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ABSTRACT
Lithuania's economy has gone through stages of feudal system, serfdom, centrally planned command economy and market-based economy. After its liberation at the end of the last century, Lithuania's transition is in process, as evidenced by the development of economic frameworks. Radical reforms, including the opening of markets, implementation of flat tax rates, rapid privatization of businesses, and efforts to maintain a stable currency, set the tone for phenomenal economic growth, not only in Lithuania, but in neighboring Estonia and Latvia as well. The Baltic Region experienced monumental growth in the mid to late 1990s, which accelerated through the early 21st century. Sweeping reforms and growth culminated with the accession of Lithuania into the European Union in 2004. The combined economic story of Lithuania, Estonia and Latvia is quite comparable to that of the Asian Tigers of South Korea, Hong Kong, Singapore, and Taiwan. The three countries have thus earned the title of The Baltic Tigers. Lithuania's accession into the EU fostered further development of the country and its economy on both the financial and political fronts.
Keywords: Emerging market, Financial regulation, Lithuania, FDI, FPI
ECONOMIC EMERGENCE OF LITHUANIA IN THE GLOBAL MARKET
The Republic of Lithuania has a rich history dating back to the Middle Ages. Like many countries, such a rich history has involved times of economic prosperity and hardship as well as conflict with other nations. For several centuries, the country's economy was based on the feudal system. Upon the abolition of serfdom in the early 1800's, a market-based economy slowly began to emerge in the region. The slow transition experienced several setbacks most notably due to significant conflicts such as WWI and WWII though Lithuania gained independence for a brief time between the wars. At the conclusion of the Second World War, modern day Lithuania was annexed by the Soviet Union. This effectively halted all economic transformation given the Soviet doctrine of a centrally planned, command economy.
In 1990 Lithuania declared independence from the former Soviet Union and in 1993 after several small conflicts, the Soviet Union withdrew all military forces from Lithuania. Following the transition in power, Lithuania began to develop the framework necessary to develop a market based economy. Radical reforms including the opening of markets, implementation...