Fixed Investments Significance and Impact on Lithuania Economy

Abstract

Investments are essential for a sustainable economic growth of industrial companies. Recently since the occurrence of the new wave of digitalization (Industry 4.0) huge investments in fixed assets have to be considered. The effective attraction of investments to the national economy is a key factor, which provides favorable conditions to perform structural changes in the national economy. Therefore, investments in the public and the private sectors conduce development of the national economy and provide conditions to increase the overall competitiveness of a country. Moreover, the fact that world economy is going through one of its most successful development periods after the global financial crisis emphasizes the relevance of this research even more. However, the scientists reasonably raise doubts about the effectiveness of marginal capital investments which becomes even smaller once the point of saturation is reached. It raises question in which particular economy cycle the fixed investments should be made. Goal of the research – to provide the theoretical backgrounds for significance of fixed investments, to estimate the changes of fixed investment growth and structure and to explore the efficiency of fixed investments and it impact on Lithuania economy. The research have shown that the level of investments in Lithuania was 21 - 29 % from GDP in 2001-2008. Over the last seven years (2011–2017), investments amounted to 19 % of GDP on average. The growth of investments after the financial crisis is especially high in equipment sector in which the investments in 2017 exceeded the level of investments in 2008 by 23,8 percent. Even more, the investment in dwellings sector in 2017 were even 5,2 times bigger compared to 2001. Results of correlative and regression analysis show that the relationship between gross fixed capital formation and economical growth is strong and almost direct. ... [et al.].