The Lithuanian Free Market Institute (LFMI) conducts regular surveys among Lithuanian opinion leaders to elicit their attitudes to the emerging market economy and judgements on the ongoing reform process. The questionnaires are designed to follow up on previous polls to ascertain shifts in opinion and the proportion of people supporting free market solutions. The opinion polls target top policy makers, leading entrepreneurs, academia, reporters, and a cross-section of public leaders. In March through April 1998, LFMI conducted a seventh survey, which targeted 405 top policy makers, politicians, entrepreneurs, academia, and reporters.
Competition is highly regarded in modern society. Few people today would dispute that competition is the vehicle of progress.
As a new law on competition was underway and discussions sparked off in Lithuania, we thought it important to look at Lithuanian opinion leaders’ views on competition. For that purpose we drew on the results of the 1998 survey of opinion leaders.
Survey participants were asked whether the government should safeguard the Lithuanian market against foreign competition. The results suggest that despite the rhetoric about competition, the principles of competition are all too often opposed in practice. A striking 72 percent of those polled said that the state should shield fully or partially the domestic market from foreign competitors. Twenty one percent of the respondents believe that the Lithuanian market should be protected, although to a limited extent. Not a single academic objected to the protective role of the state. Surprisingly, most of the opponents of protectionism, 10.1 percent, appeared to be among state officials. This is not the first case that officialdom turns out to be the most liberal-minded group. In terms of political preferences, most of the opponents of protectionism were among the supporters of the Liberal Union, 21.9 percent. The only group of respondents whose majority opposed protectionism were individuals in their twenties.
For LFMI, competition is not just a mechanical calculation of buyers and sellers on the market or the degree of their interdependence. To secure competition, it is essential for new market agents to have a free market entry and unfettered conditions for developing their business activities. Obviously, the largest obstacles stem not from the business community but from government, which imposes licenses, customs duties, tariffs, certifications, standards, bans on contracts and other restrictions on free relationships on the market. It was therefore important to assess the barriers confronting free initiative and views on how damaging their effects are.
In the LFMI’s survey, bureaucratic hurdles to private initiative were evaluated on a ten-point scale, with 0 indicating an absence of obstacles and 10 denoting total bureaucracy. Eight years ago, in the era of “co-ops”, bureaucratic barriers to business activity were estimated at 5.49 points. In 1996, at the close of the LDDP rule, they were put at 6.18 points. At the present moment, they are assessed with 6.65 points. These figures indicate that the trend is towards worsening obstacles to business development. Entrepreneurs reported the most distinct opinions, assessing the respective periods at 4.79, 5.92, and 7.36. Politicians and members of parliament reported opposite views, suggesting that the number of barriers has remained virtually the same (6.18, 6.39, and 6.23 respectively). It is noteworthy that Lithuanian opinion leaders are increasingly optimistic about the creation of liberties within the framework of economic reforms. On a scale from -10 to +10, their estimates were -1.2 in early 1995, 0.3 in late 1995, 1.8 in early 1997, and 2.06 at the beginning of 1998.
Both competition and the business environment are closely related to the problem of tax favours and exemptions. Tax favours may better business conditions for individual economic agents but they also create uneven playing fields in terms of competition. Most of those polled (64 percent) still believe that tax relief may ameliorate the tax system. Interestingly, this position is most markedly opposed by entrepreneurs (18.6 percent of business people polled).
Competition and the business climate are also crippled by state aid, which comes in the form of subsidies, guarantees and soft loans. A total of 55.6 percent of opinion leaders disapprove of such distortions of competition. Politicians favour government aid more than others, while entrepreneurs (64.7 percent of those polled) and journalists (72.5 percent) are the most sceptical in this respect.
The results of the survey show that despite the rhetoric about competition, there is still a marked inclination to repudiate and negate it.
