The tasks facing the political leadership in the newly independent Lithuania were immense and unprecedented. To be sure, the former Soviet satellite states of Central and Eastern Europe faced similar challenges, but the position of the ex-Soviet republics such as Lithuania was even more complex since they had not possessed the modest degree of economic and political independence, nor the separate economic and financial institutions, enjoyed in Poland, Czechoslovakia and Hungary. Moreover, although the latter had set out on the path of economic transition a little earlier than the Baltic states, they had accumulated too little historical experience to offer a clear and uncontentious guide to the latecomers. Again, though there were many international agencies such as the World Bank and the International Monetary Fund (IMF) which were well qualified to offer advice on economic development and anti-inflation strategies, they too had little or no experience of plotting the transition from Soviet-type command economies to liberal capitalism. Essentially, Lithuanian leaders knew, or thought they knew, the desired outcome of their economic reforms, but reaching that destination was a formidable and problematic task.
What then were the economic objectives of the Lithuanian political leadership? Shortly after their independence was recognized the Baltic prime ministers, meeting on 30 October, 1991, declared their aim to be a successful transition to a market economy involving a fast and radical implementation of market reforms. This transition, they believed, could not be separated from overall democratic reforms nor from the international integration of the Baltic economies. The political imperative was to move rapidly away from the command economy which had demonstrably failed, to consolidate political independence by means of economic reforms, and to re-establish the trading and financial links with the West which Lithuania had enjoyed in the inter-war period. However, establishing a liberal market economy was also recognized as the essential condition for achieving high and sustainable economic growth and prosperity. 1
The following discussion focuses on two stages of economic reforms in post-independence Lithuania. The first is concerned with the economics of transition-the process of disentangling the Lithuanian
LITHUANIA: STEPPING WESTWARD