The Eurasia Center by JoFsMmX

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									                                                                                                   The Eurasia Center
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                                          Poland: Country Report

Path to EU Accession:
After over forty years of communist rule, Poland became the first Central
and Eastern European nation to rid itself of the system and hold free
elections in 1989, made possible by the Roundtable Talks led by the
Solidarity trade union movement. The following years of “shock therapy”, a
rapid program of economic privatization and market liberalization, began a
transition that has developed Poland to stand out as a success story among
transition economies. Poland joined NATO in 1999 and the European Union
in 2004. It is the only country in the European Union to avoid a recession
through the 2008-2009 economic downturn, although GDP per capita is still
much below the EU average.1 The coalition government has moved slowly on
enacting business-friendly reforms, increasing workforce participation,
reduction public sector spending growth, lowering taxes, and privatizing
industry. However, if Poland addresses some of the deficiencies in
infrastructure and its business environment, its economic performance could
increase.

Economic Indicators:
 Poland currently boasts a GDP of $765.6 billion, which ranks 21th in the
     world.2

      Economic growth and
          privatization of large state-run
          companies have given rise to the
          establishment and expansion of
          small and medium sized
          enterprises (SMEs), which
          accounted for 48.6% of GDP in
          2002 and employed 63% of the
          workforce in 2003.3                                                      2001 Percentage of GDP by SMEs


1
  2012 CIA World Fact book
2
  2012 CIA World Fact book
3
  Polish Agency for Enterprise Development, “Small and Medium Enterprise Sector” Report, 2005.:
http://www.parp.gov.pl/dotacjedoc/ulotki/stan_sektora_ang05.pdf
       While Poland maintains a current account deficit of over 4 billion, the
       recent increase in Polish exports, which have grown exponentially from
       $28.4 billion in 2000 to $92.72 billion in 2005, has closely mirrored the
       value of the zloty: as polish exports steadily increased after 2000, the
       zloty unsurprisingly depreciated from $4.3464 in 2000, $4.0939 in 2001,
       $4.0795 in 2002, $3.8889 in 2003, $3.6576 in 2004, and $3.2355 in
       2005.4 However, the zloty is due to be replaced with the euro in 2010
       when Poland is expected to join the Eurozone.
Graph above: Polish Government




Graph Above: The 2012 Economist Intelligence Unit Estimates and Forecasts




        The massive economic privatization and the gained access to EU
         markets have spurred impressive growth; the most important
         downside risk for economic growth is a further significant
         intensification of the euro zone crisis.5
        After widening considerably in 2011, to more than 5% of GDP, the
         current-account deficit is expected to narrow but remain substantial in
         2012, at 4.4% of GDP. We forecast smaller annual deficits, averaging
         3.4% of GDP, in 2013-166




Deloitte, & Polish Information and Foreign Investment Agency. (2004). How to do business: Investor’s guide to Poland. Warsaw: Palilz, and the
3

CIA World Fact book.


5
    2012 Economist Intelligence Unit
6
    Ibid
                                                                                                               7




7
    Graph: http://www.eiu.com/index.asp?layout=displayIssueArticle&issue_id=1198747704&article_id=1818747766
Economic Structure:
 An inefficient commercial court system, a rigid labor code, bureaucratic
     red tape, burdensome tax system, and persistent low-level corruption
     keep the private sector from performing up to its full potential but
     measures to shore up public finances, including increasing contributions
     to the public pension scheme at the expense of private pension funds, by
     the PO/PSL coalition government, which came to power in November
     2007.8
    Unemployment: 12%9
    GDP by sector- agriculture: 3.4% industry: 33.6% services: 63%10
    Polish export commodities are broken down as follows: machinery and
     transport equipment 37.8%, intermediate manufactured goods 23.7%,
     miscellaneous manufactured goods 17.1%, food and live animals 7.6%. 11
    Poland’s main trading partner is Germany, which is the recipient of 26.9%
     of Polish exports and accounts for over 29.1% of Polish imports.12
    Since acceding to the EU in 2004, Poland has received $13.9 billion in EU
     structural funds, which will continue to flow in the future. To that end, the
     Polish government published a draft National Development Plan to discern
     how the 2007-2013 structural funds will be spent.13

Political Considerations:
 A bi-cameral legislature made up of the Sejm (lower house) and the
     Senat (upper house), as well as a strong executive headed by the
     president, constitutes Poland’s democratic political system.
    Power is also distributed to 16 local provinces known as “voivodships”.
    Tax policy must be approved by Parliament—the current Corporate
     Income Tax rate is 19%, tax on dividends is also 19%, and the EU Value-
     Added Tax basic rate on goods and services is 22%.14
    The Poland National Bank coordinates monetary policy—and its chairman
     (currently Marek Belka since 2010) is appointed by the Sejm for six-year
     terms.
    In regards to foreign investment regulations, Polish officials note, “Polish
     law allows 100 percent foreign ownership of domestic businesses, but
     there are limits on a few sectors, including: air transport (49 percent);
     radio and television broadcasting (49 percent); and gambling (0
     percent).”15

8
   2012 CIA World Fact book
9
  2012 CIA World Fact book
10
   2012 CIA World Fact book
11
    Ibid.
12
    Ibid.
13
    A copy of the 2007-2013 National Development Plan is available at the following link:
http://www.funduszestrukturalne.gov.pl/English/National+Development+Plan/
14
    Deloitte, & Polish Information and Foreign Investment Agency. (2004). How to do business: Investor’s guide to Poland. Warsaw: Palilz.
15
    http://www.heritage.org/research/features/index/country.cfm?id=Poland
Attractions:
 Diversified market: Poland is a very interesting place for foreign
  investors. It contains a large number of inhabitants (almost 40 millions),
  a diversified economy in terms of sectors, easy access to Eastern and
  Western Europe and ambitious employees.16
 Low risk: Poland offers safe environment for undertaking economic
  activity and long-term planning (stable prices, permanent GDP growth),
  and has a very low risk of a financial crisis (public sector debt amounts to
  55.0 % GDP while the EU 27 average equals 80.0% GDP).17 In addition, it
  offers investment possibilities resulting from modernizations of
  infrastructure and implementations of modern technologies in
  corporations.18
 EU membership: Access to the single market, allocation of EU structural
  funds (see above).

Path to EU Accession:
The negative economic effects of communism naturally spilled over to the
environmental realm. Heavy industrialization—focused on industry and
workers much to the detriment of the environment—left its mark on Poland.
However, the situation has improved since 1989 due to decline in heavy
industry and increased environmental concern by post-Communist
governments; air pollution nonetheless remains serious because of sulfur
dioxide emissions from coal-fired power plants, and the resulting acid rain
has caused forest damage; water pollution from industrial and municipal
sources is also a problem, as is disposal of hazardous wastes.19 Pollution
levels should continue to decrease as industrial establishments bring their
facilities up to EU code, but at substantial costs to businesses and the
government. A cleaner Poland is the result, but the work is far from finished.

Demographics:
 Poland boasts a largely homogenous population of 38,441,588, which is
  declining at a rate of 0.062%. Poles are predominantly Roman Catholic
  (89.8%) and ethnically and linguistically Polish (97.8% respectively).20
 The majority of the population (61%) resides in towns and cities, yet a
  significant rural population remains.21
 Life expectancy at birth is 72.1 years for males and 80.25 for females.22

16
   http://www.paiz.gov.pl/poland_in_figures
17
   Ibid
18
   Ibid
19
   2012 CIA World Fact book
20
   2012 CIA World Fact book
21
   http://www.fao.org/countries/55528/en/pol/
22
   2012 CIA World Fact book
 The age composition of the population is as follows:
  0-14 years: 14.7%, 15-64 years: 71.6%, and 65
  years and over: 13.7%.23
 Poland currently spends close to 4.83% of GDP on
  health, which is necessary to ensure a large and
  productive workforce.24

Education
 The Polish education system is composed of both public and private
  schools, with total governmental spending on education amounting to
  5.6% of GDP and 12.8% of all governmental expenditure.25

Geography/Natural Resources:                                source:http://Poland .pl
 Located in Central Europe, Poland borders Belarus, the Czech Republic,
     Germany, Lithuania, Russia (Kaliningrad), Slovakia, and Ukraine.
 Poland maintains a land area of 304, 255 square kilometers—roughly the
  size of New Mexico.26
 The terrain is low-lying and relatively flat, with three main mountain
  ranges in the south: the Carpathians, the Holy Cross Mountains, and the
  Sudetan Mountains.27
                                     Water area is 8,220 square kilometers; Poland has
                                       9,000 lakes—which take up 1% of the landscape—
                                       and over 29 rivers in Poland, the longest being the
                                       Vistula (1047km).28
                                     Poland is blessed with bountiful natural resources
                                       including: amber, arable land, coal, copper, lead,
                                                              29
  Skrwa River:http://poland.pl natural gas, salt, and silver.    Current reserves of coal
  amount to roughly 45.4 billion tons, which produces—along with
  pollution—around 95% of the nation’s electricity.

Agriculture
 While agriculture employs over 17.4% of the workforce, it accounts for
  less than 3.4% of Polish GDP. In addition, food and live animals constitute
  7.6% of exports.30
 Permanent crops compose one 1% of the land, and arable land accounts
  for over 40%, while there is 1,160 square km in irrigated land.31


23
   2012 CIA World Factbook
24
   http://www.tradingeconomics.com/poland/health-expenditure-public-percent-of-gdp-wb-data.html and www.worldbank.org.pl
25
   http://www.uis.unesco.org/profiles/EN/EDU/countryProfile_en.aspx?code=6160
26
   2012 CIA World Factbook
27
   http://www.poland.gov.pl/Topographical,features,282.html
28
   http://www.nationmaster.com/encyclopedia/Rivers-of-Poland
29
   2012 CIA World Factbook
30
   Ibid
31
   2012 CIA World Factbook
                                                                       Key agricultural products include:
                                          potatoes, poultry, wheat, pork,
                                          eggs, fruit, vegetables and dairy.32
                                         In 2001, Poland was home to 17.1
                                          million pigs, 5,734,000 head of
     cattle, 343,000 sheep, 48.2 million chickens, 3.5 million ducks, and
     802,000 turkeys.33
Picture Above: http://www.trekearth.com/gallery/Europe/Poland/photo397064.htm



Relevant Environmental Laws and Regulations:
Kyoto Protocol
    An international agreement in which adherents voluntarily sign up to limit their carbon
     emissions in an effort to reduce global warming. Nations can buy and sell emission credits in
     order to fulfill their pledge.
 Poland signed the treaty in 1998 and ratified it in 2002.
 Experts predict CO2 emissions in Poland should be 30% lower than those
     in 1988, and sales of these leftover emission credits could amount to
     $500-$700 million.34
Environmental Protection Act
http://www.mos.gov.pl/mos/akty-p/dostep_eng.html
    The Polish government adopted the Environmental Protection Act in 2001.
    Underpins environmental standards under the “polluter pays” principle, attempting to
     safeguard the environment from air and water pollution.
    Includes the right of popular access to environmental information.

Urban Waste Water Treatment Directive
http://ec.europa.eu/environment/water/water-urbanwaste/directiv.html
    The then European Community enacted this directive in 1991, laying out the requirements of
     EU states for waste water treatment.
 The directive is an attempt to create a system of monitoring and
  periodically reviewing water treatment, as well as constructing water
  treatment facilities and urban waste water collecting systems.
 The European Commission offers financial grants to NGOs for assistance in
  implementing the various sections of the UWWTD.
Water Framework Directive
http://ec.europa.eu/environment/water/waterframework/index en.html
    EU legislation on water policy, which began in 2000 and seeks to ensure water quality across
     Europe.


Current Funding Projects:
32
   Ibid.
33
   http://www.nationsencyclopedia.com/Europe/Poland-ANIMAL-HUSBANDRY.html
34
   http://www.eia.doe.gov/emeu/ cabs/polenv.html
    The European Commission observes, Poland needs €22-45 billion to raise environmental
     standard, but the benefits of an improved quality of life and health savings is €41-208 billion a
                   35
     year by 2020.
 Currently, Polish environmental spending, chiefly through the National
     Fund for Environmental Protection and Water Management, is 1.7% of
     Poland's gross domestic product.36

The EcoFund
 A “debt for environment” swap, which originated in 1992 and allows for a
  percentage of the Polish debt to be transferred to fund environmental
  projects in Poland.
 The United States, France, Norway, Sweden, and Switzerland all contribute
  to the fund, which will roughly add up to $474 million and is due to expire
  in 2010.37

Joint Comprehensive Baltic Sea Environmental Action Program
 Directed by the Helsinki Commission (HELCOM), the program is granted
  funds from the National Fund for Environmental Protection and Water
  Management.
 Seeks to combat water pollution in the Baltic Sea by identifying troubled
  areas, or “hot spots”, which this program monitors and grants assistance
  (a map of these hot spots is available online).38

Carpathian EcoRegion Initiative
 Led by a group of NGOs from seven Carpathian nations (Hungary,
  Slovakia, Czech Republic, Poland, Romania, Ukraine and Serbia &
  Montenegro), the initiative seeks to conserve the Carpathian mountain
  range.
 The main projects in Poland are funded by the “Time for the Carpathians”
  Initiative conducted by the EPCE Poland, Foundation for the Conservation
  of the Biodiversity of the Eastern Carpathians and WWF. For more
  information: http://www.carpathians.org/l_pol.htm


National Program for Urban Waste Water Treatment
 A government program, created in 2003, which distributes financial grants
  for the creation of water treatment plants and wastewater collection
  systems. It is designed to fulfill the requirements of the EU Urban Waste
  Water Directive.


35
   http://ec.europa.eu/environment/water/water-urbanwaste/index_en.html
36
   http://www.europa.eu/scadplus/leg/en/lvb/e15106.htm
37
   “Swapping Debt for the Environment: The Polish EcoFund”, 1998 OECD Report.
38
   http://www.helcom.fi/stc/files/Projects/JCP/TOTAL%20hotspotsAUG2005.pdf
 By the year 2015, the program will have provided aid to construct, extend
      and modernize urban water treatment plants and main collecting systems
      in 1,378 agglomerations.39


Acknowledgements:

Research and Data Development Provided by Tara Jakubik, Research Assistant
under the Supervision and Coordination of Dr. Janco, President, The Eurasia Center/EBC




39
     http://www.unep.org/GC/GC23/documents/Poland_corrected.doc

								
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