Promotion of high-tech business development in Lithuania’s free economic zones

Problem

Many of Lithuania’s Free Economic Zones (FEZ) are not fully using their potential to support high-tech industry growth and contribute to the country’s long-term economic development. While some FEZs already host successful and innovative companies, there is still no clear national strategy focused on developing high-tech businesses in these areas.

A 2023 review by the National Audit Office found that FEZ development is happening without a clear vision or expected outcomes, despite significant public investment. This shows a lack of coordination and national goals.

In 2023, 78% of companies operating in Lithuania’s 91 FEZ areas were not involved in high-tech activities. In addition, none of the seven FEZ management companies had performance targets related to advanced manufacturing. This approach does not align with Lithuania’s goal of shifting to a higher value-added economy.

Despite this, the Government’s 2025 Programme Implementation Plan includes plans to expand existing FEZs and create new ones, including in Ignalina, Panevėžys, and Alytus. However, the plan does not mention high-tech development as a clear priority.

There is also a shortage of investment-ready land in FEZs. Without clear criteria for selecting new zones or a consistent development strategy, there is a risk that state-owned land will not be used effectively. This could limit the economic value created and reduce FEZs’ contribution to high-tech and innovation growth across the country.

Another challenge is the unclear division of risk and responsibility between the state and private FEZ operators. Public authorities do not require regular performance reporting, even though these zones operate under favorable conditions. This raises questions about the efficiency of public investments and how well their impact is measured.

Finally, many FEZs are not well integrated into regional innovation ecosystems. There is little cooperation with universities, research institutions, and innovation centers. As a result, their potential to support regional technological development remains untapped.

The goal of this project is to provide recommendations on how changes in regulation and the innovation ecosystem could help boost high-tech business development in Lithuania’s Free Economic Zones.

Goal

The goal of this project is to provide recommendations on how changes in regulation and the innovation ecosystem could help boost high-tech business development in Lithuania’s Free Economic Zones.