An Inquiry into the Potential Effects of Long Term Emigration and Brain Drain on the Long-term Sustainability of Lithuanian Economic Growth

Abstract

The issue of emigration and brain drain has been a considerable worry for the economy of Lithuania almost immediately since gaining independence from the Soviet Union in 1990. Many have feared the long term repercussions of such a phenomenon on the sustainability of economic growth in the small Baltic republic if nothing is done to curtail the issue.
This paper sought after investigating to what extent brain drain has and will pose economic pressures that may lead to long term decline in development and living standards in the event the issue worsens over time, by combining economic and demographic data about the country over time, particularly since independence, and compiling and applying them to general economic theory that can explain trends in small open economies both in the short and the long term, it was found and concluded that although the issue of brain drain should not be taken lightly, it’s not necessarily a guarantee that the Lithuanian economy will struggle.
Whilst labour, particularly effective labour is an important factor for long-term development, other factors, particularly the continued advancement in the level of technology and labour augmenting capabilities within and amongst the workforce was proven to be the defining factor for sustaining economic growth even in the face of a declining and ageing population.
In order to facilitate such advancements, it was recommended that Lithuania continue attracting FDI in labour augmenting activities, which have proven to yield successful thus far due to the effective establishment of legislation and infrastructure to support such investments. Additionally, it was urged that Lithuania address its immigration practices in making them more effective in attracting foreign effective labour to offset the loss of skilled local workers to emigration.