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IBM's decision last week to set up a research center with the Lithuanian Government may stoke concern that Estonia and Latvia are falling behind as the Baltic neighbors vie for foreign investment after Europe's deepest recessions, Bloomberg reports.

Since the beginning of last year, Lithuania has attracted investments from international companies including London-based Barclays Bank, which opened an information technology center in Vilnius, and Colorado-based Western Union, which plans to establish a regional service center in the country. Stock of foreign investment in Lithuania rose 7 % last year, compared with Estonia's 3 % drop and Latvia's 2 % increase.

"Lithuania is winning as Prime Minister Andrius Kubilius acts as "investment czar," said Kitty Kubo, who heads the foresight division of the Estonian Development Fund in Tallinn, which advises the country's government. "If Lithuania continues successfully, it has a good chance of grabbing the best investments in the region and the best talents with it."

Andrius Kubilius' government plans to boost FDI to EUR 20 billion within five years by focusing on computer services and energy as the country seeks to establish itself as a service hub for the Baltic and Nordic regions, Economy Minister Dainius Kreivys said in June.

"Countries that market themselves by focusing on their capabilities in specific clusters of economic activities find it easier to communicate their specific advantages," said Christian Ketels, a professor at Harvard Business School's Institute for Strategy and Competitiveness and also a member of the Baltic Development Forum's advisory board. "As far as the Lithuanian campaign fits that bill, I think it is a step in the right direction."