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1
POLAND
15 years
contributing for the
economic prosperity
of the European
Union
April 2019
Embassy of the
Republic of Pol...
1
Page
I – Introduction....................................................................................... 3
II – Poli...
3
Ambassador
Jacek Junosza Kisielewski
On 1 May 2004, Poland, together with Cyprus, Slovakia, Slovenia,
Estonia, Hungary, ...
4
zone of influence of Soviet Russia, which was oblivious to the principles
of free market, economic calculation and effic...
5
In fifteen years1
Poland's GDP per capita has approached (almost) 23%
of the EU-15 average; 22% of EU-28; and 14% higher...
6
2.1. Poland compared to four standards
The most appropriate way to evaluate Polish performance is to compare
it with sim...
7
Figure one
In 2004 Polish per capita wealth was ± 74% of the average of other
countries; fifteen years later it was almo...
8
Despite the rapid convergence, the low starting point in 2004 (± 3/4 of
the average) makes Polish GDP per capita still b...
9
2.1.2. Poland’s convergence with EU-28
This comparison is naturally more demanding, as EU-28 includes all the
richest Eu...
10
2.1.3. Poland’s convergence with EU-15
What about compared with the "club" of the richest countries? To EU-
15?
Here, o...
11
2.1.4. Poland and Portugal
The Portuguese economy is considered by many to be a success story, so
it is useful to also ...
12
That is, in 2004 Polish GDP per capita was only 62% of the Portuguese
(50,1 / 80,6), but in 2018 represented 92% (71,7 ...
13
2.1.5. Summarizing the Polish success
Looking at figure seven comparing the per capita GDP of the twenty-
eight countri...
14
This is what is summarized by figure eight and which allowed Poland to
rise from (in 2004) 57th
in the world GDP per ca...
15
2.2. The causes of the success
This is not the time for an in-depth analysis of the causes (and hence the
lessons) of P...
16
corruption puts resources in the hands of those who do neither, nor
anything else. And consequently uses the resources ...
17
2.2.2. Economic freedom
This variable analyzed by the NGO Heritage Foundation measures the
degree to which in each coun...
18
2.2.3. Management quality
One way to calculate GDP is by adding the value added of companies1
.
The value added divided...
19
Thus, the best-managed countries are the richest and vice versa. Just
remember to which countries belong the world's la...
20
2.3. The importance of Polish success
There are three reasons why - in addition to honoring merit to who is due
- it is...
21
Why?
GDP per capita is the product of four factors: the multiplication of the
activity rate (% of the active population...
22
Figure fourteen
Now two aspects are noteworthy. First, the comparison is made with the
EU-15 (not the Eurozone or the E...
23
American and European cases has been increasing and consequently
reinforcing the importance of good examples such as th...
24
and so the USA aid to the third world is more than three times the
European.
On the other hand, and in other areas, eve...
25
Hence the importance of the Polish example, which can be summarized
in the four figures of its progress / convergence (...
3
Polish economic success can be
summarizes in the four figures of its
progress/convergence towards the
enlargement countr...
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Booklet poland

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The Polish success (since it joined the EU fifteen years ago), can be summarized in the four numbers of its convergence towards the GDP per capita average of:
1) - The other nine countries which joined the EU in 2004: + 14%;
2) - The EU-28: + 22%;
3) - The EU-15: + 23%; and
4) - Portugal: + 30%.

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Booklet poland

  1. 1. 1 POLAND 15 years contributing for the economic prosperity of the European Union April 2019 Embassy of the Republic of Poland
  2. 2. 1 Page I – Introduction....................................................................................... 3 II – Polish economic success……...………………............................... 5 2.1. Poland compared to four standards …...................................... 6 2.1.1. Comparing Poland with enlargement countries................... 6 2.1.2. Poland’s convergence with EU-28………........................... 9 2.1.3. Poland’s convergence with EU-15..................................... 10 2.1.4. Poland and Portugal…….……………….......................... 11 2.1.5. Summarizing the Polish success.………........................... 13 2.2. The causes of the success……...……………............................ 15 2.2.1. Transparency……………..…………………………....... 15 2.2.2. Economic freedom ………….………………………....... 17 2.2.3. Management quality….………...……………………....... 18 2.3. The importance of the Polish success….................................... 20 2.3.1. The European challenge ………………........................... 20 2.3.2. Productivity for Europeans……........................................ 23 2.3.3. The importance of Europe in the world….......................... 23 INDEX
  3. 3. 3 Ambassador Jacek Junosza Kisielewski On 1 May 2004, Poland, together with Cyprus, Slovakia, Slovenia, Estonia, Hungary, Latvia, Lithuania, Malta and the Czech Republic, joined the European Union. Exactly 15 years have passed since we started operating in the single market of the European Union, enjoying the free movement of goods, people, services and capital over this time. At the same time, a significant part of the Polish regions have benefited from structural and investment funds. Fifteen years is enough to analyze the economic effects of our participation in the EU. It was precisely for this purpose that this brochure was created, on the basis of which we would like readers to be able to evaluate the results achieved by Poland through its economic actions. I will confine myself only to indicating circumstances that do not have to be evident to our partners in Western Europe and outside Europe. In 1918, after 123 years of sharing between three neighboring empires, Poland regained freedom. In 1939, it was lost again as a result of an almost simultaneous invasion of Nazi Germany and Soviet Russia. The country has made the most of its 20th anniversary of the interwar period by efficiently recovering its economy and becoming one of the most dynamic developing countries in Europe at that time. After the end of World War II, Poland could not afford free development. It was in the INTRODUCTIONI.
  4. 4. 4 zone of influence of Soviet Russia, which was oblivious to the principles of free market, economic calculation and efficient management of energy resources. Consequently, the democratic opening in 1989 in the case of Poland also meant the beginning of a market economy, together with the principle of private capital development. This must be borne in mind, given that in Western Europe private capital grew independently of the existing political system. I will give an example of a significant burden on the Polish economy during Soviet rule: heavy industry reigned in the economy, based almost 100% on coal as a source of energy. In the years 1989-2017, we reduced employment in the Polish coal industry from 388,000 to 82,700 people (to 21% of the initial level), while coal mining rose to 45% of the initial level. In implementing the right strategies for the development of a renewable energy sector in the world, we cannot fail to take into account the starting point for these changes in each country. The fifteen years of Poland's presence in the EU is a period of exceptional economic dynamism that can be assessed through the following diagrams. The unique conditions of the EU common market, supported by the structural and investment funds, would have favored our country. However, this does not explain all the economic successes achieved in Poland during this period, such as the fact that our country was the only one in the EU that during the deep crisis that plunged Europe 10 years ago, not for a year fell into recession. Certainly, aspirations for life, a high level of professional qualifications and the diligence of Poles, as well as a strong internal market, are also of great importance in this context. Celebrating 15 years of belonging to the EU, we value the advantages it offers, but we are also pleased with our contribution to its development, far above average.
  5. 5. 5 In fifteen years1 Poland's GDP per capita has approached (almost) 23% of the EU-15 average; 22% of EU-28; and 14% higher than the 2004 enlargement countries average. Regarding Portugal? In 2004 Polish income per capita was only 62%; today it is more than 92% of the Portuguese. This makes of Poland an excellent example of success. Which diagrams synthesize it? What are the causes? And why is it so important to disclose it? Here are the three sections of this short text, always using official statistics (Eurostat, Ameco, OECD, IMF, World Bank), or in their absence, independent sources (NGOs such as Transparency International, Heritage Foundation, etc.). 1 Date of entry into the European Union. THE POLISH SUCCESSII.
  6. 6. 6 2.1. Poland compared to four standards The most appropriate way to evaluate Polish performance is to compare it with similar countries that have similar circumstances, since as Ortega y Gasset put it: I am myself and my circumstances. That is, to compare Poland with the other European countries. And let's do it by increasing level of demand. First, comparing Poland with the other enlargement countries1 . Then with the EU-28 (which includes those and also the richest). Then (maximum degree of demand) with EU- 15, the core of the richest countries. And finally with Portugal, considered by many to be a success story in Europe and thus bring the dimension of Polish success to our own experience. 2.1.1. Comparing Poland with the enlargement countries Figure one2 illustrates the convergence, that is Poland's approach to the average (GDP per capita) of the other nine enlargement countries. 1 The other nine countries that simultaneously with Poland joined the EU in 2004: Czech Republic, Hungary, Slovakia, Slovenia, Lithuania, Estonia, Latvia, Cyprus and Malta. 2 In this and all subsequent diagrams, the value of the horizontal line of 100, does not, of course, mean that the value of the corresponding variable (in this case the GDP per capita of enlargement countries) is assumed to be constant. But only that each year this figure and taking into account its annual variation is set at the level of 100% for the sake of easier assessment of Poland's progress in percentage terms. This naturally applies to all subsequent diagrams.
  7. 7. 7 Figure one In 2004 Polish per capita wealth was ± 74% of the average of other countries; fifteen years later it was almost +14% totalizing 87,8% (an increase at the compound annual rate1 of 1,2%), indicating that Poland grew significantly more than other countries that in the same year 2004 joined the European Union. 1 Compound annual growth rate = ( 𝐺𝐷𝑃 𝐹𝑖𝑛𝑎𝑙 𝑦𝑒𝑎𝑟 𝐺𝐷𝑃 𝐼𝑛𝑖𝑡𝑖𝑎𝑙 𝑦𝑒𝑎𝑟 ) 1 𝑁º 𝑦𝑒𝑎𝑟𝑠 − 1
  8. 8. 8 Despite the rapid convergence, the low starting point in 2004 (± 3/4 of the average) makes Polish GDP per capita still below the enlargement average. Malta, Czech Republic, Cyprus and Slovenia are the richest countries. Latvia and Hungary the poorest (see figure two). Figure two
  9. 9. 9 2.1.2. Poland’s convergence with EU-28 This comparison is naturally more demanding, as EU-28 includes all the richest European countries. Thus Poland's starting point in 2004 was lower than in figure one, only 50%, half, of the average European GDP per capita. But comparatively, progress was even greater, having converged almost 22% with the European average in just fifteen years (see figure three). Poland's annual convergence rate was 2,6%1 . Figure three 1 Compound annual growth rate.
  10. 10. 10 2.1.3. Poland’s convergence with EU-15 What about compared with the "club" of the richest countries? To EU- 15? Here, of course, the starting point in 2004 was even worse, only 44% of the average. But as figure four illustrates, progress has been even greater, with Poland converging 22,8% with the European average in just fifteen years. The annual (compound) rate was 3%. Figure four
  11. 11. 11 2.1.4. Poland and Portugal The Portuguese economy is considered by many to be a success story, so it is useful to also use Portugal as a standard for assessing Polish success. And this is what is done in figure five. In 2004 Portugal had a GDP per capita ± 4/5 (80,6%) of the EU-28 average. Poland? Half (50,1%). Fifteen years later? Portugal diverged, that is, it moved away from the average 3% (80,6 – 77,6), while Poland converged, approached the average 21,6% (71,7 – 50,1). Figure five
  12. 12. 12 That is, in 2004 Polish GDP per capita was only 62% of the Portuguese (50,1 / 80,6), but in 2018 represented 92% (71,7 / 77,6), an increase of 30%. An interesting question is, at this rate, when will Polish GDP per capita be equal to Portuguese? This is what figure six answers. If the past is prologue, i.e. if past growth rates (since 1995) remain in the future for both Portugal and Poland, it will surpass Portugal by about 2022, that is, roughly within three years. Figure six
  13. 13. 13 2.1.5. Summarizing the Polish success Looking at figure seven comparing the per capita GDP of the twenty- eight countries of the European Union and concluding that Poland is (still) the seventh lowest in the EU-28, we risk ignoring the enormous progress made by Poland. Either towards enlargement countries (±14% convergence over 15 years); even higher than EU-28 (± 22%); still higher compared to EU-15 (± 23%); and maximum compared to Portugal (30%). Figure seven
  14. 14. 14 This is what is summarized by figure eight and which allowed Poland to rise from (in 2004) 57th in the world GDP per capita ranking to 48th (in 2018)1 . And also in the competitiveness index Poland has progressed from 39th to 37th despite the number of countries analyzed increasing from 104 to 140 (almost 40% more)2 - see figure nine. 1 International Monetary Fund, April 2019. 2 World Economic Forum, Global Competitiveness Reports 2004-2018.
  15. 15. 15 2.2. The causes of the success This is not the time for an in-depth analysis of the causes (and hence the lessons) of Polish success. So we will look at just three variables: - transparency (absence of corruption); - economic freedom; and - the quality of management1 . 2.2.1. Transparency Nobel laureate M. Friedman said corruption is a tax on economic development. The reason is simple. Resources are scarce so they must 1) be applied to the greatest opportunities and 2) used as efficiently as possible. Now 1 Empirical research demonstrates that there are other variables statistically related to economic development, for example: - Trust, work ethic (sense of responsibility, initiative, zeal, etc.) and business ethics; - The political system (democracy restricts the concentration of power which, when it tends to exist, tends to spill over from politics to the economy and reduce competition between companies and hence consumer sovereignty: economic freedom); - Education (either in quantity -% of population - or in quality).
  16. 16. 16 corruption puts resources in the hands of those who do neither, nor anything else. And consequently uses the resources in a less productive way. Hence the correlation between the absence of corruption and countries' GDP per capita is very strong1 : the most transparent countries on the NGO Transparency International list (Denmark, New Zealand, the Netherlands, etc.) are also the richest; and at the bottom of the transparency list (Yemen, Syria, South Sudan, etc.) are also naturally the poorest. In 2004 Poland was in 67th place in the transparency ranking among 145 countries in the world. In 2018, although the number of countries increased to 180, Poland improved the ranking by 31 places to 36th in the world (figure ten below). 1 0,8 with zero hypothesis of being due to chance.
  17. 17. 17 2.2.2. Economic freedom This variable analyzed by the NGO Heritage Foundation measures the degree to which in each country the consumer is sovereign and free to apply his money wherever he wants. Just as in the political sphere with democracy it puts its vote where it prefers. However, to have consumer sovereignty it is necessary that in most economic sectors there is a lot of competition (and few oligopolies, dominant positions, etc.) and thus effective freedom of choice. With a lot of competition, companies are encouraged every day to do their best and when this does not happen they are penalized by bankruptcy and market exit. Therefore the economically freer regions and countries (Hong Kong, Singapore, New Zealand, Switzerland) are also the richest. And at the bottom of the list are the poorest: Venezuela, North Korea, etc. 1 Poland? In 2004 (out of a ranking of 155 countries) it was 80th in the world. That is, below half the table. And by 2019, although the number of countries analyzed increased by 25 to a total of 180, Poland moved to 46th , that is improved 34 places (figure eleven). 1 The correlation is 0,5 with 1% hypothesis of being due to chance.
  18. 18. 18 2.2.3. Management quality One way to calculate GDP is by adding the value added of companies1 . The value added divided by resources (employees, etc.) gives productivity. The goal of management is to increase productivity, i.e. the ratio between outputs (price and quantity sold by an organization) and inputs, the resources used. It is intended to maximize (the value of) production with scarce resources. 1 Revenue minus external costs.
  19. 19. 19 Thus, the best-managed countries are the richest and vice versa. Just remember to which countries belong the world's largest brands. And make an effort to find a reputed brand among the poorest countries. You get it here and there, but it's hard. There is no worldwide ranking for management quality globally, but there is for innovation which is one of the symptoms of management quality. In 2006 Poland was in 44th place in the world (in 125 countries). By 2018, it had improved 6 places (it was 38th ) even though the number of countries analyzed increased to 180 (an increase of almost 50%) - figure twelve. Seen the diagrams that illustrate Polish success. And analyzed some of its causes. The time has come to ask ourselves: Why is it important to publicize it? Who cares?
  20. 20. 20 2.3. The importance of Polish success There are three reasons why - in addition to honoring merit to who is due - it is important to publicize the Polish example: - to stimulate European competitiveness; - because productivity is fundamental for Europeans; and - the importance of Europe in the world. 2.3.1. The European challenge The richest economic bloc in the world is the USA. Now, as figure thirteen shows, European GDP per capita is now more than 1/3 lower than that of the USA, and the gap has been widening since the early 1980s. Japan itself, which was then ± 91% of the European average, is now very close to this (96,6%). Figure thirteen
  21. 21. 21 Why? GDP per capita is the product of four factors: the multiplication of the activity rate (% of the active population in the total population), the employment rate (% of the employed persons), the number of hours worked by the employees, and the productivity (wealth created) per hour. That is, notice that in the figure fourteen mutually cancel each other (because they are both in the numerator and denominator), the variables hours worked, employed population and active population, and consequently it remains only the GDP divided by the total population, the GDP per capita. Now the USA and Europe have roughly the same rate of activity, but the USA is higher than Europe in everything else: productivity per hour (+18,4%), number of hours worked (+11,2%) ) and employment rate (+3,7%) - see figure fourteen.
  22. 22. 22 Figure fourteen Now two aspects are noteworthy. First, the comparison is made with the EU-15 (not the Eurozone or the EU-28) as it is the European hard core constituted by the European countries that are together for a longer time. This is why it is a fairer comparison. And also more demanding as compared to the EU-28, the results would be even worse for Europe. Secondly it compares averages for simplicity. But if there are large differences between the northern and southern countries of the EU-15, they also not only exist but are even greater within the USA, between the richer states (e.g. District of Columbia or Alaska) and the poorer ones (Virginia, South Carolina and Mississippi). And this difference in both
  23. 23. 23 American and European cases has been increasing and consequently reinforcing the importance of good examples such as the Polish one1 . 2.3.2. Productivity for Europeans There are two reasons for this. The first is that due to population aging and despite the postponement of retirement age, the percentage of the working population in the total population has been decreasing. It is therefore necessary for each active person to be increasingly productive in order to pay for old-age pensions. Then the annual health care costs per person increase exponentially with age. So again, either there is an increasing productivity of the actives, or lacking the money, in practice, people's life expectancy is limited. 2.3.3. The importance of Europe in the world We live in a world where (still) there is much poverty. And while it is true that, as Voltaire said, each one is guilty of the good that he does not do, it is also true that there are certain virtues that only the rich can have, 1 The Gini index is a statistic that measures the difference and ranges from 0 (no difference) to 1 (total difference). Now the Gini index is higher in the USA case (0,22) than in the European one (0,16), illustrating that there is a greater difference in GDP per capita between USA states than between European countries.
  24. 24. 24 and so the USA aid to the third world is more than three times the European. On the other hand, and in other areas, everyone in the world also benefits from a strong Europe. Whether the other economic blocs see Europe as a competitor or as an ally. A competitor is a helper (E. Burke), who day by day encourages us to do our best and make progress. And the allies have opinions. So it's complicated to have allies. There is only one thing worse than having allies: not having them (W. Churchill). In short, there is no substitute for a strong Europe in the world that propagates (again Churchill says), a society where “war, disorder and tyranny are replaced by parliaments that create laws, independent courts of justice and a society based on opinions of civilians ”. Now a strong Europe is impossible without a thriving economy. Especially because people tend to listen to the rich more than the poor. And so nothing more important than the good examples. Because people learn more from their eyes than from their ears: what you do is worth a thousand words than you say.
  25. 25. 25 Hence the importance of the Polish example, which can be summarized in the four figures of its progress / convergence (over 15 years) vis-à-vis enlargement countries in 2004, EU-28, EU-15 and Portugal: 14%; 22%; 23%; and 30% (see figure fifteen). Jorge Vasconcellos e Sá With the collaboration of Magda Pereira and Isamárlie Tavares
  26. 26. 3 Polish economic success can be summarizes in the four figures of its progress/convergence towards the enlargement countries of 2004, EU- 28, EU-15 and Portugal: 14%; 22%; 23%; and 30%. And in just 15 years. VS Vasconcellos e Sá Associates, S.A.

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