Doing business in Poland

During last year, potential of polish economy was getting better. Poland has become a relative winner of the global financial crisis. Polish economy can offer a product which has lately been in short supply - economic stability. Numerous companies which until lately have not seen Poland as priority investment location started to take serious interest in the Polish market.

In 2010 Poland was one of the fastest growing countries in the EU. While the GDP of all European countries grew at an average rate of 1.8% in 2010, Poland’s GDP increased by 3.8%.  In 2011 the growth rate was 4,3%, which was one of the highest growth rate. The forecasted growth rates for the years to come are also optimistic. According to EUROSTAT estimates, GDP growth in Poland will reach 2,7%, which positions Poland on second place of the fastest growing countries (only Turkey is supposed to have a rate about 3,3%).  Polish consolidated public debt amounted 56,4% of in 2011 while for the EU27 countries it reached 82,5%.

This positive trend of expending Polish economy is forecasted to be continued. This country in the heart of Europe attracts foreign direct investments. The cost of labor, although gradually increasing, is still low and represents only a fraction of West European levels, but the quality and consequently productivity of Polish workers is constantly improving. Competitiveness of Poland in Europe is high, but there is still a lot to do, to attract more investors.

In worldwide competitiveness rankings, Poland is still in a low position. The ranking prepared by The World Bank and the International Finance Cooperation “Easy of Doing business”, which nowadays helps foreign investors to decide whether start the investment in other country or not, qualify Poland on 55^th place. It is not a good position but compare with previous year when Poland was in 74^th place, the business climate has changed a lot. Authors of rankings also marked that: “Poland was the global top improver in the past year. It enhanced the ease of doing business through four institutional or regulatory reforms, making it easier to register property, pay taxes, enforce contracts, and resolve insolvency.” Polish government did a lot to improve doing business for entrepreneurs, but is still easier doing business for example in Rwanda, or Oman.

The above results confirm the newest “Economic Freedom” ranking prepared by The Heritage Foundation. Poland’s economy freedom is ranked 64^th in the 2012 index. Its score is better than the year before because of an improvement in terms of corruption. Its overall score is still above average in the world but is lower than average of the European countries. The authors of the ranking point out that in Poland barriers to trade are quite low, and commercial operations are aided by regulations that support open-market policies. On the other hand, the foundations of economic freedom are challenged still by corruption and inefficient judicial system that is sensitive to political interference. It is also recommended that it should be made a more disciplined management of public finance due to accumulation of large fiscal deficits.

Another ranking prepared by “World Economic Forum” reaffirms Poland on 41st position this year. The report presents the strengths and weaknesses of the Polish economy. The good performance include large market size and high educational standards, in particular its high enrollment rates. Notable is the financial sector, which is well developed and inspires confidence. On the other hand, further enhancing competitiveness will require a significant upgrading of transport infrastructure, which trails international standards by a considerable margin. Although some progress has been made in this area in the run up to the European Football Championships in 2012, it is not sufficient to create the step change necessary to better connect the different parts of the country. The report confirms a weakness in overall efficiency of government and government regulation. Innovation and R&D is not on good path. There should be more partnership between universities and privet sector, easier access to venture capital, in order to create innovation environment.

Poland is quite good location to do a business. It is not as easy to do business as in Singapore or USA, but Poland is on the good path to improve its competitiveness. There is still a lot to do to make it easier for entrepreneurs. They meet as main problems the inefficiency of government, bad infrastructure and innovation environment. Poland should make more changes in its institutional and regulatory reforms. The modernization process, which was initiated by EFC in 2012 should still be continue. The problems Poland face will be hard to solve, but they are necessary to surpass in order to attract more and more foreign direct investments. 

Check how competitive is your country:

http://www.heritage.org/index/ranking

http://www.doingbusiness.org/rankings

http://www.weforum.org/issues/global-competitiveness

http://www.oecd.org/competition/

Ilona Kowalczyk

[artigo de opinião desenvolvido no âmbito da unidade curricular “Economia Portuguesa e Europeia” do 3º ano do curso de Economia (1º ciclo) da EEG/UMinho]