CHANGES IN LITHUANIAN FLAX INDUSTRY EXPORTS

Most industries of small economies are vulnerable to the changes on international markets, and the issue of declining industries is a relevant scientific problem which induces scholars for deeper analysis of the issue. The paper aims to explore how the economic integration influenced the exports of Lithuanian flax industry and also to reveal why traditional flax fibres and linen textile industry, which prevailed in the Lithuanian manufacturing a decade ago, is decreasing. The research study analyses the changes of trade-based indices for flax fibres and linen textile commodities over the period of 1996-2012 and employs the revealed comparative advantage approach in order to illustrate the relevance of the raised scientific problem. The methods of the scientific research employed in this study are the analysis of scientific literature, mathematic calculations of RCA index, and the comparative analysis of statistical indexes. In the presence of competitive pressures and the changing structure of the world demand, economic integration and harmonisation of the common EU policy, this study calls for a reassessment of the factors that influenced Lithuanian flax industry's decline. The present study showed that decreased support for flax cultivation, insufficient quality of raised flax stalks, lower prices of foreign suppliers, and lack of advanced technology were the main reasons which influenced the decline of Lithuania's flax industry after 2004. Besides, agricultural policy and applied regulatory measures play important role for the performance of the industry.