Lithuanian Free Market Institute leads Lithuania's rise on the Doing Business Index
Free-market energy reforms facilitated by the Lithuanian Free Market Institute (LFMI), an Atlas Network partner in Vilnius, have helped Lithuania attain the 11th spot on the World Bank’s 2020 Doing Business Index. This year’s ranking bumps Lithuania from 14th place primarily because of significantly improved access to electricity, with reduced costs and reduction in delivery time as principal indicators.
Before the electricity reform policies advocated by LFMI were implemented, getting connected to the electricity grid was convoluted, expensive, and time consuming. It took 95 days for the connection to be made, most of which was spent wading through red tape. LFMI identified problems in the process and worked with the government to reduce the time to connection to 45 days. Barriers such as a requirement to sign an electricity procurement contract before being connected to the grid were removed. Today, a faster connection to the electricity grid makes setting up shop in Lithuania a much more attractive proposition and is key to opening up the country to investment.
LFMI’s work is also responsible for greater transparency—and more take home pay—for taxpayers. Historically, Lithuania has suffered from high taxes on labor, mainly in the form of social security contributions. LFMI called for the consolidation of the tax base for social security contributions, so that employees would pay taxes after receiving their salary instead of their employers deducting such taxes prior to paying their employees. Under the previous system employees did not even know how much the taxes cost. Today, the lower social security burden means that many employers have raised wages. An estimate of over one million Lithuanians—just over 75 percent of the workforce—are taking home more money per paycheck since the reform passed.
Targeting the World Bank Doing Business Index is one of the strategies of Atlas Network’s Leveraging Indices for Free Enterprise (LIFE) project, which was supported by John Templeton Foundation. LIFE projects promote policy reforms that demonstrably move the needle on economic policies as measured by change in a specific prominent ranking or index, including the Doing Business Index (DBI) by the World Bank Group, the Economic Freedom Index by the Heritage Foundation in partnership with The Wall Street Journal, and the Economic Freedom of the World Report by the Fraser Institute. The program provided grants to Atlas Network partners to conduct research, advocacy campaigns, and media campaigns to affect change. The grant awarded $100,000 to each selected organization, divided over the course of three years. In 2015, LFMI’s LIFE project began with a focus on improving the country’s Doing Business Index ranking.
Lithuanian Free Market Institute is a participating organization in Atlas Network’s LIFE project. Since their participation began, Lithuania has risen in the ranks of the DBI, from 24h place to 11th place.