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Economics, Politics

Poland – A Green Island?

 

Economic development

 The Polish economy has come a long way since the fall of the Iron Curtain. The end of communism in 1989 triggered a sharp and progressive transition away from state control towards a private, market-based economy. By shifting to a Capitalist free market, Poland is one of the biggest success stories of the Communist Collapse. Since then, Poland has achieved high rankings in human development and standerd of living. As ZADEY – INTERNATIONAL BUSINESS WRITER  on globialtalksbusiness.wordpress.com depicts in his blog post Poland has developped to one of the strongest economies in Europe within only 20 years with a GDP of $468.539 bn, as measured by the IMF. It registered GDP growth of 6.5 per cent in 2007, comparing impressively with the EU average of 3 per cent. The WB considers Poland to be one of the healthies high income economies of the post-communist countries and one of the fastest growing within the European Union. GDP growth had been strong and steady from 1993 to 2000 with only a short slowdown from 2001 to 2002. Besides, Poland possesses nearly 40 percent of the 500 biggest companies in the region, according to the Warsaw Business Journal.

Trade

Due to its proximity, Germany remains a strong trading partner by importing and exporting a variety of commodities with Poland. 16.1% of Poland’s work force involves agriculture, which enhances the exportation of agricultural goods. Poland has a large number of private farms in its agricultural sector, with the potential to become a leading producer of food in the European Union. In addition to that, Poland has replaced Russia as Germany’s main eastern trading partner, even including energy.

Late-2000’s recession

Having a strong domestic market, low private debt, flexible currency, and not being dependent on a single export sector, Poland is the only European economy to have avoided the late-2000s recession, according to CNN. In 2009 Poland had the highest GDP growth in the EU. The privatization of small and medium state-owned companies and a liberal law on establishing new firms have allowed the development of an aggressive private sector.

The estimated GDP share per sector for 2009 can be broken down as Agriculture: 4.6%; Industry: 28.1%; Services: 67.3%. The Polish market is probably more of a market to sell into than manufacture from, since Polish wages are currently going through major increases and it is likely this trend will continue for at least a little while into the future.

 

 Investment

 According  to DANIEL GREENBERG, author on bigemergingeconomies.wordpress.com

the 2010 AT Kearney Foreign Direct Investment Confidence Index, indicated that Poland is the sixth-most-attractive country in the world in terms of investments.

Foreign Direct Investment in Poland has remained strong ever since the country’s re-democratisation following the Round Table Agreement in 1989.

The Polish government is working to reduce the existing barriers to the inflow of foreign direct investment.  Among the Big Emerging Economies, Poland is the sixth  most attractive destination for foreign private investment.  The country has a highly skilled, relatively cheap and motivated workforce, encourages foreign direct investment into its large private sector, and according to the Financial Times, “the Warsaw Stock Exchange has boomed, becoming central Europe’s largest capital market with a capitalization of more than $206 billion.”

Poland’s economy has emerged into a strong and stable economic power in central Europe that presents and will continue to present interesting investment opportunities for foreign investors.

Challenges

 Although the Polish economy is currently undergoing economic development, there are many challenges ahead.

The ability to establish and conduct business easily has been cause for economic hardship as the World Economic Forum recently ranked Poland near the bottom of OECD countries in terms of the clarity, efficiency and neutrality of its legal framework for firm to settle disputes. A report by CEIS (Council of European Investment Security) concluded that on-going foreign business disputes issues may “have damaged Poland’s reputation as an attractive location for FDI” by reinforcing the impression of “Poland’s substandard reputation for maintaining an efficient and neutral framework to settle business disputes involving multinational foreign investors.”  

Other problems also exist, and further progress in achieving success depends largely on the government’s privatisation of Poland’s remaining state industries and continuing development and modernisation of the economy. 

 



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Discussion

One thought on “Poland – A Green Island?

  1. Hi Viktoria,
    an interesting topic you chose. So far, I knew very little about Poland’s economic strength and its attractiveness for foreign investors. You presented detailed information, thus it seems like you invested a lot of time to gather the facts and represent them.

    What I would like to know more about is why you actually chose to write about Poland and its development. It doesn’t become that clear.
    It would also be interesting to compare the facts and dates to other European countries, especially former Sowjet Union regions, in order to examine the advantage described over others.

    All in all, a catchy subject which delivers some (to me) unknown facts.

    Posted by Fernanda | January 28, 2012, 5:09 pm

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