06 Jul Beyond the horizon: Poland- The star performer of Europe

Republic of Poland, located centrally in the heart of Europe, is bordered by Germany to the west, Czech Republic and Slovakia to the south, Ukraine and Belarus to the east, and the Baltic Sea, Russian exclave of Kaliningrad Oblast and Lithuania to the north. The country has a long coast on the Baltic Sea and is largely dominated by low-lying rolling plains in the north. The total area of Poland is 312,679 square kilometres with a population of over 38.5 million. A very large number of ethnic Poles, estimated to be around 20 million, lives overseas including in the USA. Capital Warsaw and the whole country are culturally very rich. According to UNESCO, there are 14 world heritage sites in Poland. The most famous archaeological finding is the Biskupin fortified settlement which is from Iron Age dated back around 700 BC. Poland’s first historically documented ruler, Mieszko I, accepted Baptism in 966 and adopted Christianity from the traditional pagan faith as the new official religion of his kingdom. By middle of 13th-century Polish lands were united. Casimir III the Great is the only Polish king who received the title of “Great”. He built extensively during his reign of 1333-1370, and reformed the Polish army along with the country’s civil and criminal laws. Protestant Reformist movements helped to change the majority faith of Polish Christianity, which established policies promoting religious tolerance, very exceptional in strictly conservative Europe during the early 16th century. During this time, the European Renaissance evoked and Polish culture and economy flourished greatly. Kingdom of Poland was founded in 1025 and in 1569 it formed the Polish-Lithuanian Commonwealth, one of the largest and most populous countries of 16th and 17th-century Europe. The Commonwealth ceased to exist in the years 1772-1795, when its territory was partitioned among German Prussia, Russian Empire and Austria. During World War I, all the Allied nations agreed to the reconstitution of Poland as per the proclamation of the then US President Woodrow Wilson. A total of 2.0 million Polish troops fought with the armies of the three occupying powers, and 450,000 died. Shortly after the armistice with Germany in November 1918, Poland regained its independence. But it was a short-lived peace in the Polish land after the formal beginning of World War II: Nazi Germany invaded Poland on September 01, 1939, followed by the Soviet invasion of Poland on September 17. Poland was split into two occupied zones. During 1939-41 period, hundreds of thousands of Poles were deported to the most distant parts of the Soviet Union. During World War II, German forces under direct order from Adolf Hitler set up six major extermination camps in Poland including the infamous Auschwitz killing camp. The Nazi atrocities claimed the lives of 2.7 to 2.9 million Polish Jews, and 2.77 million ethnic Poles. At the insistence of Russian leader Joseph Stalin, the Yalta Conference sanctioned the formation of a provisional pro-Communist coalition government in Moscow, a move which angered many Poles who considered it a betrayal by the Allies. In 1944, Stalin assured British Premier Churchill and US President Roosevelt that he would respect Poland’s sovereignty. But after the war ended in 1945, the Soviet authorities organised so-called “fair elections” which ensured power to pro-communist forces. End of war in 1945 brought another grief for Polish history: Poland’s borders were shifted westwards, resulting in considerable territorial losses. Poland’s territory was reduced by 20 per cent, or 77,500 square kilometres. Under Soviet patronage, “People’s Republic of Poland” was officially proclaimed in 1952. During communist rule, unlike other East European countries, Poland achieved remarkable growth in education, agriculture and heavy industrial sectors. The labour force in Poland was always active and a turmoil in 1980 led to the formation of the independent trade union “Solidarity” which over time became a pre-dominant political force. Despite persecution and imposition of martial law in 1981, the dominance of the communist Polish United Workers’ Party was eroded and by 1989, Solidarity Union led by Lech Walesa won Poland’s first partially free and democratic parliamentary elections. Lech Wa??sa eventually became the first democratically elected President of Poland in 1990. Many credited Solidarity movement for the collapse of communist regimes and parties across Eastern Europe under indirect Soviet rule. In 1999, Poland became a member of the North Atlantic Treaty Organisation (NATO). The Poles then voted for joining the European Union (EU) in a referendum in June 2003 and Poland became a full member of the EU on May 01, 2004. A shock therapy programme, initiated in the early 1990s, successfully transformed Poland into a market economy from socialist-style planned economy. Poland’s high-income economy is considered to be one of the healthiest of the post-Communist countries and is one of the fastest growing one within the EU. 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. By 2009 Poland had the highest gross domestic product (GDP) growth within EU. According to the Global Peace Index for 2014, Poland is one of the safest countries in the world to live in. In 2015, actual individual consumption, which includes the use of public services financed by the government, rose higher. The quality of life grew further, as evidenced at international well-being ratings such as the Organisation for Economic Cooperation and Development (OECD) Better Life index, where Poland does better than many other EU members. Since 1989, the country’s per capita GDP (gross domestic product) more than doubled, coming ahead of all its European peers. Exports increased more than 25 times and came close to $250 billion in 2013. Since 1995, Poland has also grown faster than all large economies at a similar level of development, as reflected in average GDP per capita growth. Despite the robust outlook for growth, rating agency S&P unexpectedly cut Poland’s credit rating a notch earlier in January 2016, saying the new government has weakened the independence of key institutions. The conservative Law and Justice (PiS) party won an election in October 2015 promising more welfare, particularly via its flagship programme of child benefits. But it has also passed laws that critics say undermined the independence of the judiciary and public media. Poland is an interesting location for research and development investments. Multinational companies such as: ABB, GlaxoSmithKline, Google, HP, IBM, Intel, LG Electronics, Microsoft, Siemens, Samsung and many others have set up research and development centres in Poland. Quite remarkably, Poland’s growth has been based on brain power, entrepreneurship, and hard work, not on natural resources or financial steroids. Poland is a net energy importer and its public and private debt levels are well below the European average. Poland’s economy grew at its fastest pace in four years in 2015, driven mainly by domestic demand that analysts expect will be sustained this year despite external risks and a recent credit rating downgrade. The Polish economy grew by 3.6 per cent last year compared with 3.3 per cent in 2014. GDP (PPP) total estimates in 2016 are US$1.051 trillion and per capita income stands at $27,654. Polish government estimated economic growth reached at 3.8 per cent in 2015 and unemployment rate fell to 7.5 per cent on average last year from 9.0 per cent in 2014. The GDP growth is nearly twice as fast as the average in the EU, estimated at 1.9 per cent. The country’s most successful exports include machinery, furniture, foods and meats, motor boats, light planes, hardwood products, casual clothing, shoes and cosmetics. Germany is the export destination of Polish products. Poland’s performance in the last quarter of a century has been not much short of a miracle. In the post-communist era, successive governments and citizens of Poland believe in political transformation, economic liberalisation and European integration. Existence and practice of the rule of law, independent monetary policy, inward foreign direct investment, robust competition, quality education, free press, and democracy helped Poland to make a social and economic miracle. Poland is the sixth country to recognise Bangladesh after its independence. Diplomatic relations between Bangladesh and Poland were officially established on January 12, 1972. High value Polish products imported by Bangladesh are mostly base metals, dairy products, ships, machinery, equipment and chemicals. Both the governments of Bangladesh and Poland have shown interest in expanding bilateral economic activities between the two friendly countries. Poland has become one of the new destinations for manpower export of Bangladesh. Bangladeshi readymade garments, pharmaceuticals, jute and jute goods, ceramics and leather and leather goods have been identified as products with huge potential in the Polish market. Besides, the Polish firms have expressed their interest to invest in the infrastructure development of Bangladesh including setting up of power plants, port facilities, LNG terminals, etc. The bilateral trade volume between the two countries is worth around $600 million which is expected to grow further in near future.

The writer is CEO & Chief Consultant, Best Sourcing Business Advisory Services. mehdi.mahbub@bestsourcing.biz