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The modern world economies are today threatened with insecurity throughout every aspect of business, technology, health care, public resources and more increasingly governments and policies structures. The philosophy that a secure premise can be adequately protected and give maximum security to the ringed-occupants can no longer hold. Borders have become porous; the ring of steel and castle-style high walls can no longer protect any economy. The environment under which they operate can be influenced so much by other factors such as neighbours, economics of existence, technologies and relationships to name a few. This paper analysis ICT issues in relation to economics of security and development, and highlights the adage that, ‘No man is an Island’, i.e. no system can exist in isolation. And with the world becoming a global village, (in)security of any nation must be the concern of one and every nation in the global equation. Can ICT ‘balance the act’ and provide solutions to the many global questions?
JEL Classification P470, P510.
Keywords: economics of security, development and sustainability, ICT, economies (developed and developing).

The article attempts to show that macroeconomic measurement of intellectual capital and its efficiency helps to evaluate adequately the structural changes, the changing productive contribution of the intellectual resources in different sectors, regions and countries. It looks, as a result, that the last one is insufficient to aim purposefully the requirements of the Lisbon Agenda. Some aspects of criterial and indicators’ system used for evaluation of intellectual resources are discussed, also the problematic directions and priority tasks for the expansion of intellectual potential of the new Baltic States are attempted to identify. The author suggests for the renewing system of statistical indicators for intellectual development and, in particular, proposes to integrate some of them into national social accounts. It also remembers that social support in the EU, e.g., of rural inhabitants, and/or to retarding areas, on the one side, substantially break the acceleration of the intellectual resources, on the other. Some other suggestions concerning the paradigm of economic significance of the intellectual potential, its measurement, economic evaluation and perspective tasks for the professional competence, management experience a/o indicators of the intellectual productivity were attempted to present in the report. The reasoning was based on the goal-oriented rule suggesting the pragmatic orientation to achieve the Lisbon Agenda objectives by metaeconomic trade-off between different values of social (first of all, intellectual) development.
JEL Classification D800, O310.
Keywords: intellectual resources; multidimensional indicators of intellectual development; competitiveness in intellectual capital.

Realization of fiscal decentralization in the public economic sector of Lithuania and its correspondence to the principles of the European Charter of Local Self-Government are considered. The principles and order of the structure of local authorities budgets, the significance of local authorities nonbudgetary funds and their development in Lithuania are discussed. Municipal revenues, their structure and sources are described. Dynamics of local authorities budget revenues and expenses and their main components is analysed in the period of 1999-2005. The model of equalizing financial resources between Lithuanian local authorities as well as borrowing opportunities are discussed. The principle of programme budget is successfully realized in both on the state and local authorities level in Lithuania. The analyses of structure of local authorities budged revenues and expenses shoved that principle of fiscal decentralization are not realized enough in the public sector of Lithuania. Structure of expenses of local authorities budgets is similar to that of countries of European Union. However the share of subsidies of state budget in the revenues of municipal budgets is too large. The borrowing opportunities of municipalities are not sufficient, too. These factors limit the financial independence of local authorities in Lithuania.
JEL classification G280, O310.
Keywords: finance of local authorities, fiscal decentralization, budgets of local authorities, non- budgetary funds.

Firms in the new member states of the European Union (EU) in Central East Europe (CEE) have either emerged from a system of economic planning (as privatised firms or part of such) or are newcomers. In any case, all firms today operate in a more or less competitive environment within the space of the enlarged European market place. Alas, their performance is still weaker than that of their competitors in Western Europe: levels of labour productivity are still much lower and only slowly catching up in Europe’s East. Firms are only able to secure their competitiveness when calculating with much lower levels of labour costs than in the West. A switch in technology paired with the necessary intensity of capital deepening would be necessary to bring firms in CEE to the levels of competitiveness that allows for wages and earnings to catch up to western levels. Moreover, a comparison of total factor productivity between firms in East and West shows that the productivity gap is not only rooted in the strategic decision of firms to choose a labour-intensive production technology. Rather, inefficiencies in the allocation of resources is still prevalent at the firm-level in the East. In an earlier study, we found that enormous progress with the introduction and maintenance of the new competitive order in the then accession countries was made, but also that quite a variety of national differences prevailed (Hölscher/Stephan 2004). From standard industrial organisation theory (the structure – conduct – performance concept) and grounded on the Schumpeterian paradigm, we can assume that intensity of competition and firm-performance are closely linked. Recent empirical literature involving firms in CEE convincingly show a positive the link between firm performance and product market competition or takes the shape of an inverted U-curve (see e.g. Carlin et al., 2003, for a literature review). Our own research indicates that next to human capital issues in general and managerial expertise in particular, the capital deepening issue accounts for a large share of the productivity gaps of firms in the East (Stephan, 2006). The aims and objectives of this study are to answer the question whether the recent reforms in European competition policy are likely to help improving the effectiveness of competition policy in Europe to thereby increase the intensity of competition and hence competitiveness in the East. Following this introduction, we critically review the reforms in European competition policy. Part 3 discusses the likely effects of those reforms on policy effectiveness in CEE with particular emphasis placed on their local situation and regional particularities. The final part then concludes with some critical remarks about the recent reforms and discusses the future prospects of productivity catch-up in the current environment of competition policy.
JEL-Classification: L40, P51
Keywords: competition policy, anti-trust, Central East Europe.

The paper analyses decision support processes for evaluation of the long-term trends of economic transition in Central and Eastern Europe under the conditions of EU enlargement and the processes of globalisation. The general and specific trends are describes and compared analysing situation before and after EU enlargement, as well as the tendencies in the future. The goal of the research, dedicated to the transformations in the Central and Eastern Europe, is to reveal core typicality in the political, social and economic development in these countries and, based on this, create preconditions for further modernization and rapid progress of the countries of the Central and Eastern Europe, with respect to new challenges, determined by common processes of globalization and development of the European Union. Some new non-traditional ideas and models of possible economic development in the future are discussed. The processes of development of integral European economic, social and cultural space are analysed.
JEL Classification P000, P510.
Keywords: decision support, transitions, long-term trends, clusters, Central and Eastern Europe, regional economy.

This article examines the determinants of poverty in Lithuania. This study is based on 2006 Household Budget Survey data. Regression analysis technique was used to identify the contributions of different variables to poverty. It was attempted to explain the level of expenditure per capita – the dependent variable – as a function of a variety of explanatory variables. The independent variables such as size of the household, living place of the households and various household heads characteristics: age, sex, education, socioeconomic status were included into regression model.
JEL Classification I320, I380.
Keywords: poverty, Lithuania, determinants, household.

Electronic space is steadily gaining popularity as an attractive environment for business organisation. Electronic dispatch of goods in a digital form allowing to avoid traditional checking procedure, increased level of anonymity of operations carried out within internet, introduction of electronic currency, and considerable mobility of electronic commerce account for the governmental institutions’ concern about effective application of tax rates that have existed up until now. Special attention is given to the more sophisticated procedures of value added tax (VAT) as its regulation by current legislation has become largely ineffective in terms of newly-introduced business models. Criticism of VAT for its poor effectivity in the area of electronic commerce was based, to a degree, on the circumstance that identification of the second party of a deed, that is the buyer, was impossible. Most authors argue that information technologies allow to identify only the IP of a computer system, not a subject who used it. The main objective of this article is to analyse the dilemma of e-commerce and value added tax (VAT) compatibility. A search for effective ways of imposing a VAT tax on electronic commerce lasted in the European Union up till 2000. In 2002, the adoption of the Sixth Directive “On Value Added Tax” consolidated a new pattern applied to the taxation of services rendered exclusively in an electronic way. Requirements of this Directive are in force also in the Republic of Lithuania since 01 May 2004. High demands are raised to the e-commerce sellers, therefore the focus is set on inadequateness between obligations which are defined in legal norms and opportunities which e-commerce provides. Even the new changes applying VAT does not wholly balance the relationship between tax institutions and e-commerce sellers. The new scheme is a first step to the efficient application of traditional VAT to the new form of commerce. Article also emphasises legal approach of virtual goods concerning VAT. Conservative legal stand of the EU towards VAT object does not facilitate equal competition between traditional and electronic commerce. Legal approach of virtual goods as being services, does not allow for electronic commerce to use all the advantages of information and communication technologies can offer.
JEL Classification H210, K340.
Keywords: electronic commerce, electronic commerce taxation, value added tax, virtual goods, digital goods.

The article deals with the changes and trends caused by the transformation of the centralised planned economy to free market economy. Such transformation affects not only the economy but also the whole social environment as privatisation is the key transformation element. Thus, models dealing not only with the economic field but also with other aspects must be used when assessing transition processes: quality of life, technological and knowledge innovations, ecological problems. The article presents models of summarised indicators that take account of their correlation and changes in time. The analysis is based on empirical data: gross domestic product, energy consumption, criminality, housing construction, etc. The concluded models allow to have a complex look at the problems caused by the transition period, and to assess their impact on further development of knowledge economy.
JEL Classification O110, P200.
Keywords: transition period, complex system, socio-economic processes, quality of life, knowledge economy.

In the past several years, the ten new Central and Eastern European members of the EU have enjoyed rapid growth but frequently alongside growing external imbalances. Economists have pointed to rising vulnerabilities, but markets express a positive view about the potential of these countries which is seen from compressed sovereign bond yields. The latest IMF study finds that the EU membership is a key factor behind a favourable treatment of CEE countries, including Lithuania, by markets. Scientists single out two types of integration – integration incited by technological progress, when sustainable economic growth is achieved because of the acceleration of technological progress, and integration incited by the growing contribution of capital, when heavier investment determines bigger production and, in its turn, heavier investment again. In projecting its economic policy as a member of the EU, Lithuania focuses a lot of attention to the implementation of large-scale infrastructural projects, emphasising the investment potential of the growth of the integration process. The experience of the period of domestic economy restructuring has, however, revealed that investment as such does not set preconditions for a consistent economic growth. Consistent economic growth is only attainable with a constant increase in economic efficiency. Rational use of EU support can be defined as an outcome of the application of new knowledge. A stable, outward-oriented and competitive macro-economic policy setting, a solid knowledge base, well-functioning institutions, an environment conducive to global learning and a competitive environment for the generation and diffusion of new technologies are some of the necessary conditions for sustained growth. This article reviews the sources and determinants for integration driven long-term economic growth in Lithuania.
JEL Classification F150, F360, P510.
Keywords: economic integration, integration influenced growth, knowledge-oriented macropolicy.

Prof. dr. Gediminas Davulis
Review. Gražina Ona RAKAUSKIENĖ. VALSTYBĖS EKONOMINĖ POLITIKA. - Monografija. Vilnius: Mykolas Romeris University Publishing Centre, 2006 -p.772. ISBN 9955-19-032-9.