bioengineers was introduced recently through the joint effort of the Institute of Biotechnology and Vilnius Gediminas Technical University (VGTU) at the VGTU. As the process began quite recently, it is difficult to assess the level of training at the moment.

Specialists in bio-informatics, characterized by interdisciplinary training (mathematics, programming, molecular biology, etc.) are not trained in Lithuania. There are only some self-trained specialists working in this field. To remedy the situation, Vilnius University should start training specialists in bio-informatics.

Laser physics and technology

The only institution training specialists in laser physics and technology in the country is the Department of Quantum Electronics at Vilnius University. Since 1974 the Department has trained 290 laser physicists. Six scientists have earned the degree of doctor habilitus, and 35 have written doctoral dissertations. Specialist training is done on three levels: bachelor, master and doctoral studies.

The general training level is sufficiently high, but the lack of more developed skills in doing experimental laser research can be observed. Therefore, the experimental resource basis available at scientific institutions and unique research equipment owned by the companies should be put to better use, practical work of bachelor and master students and research of doctoral students at the companies of light technology should be organized.

Information technology

College education

Studies in information science are offered at several colleges. There is also a special school in Vilnius for young people, the Extramural School of Young Programmers established in 1981, which does not have a permanent location for teaching and consultations, and training is done through correspondence.

The supply of the IT sector in Vilnius with the specialists with college education is sufficient. However, their training level is rather low and may be compared to vocational schools, rather than college level. Such specialists mostly work in equipment repair, network building, technical support and maintenance, but they do not have programming knowledge and skills and have scant knowledge of electronics. Colleges involved in the training of IT specialists should provide a more narrow and deeper specialization, perhaps even with an orientation towards specific employers (e.g. Lithuanian Telecom).

University education

IT training is provided at three Vilnius universities: Vilnius University, VGTU and Pedagogical University. Regardless of the fact that there is a large number of IT specialists with university education in the market, there is fierce competition among Vilnius IT companies for good experts. This is caused by the inadequate level of IT training for the needs of today.

Bachelor studies at these universities focus too much on subjects in applied mathematics with too little attention to computer theory, i.e. theoretical subjects are not biased enough with respect to information technology (this is partly determined by the specialist fields of the university teachers, most of whom are mathematicians). University bachelor studies do not provide or provide only superficial instruction in the subjects that would be beneficial to highly qualified IT specialists, e.g. modern programming methods, management of computer projects, object programming, etc. To take a concrete example: JAVA has become increasingly popular in computing, but few university graduates have in-depth knowledge in this area. Knowledge of languages of internet technology (XML, PHP, etc.) is also scant. Because of the above, most graduates are unable to take up jobs requiring high qualifications right after graduation. For instance, there are usually just a few persons who can start working as network administrators after graduation.

The level of training of bachelors for particular jobs is mostly similar and in some cases even inferior to the level of people who complete special training courses. The teaching of specialized subjects for senior students (2^nd and 3^rd year) should at least be on the same level as in training courses. Universities should review bachelor syllabi towards teaching their subjects through information technology, rather than mathematics. Narrower profiles should be introduced in senior years. Courses in certain fields, e.g. network administration, programming, should serve as a model in this respect. In order to train high-level specialists, universities should establish specialized structures, such as informatics laboratories, which would provide the opportunity for teachers to raise their qualifications and for students to consolidate their theoretical knowledge.

IT master studies should be organized within institutions where research in IT is conducted. In the meantime, IT master studies are offered in the departments that are mostly involved in teaching. Taking into account the fact that research in IT is underdeveloped in Vilnius and other Lithuanian cities, more master students should be sent to educational institutions abroad.

3.4. Availability of Library Stocks and Services

Public libraries get very much attention in progressive countries of the world as centers for the spread of information. The main technological processes in modern libraries are computerized, and internet is widely used. In developing knowledge society, city libraries should play an important role in enhancing information literacy among city population.

The situation in Vilnius in this area is far from satisfactory. In 1992 Vilnius had 55 public libraries, while by now there remain 28 municipal libraries and 4 public libraries of the Ministry of Education and Science. The number of public libraries financed by Vilnius City Municipality declined from 88 in 1990 to 28 (including subdivisions) in 2001. Entire districts of Vilnius have been devoid of a public library network. This is a partial reason why only slightly over 9 per cent of Vilnius population use public library services. The situation is partly remedied by the fact that there are over a hundred libraries of educational and research institutions.

Vilnius is characterized by ample library stocks. By the number of books in library stocks in Vilnius per capita, Vilnius leads among many capital cities of neighboring countries (e.g. Riga, Tallinn, Stockholm, Copenhagen, Helsinki). However, library stocks have markedly declined over the recent years. From 1995 to 2000, the stocks of public libraries in Vilnius declined by more than a quarter. All this happened because of the lack of financing, but also because many outdated and unimportant books were removed. Nevertheless, the situation in Vilnius is much better than elsewhere in Lithuania: there are nearly twice as many copies of books in public library stocks per 100 residents in Vilnius than there are on average in Lithuania.

At the same time, it should be taken into account that in modern society printed literature is replaced on an increasing scale by electronic information. Therefore, in discussing provision of information to the public, availability of electronic information media rather than traditional media is becoming the key indicator.

The computerization of libraries has started relatively recently in the world (the first experiments were carried out in the sixties), yet by the eighties the main technological processes in modern libraries had been computerized, with wide use of computer networks, primarily the internet. These processes, while still in the early stages, are also going on in Vilnius libraries. In some larger city libraries, the processes of collection, cataloguing, systematizing and subject allocation have been computerized, libraries join various data bases and participate in their development and apply wider use of the internet in everyday practice.

However the libraries in Vilnius and, generally, Lithuania are very much behind developed countries. The provision of copying, sound and image equipment, sound and video tapes is insufficient. Only five public libraries in Vilnius have computers and an internet connection. According to the study “Digital Lithuania 2001”, most of the population (approx. 60% of respondents) would primarily like to see public computers at libraries.

3.5. Life-Long Learning and Distance Learning

Life-long learning

Education services provided by universities and other educational institutions in Vilnius create the conditions for life-long learning, raising and changing acquired qualifications.

Vilnius has a high concentration of universities, colleges and vocational schools. Working population also has opportunities to study. Four largest Vilnius universities offer evening and extramural courses in such popular areas as business and administration, law, engineering, etc. Some of schools of higher education, such as the International Business School, the International School of Management have designed special business and administration studies for working population, which are more intense and are based on individual learning.

Vilnius stands out among other cities by the number of courses for raising and changing qualifications. Such courses are organized by training centers, universities, institutes and individual companies. Among the most popular courses are computer courses, English, management, administration, accounting and driving.

The need for learning and raising qualifications has been increasingly felt. A survey[3] conducted among SME employees has shown that over 55 per cent of respondents raised their qualifications during the past two years. The same proportion of such employees is aware about the opportunities of raising their qualifications. Over 36 per cent of the respondents have been planning to raise their qualifications.

Financing has remained the major difficulty in life-long learning. Employees of public institutions and large companies have most opportunities to learn. Meanwhile, raising qualifications at SMEs has not yet become part of the strategy of such companies, as reflected by the poll. Only 21 per cent of company managers said they had training plans. This is to a large extent determined by the shortcomings in the legal framework and the tax system of the country.

Distance learning

The area of distance learning has been developed for a number of years. The Distance Learning Council has been established under the Ministry of Education and Science. Two distance learning projects have been developed and implemented, including a distance learning video conferencing network LieDM. The network consists of two distance learning centers in Vilnius and Kaunas and 13 remote distance learning classrooms in all larger cities of Lithuania, including two such classrooms in Vilnius.

Distance learning opportunities in Vilnius have grown each year. Design of distance learning syllabi has been in the focus of attention. By now Vilnius has assumed a strong position among Lithuanian cities in the use of virtual learning media. Distance learning in the city is provided by several universities, of which the most active and experienced are Vilnius Gediminas Technical University and Vilnius Distance Learning Canter (VNSC) at Vilnius University.

More favorable conditions for distance studies have recently been created by the video conferencing studio opened at Vilnius Distance Learning Canter. As Vilnius University soon becomes an associated member of World Bank Global Development Learning Network, the studio will be able to broadcast lectures from foreign universities and offer courses for foreigners through video conferencing and virtual learning media. The studio has 30 study places, and 60 students can participate in videoconferences.

While the number of students choosing distance learning has not been high, interest in such studies has been rising. For instance, Vilnius Distance Learning Center currently has over 40 full-time students, but there are approximately 2000 people studying in individual courses. The rising student requirements to such study forms and provision of technical equipment create favorable conditions for the further development of distance learning in Vilnius. According to the poll** among Vilnius university full-time and correspondence students, 86 per cent of them would like to study more subjects through distance learning, and 46.9 per cent would like to change the study form from full-time and extramural studies to full distance learning. In addition, the major part of students has good opportunities to use e-learning methods: 74.1 per cent of them own computers, and 57.5 per cent have an internet connection at home.

Until now Vilnius City Municipality has hardly participated in the organization of life-long and distance learning in Vilnius, yet in the Strategic Plan these areas are given much attention. The Plan provides for extending the functions of the municipal division of education in assessing the needs for life-long learning and additional IT training.

4. Information Infrastructure

4.1. Availability of Communication Technology

Telecommunications

Regardless of the fast development of telecommunications in Lithuania, the level of provision of telephone services is not high. According to the Department of Statistics, there are 31 fixed telephone lines per 100 residents. In Vilnius this figure is slightly higher (32). Compared to the countries of the EU, both the Lithuanian and Vilnius average is significantly lower: in the EU, there are 46 fixed telephone lines per 100 residents, while in some countries of the EU the figure is even higher (e.g. 65 in Sweden and 55 in Denmark).

It should also be noted that the quality of telephone communications is rather high: by now the analogue lines for nearly all subscribers have been upgraded to digital lines. In addition, the shortage of fixed line communication has recently been compensated by the fast development of mobile communications. According to the study “Digital Lithuania 2001”, one third of the Lithuanian population have mobile telephones. In Vilnius, this proportion is 47 per cent, and an additional 13 per cent have been planning to acquire a mobile phone in the nearest future. So far Lithuania has been behind industrial countries by the coverage of mobile communications, including Vilnius. However, if the current rate of growth continues, Vilnius will catch up with those countries in the next few years.

Chart 5

Coverage of mobile communications by countries, spring 2001

(% of population)

Sources: SIC Market Research; study “Digital Lithuania 2001”.

Provision of computers

The number of personal computers in Lithuania increased more than four-fold in the period from 1994 to 2001 and now amounts to 300 thousand. The user market has been annually supplemented by 30 to 50 thousand new computers. The population of Vilnius have twice as many computers as the country average.

According to the data of SIC Market Research, in 2001 nearly 57 per cent of domestic companies were computerized (see Chart 6), and 22 per cent of companies were planning to acquire computers in the next 6 months. The highest computerization level among Lithuanian cities was among Kaunas companies. Companies in Vilnius were somewhat behind. The best provision of computers and licensed software is among public management institutions.

Chart 6

The computerization level among companies, spring 2001 (% of companies)

Source: SIC Market Research

According to the data of the study “Digital Lithuania 2001”, 70 per cent of working and studying population, i.e. 38 per cent of all Lithuanian population 15 years old and above, have worked or studied at computerized working or study places. The highest computerization level of working and study places has been in Vilnius: 51.6 per cent of the population of Vilnius 15 years old and above have studied or worked at computerized working or study places, of which over 60 per cent used computers at work or study institution every day.

According to the same study, 13 per cent of Lithuanian population have home computers. The proportion of the population in Vilnius owning a home computer was nearly twice as high (23%). This is one of the highest indicators among Lithuanian cities. In this respect, Kaunas is slightly ahead of Vilnius. However, there are more residents in Vilnius who are planning to purchase a computer in the nearest future.

Chart 7

Population owning a personal computer at home, 2001

(population of 15 years and older, %)

Source: Study “Digital Lithuania 2001”

Vilnius is notable by the fact that a large proportion of the population use computers not only at educational institutions, work or home but also somewhere else (mostly friends or libraries).

Table 6

Population using a computer not only at work, educational institution or home, 2001

(total population of the city able to use a computer, %)

	Library	Internet café	Friends, relations	Information centres	Other
Vilnius	14,1	7,8	32,0	3,5	2,0
Kaunas	7,4	9,1	31,8	4,0	1,7
Other cities	10,3	4,3	27,8	1,8	1,8
Countryside	9,5	1,3	31,6	1,9	1,3

Source: Study “Digital Lithuania 2001”

4.2. Internet Access

It is estimated that at the end of 2000 407 million persons, or 6.7 per cent of the global population, used internet. In Lithuania, the proportion of internet users made up 19.5 per cent of the population, i.e. 682 thousand persons, three times above the global average. All countries that have a border with Lithuania (Latvia, Poland, Russia and Belarus) had fewer internet users. However, average internet use in the EU is higher, in some countries two or three times (e.g. New Zealand, USA) (see Chart 8).

Chart 8

Internet use, 2001 (population, %)

Source: Study “Digital Lithuania 2001”

It should also be noted that of the Lithuanian internet users 15 years old and above only 43 per cent use it frequently – every day or several times a week. 15 per cent of such users use internet once a week, and 40 per cent once or several times a month or less. In Vilnius these figures are higher (see Chart 9), yet they are lower than in Kaunas.

Chart 9

Frequency of internet use, 2001

(% of internet users)

* Several times or once a month or rarely

Source: Study “Digital Lithuania 2001”

According to the data of SIC Market Research, in spring 2001 40 per cent of domestic companies used internet, and 7 per cent of companies were planning get a connection in the nearest future. Widest use of internet by companies was recorded in Klaipeda, Kaunas and Vilnius (see Chart 10). 10 per cent of companies had internet sites, and the same proportion of them were planning to open their sites in the nearest future. 18 per cent of companies in Klaipeda, 16 per cent in Kaunas and 14 per cent in Vilnius had internet sites.

Chart 10

Actual or intended use of internet by companies, spring 2001

(% of companies)

Source: SIC Market Research

In terms of internet access, the worst situation in Lithuania is in households: less than 6 per cent of the population 15 years old and above have internet access at home. In Vilnius the situation is relatively better, with 11 per cent of residents with internet access, yet this is significantly lower than EU average (18%) and is several times lower than in some countries (e.g. in Sweden as many as 48% of households have internet access, 45% in Demark, 46% in the Netherlands).

Chart 11

Internet at home, 2001

(population of 15 years and older, %)

Source: Study “Digital Lithuania 2001”

There is no accurate information about internet use by Vilnius residents in public places (such as internet cafés, information centers, public libraries, etc.). It can be assumed, however, that an increasing number of people have used internet in such places. For instance, a year ago there were 10 internet cafés in Vilnius, which has increased to 20 by now.

The spread on internet in Lithuania, including Vilnius, should be encouraged by the recent (May 2002) establishment of the information society development alliance “Window to the Future”, created by four leading companies in telecommunications and banking: Lithuanian Telecom, Omnitel, Vilnius Bank and Hansa-LTB. The goal of the alliance is to promote internet use in Lithuania. Each partner of the alliance has undertaken to grant at least LTL 1 million to support projects. The alliance has set the specific goal of reaching European Union average of internet penetration, i.e. use of internet by 39 per cent of the country’s population, in three years.

4.3. Development of E-Government Services

The Government of Lithuania stresses that development of information society is a new, prioritized long-term strategy of the Government. The Government resolution of 28 February 2001 “On approving the concept of the development of the Lithuanian national information society” defines the concept of e-government whose implementation will require to “modernize management of the state, […] provide the population with real opportunities of getting unrestricted information from all state government and management institutions, create the conditions to develop information society in Lithuania, make proposals, present criticism and take part in decision taking”. It is expected that the development of public services based on information technology will improve services to the population, will enable each person to present questions and get answers from all public institutions through public networks, take active part in various polls and in dealing with important policy issues.

This state information initiative, the e-government project, is viewed positively by the Lithuanian population. According to the data of the study “Digital Lithuania 2001”, nearly 70 per cent of the Lithuanian population and as many as 86% per cent of Vilnius population would like to see the development of public digital services, including municipal services.

Foreign experts that make assessments about the readiness of the countries for the arrival of digital economy (McConnell International that made a survey in 2001 in 53 countries, including Latvia, Poland, Estonia and Russia) have pointed out that the conditions for e-business and activities of e-government in Lithuania, compared to other countries, are moderate. This means that there are no serious obstacles, yet improvements are necessary. All indicators that were subject to analysis, such as access quality, role of the state, data safety, human capital and general climate for e-business, have been attributed to the moderate category.

By access quality, which includes communications quality and acceptability of prices in the country, Lithuania ranks together with Estonia and is ahead of Latvia, Poland and Russia. On the basis of data safety, Lithuania, Estonia, Latvia and Poland have been attributed to the same category. In comparing the results in such areas as the e-role of the state (i.e. the priorities declared and implemented by the government), human capital and general climate for e-business, Lithuania, with Poland and Latvia, is ahead of Russia, yet it falls behind Estonia.

E-services of Vilnius City Municipality to the population

As it was noted in chapter 1.1. Strategic Action Plan of Vilnius City Municipality includes special program on development of e-services of the Municipality.

Vilnius City Municipality provides most electronic services to the population among all local government institutions in the Republic of Lithuania. The system of computer networks and data bases has been developed for over than ten years and now allows interested parties to get access to more than 12 data bases from within Vilnius City Municipality and from the outside. A package of internet services to local residents and Vilnius visitors has been undergoing rapid development. An integrated information system with a system of information terminals and the main city site – www.Vilnius.LT – is in the process of implementation. The portal www.Vilnius.LT links the services of data bases on the local network with internet services. Visual and sound information, over 30 forms, more than 15 independent news feeds every day make the portal an attractive and convenient tool for providing services to the residents of Vilnius.

Box 1

Internet Site of Vilnius City Municipality

The new internet site of Vilnius city municipality www.vilnius.lt, created in May 2001, was recognised as the best city internet site on two occasions. Vilnius City Municipality was among the first in the country and in Europe to create an integrated internet site for convenient use by both local residents and tourists.

The competition among the best municipal and regional internet sites EuroCrest 2002 involved EU candidate countries from Central and Eastern Europe. Vilnius city municipality internet site was recognised as the best of all Lithuanian municipal internet sites at the 5^th international conference “Internet in Public Administration” held in Hradec Kralov (Czech Republic) on March 25–26. The review of city internet sites was held by each country. During the ceremony held at the conference, representatives of the European Commission Gerald Santucci and Giangaleazzo Cairoli presented the awards to the following cities: Vilnius (Lithuania), Szczecin (Poland), Nove Zamky (Slovakia), Tapa (Estonia), Stara Zagora (Bulgaria) and Most (Czech Republic). A special prize was awarded to the capital city of Austria Vienna, whose internet site could serve as an example to the internet sites of other cities.

On 3 April 2002, Vilnius municipal internet site was selected by the tourist information search portal Toorista.com as one of the best in this category. Toorista.com publishes links to the best travel related internet sites taking into account their quality in terms of content, design and simplicity of use.

Visitors of Vilnius municipal internet site can get access to the data base on the capital, the Municipality and provided services. The information on the site is presented in a simple and clear way to help each tourist, investor or local resident find the necessary information easily. At the moment the site has Lithuanian and English versions, and in the future these will be supplemented with German, French, Russian and Polish versions. Internet allows people to find out about the most important events in the city, the projects under implementation, future plans and also submit their opinion and comments. The internet site also hosts a virtual info hall where people can find answers to frequently asked questions.

Source: www.vilnius.lt, 16/04/2002

The following main e-services can be mentioned among those provided by Vilnius City Municipality:

q Legal database of Vilnius City Municipality

This service is presented in the form of three data bases: internal use, free access and mixed. The databases for internal use are collections of data with private or commercial information protected by the Law on the Protection of Personal Data. Information for free access is published on the internet and is available in the databases of similar nature of other public organizations. The total number of published and maintained documents at the moment amounts to 400 thousand items.

q Internet service

This includes a system of multilingual info terminals in the city, over 5 gigabytes of information collections in the portal www.Vilnius.LT, dozens of forms and comment pages to accumulate information about the needs of the population and the situation in the city. All requests get the same status as written or oral requests. If possible (when a request is not anonymous) an answer is submitted using the same internet tools. The total number of e-services provided through the internet is over 30. Around 15 subdivisions of Vilnius City Municipality have independently maintained information sources on the internet.

q Design and modeling system GIS

With the help of the system the working group of the City Development Department carries out digital modeling of the city by linking specialized data bases of public and private organizations. In this way investment projects are based on comprehensive multiple technical, trade and visual information. All this makes investment process easier, provides the opportunity for local government institutions to make effective use of the tax payers’ money.

Specialized services to thematic groups

Important working and thematic group questions are integrated in public working tools of working groups GroupWare accessible through the internet. There are 3 such tools at the moment, an example of which could be a house community project with a developed GroupWare tool available on a specialized server, allowing a user to get information about collective management of private property and offer active help to the colleagues through the same GroupWare tools. The success of such projects depends on the general scope of internet use that has recently been increasing fast.

Closer co-operation with specialized information services, such as the labor exchange and employment agencies, has been planned in order to help the population deal with social problems.

Publicity

Vilnius City Municipality aims to achieve transparency in the activities of the Municipality and its officers, which would allow the population to assess the work and services provided by them. This has served as the primary reason for creating the opportunity to get acquainted with the daily schedule of the Mayor of Vilnius and directly watch his meetings over the internet. This was the first original project of Lithuanian public institutions providing a visual broadcast from the Mayor’s office for over a year. It has prompted many other municipal as well as political and governmental institutions to take note of the technical possibilities provided by the internet. Owing to the development of technology, it is expected that fully functional virtual management institutions may be established, providing the citizens an opportunity to interact (in real time) with municipal officers and deal with problems with the help of internet tools and multimedia (video/audio).

Strategy and prospects

The main guiding principle of the ITT policy implemented by Vilnius municipal administration is the development of ITT in the most effective way. Efforts have been made to present the work of the municipality in an easily accessible form through the internet. This has been done to achieve transparency, so that any taxpayer can clearly see at any time what and when is being done and what projects are implemented. Vilnius City Municipality also aims to provide a free email address with the domain name vilnius.lt to all interested Vilnius residents.

In order to achieve publicity and transparency in local government actions, technical development measures are planned to allow any legal or natural person to get easiest access to information without any additional costs or carry out necessary actions at Vilnius City Municipality. To shorten the way from the expression of interest in performing the action of receipt/submission of information or a legal action by a citizen or an economic entity to achieving the actual result, investment will be provided to bring the databases to a uniform standard and ensure coherent accumulation and automation of information. The goal is to provide the opportunity for the population to deal with their problems directly from home or office through standard internet tools, although achieving this within the framework of the current legal environment with respect to IT and the level of communications is not straightforward.

Vilnius City Municipality takes an active part in city development projects. One of such projects is the Knowledge Economy strategic planning group aiming to unite representatives of research and trade. This goal involves long-term projects and large-scale investment and technological projects. All information related to investment and strategic planning is available at www.vilnius.lt or directly from authorized officers of Vilnius City Municipality.

In order to ensure adequate organization and regulation of the provision of e-services to the population, technical equipment is renewed, data base integration tools are developed, meetings of e-Vilnius working group are held with leading Lithuanian ITT companies and individual ITT experts invited to provide consultations.

5. Environment Conducive to Innovation

5.1. Network of Research Institutions

The city of Vilnius is known for its environment conductive to the development of innovations. A considerable scientific potential has been concentrated here. A number of scientific and educational establishments, scientific research institutes operate in the city pursuing research in the fields of information technology, biotechnology, physics and others. Following the data of the Lithuanian Economic Development Agency, over 2000 scientists are involved in the research activities in Vilnius. Such institutions providing support to innovations as the Lithuanian Innovation Center, Lithuanian National Information Center “EUREKA” and Science Technology Park have been established in Vilnius.

More detailed information on Vilnius research institutes, which are directly related to leading high technology sectors of the city, is presented below.

Biotechnology science

The Program of High Technology Production Development attributes an exceptional place in the field of the Lithuanian biotechnology science to the Institute of Biotechnology. The Institute is famous for its purpose-orientated research activities, high level of operation, which is reflected by the scientific produce and numerous foreign grants awarded to the Institute (including EU grants), as well as by its intensive and fruitful co-operation with economic entities. The Institute has established a close co-operation with AB “Fermentas” and UAB “Biotechna” executing their orders, training highly qualified personnel, organizing joint workshops, etc. The co-operation has an impact on the development of institute’s fundamental research topics, which are aimed at acquiring knowledge, necessary for the future applied research, creating new generation biologic products and improving technological processes.

Other biotechnology science and training institutions (Institute of Biochemistry, VU Biochemistry Department) also pursue modern high-level research. Although no marked practical results have been achieved while conducting such research, undoubtedly, it is of utmost importance for training of specialists and formation of the aggregate scientific potential of Lithuania. The Institute of Biochemistry pursues high-level genetic, cell-biology and enzymology research. Scientific work has been carried out in close collaboration with scientists from European countries.

One could judge of a high level of scientific work at the Institute of Immunology, which is important not only for biotechnology, but for medicine and agricultural sector from publications in foreign scientific editions. However, the practical output of the Institute’s scientific research is not considerable.

Laser science

The strongest centers of laser physics, laser technology and laser optical electronics operate in Vilnius University, the Institutes of Physics and Semiconductor Physics. Alongside scientific centres, which are mainly funded from the public budget, the private companies like “EKSMA”, “EKSPLA”, “Šviesos konversija” and others successfully conduct research and technology development works. This statement could be confirmed by numerous publications of these companies’ employees in prestigious scientific editions and presentation at international conferences.

The main direction of research at VU Laser Research Center (established in 1982 on the scientific basis of VU Quantum Electronics Department) is ultra fast non-linear optic processes in crystals, fluids and gas. The Center is equipped with modern quantum electronics, non-linear optics, laser spectroscopy and biophotonic laboratories. Scientific projects at the Laser Research Center are funded both from the Vilnius University budget, and from National Science and Studies Funds, as well from the European Union and NATO programs (e.g. COPERNIKUS, REMPUS, Nato Science for Peace Program “Laser Spectrometer for Testing of Coatings of Crystals and Optical Components in Wide Spectral and Angle Range”; the European Commission program “Cell Ciology and Lasers: Towards New Technologies” and others).

During the recent decades, the Department of Semiconductor Physics and Department of Material Science at VU Institute of Material Science and Applied Research (IMSAR) designed new photoelectric and non-linear optic techniques (including holographic ones), which are applied for characterization of modern quasi-conductor materials and production technology controls. Scientific attainments are grounded on longstanding co-operation with well-known scientific centers in the USA (Brown University), France (divisions of National scientific research centre CNRS in Orsay and Bordeaux), Belgium (intercollegiate microelectronics centre IMEC in Leuven), German Humboldt and Technical Universities, London Royal Society and Glasgow University. The IMSAR takes an active part in large-scale international projects, e.g. NATO Science Committee program “Science for Peace” and others.

Principal directions of research conducted at Non-linear Optics and Spectroscopy Laboratory under the Institute of Physics (UOSL) are characterization of laser fiber and impulses, photovoltaic research of quasi-conduct materials, surface spectroscopy and others. The research projects are supported both from the budget and programs of the European Union.

Optic Electronics Laboratory at the Institute of Semiconductor Physics has been exploring the principles and appliances of ultra fast optic electronics for over two decades. The development of an original GaAs epitax layer technology has become the greatest achievement of the recent years. Currently, terahertz generators and receptors are being created from a low-temperature GaAs, which was grown in MBE mode. The Optoelectronics Laboratory was conducting joint research with the Polish “UNIPRESS” Institute, Greek National Technology Center “FORTH”. At the moment, the Laboratory participates in joint projects with French Scientific Institutions, pursues research within the framework of EU project DUO (“Devices for Ultrafast Optic Electronics”).

Information technology

IT research field in Vilnius is represented by the Institute of Mathematics and Computer Science established in 1956. In addition to other directions of research (theory of chances, mathematical statistics, integral differential equations, recognition processes, research in complex systems and their management, etc), the Institute has been developing mathematical software and databases for computers and computerized systems. The Institute carries out research in such fields as information systems, knowledge-based systems, graphic information systems, programming languages, data types, statistic data analysis, neuron nets, images analysis, etc. The Institute under contracts with the European Union, UNESCO and Lithuanian economic entities conducts the major part of research and applied research.

5.2. Environment for Creativity

Due to its concentrated research, educational and business potential the city of Vilnius is known for its most favorable conditions for innovation creation, meanwhile the overall innovation environment in the country has not been sufficiently developed: one experiences various economic hardships, disadvantageous legal system, scarce information supply, etc. Expenditure on research in Lithuania, likewise in majority of other Central and Eastern European countries (where it does not exceed 1.5% of GDP) is insignificant: in 2000, the expenditure made up 0.6 per cent of GDP (LTL 269.9 million).

Despite of the problems mentioned, the infrastructure necessary for development of innovations is being formed. In 2000, the Lithuanian Government approved a three-year Program for Innovations in Business, the aim of which is to promote application of scientific achievements and technological solutions to businesses. Currently, enterprises implementing innovative projects may apply for financial support of the Ministry of Economy through the utilization of the Program of Industrial Competitiveness Enhancement. In the field of innovation development, there operate 2 science technology parks and 2 innovation centers in the country.

Vilnius has welcomed the establishment of such key innovation support organizations as the Lithuanian Innovation Center, Lithuanian National Information Center “EUREKA”, Science and Technology Park, and in autumn 2002, Siaures Miestelis Technology Park will launch its activities.

The Lithuanian Innovation Center (LIC) has operated since 1996. The prime objective of its activities is to foster commercialization of innovations in Lithuania and their presentation to international and Lithuanian markets. The main customers of the LIC include laboratories, which are aspired to transfer the scientific attainments and industrial innovations to industry as well to increase the market value of the latter, including the co-operation with large-scale industries and SMEs, which are in need for innovative solutions and new technologies.

The National Information Center “Eureka” was established in 1999 and has been providing ever since the possibilities to the Lithuanian enterprises to participate in the European Research Development and Co-operation Program “Eureka” and the COST program The Center is the co-coordinating body for these two programs.

The aim of Science and Technology Park (MTP), established in 1993, is to consolidate innovative enterprises, to assist them in growing up and expanding their business activities by providing information, administrative and consultation services to them. The MTP services are designed for research and technology orientated SME enterprises. The MPT is planning to develop new technologies and projects in the fields of microelectronics, optical electronics, sensor systems, information systems, energy saving and environmentally friendly technologies. Currently, the Science and Technology Park is uniting 30 SME enterprises.

In comparison with other regions, the innovation development of Vilnius has received the utmost attention. In 2000, 47.2 per cent of funds allocated for research in the country were spent in the research institutions of Vilnius County (no data have been provided for the city of Vilnius solely).

Experts of the Lithuanian Innovation Center note that Vilnius enterprises introduce most of innovations to their businesses. The survey* conducted by the Institution shows that Vilnius region enterprises mainly (approximately 76%) implement in their activities short-term (up to 1 year) innovation projects. The majority of such projects are directed towards innovation of produce (44%) and technology (25%).

Innovation development experiences a positive effect of the National Industrial Property Protection System implemented in Lithuania. In the country, a system of institutions, responsible for intellectual property protection, has been established. State Patent Office (SPO) is involved in formulation of a state policy in this field. Such institutions as the Lithuanian Patent Trustees Organization and Lithuanian group of International Intellectual Property Protection Association have been established in the country. All the major legislation regulating the protection of industrial property units was adopted: the Law on Company Names, the Law on Competition, the Law on Trade Marks, the Law on Patents, the Law on Industrial Design and the Law on Legal Protection of Semiconductors Products Topography. Lithuania is a member of various international organizations. One of the most significant events in the recent years was the proposal of the European Paten Organization to Lithuania to join the European Patent Convention after a long-term co-operation with this organization.

Nevertheless, economic hardships, legal framework holdbacks and other causes determine the scarce number of patent application submitted by enterprises and natural persons. In 2001, the State Paten Office (SPO) received 123 patent applications (including 68 from Lithuanian applicants). The number of patent issued is respectively low. In 2001, the SPO granted 128 patents (including 74 patents to Lithuanian applicants).

5.3. Access to International Research and Development (R&D)

The access of Vilnius research and business entities to international research and technology development (R&D) could be assessed as comparatively high.

Majority of Vilnius training and research institutions, including all the principal Vilnius higher educational and research institutions operating in the field of high technology in the city of Vilnius (see paragraph 5.1) participate in international projects and collaborate with foreign science institutions. This provides broad possibilities for the institutions to develop their own scientific activities by disgorging into international scientific networks, to utilize international scientific attainments for their research work as well to apply them into practice. International co-operation of educational and research institutions in the R&D field has been intensified lately. In order to prove it one could mention the example of the Institute of Biotechnology (see picture 2).

Box 2

International Activities of the Institute of Biotechnology

More and more research has been conducted by the Institute of Biotechnology based on research contracts with foreign clients. The Institute is expanding its international scientific co-operation. In 2000, as compared to 1999, the volume of contracts with foreign clients increased 7.3 times. Scientists of the institute have established fruitful co-operation with representatives of twenty-six research institutions from Germany, United Kingdom, USA, Canada, Japan, Sweden, Denmark, France, Latvia, and Estonia.

Source: Institute of Biotechnology: Annual Report 2000, Vilnius 2001.

Another important channel uniting Vilnius with international R&D is studies of students of higher educational institutions and internships of researchers abroad. As it has been mentioned in paragraph 3.3, every year a comparatively high number of Vilnius University students (700 per year) in the course of studies deepen their knowledge in foreign educational establishments. Besides, quite a few persons after having obtained a bachelor’s degree in Vilnius higher educational institutions pursue their master’s studies abroad. Lately, the number of persons, who have obtained or are in the process of obtaining the doctoral degree in foreign educational establishments, is increasing. One should mention, that foreign nationals study or have their internship programs (including doctorate programs) in Vilnius educational institutions. For example, a group of graduates from Insubria University (Italy) study and conduct research work at Vilnius University Quantum Electronics Department.

An important weight in international co-operation of Vilnius enterprises in the R&D field is attached by such Vilnius institutions, mentioned in section 5.2., as the Lithuanian National Information Center “Eureka”, which co-ordinates the relations of the Republic of Lithuania with the European Research and Development Co-operation Program “Eureka” and the program of the European co-operation in the field of science and research COST; the Lithuanian Innovation Center (LIC) and Science Technology Park (STP).

The LIC assists Lithuanian enterprises in finding partners, capable of providing with necessary technologies, as well it allows for Lithuanian enterprises to disseminate their created innovated technologies abroad and submits information about EU research and technology development programs. The Center maintains close relations with international organizations: it operates in the European innovation research centers network (IRC network), as well is a member of the European technology transfer, innovation and industrial information (TII), it co-operates with the European business innovation centers network (EBN) and with the International Association of Science Parks (IASP).

Activities of the Science and Technology Park are also closely related with the fostering of international relations and co-operation. The MTP provides information and counseling services concerning EU research programs and funds in the R&D field, participates in international programs, including the Lithuanian National Contact Points for EU 5 Framework Program in the framework of the Fifth Framework Program of the European Commission. Designed for scientific research, technological development and demonstrational activities.

Access to international scientific technological development is increased by the growing foreign investments in Vilnius enterprises, which together with capital bring the latest technologies, advanced management and know-how.

Participation in international conferences and exhibitions organized abroad and in Lithuania provides additional possibilities for Vilnius research and business enterprises to get access to international R&D. Largest international exhibitions are hosted in the Lithuanian Exhibition Center LITEXPO, situated in the city of Vilnius, which today is considered an exhibition organization leader among other Baltic States. LITEXPO has directed its activities into two fields: organization of international specialized exhibition locally and exposition of Lithuanian companies abroad. Annually, LITEXPO organizes approximately 40-48 events, including 20 international exhibitions on various topics, 6-11 expositions of the Lithuanian enterprises, several conferences, workshops and other events. Taking into consideration the changes in the market and needs of Lithuania and other neighboring countries LITEXPO has worked out its traditional schedule of exhibitions, which is amended according to the economic adjustments and new demand arising thereof. During several last years, the highest number of visitors is attracted to the information technology and telecommunication exhibition “Infobalt”, the “Balttechnika” exhibition has expanded in all respects, by including into the list of its topics such weighty sectors as energy and electronics, automatics, control and measuring devices, etc. The exhibitions mentioned always attract a considerable scientific potential of Lithuania.

5.4. Preconditions for Cluster Development

None would doubt nowadays that formation of knowledge economy clusters is an important condition for prosperity of the city and the whole nation. Only in Europe, there have been established 15 knowledge economy clusters. Among essential conditions for uprising of such clusters one should mention the presence of universities, research institutes, high technology business, good connections and communications. Knowledge clusters concentrate comparatively considerable human resources, e.g.: Kyst cluster (Sweden) employs nearly 30 thousand persons, Bangalor (India) - 150 thousand, Silicon Valley (JAV) - 500 thousand persons.

Process of knowledge economy clusters formation is actively developed in geographically neighboring with Lithuania Nordic countries. In addition to the mentioned Kyst cluster, in Sweden (Stockholm), a mighty, second after Silicon Valley by its size world-wide the information technology center; a biotechnology region Medicon Valley is being developed in the southern part of Scandinavia.

Last decade Vilnius has faced establishment of favorable conditions for springing-up of knowledge economy clusters. A strong high technology sector in the city and latest public initiatives have had an enormous impact on clusters formation. Currently, five projects related to knowledge economy clusters are being implemented or initiated in the city of Vilnius.

Material Science and Measurement Cluster

Material science and measurement cluster has been among the very first science and technology parks (STP) in Lithuania and has operated since 1993. It is a joint project of three scientific institutions – the Institute of Semiconductor Physics, the Institute of Physics and the Institute of Theoretical Physics and Astronomy. The STP is based in the center of the city and has 3000m² of floor space.

STP activities include services to companies (technical and technological examination, consultations in the area of scientific research, technological information, EU funds for research projects); provision of infrastructure to companies (research base, technological and production facilities, modern telecommunication network, rent of office and production premises); services to researchers (information on EU research programs and funds, consultations on EU projects and partnerships). STP services are aimed at Sauletekis Valley companies working in scientific research and technology. At present STP involves 30 companies with the total staff of over 190.

The following are the technologies and projects developed at the STP:

§ microelectronics

§ optical electronics

§ sensor systems

§ information technology

§ energy saving

§ environmental technologies

Information Technology Centre

A district of Vilnius known as “Siaures Miestelis” will soon see the establishment of the business incubator Information Technology Center (ITC). This area, close to the center of the city, is a good location for business undertakings. An area that was previously occupied by a Soviet Army military base is now developing into a complex of modern architecture, including offices, trade centers, hotels and residential housing. The ITC will occupy two identical buildings close to each other with the total floor space of 2000m². The UAB Lithuanian Telecom Business Solutions and other IT companies nearby offer good prospects to develop a high business complex in the area.

The aim of the ITC will be to promote progress in domestic IT sector by supporting selected projects and business mostly dealing with information technology.

The ITC will provide incubator services, IT business consultations, will be involved in the distribution of IT information, close co-operation with universities, will develop relations with the IT and financial industry and other support projects.

The whole project is viewed by academic, business and government representatives as a timely and important one for IT development. The founders of the ITC are the municipal company UAB Siaures Miestelis and the Ministry of Economy. At present, the premises for the incubator are in the process of renovation. The incubator will start functioning in the autumn of 2002.

Biotechnology Research Park

A Biotechnology Research Park is to be established in Paneriai district of Vilnius. The favorable conditions for starting and developing a biotechnology business in the area are created by the biotechnology center that has already emerged here. Nearly all of Vilnius biotechnology research institutions and industrial companies are based here. The Biotechnology Research Park will be based in the old building of the institute of Biotechnology with over 5000 m² of floor space and a design that can be easily converted into laboratories and offices.

The aim of the Biotechnology Research Park will be to promote further progress in biotechnology industry. The activities of this specialized organization will include such areas as:

§ Exchange of information between universities, support and management of research organizations and businesses;

§ Promotion of innovation through business incubation and support;

§ Establishment and rental of premises, joint laboratories and other specialized facilities.

Taking into account the potential of companies and organization working in the Paneriai area, the Biotechnology Research Park environment could enable the following developments:

§ Branching and development of new businesses;

§ Emergence of new markets for the existing businesses specializing in meeting the special needs of existing companies, biotechnology industry and research;

§ Emergence of new related businesses (e.g. patent consultants, experts in biological informatics);

§ Development of a similar biotechnology business that could benefit from the existence of joint laboratories and co-operation with the existing research force;

§ Strengthening of university potential by using researchers working in business and the facilities owned by businesses (laboratories, lecture rooms) for teaching purposes.

It is expected that the Biotechnology Research Park will be established jointly by public and private capital. The parties interested in the project are such public institutions as the Ministry of Economy, the government of the City of Vilnius and private companies.

Sauletekis Valley

The area of Vilnius known as Sauletekis is expected to become the location of the information economy kernel Sauletekis Valley. The area is a university campus. This area offers a favorable location for the information economy kernel because of a large concentration of study and research and good development prospects.

At present, a considerable portion of Vilnius University and Vilnius Gediminas Technical University divisions and related units, UAB Šviesos konversija (laser technology enterprise) are based in Sauletekis.

For the development of the information economy cluster 18-hectare reserve area is available. It is expected that Sauletekis Valley will become an area of close co-operation between modern universities and research institutes, existing and new high technology companies. Therefore, the following possibilities for the use of the free area are being considered:

§ Establishment of high technology companies

§ Establishment of business and innovation support structures (e.g. incubator, innovation center)

§ Establishment of business services companies

§ Transfer of other VU and VGTU university divisions from other regions of the city.

On the basis of the specialization of the research institutions concentrated in the area and the competitive advantages of the city of Vilnius, the following businesses could be developed in Sauletekis Valley:

§ Information technology

§ Laser technology

§ Semiconductor optical electronic technology

§ Nanotechnology

§ Environmental technology.

The project has the support of the public of Vilnius, academic and public institutions. At the moment, a working group has been created to take the necessary actions for the establishment and development of Sauletekis Valley.

Visoriai Valley

Another potential area for one more information economy cluster related to IT and biotechnology industry development in the city of Vilnius is Visoriai. The area has the advantage of the presence of the Academy of Sciences campus, IT companies and a modern biotechnology facility. At present such research institutions as the Institute of Biochemistry, the Institute of Ecology, the Institute of Mathematics and Computer Science, Division of the Institute of Botany, divisions of the Institute of Veterinary and the Institute of Chemistry as well as several biotechnology, laser technology and IT companies are based here.

The Academy of Sciences campus has an area of 11 hectares, and the production facility of Biotechna located nearby additional 4.5 hectares. Another 18-hectare area is available for the formation of the information economy area.

Among the first projects planned in this location is establishment of a science and technology park Visoriai Information Technology Park. This organization will be established in the 1500 m² premises previously owned by the Institute of Geography on Akademijos St. By now, a Memorandum of Understanding on the establishment of this organization has been concluded between the main founders and initiators, including Vilnius higher schools involved in training of IT specialists, Institute of Mathematics and Computer Science and two IT companies based in Visoriai.

5.5. Partnerships in Creating Innovation Network

Various initiatives on establishing a favorable environment for innovations in Vilnius rise from an intensified partnership of the city’s authorities, research education and business communities. In Vilnius as well as all over the country, there operate a number of public organizations that combine potential of studies, science and business, among them Knowledge Economy Forum uniting managers of the high technology enterprises, researchers and politicians; Infobalt representing ITT companies and educational institutions; information society development alliance “Window to the Future”, created by four leading companies in telecommunications and banking, and others. Active support of Vilnius City Municipality to new public initiatives and its participation in the implementation of the latter has been an important factor to mention.

Business-Government-Science partnerships

Among other significant examples of co-operation between Vilnius City Municipality and city communities one should mention the agreement on knowledge economy development in the city of Vilnius. In January 2002, Municipality together with Vilnius Gediminas Technical University and Association Knowledge Economy Forum signed a Memorandum of Understanding, by which the parties confirmed aims and forms of co-operation between themselves. By signing the Memorandum, the parties agreed to co-operate by fortifying the sector of high technology (biotechnology, laser technology, information technology, etc.), by promoting a positive attitude in the society towards the knowledge economy and establishing knowledge economy clusters in the city of Vilnius.

In the course of co-operation with Knowledge Economy Forum an idea to establish a Sauletekis Valley was born. In the most common sense Sauletekis Valley would include several projects related to the development of knowledge economy, i.e. Siaurės Miestelis (North town) Technology Park, which will soon begin its activities, Biotechnology Research Park in Paneriai district, knowledge economy cluster in Sauletekis student campus, as well other development possibilities may be found in another district of the city – Visoriai. The aim of Sauletekis valley is to increase the potential of the city of Vilnius in the field of research and studies, to promote innovations and high technology sector development. Recently, representatives of Vilnius City Municipality and Vilnius County, research and educational institutions, managers of high technologies enterprises, politicians and consultants joined themselves into a working group, which has drafted a concept of Sauletekis Valley. Besides, the working group should co-ordinate further activities related to the project.

Establishment of Technology Park in the city of Vilnius is an example of co-operation between Vilnius City Municipality and public authorities for the sake of innovation development. In April 2002, the Municipality and the Ministry of Economy established a VSI Siaurės Miestelis Technology Park (SMTP). The mission of the organization is to promote ITT and progress of other high technology industries by supporting innovative projects and businesses by applying strategic, technical and administrative support tools. Besides, SMTP will perform a business incubator function by proving business consultations, business opening capital (risk) and special office premises for initiated promising businesses. SMTP is aiming at becoming an important member of knowledge economy development, which will actively promote co-operation and information exchange between academic, research, business and public authorities.

One the most important public institutions facilitating joint activities of Vilnius government and its society in development of city’s economy is Tri-party Council, which consists of the representatives of Vilnius City Municipality, city employers and trade unions.

In order to increase the competitiveness of Vilnius, the Municipality has signed two important partnership agreements: agreement with the Ministry of Culture and Ministry of Environment on sustainable development of the city and on strengthening of culture and environment protection; and agreement with Lithuanian Union of Architects on evaluation of city development’s quality.

Co-operation Between Cities

Vilnius City Municipality has formed a partnership not only with Vilnius community, but also with other towns of the country. At the beginning of 2002, municipalities of Vilnius and Kaunas agreed to combine their potentials and co-operate in order to create a center of attractive force of the European level. In the nearest future it is planned to establish a joint working group, which, following Vilnius Development Strategy and National Development Strategy, will take action in order to attain the aim.

Conclusions and SWOT

Principal conclusio