VILNIUS METROPOLITAN AREA Donatas Burneika Institute of Human

VILNIUS METROPOLITAN AREA Donatas Burneika, Institute of Human Geography and Demography, Lithuanian Social Research Centre Vilnius, LITHUANIA

Main aim The main aim of this presentation is to reveal general trends of the development of Vilnius metropolitan area and socio-economic factors determining its main trends

Main idea The fast development of Vilnius city and its spread into the vast urban region should inevitably make certain effect on the development of the surrounding areas, which are being commonly perceived as the least developed region in Lithuania. The scale and some peculiarities of this impact are under discussion. The positive and negative sides of this impact are to be established.

Economic crisises and booms in Lithuania since 1991

Population decline in Lithuania in 2001 - 2011

Trends of the metropolization are expressed more by shrinkage of smaller cities than by expansion of capital city-region

Structure of Vilnius’ hinterland

Distribution of unregistered labour migrants to major cities in 2012 according to redistribution of residents’ income tax and wage differences in major cities

Vilnius city core and the surrounding region – contrast area The zone between Vilnius city core and the hinterland (zone of sprawl of the city) can be characterized as a space of huge contrasts in various fields: §Economical §Social §Ethnical §Political §Environmental All these differences make impact on the conditions for city sprawl to various directions. Complicates coordinated planning and development. However existence, functioning and growth of the city is the main factor of development of the region. The most prosperous Lithuanian city develops in the middle of the most problem region It creates spaces, with different trends of development than the rest of the area

Fast and extensive spread of Vilnius metropolitan area in 1990 - 2011. The city sprawl

Middle part of Vilnius metropolitan area

The impact of Vilnius on the economy of East Lithuania § § § § § Inflow of rich people into the zone of suburbanization Inflow of money into the zone of suburbanisation Export of “socially excluded” ones to farther areas Import of young population from all over the region Export of money via residents’ income tax Supply of jobs to the residents of the region Market for locally produced goods (commuting zone) Demand for services in peripheral parts via tourism Etc. . .

Impact of Vilnius on the budgets of municipalities

Relative GDP per capita in 1996

Differences of growth rates of GVA per capita in municipalities in 1996 - 2011

GDP per capita (thous LT)

What are the main trends in restructuring the regional economy • The structure of economy is fairly stabile. Decline of agriculture, construction and rise of traditional services is evident. (bankruptcy of the third largest bank made some negative consequences on business services).

What are the main trends in restructuring the regional economy • The development of modern R&D industry, IT services are being mentioned as the newest positive trends. (fig. – latest trends of turnover of IT sector in Lithuania and Vilnius county)

What factors of regional development were the most important (exogenous, endogenous, structural, sociopolitical, others)? • Most questioned experts stated that endogenous factors were more important (e. g. – status of Capital city, demographic structure, education, qualification). • Foreign capital was not so important in Lithuania like in other Baltic countries and majority of biggest companies of Lithuania are located in Vilnius are of Lithuanian origine. • However many positive recent trends are related to foreign capital (like growing occupation in world wide service centres of such companies like Barclays, Western Union) And city is a primary destination for FDI in Lithuania. • Many tend to forget export of services, which is important in case of Vilnius

Export of goods of Lithuanian origin from Lithuania and Vilnius

FDI in Vilnius 2008 -2012

Has the productivity growth been related to the increase of the innovative capacity of the region? • Though there is a few statistical data, confirming or denying these facts (for example 70% of all expenditure for technological innovations in Lithuania have been made in Vilnius county in 2010), majority agrees that such relation is evident. • However the argumentation of such conclusion is quite uncertain….

Are social disparities and economic growth within the region interlinked? And how? (lower level of inequalities and exclusion / higher growth? or? ) • It is, though interlink is quite uncertain. Generally situation in whole Lithuania confirms trend, that economic recessions have very negative consequences and inequality increases both regionally and vertically… Fast economic growth do not result in social wellbeing so fast. • However, in the longer run The economic growth of Vilnius, results in lesser social disparities in the region, as city is important source of incomes both for employees, business, municipalities and those owning land in metropolitan area.

What were the most successful regional/local policies? • Questioned experts struggled mentioning concrete local policies, while mostly agree that there were actually no successful regional policies in the area. • Proactive position of some mayors, promoting the city as the best plays to live and work and attracting investments (also using EU funds) is among those mentioned. • Successful renovation of certain areas of the city like new modern centre of the city) were also mentioned.

Has the external intervention been important for development of the region? • The opinion of experts differ a lot here. Everyone agrees that this is a positive factor, but most tend to say that not a decisive one. • However the newest investments in R&D sector, IT service centres and many other were made with the support of EU ERDF help. • Tourism (and shopping tourism) is very important source of income in the peripheral EU city near the border of the country with very limited supply of many goods and services.

Conclusions § Natural processes of depopulation of rural areas related to continuation of delayed urbanisation will persist in Lithuania and in surrounding countries. It will be making negative impact on local population first of all by damaging their expectation and hopes but not their incomes or living standards. § The development of Vilnius and spread of its urban region will persist and city will become more and more important factor of development of the region. The consequences of this spread would depend of successful coordination of such processes between the city and other municipalities and wise regional planning. However almost no cooperation and common planning and regulating of processes of suburbanisation exists at present and there are no signs for this in the nearest future.

Thank you for your attention!