Poland’s Economy Excels!

By Shlomo  Maital       

 Consider Poland. This large country of 38 million people, and 313,000 km.2 grew 4.3% in 2011, faster than nearly all other EU nations.  Its unemployment rate is lower than the EU rate (9.7%), and it attracted massive foreign direct investment in 2011 (2.8 % of GDP), much of it from Germany.  Poland’s GDP per capita is a surprising $20,731.  Its currency, the zloty, is about three per dollar, which means it is much like the Chinese yuan, undervalued, giving Polish exports a boost. 

  According to Marcin Piątkowski, a World Bank Senior Economist, Poland has made effective use of some 10 b. euros of EU funds.  Most of it was spent on low-tech, not high-tech, and the result was to make Poland part of Germany’s wider industrial ecosystem, with Polish factories and workers providing low cost manufactures, buttressed by the undervalued currency.  This is almost a Chinese model.  It stands in stark contract to, for instance Hungary, which had a property bubble and which is mired in debt, much of it euro and dollar debt that is hard to pay back. 

Poland is 34th in global competitiveness, up from #44 in 2008.  It has no glaring weaknesses – its economy, govt. efficiency, business efficiency and infrastructure are all reasonably good. Poland’s sturdy independent farmers, who never gave in to the USSR’s kolkhoz collectivization, give Poland a strong collective memory of free markets. According to the IMD World Competitiveness Yearbook, Poland has predictable policy, a skilled workforce, competitive costs, good education, good labor relations, and access to financing.  And, of course, a big neighbor, Germany, that likes to invest in Poland because of its proximity.

  What we learn from Poland, is that each nation needs its own unique competitive strategy, tailored to its own advantages, history and culture.  Poland has found a good one.  You do not need high tech, or high R&D  spending, to thrive.  If you have a big neighbor, find how you can hitch a ride on its economy, find what it needs, make it efficiently and at low cost, and you can do well. It’s very simple.