Analysis of Cyclical Sensitivity in Traditional and New Sectors: the Case of Lithuanian Economy

Abstract

In this article, different sectors of the Lithuanian economy during 2000–2010 are analysed, as well as theoretical aspects of issues in sector classification. Sectors are classified by the author into groups of high value-added, medium value-added and low value-added; by OECD into high-technology industries, medium-high technology industries, medium-low technology industries and low technology industries. Furthermore, all sectors are labelled either modern or traditional. Intentions to restructure national economy with priorities in high-technology, knowledge-intensive and high value-added sectors call for formation of a new national specialization. It is important to thoroughly analyse possible effects and influences of these processes to the national economy and welfare of society.

With current interconnections of economies and processes of globalization, it is very important to evaluate sensitivity of different sectors (of different technological intensity and value-added) to general fluctuations of economy. Small open economies, such as Lithuania, are especially susceptible to this problem.

Although this problem may seem to be narrow at first glance, it is in fact quite complex and has not been sufficiently studied in scientific literature. Available research of separate segments is inconclusive due to rapid changes in circumstances, interconnections between segments and contradictions between technological intensity and creation of value-added. In this article, a correlation and regression analysis of fluctuations in gross value-added and GDP of different sectors of Lithuanian economy during 2000–2010 is presented. Although no concrete conclusions were reached, important tendencies were revealed and a basis for further research was established. Some proposed goals are as follows: evaluation of relevance of factors of production to value-added, fluctuations of value-added in markets for services and products, and evaluation of impact of economic policy to cyclicity of different sectors.

DOI: http://dx.doi.org/10.5755/j01.ee.25.4.2055