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Poland Economy - History

Poland Economy - History


GDP (2003): $209.5 billion.
Real GDP growth (2003): 3.8%
Per capita GDP (2003): $5,270.
Rate of inflation (2003): 0.7%.

Budget: Income .............. $36.5 Billion
Expenditure ... $38.3 Billion

Main Crops: Potatoes, fruits, vegetables, wheat; poultry, eggs, pork, beef, milk, cheese.

Natural Resources: Coal, sulfur, copper, natural gas, silver, lead, salt.Major Industries: machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages, textiles .


Communist Poland

The postwar Polish republic, renamed in 1952 the Polish People’s Republic, occupied an area some 20 percent smaller than prewar Poland, and its population of almost 30 million rose to nearly 39 million in the following four decades. The Holocaust, together with the expulsion of several million Germans and population transfers with the U.S.S.R., left Poland virtually homogeneous in its ethnic composition. The expulsion of the Germans was approved by the Potsdam Conference, but the final decision regarding the new German-Polish border along the Oder-Neisse Line was left to a future peace conference. The U.S.S.R. cleverly capitalized on its status as the sole guarantor of this border, which gave Poland a long seacoast, with such harbours as Szczecin and Gdańsk, and such natural resources as coal and zinc in Silesia.

Despite the potential for wealth established by the redrawn borders, the fact remained that the war had devastated Poland. Warsaw, Wrocław, and Gdańsk lay in ruins, and social conditions bordered on chaos. Huge migrations, mainly to the ex-German “western territories,” added to the instability. Fighting against the remnants of the Ukrainian Liberation Army was followed by the mass relocation of the Ukrainians (Operation Vistula) in 1947. Persecutions of the AK and political opponents (the National Party was outlawed) by the communists led to armed clashes that continued for several years. It was under these conditions that a Jewish pogrom occurred in Kielce in June 1946, claiming more than 40 lives.

Bierut, who was formally nonpartisan but in fact was an old communist, assumed the presidency. In a cabinet headed by a socialist and dominated by communists and fellow travelers, Mikołajczyk became deputy prime minister. He successfully re-created a genuine Polish Peasant Party (PSL Polskie Stronnictwo Ludowe, later also called the Polish People’s Party), which was larger than the PPR and its socialist and democratic satellite parties (the PPS and the SD, respectively). Supported by all enemies of communism, Mikołajczyk sought to challenge the PPR in the “free and unfettered” elections stipulated by the Yalta accords. His opponents included the ruthless secretary-general of the PPR, Władysław Gomułka, a “home communist,” and the men in charge of security (Jakub Berman) and of the economy (Hilary Minc), who had returned from Russia.

The Sovietization of Poland, accompanied by terror, included the nationalization of industry and the expropriation of privately owned land parcels larger than 125 acres (50 hectares). Yet in some areas (namely, matters concerning the church and foreign policy), the communists trod lightly during this transition period. The test of strength between Mikołajczyk and the PPR first occurred during the referendum of 1946—the results of which, favourable to Mikołajczyk, were falsified—and then in the general elections of 1947, which were hardly “free and unfettered.” Mikołajczyk, fearing for his life, fled the country. The victorious communists completed their monopoly of power in 1948 by absorbing the increasingly dependent PPS to become the Polish United Workers’ Party (PUWP).

Over the next few years the Bierut regime in Poland closely followed the Stalinist model in politics (adopting the Soviet-style 1952 constitution), economics (emphasizing heavy industry and collectivization of agriculture), military affairs (appointing the Soviet Marshal Konstantin Rokossovsky as commander of Polish forces and adhering to the Warsaw Pact of 1955), foreign policy (joining the Communist Information Bureau, the agency of international communism), culture, and the rule of the secret police. Political terror in Poland, however, did not include, as elsewhere, show trials of fallen party leaders—Gomułka, denounced as a “Titoist” and imprisoned in 1951, was spared such a trial. Moreover, the primate of Poland, Stefan Wyszyński, could still negotiate a modus vivendi in 1950, though, as the pressure on the church increased, he was arrested in September 1953 (by which time he had been named a cardinal).

The death of Stalin in March 1953 opened a period of struggle for succession and change in the U.S.S.R. that had repercussions throughout the Soviet bloc. The interlude of liberalization that followed culminated in the Soviet leader Nikita Khrushchev’s denunciation of Stalinism at the 20th Party Congress in February 1956. With the sudden death of Bierut, anti-Stalinists in Poland raised their heads a violently suppressed workers’ strike in Poznań in June 1956 shook the whole country. Gomułka, who believed in a “Polish road to socialism,” became a candidate for the leadership of the party. What appeared as his confrontation with Khrushchev and other top Soviet leaders who descended on Warsaw in October and threatened intervention made Gomułka popular throughout Poland. In reality the Polish leader convinced Khrushchev of his devotion to communism and of the need for a reformist approach to strengthen its doctrine.

Important changes followed, among them Polish-Soviet accords on trade and military cooperation (Rokossovsky and most Soviet officers left the country), a significant reduction of political terror, an end to forced collectivization, the release of Cardinal Wyszyński (followed by some concessions in the religious sphere), and increased contacts with the West, including freer travel. Gomułka’s objective, however, was to bridge the gap between the people and the party, thereby legitimizing the latter. Hence, the period of reform known as “Polish October” did not prove to be the beginning of an evolution of communism that revisionists at home and politically motivated émigrés had hoped for.

Within a decade economic reform slowed down, the activity of the church was circumscribed, and intellectuals were subjected to pressures. Demonstrations by students in favour of intellectual freedom led to reprisals in March 1968 that brought to an end the so-called “little stabilization” that Gomułka had succeeded in achieving. Ever more autocratic in his behaviour, Gomułka became involved in an “anti-Zionist” campaign that resulted in purges within the party, administration, and army. Thousands of people of Jewish origin emigrated.

Also in 1968, Polish troops joined the Soviet-led intervention in Czechoslovakia. In 1970 Gomułka registered a foreign-policy success by signing a treaty with West Germany that involved a recognition of the Oder-Neisse border. In December 1970, however, major strikes in the shipyards at Gdańsk, Gdynia, and Szczecin, provoked by price increases, led to bloody clashes with police and troops in which many were killed. Gomułka had to step down and was replaced as first secretary by the more pragmatic head of the party in Silesia, Edward Gierek.

The Gierek decade (1970–80) began with ambitious attempts to modernize the country’s economy and raise living standards. Exploiting East-West détente, he attracted large foreign loans and investments. Initial successes, however, turned sour as the world oil crisis and mismanagement of the economy produced huge budget deficits, which Gierek tried to cover through increased borrowing. The policy of consumerism failed to strengthen the system, and new price increases in 1976 led to workers’ riots in Ursus and Radom, which once again were brutally suppressed.

A Workers’ Defense Committee (KOR) arose and sought to bridge the gap between the intelligentsia, which had been isolated in 1968, and the workers, who had received no support in 1970. The names of such dissidents as Jacek Kuroń and Adam Michnik became internationally known. Other committees appeared that claimed the legality of their activity and protested reprisals as being contrary to the 1975 Helsinki Accords. The PUWP responded with measures of selective intimidation.

In 1978 the election of Karol Cardinal Wojtyła, the archbishop of Kraków, as Pope John Paul II gave the Poles a father figure and a new inspiration. The coalition of workers and intellectuals, operating largely under the protective umbrella of the church, was in fact building a civil society. The pope’s visit to Poland in 1979 endowed that society with national, patriotic, and ethical dimensions. A strike at the Gdańsk shipyard led by a charismatic electrician, Lech Wałęsa, forced an accord with the government on August 31, 1980. Out of the strike emerged the almost 10-million-strong Independent Self-Governing Trade Union Solidarity (Solidarność), which the government was forced to recognize. Here was an unprecedented working-class revolution directed against a “socialist” state, an example to other peoples of the Soviet bloc.

A huge movement that sought not to govern but rather to ensure freedom through a “self-limiting revolution,” Solidarity could not have been homogeneous. The opponents of communism ranged from those who opposed the system as contrary to liberty and democracy to those who saw it as inimical to national and Christian values and to those who felt that it had not lived up to its socioeconomic promises. These three attitudes all resurfaced after the fall of communism and explain a good deal about the developments in Poland of the 1990s.

Gierek did not politically survive the birth of Solidarity, and he was replaced by Stanisław Kania, who was followed by General Wojciech Jaruzelski. By the autumn of 1981, Jaruzelski held the offices of premier, first secretary of the party, and commander in chief. His decision to attempt to break Solidarity through the introduction of martial law in December 1981 may well have stemmed from a conviction that the constant tug of war between Solidarity and the government was leading the country toward anarchy, which had to be ended by Polish or by Soviet hands. It is likely that he could not conceive of any Poland except a communist one.

Martial law effectively broke Solidarity by paralyzing the country and imprisoning virtually all of the movement’s leadership, Wałęsa included. It did not, however, destroy the movement. After the lifting of martial law in 1983, the government, despite its best attempts, could not establish its legitimacy. Severe economic problems worsened the political deadlock. In 1984 a popular priest, Jerzy Popieluszko, was murdered by the secret police, but, for the first time in such a case, state agents were arrested and charged with the crime.

In 1985 when Mikhail Gorbachev came to power as the leader of the Soviet Union, his policies of reform (glasnost and perestroika) started a process that eventually led to the collapse of communism in eastern Europe and the disintegration of the U.S.S.R. The Jaruzelski regime realized that broad reforms were unavoidable and that a revived Solidarity had to be part of them. The roundtable negotiations under the auspices of the church—Józef Cardinal Glemp succeeded Wyszyński as primate—resulted in a “negotiated revolution.” Solidarity was restored and participated in partly free elections in June 1989 that brought it a sweeping victory.


Trade

The fall of communism greatly affected Poland’s trade, which prior to the demise of the Soviet bloc had been conducted within Comecon, including the export of coal and machinery to the Soviet Union and eastern Europe. In 1990, however, Germany edged out the Soviet Union as Poland’s primary trading partner, and by 2001 Germany accounted for one-fourth of Poland’s imports and one-third of its exports. By the 2010s about one-fourth of Poland’s imports continued to come from Germany, but Germany’s share of Polish exports dropped to about one-fourth. China, Italy, France, the United Kingdom, the Czech Republic, Russia, and the Netherlands are also important to Polish trade.

Machinery, metals, textiles and clothing, coal, and food account for the bulk of exports, and machinery, chemicals, and fuels are the major imports. Germany is the largest market for almost all categories of exports, while Russia remains by far the most important source of energy imports, and Germany and Italy serve as the chief sources of foreign machinery and chemicals.


Overview

The well-diversified Polish economy is among Europe’s least affected by the COVID-19 pandemic. Nevertheless, GDP declined by 2.7 percent in 2020, the first output contraction in over 20 years. Before the pandemic, prudent macroeconomic policies, effective absorption of European Union (EU) investment funds, a sound financial sector, and better access to long-term credit fed into inclusive growth and poverty reduction. Real wage growth and a range of demographically targeted social programs led to robust consumption growth until early 2020. With an improving business environment, Poland integrated well into regional value chains.

A key challenge over the short term is to continue supporting the sectors most affected by the pandemic while ensuring public debt sustainability. The unprecedented policy response to the COVID crisis has narrowed the available fiscal space. Increased spending efficiency is needed to rebuild fiscal buffers for future countercyclical policies and to prepare for the growing fiscal burden arising from the increase in the number of elderly people.

Over the medium term, a key challenge to sustained growth is a tightening labor supply that has been made more acute by the aging population. Achieving decarbonization commitments is another challenge. Strengthening institutions at both the national and subnational levels is a necessary ingredient to sustained and inclusive growth and the narrowing of regional disparities.

Strategy

IBRD Lending1 Loan (US$504 million)
Reimbursable Advisory Services1 (US$1.22 million)
Trust Fund-Financed Advisory Services and Analytics 6 (US$3.38 million)

Since the 1990s, the World Bank has been one of the most prominent development institutions in Poland, providing a total of US$16 billion in loans and helping introduce a number of key policy reforms.

Poland’s relationship with the Bank is based on the recognition that the Bank’s presence in the country continues to generate value-added for both sides: for Poland through access to financial and knowledge services in critical areas, and for the World Bank through a strengthened relationship with a high-income country that can bring development lessons to other countries around the world.

The World Bank Group’s current Country Partnership Framework for Poland concentrates the Group’s engagement on key remaining development concerns, including environmental threats, the health care system, and regional convergence.

KEY ENGAGEMENT

Despite significant efforts to reduce harmful air emissions, during and after the economic transition in the 1990s, Poland remains home to many of the most polluted cities in the EU. Tens of thousands of people die prematurely every year because of smog. The economic costs associated with disease and premature death from exposure to ambient, small particulate matter (PM2.5) could be as high as US$40 billion a year.

Aware of these problems, as well as of the growing pressure from civil society, the Polish Government has begun taking steps to improve air quality. The World Bank has been supporting these efforts and advising Poland in the implementation of financial mechanisms to launch a national program for anti-smog and energy efficiency. The already established Clean Air Program will reach roughly 3 million single-family buildings that are now primarily responsible for the smog and that need to replace their heating sources and carry out a thermal retrofitting.

After two years of advisory help provided to Poland, and upon the request of the Polish Government, the World Bank is now preparing a Program-for-Results operation to further support reforms in that critical area.

In addition to the expected improvement in health outcomes in society, the Clean Air Program may also become a driving force for the Polish economy, especially as the immediate COVID-19 crisis subsides, due to the sheer magnitude of the huge financial resources needed for its implementation and the associated creation of jobs related to insulating buildings and replacing heating systems.

Recent Economic Developments

The economy recorded its first contraction since 1991 amid the pandemic, with output contracting 2.7 percent in 2020. The Government swiftly implemented exceptional stimulus and accommodative monetary policy to mitigate the health and social impact and to prevent economic scarring.

The COVID crisis, heightened uncertainty, and effects from negative confidence dampened private consumption (-3.1 percent) and total investment, (-8.4 percent). Government spending to cushion the pandemic’s impacts and a higher public wage bill contributed to the 3.2 percent increase in public consumption, while public investment remained stable. The current account surplus rose to 3.5 percent of GDP.

The stimulus packages have been effective in preventing a sharper increase in unemployment and earnings losses by subsidizing salaries and supporting domestic enterprises via non-returnable transfers, loans, and tax relief and deferrals, among other measures. The increase in the unemployment rate was contained to 1 percentage point year-on-year by January 2021, rising to 6.5 percent.

The large fiscal stimulus and the decline in economic activity caused the fiscal deficit to widen to an estimated 8.5 percent of GDP in 2020. Inflation reached 3.4 percent in 2020, primarily due to lower international fuel prices and food prices. Higher electricity tariffs and a record low reference interest rate prevented a sharper decline in inflation.

Trade recovery in the euro area, combined with improved confidence and a rebound in private consumption and investment, is expected to support a moderate recovery of around 3.3 percent in 2021. The outlook incorporates the uncertainty arising from the new strains of COVID-19 and the current pace of the vaccination campaigns throughout Europe. Exceptional policy accommodation in Poland and in the EU more broadly is expected to continue throughout 2021, including near-zero policy interest rates. This baseline assumes that the pandemic is contained, with a vaccine effectively rolled out in 2021.

The persistence of the crisis is expected to put a continued financial strain on poor working households that are more vulnerable to reductions in work hours and job losses. Therefore, the share of the population at risk of poverty could remain elevated through 2021 before gradually recovering in 2022.

Pent-up domestic demand, especially for capital and durable goods, and stronger demand for Poland’s exports from key EU trading partners will support a recovery in the industrial sector and exports.

The fiscal deficit is expected to narrow starting in 2021, as the economy recovers and as support measures are targeted to the most affected sectors and vulnerable groups.

PROJECT SPOTLIGHT

Odra-Vistula Flood Management Project

The World Bank has been partnering with Poland to strengthen the national flood protection system and secure the lives, health, and property of citizens since 1997, when the devastating “Millennium Floods” struck the country.

This natural disaster reminded Poland of its intrinsic vulnerability to flooding caused by the mountainous and hilly landscape and by decades of neglect.

In 20 years, thanks to World Bank support, a considerable stretch of the Odra River has been secured, while Wroclaw, one-third of which was flooded in 1997, today is a vibrant European city.

After significant investments along the Odra River, the Government shifted its attention to Poland’s longest river, the Vistula, where the needs are still high. In 2015, the Government launched the Odra-Vistula Flood Management Project. Its development objective is to increase access to flood protection for people living in selected areas of the Odra and the Upper Vistula river basins and to strengthen the institutional capacity of the Government to mitigate flood events more effectively.

The total project costs are US$1.317 million, with World Bank financing amounting to US$504 million. The project implementation period is eight years. Subsequent contracts for civil works and technical assistance are being signed and are currently under implementation.


Environment

Environment - current issues

decreased emphasis on heavy industry and increased environmental concern by post-communist governments has improved environment air pollution remains serious because of emissions from burning low-quality coals in homes and from coal-fired power plants the resulting acid rain causes forest damage water pollution from industrial and municipal sources is a problem, as is disposal of hazardous wastes

Environment - international agreements

party to: Air Pollution, Air Pollution-Nitrogen Oxides, Air Pollution-Sulphur 94, Antarctic-Environmental Protection, Antarctic- Marine Living Resources, Antarctic Seals, Antarctic Treaty, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Climate Change-Paris Agreement, Comprehensive Nuclear Test Ban, Desertification, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping-London Convention, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Tropical Timber 2006, Wetlands, Whaling

signed, but not ratified: Air Pollution-Heavy Metals, Air Pollution-Multi-effect Protocol, Air Pollution-Persistent Organic Pollutants

Air pollutants

particulate matter emissions: 20.54 micrograms per cubic meter (2016 est.)

carbon dioxide emissions: 299.04 megatons (2016 est.)

methane emissions: 46.62 megatons (2020 est.)

Total water withdrawal

municipal: 2.028 billion cubic meters (2017 est.)

industrial: 7.035 billion cubic meters (2017 est.)

agricultural: 1.018 billion cubic meters (2017 est.)

Total renewable water resources

60.5 billion cubic meters (2017 est.)

Climate

temperate with cold, cloudy, moderately severe winters with frequent precipitation mild summers with frequent showers and thundershowers

Land use

agricultural land: 48.2% (2018 est.)

permanent crops: 1.3% (2018 est.)

permanent pasture: 10.7% (2018 est.)

forest: 30.6% (2018 est.)

other: 21.2% (2018 est.)

Revenue from forest resources

forest revenues: 0.17% of GDP (2018 est.)

Revenue from coal

coal revenues: 0.27% of GDP (2018 est.)

Urbanization

urban population: 60.1% of total population (2021)

rate of urbanization: -0.16% annual rate of change (2020-25 est.)

Total population growth rate v. urban population growth rate, 2000-2030

Major infectious diseases

degree of risk: intermediate (2016)

vectorborne diseases: tickborne encephalitis (2016)

Waste and recycling

municipal solid waste generated annually: 10.863 million tons (2015 est.)

municipal solid waste recycled annually: 2,866,746 tons (2015 est.)

percent of municipal solid waste recycled: 26.4% (2015 est.)


Poland: History, Politics, Economy, and Foreign Policy

The Republic of Poland today is one of the major actors in the European Union, NATO, and regional as well as global affairs. This predominantly Catholic parliamentary democracy comprises 312,000 sq. kilometers sharing borders with seven states and has a population of more than 38 million.

The main geostrategic Achilles’ heel of Poland has been its location between Russia and Germany and its lowland terrain with no natural borders for protection. Since the dissolution of the USSR, Poland has embraced a Eurocentric foreign policy. The 1999 NATO and 2004 EU accessions serve as a testament of Poland’s commitment to a “United Europe”. At the same time these policies have raised some concerns in Russia.

Poland traces its history to 965-966 A.D. when king Mieszko I rejected his pagan religion and converted into Christianity. Since then the Polish Kingdom grew in power especially during the Polish-Lithuanian Commonwealth period beginning in mid-16th century. Despite the initial success and regional supremacy, Poland lost its sovereignty as a result of successive partitions among Russia, Austria, and Germany in 1772, 1793, and culminating in 1795. It was not until 1918, when following the end of WWI Poland once again regained its independence that lasted until the 1939 Nazi and Soviet invasions (persisting through the end of WWII). Such historical developments left their permanent marks on the Polish psyche that define part of the national identity to this day.

Firstly, the wars that Poland fought throughout the 18 to 20th centuries reshaped the once diverse state into an ethnically homogenous polity. This further allowed for the Catholic Church to strengthen its position within the country. Secondly, the persisting memory of the Polish-Lithuanian Commonwealth underlines the contemporary regional ambitions of the Polish foreign policy. Therefore, it is important to establish some basic understanding of Polish history to better grasp the current state of affairs.

During the weeklong negotiations at the Yalta Conference, both Roosevelt and Churchill had accepted the idea that Poland should be viewed within the context of the Soviet national security. Following the end of WWII, it took Moscow about three years to fully establish communist governments throughout the east and central Europe, including Poland.

The reign of terror and persecutions lasted until the death of Stalin in 1953 and Polish Stalinist leader Bolesław Bierut in 1956. Following the deaths of Joseph Vissarionovich and Bierut a series of protest waves in 1956, ’68, ’70, ’76, and ’80 initiated by students, intelligentsia, and workers forced the communist regime in Poland to give in to successive concessions. With each round of protests the opposition was becoming increasingly competent. After the 1976 demonstrations, the Committee to Protect the Workers (KOR) was created in order to organize the opposition as well as to support the arrested activists. Starting in mid-1970s a large, active underground opposition apparatus was carrying out activities throughout Poland. In the 1980s workers in the northern coast of the country began mass protests demanding economic reforms. PZPR Solidarność, or Solidarity— a mass independent trade union— was gaining momentum. By 1982 it had over three million members, mostly industrial workers, who were capable of exerting enormous pressure on the Polish authorities.

Even before Stalin’s death Poland was already a major trading partner of Europe, especially when compared to other Eastern bloc states, comprising about 30% of its total trade turnover. Due to deep trade ties with the West and the need for modernization, the Polish authorities had accumulated large debts by borrowing from the Western European states. This process largely began in 1970 after the failed reform attempts by Edward Gierek, head of the Communist party. The situation got so desperate that by 1980 the prices were too high and the shelves of the stores were almost empty.

Poor economic growth had depleted the political capital of the Communist government. In an attempt to jumpstart the economy, the country’s leadership decided to reach out to the opposition. The Catholic Church, as a respected institution by both sides, mediated the negotiations. After seven months of public and private discussions, the two sides decided to defer the economic reform agenda and move forward with political modifications. As a compromise, it was decided to create a bicameral Parliament comprised of the Senate (upper house) and Sejm (lower house) that would jointly elect the president. The seats of the parliament were negotiated to provide the two sides with sufficient incentives to participate in the political processes and to work together. Nobody expected the communist regime to fall, yet the 1989 elections proved everyone’s expectations wrong.

Some smaller parties elected under the Communist banner proved to be “Trojan horses” and changed sides right after the elections. Thus, the anticipated (and negotiated) 65% of the Communist Party seats suddenly became 35%, providing Solidarity with the majority votes in the Polish Parliament. The new government under the leadership of Tadeusz Mazowiecki revised the Constitution of Poland and embarked on the implementation of the Balcerowicz Plan. In 1990, under the new constitution, Lech Wałęsa was popularly elected as the new President. These (unexpected) developments brought an end to the communist era in Poland and set it on a course of “rejoining Europe”.

Given the fact that Poland was under a tight grip of Moscow, it is hard to talk about a sovereign Polish foreign policy. Despite its privileged position to trade with the West, Poland was largely incapable of independently deciding its external policy.
Since 1991, Poland has gone through many administrations with varying economic and political platforms. The end of communism brought to light many political parties and fragmentation within the Parliament.

Nonetheless, NATO membership and EU candidacy may be considered as one of the greatest achievements of the 20th century Polish foreign policy. Since 1989 Poland was trying to relegate its Warsaw Pact membership and draw closer to the Euro-Atlantic community. The 1990 treaty with Germany and the withdrawal of the Russian troops from the Polish territory opened a new chapter in Polish history, full of opportunities and risks. One of the major achievements of the time was the improvement of relations with Germany. Since then the economic interdependence between the two states has been growing by each passing year turning Poland into an export-oriented economy (as part of the German value chain) with exports amounting to 46% of its GDP. These developments were not welcomed in Moscow especially the eastward expansion of NATO being seen as a threat to Russia.
Upon becoming a member state of the EU, Poland has been working towards promoting its national interests. Firstly, large cash flows from Brussels allowed to develop critical infrastructure in the country and cut down on transportation and other costs. This facilitated an inflow of investments, especially from Germany, that have promoted a sustained economic growth in Poland. The economy was tamed after soviet and post-soviet administrations attempted implementing various economic policies. Secondly, Poland, together with Sweden, began pushing forward the Eastern Partnership Program with the vision of drawing the eastern neighbors closer to the EU.

Relations with Russia have been generally positive, but some historical strains remain. Additionally, the Nord Stream gas pipeline, the plane crash of 2010, the US plans to deploy missile defense systems in Poland, and other factors have had their toll on bilateral relations.

Since 1991 the economy of Poland has been growing primarily due to its relatively cheap labor cost as well as its proximity to and large investment flows from Germany. Graphs below depict some macroeconomic data from 1991 through 2012 (see Annexes). The red vertical line signifies Poland’s accession to the EU in 2004. These three graphs already tell a lot about the recent economic history of Poland. Except for the year 1991, the country has recorded solely positive GDP growth in the past two decades and the GDP has more than doubled through the period. Now the challenge for the country is transitioning to a high technology, value-added economy in order to make sure that the well-being of the citizens keeps increasing and the country is not stuck in the middle income trap.

On the foreign policy front Poland is fully integrated with the Euro-Atlantic community which means that the only point of concern for the official Warsaw is its eastern frontier. Recent historical developments have effectively put an end (at least for the time being) to Poland’s historical East-West divide and the country is arguably in a more advantageous and secure position today than it has ever been before.

Nevertheless, with the plans to launch the Eurasian Economic Union (EEU) in 2015, Russia, Kazakhstan, and Belarus will effectively turn into one giant economic bloc. This would mean that Poland will be bordering not just Belarus and Kaliningrad separately, but rather as parts of a larger organization dominated by Russia. Armenia, Kyrgyzstan, and other CIS states are likely to join the EEU by January 1, 2015 also. This fact, paralleled by the recent deployment of the “Iskander” nuclear-capable missile system in Kaliningrad, creates security threats first and foremost for Poland as it is sited the closest (beside the Baltic States). Should the relations between the West and Russia deteriorate, Poland will likely be one of the first targets for military action. Even though such a scenario is unlikely in the short- to medium-term, Poland should not waste any time in further bridging the gap between Russia as well as other former Soviet states and the European Union. Poland’s leadership in the Eastern Partnership Program as well as the recent active participation in negotiation rounds with Ukraine serve as a positive indicator that the official Warsaw realistically assesses the situation and formulates adequate foreign policy objectives that will best serve its interests.

Notwithstanding those facts, Poland can and should try to further deepen its cooperation with Russia. History and recent developments have been a cause of mutual distrust and underutilization of potential. If both sides are ready to relate to each other as equals and not regard one another as rivals then there is a possibility for improvement in relations. However, this would require political will on both sides to come up with a mutually-agreeable format for cooperation.

Rapprochement with Russia is in Poland’s national interest. It will secure Poland’s eastern borders (and energy flows) and allow for greater economic growth. Poland should work with its EU and NATO partners in trying to come up with a new framework of cooperation with Russia and the EEU at-large. A harmonious collaboration is in everyone’s interest given the growing economic, political, and security interdependence of states. Poland has proven its leadership in the Eastern Partnership Program and even by modifying the existing platform it can attempt to improve current relations.

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Poland Economy - History

Poland has pursued a policy of economic liberalization since 1990 and today stands out as a success story among transition economies. In 2007, GDP grew an estimated 6.5%, based on rising private consumption, a jump in corporate investment, and EU funds inflows. GDP per capita is still much below the EU average, but is similar to that of the three Baltic states. Since 2004, EU membership and access to EU structural funds have provided a major boost to the economy. Unemployment is falling rapidly, though at roughly 12.8% in 2007, it remains well above the EU average. Tightening labor markets, and rising global energy and food prices, pose a risk to consumer price stability. In December 2007 inflation reached 4.1% on a year-over-year basis, or higher than the upper limit of the National Bank of Poland's target range. Poland's economic performance could improve further if the country addresses some of the remaining deficiencies in its business environment. An inefficient commercial court system, a rigid labor code, bureaucratic red tape, and persistent low-level corruption keep the private sector from performing up to its full potential. Rising demands to fund health care, education, and the state pension system present a challenge to the Polish government's effort to hold the consolidated public sector budget deficit under 3.0% of GDP, a target which was achieved in 2007. The PO/PSL coalition government which came to power in November 2007 plans to further reduce the budget deficit with the aim of eventually adopting the euro. The new government has also announced its intention to enact business-friendly reforms, reduce public sector spending growth, lower taxes, and accelerate privatization. However, the government does not have the necessary two-thirds majority needed to override a presidential veto, and thus may have to water down initiatives in order to garner enough support to pass its pro-business policies.


How the EU transformed Poland

O f the 10 mostly post-communist countries that joined the European Union exactly a decade ago today, none has benefited more from membership than Poland. First and foremost, there's the cash: the country received £56bn in development funds between 2007 and 2013, money that was used to build hundreds of kilometres of highways and express roads as well as youth sports facilities, modern sewerage systems, kindergartens and pre-schools.

Add to that the £60bn earmarked for Warsaw in the EU's 2014-20 budget and the country will have enjoyed a windfall equivalent to roughly double the value of the Marshall Plan, calculated in today's dollar figures. And that does not take into account the tens of billions of pounds that Polish farmers continue to receive in agricultural subsidies from Brussels. What we are witnessing is, without doubt, one of the largest wealth transfers between nations in modern history.

Then there is the boost the Polish economy has enjoyed thanks to its booming exports, which mostly head to other EU countries. A year before accession, Poland generated an annual GDP of £130bn by 2013, that figure had grown to £305bn. Meanwhile, GDP per capita has risen from 44% of the EU average on accession to 67% today and is forecast to reach 74% by 2020. Small wonder then that some nine out of 10 Poles support their country's membership of the EU, according to a survey last month .

But it is not just Poland's economy that has changed it's the country's citizens as well. Young Poles today travel and study all over Europe, taking part in exchange programmes or just simply packing up their bags and heading for the nearest airport. Many have now personally interacted with folk from different countries and races or know people from their families who have. This was not always the case.

When I first arrived in Warsaw as a student in 1995, most Poles had had little or no contact with the outside world. Communism had ended only a few years before. It was common for non-white foreigners to get called nasty names in public. The country was going through a painful economic transformation, times were tough and its frustrated citizens were often coarse and gruff in their behaviour.

But a decade in the EU and a decidedly more prosperous environment has helped to civilise Poles, much as prosperity tends to do everywhere. Nowadays, foreigners of all hues can walk the streets at night without fear of attack by skinheads, as was the case too often in the chaotic 1990s.

Poles have also grown more confident of themselves and their country. Many have stopped viewing their nation as the eternal victim. A collective inferiority complex, shaped historically by the loss of independence and foreign oppression, is slowly eroding, although it will still take some time to disappear altogether.

It would be silly to claim that Poland has become a land of milk and honey for all and sundry. If that were the case, 2 million Poles would not have emigrated, mostly to the UK, after accession.

Unemployment, at almost 14%, remains stubbornly high and would surely be higher if so many had not left. Poland exports its furniture, food, cosmetics and unemployment, so goes the joke in Warsaw. For those who do have a job, wages remain low compared to "old" Europe, one of the main reasons the country is a darling of western multinationals.

On the social front, there are grumbles from the more conservative members of the commentariat who say Polish traditions are being eroded by the influence of nihilistic western pop-culture. While these critics have no qualms taking EU cash, they are derisive of some of the public attitudes expected in a member state, things such as respect for LGBT-rights, gender equality (there is no such thing as discrimination against women in Poland, they say) and rightwingers' favourite bogeyman – political correctness.

Some yearn for the days when you could say "faggot", "nigger" or "kike" in public without anybody making an unnecessary fuss. Today, the persecuted wail, their "freedom of speech" is being stifled.

But this cultural backlash is to be expected in a country that is one of the most ethnically and culturally homogenous in the world, being 99.9% white and 95% Roman Catholic. What counts is that Polish mainstream society has adapted to western standards in public behaviour admirably quickly.

All in all, most Poles, conservative and progressive, would agree it would be difficult to point to a decade in Poland's troubled history that has been as benevolent for the country as the last one.


Poland

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Poland, country of central Europe. Poland is located at a geographic crossroads that links the forested lands of northwestern Europe to the sea lanes of the Atlantic Ocean and the fertile plains of the Eurasian frontier. Now bounded by seven nations, Poland has waxed and waned over the centuries, buffeted by the forces of regional history. In the early Middle Ages, Poland’s small principalities and townships were subjugated by successive waves of invaders, from Germans and Balts to Mongols. In the mid-1500s, united Poland was the largest state in Europe and perhaps the continent’s most powerful nation. Yet two and a half centuries later, during the Partitions of Poland (1772–1918), it disappeared, parceled out among the contending empires of Russia, Prussia, and Austria.

Even at a time of national crisis, however, Polish culture remained strong indeed, it even flourished, if sometimes far from home. Polish revolutionary ideals, carried by such distinguished patriots as Kazimierz Pułaski and Tadeusz Kościuszko, informed those of the American Revolution. The Polish constitution of 1791, the oldest in Europe, in turn incorporated ideals of the American and French revolutions. Poles later settled in great numbers in the United States, Canada, Argentina, and Australia and carried their culture with them. At the same time, Polish artists of the Romantic period, such as pianist Frédéric Chopin and poet Adam Mickiewicz, were leading lights on the European continent in the 19th century. Following their example, Polish intellectuals, musicians, filmmakers, and writers continue to enrich the world’s arts and letters.

Restored as a nation in 1918 but ravaged by two world wars, Poland suffered tremendously throughout the course of the 20th century. World War II was particularly damaging, as Poland’s historically strong Jewish population was almost wholly annihilated in the Holocaust. Millions of non-Jewish Poles also died, victims of more partition and conquest. With the fall of the Third Reich, Poland effectively lost its independence once again, becoming a communist satellite state of the Soviet Union. Nearly a half century of totalitarian rule followed, though not without strong challenges on the part of Poland’s workers, who, supported by a dissident Catholic Church, called the economic failures of the Soviet system into question.

In the late 1970s, beginning in the shipyards of Gdańsk, those workers formed a nationwide movement called Solidarity (Solidarność). Despite the arrest of Solidarity’s leadership, its newspapers kept publishing, spreading its values and agenda throughout the country. In May 1989 the Polish government fell, along with communist regimes throughout eastern Europe, beginning Poland’s rapid transformation into a democracy.

That transformation has not been without its difficulties, as the Nobel Prize-winning poet Wisława Szymborska wrote a decade later:

I came to the paradoxical conclusion that some workers had it much easier in the Polish People’s Republic. They didn’t have to pretend. They didn’t have to be polite if they didn’t feel like it. They didn’t have to suppress their exhaustion, boredom, irritation. They didn’t have to conceal their lack of interest in other people’s problems. They didn’t have to pretend that their back wasn’t killing them when their back was in fact killing them. If they worked in a store, they didn’t have to try to get their customers to buy things, since the products always vanished before the lines did.

By the turn of the 21st century, Poland was a market-based democracy, abundant in products of all kinds and a member of both NATO (North Atlantic Treaty Organization) and the European Union (EU), allied more strongly with western Europe than with eastern Europe but, as always, squarely between them.

A land of striking beauty, Poland is punctuated by great forests and rivers, broad plains, and tall mountains. Warsaw (Warszawa), the country’s capital, combines modern buildings with historic architecture, most of which was heavily damaged during World War II but has since been faithfully restored in one of the most thoroughgoing reconstruction efforts in European history. Other cities of historic and cultural interest include Poznań, the seat of Poland’s first bishopric Gdańsk, one of the most active ports on the busy Baltic Sea and Kraków, a historic centre of arts and education and the home of Pope John Paul II, who personified for the Polish their country’s struggle for independence and peace in modern times.


Poland Economy - History

Economy - overview:
Poland has the sixth-largest economy in the EU and has long had a reputation as a business-friendly country with largely sound macroeconomic policies. Since 1990, Poland has pursued a policy of economic liberalization. During the 2008-09 economic slowdown Poland was the only EU country to avoid a recession, in part because of the government’s loose fiscal policy combined with a commitment to rein in spending in the medium-term Poland is the largest recipient of EU development funds and their cyclical allocation can significantly impact the rate of economic growth.

The Polish economy performed well during the 2014-17 period, with the real GDP growth rate generally exceeding 3%, in part because of increases in government social spending that have helped to accelerate consumer-driven growth. However, since 2015, Poland has implemented new business restrictions and taxes on foreign-dominated economic sectors, including banking and insurance, energy, and healthcare, that have dampened investor sentiment and has increased the government’s ownership of some firms. The government reduced the retirement age in 2016 and has had mixed success in introducing new taxes and boosting tax compliance to offset the increased costs of social spending programs and relieve upward pressure on the budget deficit. Some credit ratings agencies estimate that Poland during the next few years is at risk of exceeding the EU’s 3%-of-GDP limit on budget deficits, possibly impacting its access to future EU funds. Poland’s economy is projected to perform well in the next few years in part because of an anticipated cyclical increase in the use of its EU development funds and continued, robust household spending.

Poland faces several systemic challenges, which include addressing some of the remaining deficiencies in its road and rail infrastructure, business environment, rigid labor code, commercial court system, government red tape, and burdensome tax system, especially for entrepreneurs. Additional long-term challenges include diversifying Poland’s energy mix, strengthening investments in innovation, research, and development, as well as stemming the outflow of educated young Poles to other EU member states, especially in light of a coming demographic contraction due to emigration, persistently low fertility rates, and the aging of the Solidarity-era baby boom generation.

Agriculture - products:
potatoes, fruits, vegetables, wheat poultry, eggs, pork, dairy

Industries:
machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages, textiles

Exports - partners:
Germany 27.4%, Czech Republic 6.4%, UK 6.4%, France 5.6%, Italy 4.9%, Netherlands 4.4% (2017)

Exports - commodities:
machinery and transport equipment 37.8%, intermediate manufactured goods 23.7%, miscellaneous manufactured goods 17.1%, food and live animals 7.6% (2012 est.)

Imports - commodities:
machinery and transport equipment 38%, intermediate manufactured goods 21%, chemicals 15%, minerals, fuels, lubricants, and related materials 9% (2011 est.)

Imports - partners:
Germany 27.9%, China 8%, Russia 6.4%, Netherlands 6%, Italy 5.3%, France 4.2%, Czech Republic 4% (2017)

Exchange rates:
zlotych (PLN) per US dollar -
3.748 (2017 est.)
3.9459 (2016 est.)
3.9459 (2015 est.)
3.7721 (2014 est.)
3.1538 (2013 est.)

NOTE: 1) The information regarding Poland on this page is re-published from the 2020 World Fact Book of the United States Central Intelligence Agency and other sources. No claims are made regarding the accuracy of Poland Economy 2020 information contained here. All suggestions for corrections of any errors about Poland Economy 2020 should be addressed to the CIA or the source cited on each page.
2) The rank that you see is the CIA reported rank, which may have the following issues:
a) They assign increasing rank number, alphabetically for countries with the same value of the ranked item, whereas we assign them the same rank.
b) The CIA sometimes assigns counterintuitive ranks. For example, it assigns unemployment rates in increasing order, whereas we rank them in decreasing order.