Lithuania

The southernmost of the Baltic States, in medieval times Lithuania was a powerful kingdom in eastern Europe, and as part of the Polish-Lithuanian Federation, was one of the largest and most powerful entities during the 16th century. It became a part of the Russian Empire in the 18th century (mainly with the Third Partition of Poland in 1795), and gained its independence in 1918. However, it was invaded by the Soviet Union in 1940, by Nazi Germany in 1941, and then reoccupied by the Red Army in 1944. It remained a part of the Soviet Union until independence in 1991.

Traditionally the Lithuanian economy was heavily dependent on agriculture, although the traders from the Hanseatic ports also were interested in minerals such as iron ore and coal sourced from near Memel (Klaipeda). Napoleon gained many of his supplies from the region before his invasion of Russia in 1812, and from independence until World War II, the republics main products were rye, wheat, barley, oats, and potatoes. Its exports included bacon, dairy products, cellulose, timber, flax, and also livestock, with the major imports being herring, coal, cement, metals, textiles, and machinery. Although most of the trade was with Poland, Germany, Latvia, and Scandinavia, there was also trade farther afield.

In 1939 when war broke out, Benjamin Kagan, a Lithuanian textile manufacturer, was in England on a Lithuanian-government buying mission. His son, Joseph Kagan (1915–95), was later to move to Britain himself, where he set up a textile business and developed Gannex, which was used in the Gannex coats that were much favored by statesmen and politicians around the world. This was one of many economic successes of Lithuanians overseas, with Joseph Kagan being named a Lord prior to his disgrace.

During the Soviet and then the German occupation of the country, Lithuania was devastated. From 1944, the entire economic life of the country was placed under state control, and Lithuania became a part of the Soviet Union with all major decisions being made from Moscow, and the vast majority of people in the country working for state-owned enterprises or on collective farms. During this period the infrastructure of Lithuania, much of which had been destroyed in World War II, was rebuilt, and the economy was integrated with the rest of the Soviet Union. As a result, after independence in 1991, Lithuania struggled economically. It introduced rapid privatization of the economy and of land ownership, but did suffer from rampant inflation of 225 percent in 1991, rising to 1,100 percent in the following year, 409 percent in 1993, and then dropping to 45 percent in 1994. In February 2002, the local currency, the litas, was pegged to the U.S. dollar, and inflation now stands at 3.6 percent.

Lithuania now shares borders with Latvia, Belarus, Poland, and the Russian Federation; it maintains a large number of export industries, and also imports much from overseas. Machinery and equipment make up 22 percent of the country's exports, and 18 percent of Lithuania's imports. Other exports include mineral products, chemicals, textiles, clothing, and foodstuffs, with imports also including mineral products, chemicals, textiles, clothing, and foodstuffs, as well as transportation equipment. There is now a sizable tourist sector with many people, including Germans and also Jews whose families lived there before World War II, visiting Lithuania.

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