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An economic success

A dynamic economy that plays to its strengths and knows where it is going

The only modern European economy where growth has never once faltered, despite the crisis, Poland has set itself ambitious but attainable targets. The five key areas are investment and innovation (where PKO Bank Polski is prominent) and industry and export (very much KGHM Polska Miedź’s fields), as well as spreading development over the country as a whole. While other countries have – perhaps unwisely – deindustrialised, Poland looks to industrial modernisation. Investment is key to development of a modern industrial base and foreign direct investment enjoys significant incentives as well as a large domestic market, a competent labour force and central logistics. Add in strong EU support for trans-national infrastructure and the country’s tightening fiscal discipline, and Poland is poised to narrow the economic gap between it and its western neighbour by 2030.

Poland: an economic success

The year 1989 opened the way to rebuilding Poland’s independence and return to the world of democratic capitalism. Anchoring the country in the political and military structures of the West has enabled one of the most extraordinary transformations from socialism to capitalism imaginable. Accession to the European Union in 2004 has integrated the country economically with the West and, rooted in political and economic stability, Poland has emerged as a symbol of dynamic – and unfaltering – growth in the single European market.

Some indicators

The sixth-largest EU economy , real per-capita GDP increased by 135 per cent, 1989-2017, moving Poland from World Bank middle-income to high-income status at a record-breaking pace. At over sixty per cent, the increase in disposable income for Polish households, 2007-17, exceeded that in the largest EU economies. Growth in the financial sector led to FTSE Russell's decision to reclassify Poland as a developed market.

EU membership

Poland’s accession to the EU allows eighty per cent of its exports to go to EU markets. One of the union’s most industrialised countries, Poland accounted for almost twenty per cent of new EU industrial jobs in 2017. From being the largest source of emigrants in the EU, Poland has changed meanwhile to the economy with the largest inflow of migrant workers from outside the EU, notably from Ukraine.

Skills base

The country has long had a very sound education system and widespread technical knowledge now gives a notable competitive advantage in a knowledge-based economy. The model is exceptionally egalitarian – over 40 per cent of 20-24 year-olds are in education – giving Poland thirtieth place among 157 countries in the World Bank’s Human Capital Index (ahead of Spain or Luxembourg). Wages in the services sector are well above average and are growing as firms compete for employees – part of the explanation for the exceptional resilience of the economy.

Pulling things together

The foundation for building greater solidarity and a pro-innovation economy is a modern tax system. Poland leads Europe in closing the VAT gap and reducing the informal economy. For last three years technocratic finance ministers have secured remarkably swift, technologically-based results, making increased funds available for expanded social welfare programmes.

An oasis for business development in the heart of Europe

The largest country in Central and Eastern Europe, Poland is an ideal location for investors. Pretty well the exact centre of the European continent, trade routes intersect there, while the Three-Seas Initiative aims to accelerate the construction of transport, energy and digital infrastructure in Central and Eastern Europe with EU support. Poland’s attractions are its professional work-force, widespread competence in English, large domestic market, and close communication with the West. Foreign direct investments amounted to EUR 176 billion at the end of 2016 and Poland’s share of FDI inflows to the EU increased from five to ten per cent, 2015-17. Firms which have invested in Poland express record-levels of willingness to invest further, evidence of an exceptionally positive climate for company development.

Industrial revolutions

Poland has the opportunity not only to participate fully in Industrial Revolution 4.0, but also to help shape the new modernity: switching the development path to digital has become a raison d’état. Big Data and Artificial Intelligence will deal out a new hand in the global economy game, a hand that Poland is determined to play. The plan is set out in the ‘Strategy for Responsible Development’, with five general pillars of development, as well as specific projects such as electro-mobility and drones. One goal of this ‘Morawiecki Plan’ is to position Poland as an industrial leader, where an innovative economy is co-created by a new model of private and public sharing of investment risk within the Venture Capital market, modelled on the Israeli ‘Yozma’. One of the most pro-innovative tax systems in the world is also being developed for investment in intellectual property or research and development.

An open economy

Poland has built democratic capitalism based on an open economy. Cooperation between the academic and business worlds has entered a new stage, recalling the achievements of the Lwów school of mathematics and the Polish cryptology school which helped crack the Enigma Code. Present-day Polish academics experience the world’s leading universities and the priority is the internationalisation of the Polish universities where, for example, Warsaw encourages its academics to publish in English. It is not only Warsaw or the cities of Western Poland such as Wrocław or Poznań which drive development. In the east of the country, Rzeszów has become the centre of a notable aviation-industry cluster while Lublin, an academic city (quite distinct from KGHM’s base in Lubin in the west) is also becoming a centre for Poland’s future. With significant economic growth being generated outside large cities, an important pillar of current planning is to spread development. One example is the Copper Basin in Lower Silesia, in Lubin, Legnica, Głogów and Polkowice where KGHM’s production of copper is centred. Another example is Zamość, a Polish city created in the Italian Renaissance style, which is today the centre of digitization of PKO Bank Polski.