EFFICIENCY OF THE EU STRUCTURAL SUPPORT AND ITS EFFECTS ON THE COUNTRY'S PROGRESS

The article deals with the main method used by the European Union (hereinafter called the EU)to re duce the discrepancies in the economy of Lithuania - structural support for the country's development and progress. The article analyses the economic, social, environmental, innovative and other indices of the economies of Lithuania and EU countries; the difference of particular indices of Lithuania and EU countries is assessed in marks. The progress of the Lithuanian economy in implementing the lis bon strategy is evaluated according to eight groups of indices. The present study assesses the facto~ that correspond to the national implementation programme of the Lisbon strategy and the facto~ that influence the individual indices on the national progress.


Introduction
Oflate years, changes in the social-economic situation in Lithuania are fast, however, according to separate macroeconomic indices this country still significantly behind the EU average. The Lithuanian GNP makes only 52% of the EU average; unemployment has decreased rapidly during the recent years, but the efficiency of employees is only 52.5% of the EU average and the people employed in agriculture, hunting and forestry account for 13.9% of all labour force versus the EU average of 5.8%. It has been provided in the EU Treaty that the European Community must try to decrease differences in the development level of different regions and the backwardness ofless developed regions. To decrease these gaps, the EU regional policy has been designed. This po-52 licy is financed from the structural funds which are based on the principles of programming, concentration, partnership and complementarity. In 2004-2006, Lithuania assimilated the structural support according to the Single Programming Document (SPD) for 2004-2006 and its Annex. This support and the support of the next programming period have to contribute to a faster implementation of the Lisbon strategy which will facilitate becoming "the world's most dynamic, competitive knowledge-based economy". However, as the research of macroeconomic indices shows, the implemented measures and actions of the regional policy do not make a major impact on the country's progress and Lithuania still lags significantly behind the EU average: within two years Lithuania rose from the 20 th to the 121h position among the 25 EU and its progress indica-tor has increased by 0.26 points, whereas some new member states have achieved a greater progress, e.g., Slovakia by 0.5 points and the Czech Republic by 0.38 points.
The objective of this work was to assess, whether the EU regional policy is being implemented in Lithuania and the policy's financial instruments are targeted at the priority sectors that make the greatest impact on the country's rTl_ Objectives fonna! (e:oro~a1.

EU Regional Policy, Structural Funds and Their Tasks
In order to assess the impact of the EU structural support on the country's progress, first of all it is important to understand the tasks ofthe EU regional policy, assigning of structural funds and the measures used to implement these tasks in Lithuania. The goals of the EU regional policy, EU structural funds, the Single Programming Document (SPD) for Lithuania and its financing strategies (priorities) could be depicted as a Molecule o/Development Objectives in which every atom is pictured according to the existing structure and demonstrates complex relations among these atoms. Figure I displays the relation between the EU support use strategies planned by Lithuania and the indices ofthe Lisbon strategy implementation progress. With reference to this scheme, the authors try to reveal the effectiveness of the EU structural support in Lithuania and the impact of this support on the country's progress. EU Regional Policy and Its Objectives. EU regional (Latin: regiocountry, land, vicinity) policy is the second largest EU policy in terms of budget (after the EU Common Agricultural Policy). The regional policy budget accounted for 213 billion Lt in 2000-2006. The EU regional policy emerged due to a huge gap between the richest and the poorest EU states (social and economic justification ofthe EU regional policy The goal of the EU regional policy is a consistent reduction of social and economic differences among the regions and promotion ofthe even development of the entire EU (in Fig. 1 this goal is 54 indicated as SI). The overall goal the EU regional policy is social and economic cohesion. The EU regional policy is directed to: a) supporting economic development in EU regions, establishing the required long-term development conditions (long-term objectives); b) formation of infrastructure following social, economic and environmental requirements (material and nonmaterial investments in long-term assets, human resources); c) reduction of differences in the living, economic, cultural and educational situation among the EU regions (Nekrosis, 2003). The EU Regional Policy is characterized by a combination ofthe following main features: i) regionalization (based on the central authorities and management "from top to bottom"); ii) regionalism (based on the management method "from bottom to top" as well as territorial integration); iii) decentralization of regional authorities (internal redistribution of national tasks for regional subdivisions) (Nekrosis, 2003).
Structural Funds. To implement the objectives ofthe EU regional policy, EU member states receive financial support from four structural funds and the Cohesion Fund. The general objectives of the structural funds are as follows: a) support to development of poorer regions with the main focus on investments in production sector and even development; b) support to economic and social restructuring problem fields; c) support to education, upgrade of skills, training and retraining.
The objective of the EU Regional Development is to reduce regional differences among the regions and to promote their sustainable development. The objective of the European Social Fund is support of human resources and promotion of employment. The objective of the European Agricultural Guidance and Guarantee Fund is support to the Common Agricultural Policy and development of agricultural structures. The objective of the Financial Instruments for Fis-heries Guidance is a sustainable management of resources and creation of competitive structures (Objectives of the EU Structural Funds are indicated as TI' T 2 , T 3 , T4 in Fig.1).
Objectives ofEU Support in Lithuania. In 2004-2006, the EU structural support was used according to the Single Programming Document (SPD). The Single Programming Document is a general document for planning investments allotted by the EU to a country. The document prescribes an appropriate development strategy, it presents description of priorities and tasks and a preliminary financial plan. It was planned that with the help of this Programming Document the structural fund investments will help improving the economic-social state of the country and enable Lithuania to use favourable GDP growth indicators and the progress directed at achieving macroeconomic stability by developing the necessary structural reforms.
The main goal of the Lithuanian SPD for 2004-2006 was to increase preconditions of the long-term competitiveness of the national economy, accelerate transition to knowledge economy which is characteristic of the growth of GDP and a high indicator of population employment, strengthen the development of knowledge economy which determines a higher level oflife and wellbeing of all Lithuanian population (Lietuvos Respublikos Vyriausybes 2004m. rugpjiicio 2 d. nutarimas ... , 2004) (in Fig.l the main goal ofSPD is indicated as L I , SPD priority objectives as PI' P 2 , P 3' P 4 , Ps' and the measure objectives of an individual priority as NI' N 2 , NJ. A more detailed description ofSBPD financing strategies (priorities) and their measures is presented in Table 4.
The objectives of the EU support and their implementation actions strengthen each other, promote the competitiveness of the Lithuanian economy, increase employment, economic and social integration, i.e. they are harmonized with the EU regional development objectives. Thus, the EU regional policy is distinguished by the ambition to reduce social and economic differences among the regions and promote even progress of the entire EU. The main instrument used in regional policy development is structural funds. Their general objectives are support of the development of poorer regions with the main focus on investments in the production sector and even development, support of economic and soci-al restructuring in problem fields and support of education, upgrade of skills, training and retraining. In 2004-2006, in Lithuania the EU structural support was used with reference to the Single Programming Document, its purpose being to increase preconditions of the long-term competitiveness development of the national economy, accelerate transition to knowledge economy and strengthen its development which determines a higher level of living and wellbeing of all Lithuanian population. The Lithuanian strategy of using the EU structural support for 2007-2013 is based on the strategic vision that in 2015 Lithuania will reach the level of social and economic development of some old EU member states.
Priority directions of the EU structural support use in 2007-2013 are productive human resources for knowledge society, competitive economy and living quality and cohesion. With the help of the support from the EU structural support funds Lithuania anticipates establishing a strong, competitive economy, training qualified labour force and promoting social and economic cohesion at the same time. However, the question is whether Lithuania has chosen the priorities of the EU support use for 2004-2006 and 2007-2013 that would enable reaching the planned declaratory objectives and have the greatest impact on the country's progress. Three years have passed since the beginning of the EU structural support assimilation, but there is no major progress in the country (Estonia, Slovenia and Slovakia had similar starting positions but now are significantly ahead by separate indices of progress leaving Lithuania behind together with the EU outsiders such as Poland and Latvia). Therefore, the article continues in trying to answer the questions whether the Lithuanian support measures for 2004-2006 are harmonized with the Lisbon strategy and whether these measures have any impact on the country's progress.

Lisbon Strategy and Lithuania's Progress in Reaching Its Goals
Lisbon Strategy. The Council of the European Leaders approved the Lisbon Strategy in 2000, and Lithuania as the EU member state must reach the long-term goal of the EU to become "the world's most dynamic, competitive knowledge-based economy" by speeding up its technological progress, creating a knowledge society, implementing the necessary economic reforms and decreasing social disjuncture by 2010. The integrated Lisbon strategy guidelines are implemented by realizing the guidelines of the common economic policy and employment strategy, and each EU member state prepares a national reform programme which presents specific measures ensuring the economic growth and overall progress of the country. The Lisbon strategy implementation consists of24 Guidelines (such as guaranteeing the economic stability for sustainable growth; safeguarding economic and budgetary sustainability, a prerequisite for more jobs; promotion of an efficient allocation of resources , which is geared to growth and jobs; strengthening the consistency of macroeconomic, structural and employment policies; increasing and improving investments in research and development, in particular in the private sector; facilitating all forms ofinnovation, etc.).
The National (Lithuanian) Lisbon Strategy Implementation Programme provides for the basic goal of the economic strategy -to minimize the backwardness of economic development levels in comparison with the average of all of the EU countries. This goal is being implemented via four major activity directions -the macroeconomic stability, structural labour market reforms, encouraging competitiveness and ensuring stability of the financial sector (this will ensure an even rate of real convergence with the EU States and a stable macroeconomic environment). The strategy preparation process for the use of structural support by Lithuania in 2007-2013 was harmonized with the priorities, objectives, tasks and measures of the Lisbon strategy implementation, which need the support of structural EU funds to be implemented. It is planned to use part of structural support of2007-2013 for implementation of the Lisbon strategy. The following priority directions will be financed: research and technology development, innovations and business; information society; transport; environmental protection and risk prevention; improvement of adaptability of workers and enterprises, increasing possibilities of employment and maintaining labour market, etc. It is planned to use somewhat more than a half of all Community support for the years 2007-2013 will be used for the implementation of the Lisbon strategy objectives. A conclusion can be made that about a half of the investment activities financed from the EU structural support will not contribute to the implementation of the Lisbon strategy and will have no direct influence on the country's progress.
Research of the EU Countries' Progress. The European Commission announces the list ofEU countries' progress reforms in implementing the Lisbon strategy. The methodology of this research is as follows: the generalized progress index is calculated by eight sub indices each of which is composed of additional criteria (Fig. 2). The information (criteria values) is taken from two main sources: the values of quantitative subindices are taken from statistical databases (EUROSTAT, etc.); and the values ofqualitative subindices are taken from the World Economic Executive Opinion Survey (EOS) in which the world business leaders from over 100 countries present their opinion on different indices whose quantitative values cannot be identified (e.g., quality of education system, etc.). The last EOS Report was prepared in the spring of2006.
The subindex values are taken while evaluating their significance (weight) coefficient in different categories. The qualitative subindices are assessed under a mark system in which fixed mark values range from 1 to 7, 1 being the minimum and 7 the maximum value. The values of different subindex categories are added and then divided by the total number of the sub index groups to derive the mean generalized progress index R).

1-1
An analogous methodology of progress assessment was employed in 2004 and 2006, therefore, it is easy to compare the results obtained in different years.  Table 1 presents the composition of the progress subindices and their significance, each subindex accounting for 118 of the total generalized index R and the value of each subindex consisting of quantitative and qualitative criteria the significance of which is presented it the table.
In 2004, Lithuania was in the 7'h position with 4.05 marks among potential new countries (21st position in the total list of all EU member states and new potential members). The greatest Lithuania's progress was observed accor~ling to the subindices of Network Industries and Finan-   Sustainable Development (R.) 118

Survey (EOS) data (stringency level of environmental regulation, consistency of environmen-3/3 tal regulation, environmental policy of entelprises processing natural resources)
Hard data -cial Services (4.67 and 4.51 marks, respectively). The smallest progress was achieved in Information Society and Innovation Development sectors (only 3.36 and 3.57 marks, respectively).
In the research of 2006 Lithuania took the 20 th position. Lithuania is advised to strengthen the system of scientific research and development and to increase the state expenditure in this field significantly. Lithuania also needs additional efforts to increase the supply of qualified labour force, promote regional movement of employees and the further education of oldish employees. Data on the Lithuanian progress in 2004 and 2006 are presented in Table 2.
As one can see, the greatest change was achieved in the sectors of Information Society and Financial Services. Changes in the development ofInformation Society are present, however, Lithuania is still among the outsiders (l8 th position among the EU-25 countries). Neither the abundant support from the EU structural funds or the implemented active state programme ofthe information society development helped to achieve a notable progress. For comparison Estonia could be mentioned, which took the 5 th position among the EU-25 countries, despite the fact that it had been in a similar position as Lithuania after the restitution of independence.
The least noticeable progress was achieved in Liberalization and Sustainable Development sectors, although attention had been focused on these sectors during the EU structural support period 2004-2006 (to increase competitiveness and to implement environmental measures). In this respect, the most advanced countries are Denmark, Finland and Sweden. Ireland belongs to the three best countries in creating the most favourable business environment according to business establishment and credit obtaining conditions. Lithuania is significantly behind another Baltic country Estonia which took the 12th position in the general progress research. The Lithuanian neighbour Latvia was in the 22 nd position.
As one can see in Fig. 3, the Lithuanian progress indices are considerably lower versus the average ofthe EU countries and much more below the average ofthe USA and East Asian countries. Lithuania is best assessed by separate business development criteria (Lithuania achieved 4.57 marks out of7 and was positioned 13 th among the 25 EU countries). This index was assessed by the following criteria: the procedure of establishing a new enterprise; a possibility to obtain a bank loan by only submitting a business plan; the number of procedures required to start business; the number of days necessary to establish an enterprise; the country's tax level; the number of procedures required to arrange a contract, etc.
The worst situation in Lithuania according to the subindices under analysis is related with  Compared with the other EU countries. Lithuania is also lagging behind in the field of in no vat ion development due to the prevailing orientation of economic entities to traditional technologies and markets.
As wc see from the research of the Lithuanian progress in implementing the Lisbon strategy, Lithuania's greatest progress in 200~-2006 was achieved in the sphere oflnformation Society (R,), though it did not exceed the 4.0 mark threshold. As Lithuania was allotted considerable support from the Ell structural funds to reduce discrepancies.

Harmonization of EU Structural Support Usc with Lisbon Strategy and Effects on Country's Progress
It is early days yet to speak about the effects of the EU structural support on the Lithuanian economy development as only part of the projects are being implemented at the moment and only slightly more than 50 percent of support to separate sectors for the period 2004-2006 has been allowed. However, certain economy development sectors do not achieve the planned results and do not contribute to the overall economy development, although their financing is substantial. Therefore, it is vital to reconsider whether the EU structural support has been targeted to the sectors (right priorities chosen) that determine the fast progress of the economy and a lower level of unevenness among the EU countries. This research could be an impetus for further investigations of the efficiency of using the EU structural support.
The priority objectives of SPD for Lithuania for 2004-2006 were analysed. The objectives of SPD for 2004-2006 were chosen in order to give a detailed description of the situation and to reveal a possible impact on the progress indices, as the programming documents for 2007-2013 are still under preparation; they may be changed by the Eu-ropean Commission, and the specific investment directions are not yet clearly known. In the coming period, the priority directions will remain similar, therefore, the study results should be also similar. The study also establishes whether the objectives of these priorities are harmonized with the national implementation programme of the Lisbon strategy. Here three types of assessment are possible: a) fully harmonized (actions correspond to the programme objectives, measures and resources are provided for to implement these actions, institutional support is ensured); b) partly harmonized (actions partly (indirectly) contribute to the implementation of the programme objectives); c) not harmonized (actions do not correspond to the national programme objectives). Then, it is established how much influence the priority actions provided for will have on the progress subindices ~, R., ... ~. The effect of these actions on the progress subindices is assessed in marks as well (1 mark-minimum impact, 5 marks-maximum impact). This impact was assessed taking into ac-count the following criteria: the nature of actions (a capital grant of income grant), the size of the group, the support budget for the period, support administration and payment, the effect on the overall country's development, the strength of the effect of separate actions on the progress subindices (e.g., Measure 3.4 of SPD exerts effects on three progress subindices, but its effect is little; e.g., the development ofinfonnation services is supported, but the support payment for this activity is notably minimal and the effect on the progress subindices is equal to zero).
The results revealed during the research of the efficiency of the EU structural support and its effects on the country's progress are presented in Table 4.   Ii ngly under these measures, however, later even some competition was observed in certain branches, but it is too early to decide on the efficiency of support under these measures as due to the lack of administrative capabilities the support is allotted with great difficulties and the effect can be smaller than anticipated. The least contribution to the measures ofthe national programme for implementing the Lisbon strategy is related with the measures of Pr iorities 1 and 4 as, e.g., in this programme very little attention is paid to the agribusiness and rural development sector, and the measures ofSPD Priority 4 in fact only indirectly contribute to the implementation of the Lisbon strategy.
The greatest impact on the progress indices was made by measures 2.5; 3.1; 3.2; 3.4; 4.1; 4.3 and 4.4 of the Lithuanian SPD for 2004-2006. They finance the activities of increasing competitiveness, human resources and social inclusion, the development ofinformation technologies and introduction of new technologies (innovations). The least effect on the progress indices is made by the SPD measures that are oriented to one particular activity (e.g., measure 4.6. was mainly targetted at skill improvement (however, the support reached the consultants but not the community members) and some approved pilot strategies will not have any more significant impact on community development).
In summary, it can be stated that Lithuania benefited from the substantial EU structural support in 2004-2006 allocated for decreasing the eco-ties (e.g., healthcare, agriculture, etc.). However, although these sectors do not bear a significant part of the progress, they are usually sectors of "political will" and must also be developed with the help ofthe EU structural support. While preparing the programmes for 2007-2013 and coordinating them with the EU Commission, a better harmonization of the EU support use measures with the national programme for implementing the Lisbon strategy is necessary, and the measures should be implemented in a complex manner, i.e. both economic-social and innovations related, environmental and other objectives of the economy development should be achieved; e.g., in the agribusiness sector both the projects solely increasing the productivity of an economy entity and those increasing also the possibilities of export, creating new workplaces, introducing innovations and contributing to the implementation of environmental, hygienic, veterinary and other standards should be supported. Only in this case the Lithuanian progress will be fast and the discrepancies compared with the EU countries will not be so huge and obvious, and the benefits of economy growth will reach all citizens of Lithuania.
Data of the present research could be applied in more detailed investigations to establish the expedience of the EU structural support and its impact on different economic-social indices.

s. Conclusions
nomic, social, innovative, environmental and ot-Analysis of the peculiarities of the Lithuanian her discrepancies. The research showed that two and the EU economy development, a review of thirds of the EU support distribution measures measures applied for decreasing the discrepan-(in accordance with the Single Programming cies, and an assessment of the EU countries' pro-Document) follow the objectives and actions of gress indices and ofthe effects ofthe EU structuthe national programme for implementing the ral support on these indices suggest the following Lisbon strategy, but few of these measures exert complex effects on the progress indices. The least effect on the country's economy is made by the measures oriented to "narrow" sectors of activi-formulation of the conclusions: 1. The Lithuanian and the EU countries' main economic, social, environmental and other indices show that Lithuania is still markedly behind the EU countries' average, and the EUROSTAT forecasts show that in 2008 this backwardness will not be reduced substantially. To decrease these discrepancies, the EU allots Lithuania a structural support which ensures a faster development and progress of its less developed regions.
2. The EU structural support for Lithuania in 2004-2006 was distributed through the Single Programming Document. The influence of this support on the country's economy development is already traceable (a greater impact will be obvious from 2008 after the complete assimilation of the support), however, it is not sufficient for a rapid progress of the country. Lithuania is only in the 20 th position among the EU countries according to the generalized progress index, whereas Estonia is in the 12th position, despite the fact that both countries had similar starting positions. The Lithuanian progress is least in the sectors of market liberalization, sustainable development and social inclusion.
3. The research of the use of the EU support and its effects on the country's progress has shown that about two thirds of the measures follow the national programme ofimplementing the Lisbon