Poland - Economic analysis of government's policies, investment climate and political risk.
THE
McKEEVER INSTITUTE
OF
ECONOMIC POLICY
ANALYSIS
POLAND: Economic Policy Analysis
This site presents an analysis of the Polish government's economic policies
compared to a list of 34 economic policies as prepared by student Albert Knuth with the McKeever
Institute of Economic Policy Analysis (MIEPA) in the Fall of 2004. To read the analysis
scroll through this site. To learn more about the background policies,
click here
Introduction and Policy Recommendations
To learn more about MIEPA, click here
Return to MIEPA's Home Page
Several foreign born students living in California have completed a
study of their home country governments' economic policies as compared
to the MIEPA list of policies as outlined above. The study on Poland is
shown below. The ratings herein are based on the following rating scale:
RATING SCALE
5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]
To read a disclaimer about the analysis in this file, scroll to the
bottom of the file.
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POLAND:
Comparison of Poland's economic policies to MIEPA criteria as prepared
by native student of Poland, Mr. Albert Knuth, studying in San Francisco in
Fall 2004.
RATING SUMMARY:
POLICY NUMBER RAW SCORE ADJUSTED SCORE POSSIBLE PERCENTAGE
1 3.0 9.0 15.0 60%
2 5.0 15.0 15.0 100
3 3.8 11.4 15.0 76
4 4.0 12.0 15.0 80
5 4.6 13.8 15.0 92
6 4.7 14.1 15.0 94
7 3.0 9.0 15.0 60
8 4.3 12.9 15.0 86
9 3.6 10.8 15.0 72
10 4.5 13.5 15.0 90
11 4.0 12.0 15.0 80
12 3.4 10.2 15.0 68
13 4.0 8.0 10.0 80
14 5.0 10.0 10.0 100
15 3.8 7.6 10.0 76
16 4.4 8.8 10.0 88
17 2.5 5.0 10.0 50
18 4.9 9.8 10.0 98
19 3.8 7.6 10.0 76
20 3.5 7.0 10.0 70
21 4.0 8.0 10.0 80
22 5.0 10.0 10.0 100
23 3.8 7.6 10.0 76
24 4.2 8.4 10.0 84
25 3.0 6.0 10.0 60
26 3.0 6.0 10.0 60
27 3.9 7.8 10.0 78
28 4.5 9.0 10.0 90
29 3.0 3.0 5.0 60
30 4.8 4.8 5.0 96
31 4.5 4.5 5.0 90
32 4.1 4.1 5.0 82
33 5.0 5.0 5.0 100
34 3.8 3.8 5.0 76
TOTAL 136.4 295.5 375.0 78.8%
===== ====== ===== =====
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INDIVIDUAL POLICIES
1 Freedom from internal control: Rating 3.0
Overall citizens in Poland are free from positive or pro-active control by
government agencies. People are free to move about and take on any activity
that is not against the law. There can be however a lot of bureaucratic red
tape when trying to open a business and depending on the area and nature of
the business, government officials might have to be bribed in order to speed
up otherwise deliberately sluggish permit procedures. Nevertheless, it is
easier to open a business in Poland than in some Western European countries,
as Poland is trying to attract investment and entrepreneurship. In
comparison to the United States however, citizens in Poland are definitely
less free from internal control and the Poland could use some deep-reaching
reforms to clean up its bureaucratic machinery.
Sources: Personal Information
2 Freedom of speech: Rating 5.0
Polish people are able to express themselves freely without censorship or
restriction. Their freedom of speech is protected by the constitution and
cannot be manipulated in any way or manner. The press and the people attach
a lot of importance to this right as it has been taken away from them for 40
years (until the early 90?s), prior to the fall of communism. The free
press, television and radio practice critical journalism and scrutinize
closely on the government, business activities, social changes and so on.
Hence, Poland receives a high rating in this category.
Sources: Personal Information; Poland.gov (accessed through:
www.poland.gov.pl)
3 Effective, fair police force: Rating 3.8
The police force in Poland went through a lot of change and reform since the
early 90?s. Poland?s police had to rid itself from a bad reputation of being
the right hand of the politburo and had to go through extensive reforms
which followed after numerous corruption scandals went public. Today, the
police force is not only better equipped and much less prone to corruption,
but it also attracts prospect police officers which come from a generation
of poles who grow up in a free democracy and have more respect towards
citizen?s rights and the law. However, the police still have to overcome
many shortcomings, which range from corruption to low effectiveness and low
moral. Some of it has to do with the police force still lacking sufficient
financial support. Furthermore, many poles still distrust anybody who is an
agent of the government in general, a condition which stems from the fact
that poles have been oppressed for 40 years by their government.
Sources: EUbusiness.com (accessed through:www.eubusiness.com)
4 Private property: Rating 4.0
Private property is protected by law and the government has no right to
infringe on that right, unless of course the property has been obtained by
legally questionable means. Property rights in Poland are just as strong and
established as in any other country of the European Union. Poland however
has been protecting some of its real estate from foreign buyers, as it was
trying to protect land along the Baltic coast for instance, from being
bought up completely by wealthy buyers from Western Europe. That way, many
poor farmers were unable to sell their valuable land immediately because
there were not enough polish buyers with sufficient capital, and foreigners
were restrained from buying land. The effect has been especially positive in
many tourist areas of Poland. Young people in farming families found
incentives to stay in their home towns and change their family farms into
campgrounds and earn enough money to feed their families and to reinvest it
into their properties. Now, much of the Baltic coast has become prosperous,
the campgrounds changed into vacation homes, small farm houses into estates
and the land is still owned by the same people who have been living there
for many years.
Sources: Personal Information
5 Commercial banks: Rating 4.6
Poland has a well-developed financial services system with both, private and
federal banks, national and international. Banks activities in Poland range
from corporate and institutional services,to investment banking, foreign
trade operations, custodial services, retail banking and many other related
financial services. The largest bank monopoly in Poland Bank Pekao is well
on its way to complete privatization and today Poles have a variety of banks
to choose from.
Sources: Personal Information; www.business.com
6 Communication systems: Rating 4.7
An extensive network of communication facilities - telephone, TV, radio,
FAX, newspapers, magazines, computer networks et cetera exists in Poland and
makes it easy for everybody to communicate efficiently. The changes since
the 1990?s have been tremendous and with the spread of cellular technology
and High-Speed internet Poland shows little to no difference in its
communication systems as other European Countries. The entire phone system
in the country has been rebuilt. Today, a phone call from overseas to a
remote area of Poland sounds just as good as a local phone call in any city
in the US. Ten years ago one would have to spend an hour to even get
connected from the US to Poland, and even when a connection was finally
made, the quality of the phone call would have been terrible.
Sources: CIA World Factbook (accessed through:www.cia.gov); Personal
Information
7 Transportation: Rating 3.0
High-quality transportation is available for Poles and commercial activity
can be sufficiently moved form one place to another. Problems do exsist
however in the road, rail and air systems. All three transportation systems,
even though much improved since the collapse of communism, are still not
quiet up to the same standards as for instance Germany and France. Poles
still have to endure outdated trains which in addition are chronically
late. Highways and streets, even though also much improved, are still
damaged and unsafe, especially in areas away from large cities. Airports are
not available in all large cities and most International flights go only to
Warsaw. Poland also only has about 122 airports, whereas Germany for
instance has over 500. Overall, Poland?s score in this category will be
fairly low.
Sources: CIA World Factbook (accessed throguh:www.cia.gov); Personal
Information
8 Education: Rating 4.3
The education system in Poland is good. The literacy rate is at 99.8% for
the whole population (male: 99.8%; female: 99.7%, 2003 est.)
As a matter of fact Poles have the right to free education, including higher
education at an University. Polish children are required to learn a second
language and they score higher in mathe, reading and the sciences, accordign
to the Pisa study. However, since many school buildings are still from
communist time, polish children often do not enjoy modern facilities, as
their european counterparts do in Western Europe.
Sources: CIA World Factbook (accessed throguh:www.cia.gov); Personal
Information
9 Social Mobility: Rating 3.6
Poles are able to advance in earning capacity, regardless from which group
or class they come from. However, most Poles, opposite to Americans, do not
believe they everybody can become wealthy and successful by their own means.
Poles oftentimes hold the belief that it matters a lot who one knows and
what status ones family has in regards to a persons ability to become
successful in Poland. That is not uncommon amongst Europeans however and
true to some extent. For instance: generally it is much easier in the United
States to find work, then move on to college and become educated and
successful. In Poland the unemployment rate is very high, well paying
part-time jobs are often unavailable and only Poles who have been successful
in high school and choose the preparatory path for higher education are
allowed to go to a university.
Sources:Social Mobility in Europe (accessed through: book; ISBN 0199258457);
Personal Information
10 Freedom from outside control: Rating 4.5
Poles are subjects to the Polish Constitution and the Polish Common Laws.
There are also provisions from the European Union which all citizens of the
EU have to abide to. Otherwise however, Poles are completely free from
outside control
Sources: Personal Information
11 Foreign currency transactions: Rating 4.0
Only the domestic currency is allowed for trade within the country and
foreign currencies have to be converted. This did not used to be that way
and especially in the years directly preceding the collapse of communism,
the dollar and the German mark where used in most business transactions.
Today this has changed, the zloty has strongly appreciated in value and the
majority of people value it as a strong and valid currency.
Sources: Warsaw Business Journal (accessed through: www.wbj.pl)
12 Border Control: Rating 3.4
Since Poland has joined the European Union earlier this year (2004), it also
became the border of western Europe. Mainly it now became the western border
to countries like Ukraine, Belarus, Lithuania and Russia, countries which
citizens used to be able to travel to Poland simply by showing a passport,
but now need to meet immigration and visa requirements. For that matter,
Poland is being supplied by the European Union with modern equipment
(Vehicles, Weaponry, Night Vision equipment etc.) to be better able to do
its job. But Poland is also a transit country for drugs coming from
Russia,and smuggled and stolen goods coming from western Europe and going to
Russia. Here Poland still has to improve its workings in regard to border
control, as corruption and bribery amongst border control guards are almost
an accepted way of "getting things done." However, being under the tight
supervision of the European Union and having adopted an important role in
border protection, one can hope that over time the situation will get
better.
Sources: Personal Information; The Herald Tribune (accessed through:
www.iht.com)
13 Currency: Rating 4.0
Poland has a single currency throughout the country, which is the official
and government approved Zloty. Looking at following numbers, one can see
that the polish currency has become stronger in relation to the dollar in
the past years. The zloty per US dollar changed from 1999 ? 2003 as follows:
3.8891 (2003), 4.08 (2002), 4.0939 (2001), 4.3461 (2000), 3.9671 (1999).
Even though this is generally a good sign, it can also be a call for
concern, as Poland?s economy is highly export driven and a steep rise of the
zloty could lead to diminished buying power from importing countries and
hence reduce exports. Overall however the zloty is a strong currency and is
fairing really well since the fall of communism.
Sources: CIA World Fact Book (accessed through www.cia.gov); Forbes Magazine
(accessed through: www.forbes.com)
14 Cultural, language homogeneity: Rating 5.0
Poland is a culturally very homogenous country, with Poles making up 96.7%
of the population (German 0.4%, Belarusian 0.1%, Ukrainian 0.1%, other 2.7%
(2002)). In regards to religious homogeneity it can be said that Poland is
mainly catholic Roman Catholic 95% (about 75% practicing), Eastern Orthodox, Protestant,
and other 5%). Polish is the official language of the nation and Poles show
great pride to preserve their language, heritage and culture. Cultural
differences are very small and even differences within regions in Poland (in
regards to culture and heritage) are little. However, many regions have
their own specific customs and dialects, which only add to the richness of
polish culture.
Sources: CI
15 Political effectiveness: Rating 3.8
Poland?s government is effective, relatively to the historic problems it has
to overcome and issues to resolve. By historic problems one should think
about 40 years of an inefficient and corrupt bureaucracy and political
elite, whose inefficiency and influence is still an issue to be dealt with
to this day. In other words, even though Poland has proved itself to be
able to move into the direction of becoming a prosperous and democratic
nation embedded in the European Union, it still has to fight against
negative influences in its government, which hinder polish progressivism. As
will be discussed later in the section about Honest Government, it is clear
that especially corruption still plays a major role in politics, slowing
down effectiveness. However, regional policies in Poland, aimed at the
redevelopment of local districts, regions and cities, have shown to be an
effective tool to successfully apply self-reliance from state government,
which gave local municipalities more responsibilities and ultimately
increased their effectiveness. Furthermore, compared to 40 years ago, polish
political figures are showing a great deal of effectiveness in changing the
country to the better (i.e. Lech Walesa, Alexander Kwasniewski)
Sources: Personal Information; Encyclopedia Britannica (accessed through:
www.britannica.com)
16 Institutional stability: Rating 4.4
Speaking of the stability of Eastern European countries, Stanley N. Katz,
senior fellow in public and international affairs at Woodrow Wilson School
at Princeton and president of the American Council of Learned Societies said
that Poland has the best chance of any of the Eastern European countries of
developing a stable environment, both, politically and economically.
Indeed, Poland shows strong signs that it is focused on institutional
stability by trying to fight corruption, reforming the banking system and
concentrating on fiscal policies which will bring long-term macroeconomic
stability.
Sources: tiscali.europe (accessed through: http://europe.tiscali.co.uk); The
Daily Beacon (accessed through:http://dailybeacon.utk.edu)
17 Honest Government: Rating 2.5
For a country joining the ranks of the European Union, Poland has
substantially too many problems with corruption. A lot of this problem has
been caused by the ?Compromise of 89,? which was essentially an agreement
between the communist government and the opposition, dissolving the
communist party but pushing many of the powerful Politburo members into key
positions. Many scandals become public and a recent poll found that 91
percent of Poles believe the threat of corruption in their country is "very
high" or "rather high," and that 71 percent think senior government
officials reap unwarranted benefits from holding public office. Much of that
attitude stems from people actually experiencing corruption in their lives
often. It is well known and sadly often customary to bribe police men,
customs officers, building inspectors and others, in order to avoid problems
or to speed up bureaucratic processes. Even though corruption will probably
decline over time as business and politics untangles, the old garde which
still pulls strings in government will slowly vanish, and as the Polish
government will be under the scrutiny of the European Union. However,
currently it is still a major problem, especially because the polish people
have little or no trust in politics and foreign investors might get
discouraged to deal with corrupt systems.
Sources: Personal Information; WarsawBusinessJournal (accessed through:
www.wbj.pl)
18 Common laws: Rating 4.9
Poland has the same set of non-conflicting laws, justice and dispute
resolution throughout the country. It guarantees, among other things,
freedom of speech, freedom of religion, the right of assembly, the right to
organize and to strike, the rule of being innocent until proven guilty and
the right of habeas corpus, as well as the right to move within the country
or outside the country at will. Everyone is guaranteed equality under the
law; no one can be discriminated against in political, social or economic
life. The constitution is also supposed to guarantees free healthcare and
education, a minimum wage and a range of other social provisions.
Sources: Personal Experience
19 Central Bank: Rating 3.8
After 1989 seventy licenses were issued to private banks, cooperative banks
and foreign banks. Furthermore the privatization of the Export Development
Bank began in 1991, and legislation was introduced to allow private
individuals, to form banks as limited stock companies. Now the National Bank
of Poland is the central bank and its tasks are set in the Polish
Constitution, the Act on the National Bank of Poland and the Banking Act.
Today the main goal of the National Bank?s activity is to maintain price
stability and under a responsible monetary policy, to stabilize the
inflation rate at a level of 2.5%. This is especially important now, since
Poland joined the European Nation and has to follow monetary guidelines
regarding its currency, inflation rate, debt ratio etc. Furthermore the
National Banks future policies will be essential in order to meet the
Maastricht standards for Poland?s admission to the EURO zone.
Sources: Forbes magazine (accessed through: www.forbes.com); Financial Times
(accessed through: www.ft.com)
20 Domestic budget management: Rating 3.5
The polish government spent $48.64 billion (including capital expenditures)
and collected $39.13 billion in revenues. Poland?s debt accounts to
approximately 47.4% of GDP and inflation is currently at approx. 4.3%,
compared with the European central bank's target rate of 2.5 %. This
ultimately results in Poland?s relatively low rating of 3.5. However,
Poland?s inflation is declining and the country is still believed to meet
the norms for a steady long-term interest rate and stable inflation levels
of the Maastricht Treaty within the next two years, allowing the country
then to adopt the EURO.
Sources: EU-Business Online (accessed through: www.eubusiness.com); CIA
World Fact Book
21 Government debt: Rating 4.0
Poland?s government debt made up 47.4% of GDP in 2003. Compared to US
(62.4%) and Germany (64.2%). Poland?s debt is of good standing; however
there are forecasts that the ratio of public debt to GDP will exceed 55% of
GDP in 2005. At such relatively high levels of the public-debt-to-GDP ratio,
the Polish government is under legal pressure to further tighten fiscal
policy in the short term to meet not only public finance law, but also EU
membership requirements (EU limit is 60%). Furthermore, the 2005 budget
deficit of 35 billion zloty represents 3.7% of GDP. However, if compared
with Germany, Poland doesn?t look that bad in regards to public debt. Not
only did Germany's public deficit violate EU limits in 2002, but its total
public debt did as well, with German debt amounting to 60.8 percent of GDP
in 2002.
Sources: CIA, The World Factbook, www.cia.gov; Poland Development Gateway
(accessed through: http://www.developmentgateway.org)
22 Economic Statistics: Rating 5.0
The Polish Glowny Urzad Statystyczny (GUS), or Central Statistical Office,
is the central government agency concerned with gathering statistical data,
storing and processing gathered data, publishing, rendering and
disseminating results of statistical surveys as official statistics data.
The GUS continuously publishes numerous statistics, which are highly
accurate. Furthermore there are numerous TV stations, news agencies,
independent research companies, universities and private enterprises which
make statistical data about economic, social and political factors available
to the public.
Sources: Personal Information
23 Protection of public health and safety: Rating: 3.8
The health sector has dramatically improved in Poland since the fall of
communism. Even though Poland has still a fairly large problem with
alcoholism and smoking, people are starting to become more health conscious.
Most people have access to doctors and hospitals and are also able to afford
health care, which is partly paid for by the government. However, there are
people who do not get medical care which is up to EU standards. This is
especially the case in rural areas and in cities which used to be the main
producers of steel and coal. The following statistics show a general change
towards the better in regards to public health.
PL Infant mortality rate: 8.73 deaths/1,000 live births (2004 est.); Life
Expectancy: 74.16 years; HIV deaths: 100 (2001 est. US Infant mortality
rate: 6.63 deaths/1,000 live births (2004 est.); Life Expectancy: 77.43
years; HIV deaths: 14,000 (2003 est.); Tuberculosis per 100.000: 32.1 (2002
est.) US: 4.9; Germany: 9.7; Europe: 50.7; Infant Mortality/1000 live births
went from 62 in 1960 to 8 in 2002.
Sources: CIA, The World Factbook, www.cia.gov; Personal Information
24 High wage policies: Rating 4.2
According to a recent survey of the Warsaw Business Journal, the most
important reason for roughly 90% of investors to choose Poland was the
relatively low labor cost. However, wages in Poland have been increasing
slowly since 2001, primarily due to high unemployment. As a result, the wage
level in the Czech Republic and Hungary is now higher than in Poland.
Overall however, Poland is able to offer a standard of living equal to most
Western EU countries, but it can do this relatively cheaper. In other words,
even though wages might be lower than in other European countries, the
relatively lower cost of living is partly able to make up for this. This is
especially true for young and educated, who are career-oriented and driven,
reflecting the patterns of Western Europe. However, for Poles who have
families, do not have college degrees and who do not work in professional
occupations, the gap between the cost of living and their actual wages can
be very high.
Sources: Polish-American Chamber of Commerce; Personal Information
25 Environmental protection: Rating 3.0
Since the collapse of communism in Poland in 1989, solving environmental
problems has become one of the top priorities of the Polish government.
Before 1989 the Polish communist party blatantly disregarded any measures to
protect the environment, making Poland one of the most polluted countries in
Europe. The Slask region in the southern part Poland was the back bone of
polish coal and steel industry, epitomizing the communist party's emphasis
on maximum industrial and economic gains, without any regard for the
environment or the health of the polish people. Since then Poland has made
great progress in improving its environmental record. After Poland started
to introduce democracy and capitalism closed down many inefficient,
polluting factories, and new policies promoting environmental protection and
energy efficiency have been introduced and continue to be implemented. In
1997, the Polish parliament adopted a new energy law defining the principles
for developing a national energy policy. The law was intended to ensure that
the Polish government provides efficient and rational use of fuels and
energy for the country, taking into consideration environmental protection
requirements.
As a result, industrial and agricultural discharges in Poland have been more
than halved, and major air pollutant emissions have been significantly
reduced. Much of the country's obsolete and inefficient power plants have
been retrofitted with pollution prevention equipment in order to cut down on
sulfur dioxide emissions. Regulations and legislation governing oil and gas
development, as well as coal mining, have been upgraded to include better
environmental protection measures. Nevertheless, there is still much room
for improvement.
Sources: WBJ; CIA, The World Factbook, www.cia.gov, Personal Information
26 Strong Army 3.0
With its military expenditures at approx. $4.5 billion, Poland ranks 28th on
the global scale of nations, and as such it represents a relatively small
military force. Poland is steadily increasing its military expenditures and
purchasing modern weapons and communication equipment. Just recently
(Sep.20th 2003) Poland finalized the purchase 690 of armored, a transaction
worth almost $1 billion and which represents one of the biggest arms deals
in Europe. Furthermore Poland is putting up the third largest contingent of
military personal in the war in Iraq, handling a very complex and demanding
military operation.
However, even though Poland?s army is now tied into the EU and the NATO, it
still has to overcome its relative inferiority which is largely due to
Poland?s 40 years of communism and 40 years of subordination to Soviet
Russia. Overall Poland?s army is functioning and improving but it could most
likely not withstand a foreign attack by a western power if it would not get
the full support of NATO.
Sources: CIA-World Fact Book(accessed through: http://www.cia.gov)
27 Foreign trade impact: Rating 3.9
For 2003: Exports $57.6 billion vs. Imports $63.65 billion = $4.085 billion
deficit. Poland imports more goods and services than it imports, thus having to deal
with a trade deficit of roughly $4 billion. Poland's Imports and Exports
constitute approx. 32% of the country's GDP.
Sources: CIA-World Fact Book (accessed through: http://www.cia.gov)
28 Protection of foreign currency earning enterprises: Rating 4.5
Two departments are at work in Poland to promote foreign direct investments
in Poland and to support and encourage polish exports. These institutions
are the Polish Agency for Foreign Investment (PAIZ) and the fairly new
government agency Pro Polonia. In the future Pro Polonia will merge with
PAIZ to create a more streamlined and effective agency. The chief purpose of
Pro Polonia will be the support of polish entrepreneurs who want to start
their new export ventures. Pro Polonia will act as a liaison between them
and polish authorities, helping them to through legal processes and
bureaucratic procedures. The agency will be subordinate to the minister of
the economy, while the president of Pro Polonia will be appointed by the
prime minister.
Sources: Polish Information and Foreign Investment Agency (accessed through:
http://www.paiz.gov.pl/index/)
29 Management of Foreign Currency Budget: 3.0
For the year 2003: Export revenues totaled $ 29.9 billion. Import
expenditures increased to $ 36.9 billion. A generally lower percentage
increase in import expenditures compared to export revenues contributed to a
decrease in the trade deficit from the level of USD 7.3 billion in the first
three quarters of 2002 to USD 7.1 in the corresponding period of 2003. Even
though the trade deficit is still high (approx.10% of GDP), it is gradually
decreasing and in 2003 Poland's exports with the EU increased by 8%, where
it?s imports increased by only 1%.
Sources: Poland Development Gateway (accessed through:
http://www.developmentgateway.org)
30 Layers of collective action: Rating 4.8
Since 1991 Poland is a parliamentary democracy where ultimately the citizens
elect their government officials. The president is directly elected for five
years and he is the commander in chief of the armed forces, has veto rights
on parliamentary decisions and he has substantial influence on the
appointment of key members of the military and the department of foreign
affairs. The Parliament consists of two chambers: the Sejm, who?s 460
members are elected in proportion to the size of the region they are
representing and the Senate, who?s 100 members are elected by a voting
system based on majority rule. Furthermore, Poland has regional Parliaments
which can make, amongst others, their own financial and budgetary decisions.
The smallest form of self government is constituted by municipalities, which
represent smaller villages and towns, and which can make important local
decisions which do not need to be dealt with by regional governments.
(Source: Personal Experience)
31 Pro business climate: Rating 4.5
Poland's fast growth can be accredited to the growing small and medium
business sector. Businesses from this sector also employ much of the
workforce which lost their jobs from unprofitable government enterprises
during the privatization process. As such, private business and their
managers have a positive reputation and are seen as the driving force which
will put Poland into the ranks of prospering Western European nations.
Moreover, the government under president Aleksander Kwasniewski is trying to
encourage and further the business climate by passing bills which deal with
the question of economic liberty. On July 2, 2004, congress passed a bill
to rid the economy from many cumbersome bureaucratic procedures and
unnecessary concessions, to limit the duration of audits which business are
often subjected to and to speed up the process of business registrations.
Sources: www.WarsawBusinessJournal.com; German Department of Foreign Affairs
(accessed through: www.auswaertiges-amt.de)
32 Government enterprises: Rating 4.1
In the 90?s Poland embarked on the burdensome journey of privatizing large
monopolies and government-owned industries, left over from the communist
era. To date there are still large government enterprises, such as the press
distributor Ruch and the largest polish distillery, Polmos. However, the
government is actively working on the privatization process and just
recently (September 2004), Poland's largest retail bank, PKO BP, has
obtained the go-ahead to go public from the Securities and Stock Exchange
Commission. Furthermore, the large government-owned oil and margarine
producer ZPT, will possibly be integrated into the private enterprise Olvit,
a large dairy product company. The privatization of abovementioned press
distributor is also in the works.
Sources: Der Spiegel Online (accessed through: www.spiegel.de)
33 International security agreements: Rating 5.0
After the collapse of communism in Eastern and Central Europe, Poland
recognized the importance of entering new security agreements with its
European neighbors to ensure lasting conditions of stability and security.
Poland achieved its goal by joining the North Atlantic Treaty Organization
(NATO) on 03/12/199. Poland became part of this European and American
defense system of allied forces and now enjoys the guarantee of security and
stability, as a democratic, independent and sovereign country. Additionally
Poland became a close ally to the United States, providing one of the
largest contingents of military personnel in the current war in Iraq.
Sources: Personal Experience; CIA World Fact book (accessed through:
www.cia.gov)
34 Protection of domestic enterprises from government mandated costs: Rating
3.8
In comparison to most Western European countries Poland is able to offer
domestic firms and investors the large advantage of relatively cheap labor
costs, a progressive culture of entrepreneurship and a generally open
business climate. With its economy growing at a rate of about 7% a year,
Poland is also often referred to as an Eastern European ?tiger? state.
However, the country could probably do much better in many areas if it
wouldn?t be for remnants from communist times, like an unclear and slow
administrative machinery, the ever present problem of nepotism and bribery,
and the excessive burden of concessions and permits, required to get things
done. These factors impose direct or indirect government mandated costs on
the investor. According to the U.S. Department of State, ?The [polish]
government acknowledges that its policies are not as transparent as they
ought to be and that bureaucratic requirements continue to impose a burden
on investors. Uneven and unpredictable regulatory treatment and a generally
high level of administrative ?red tape? are recurring complaints of
investors.? In addition, ?investors must comply with a variety of laws
concerning taxation, labor practices, health and safety, and the
environment. Complaints about these laws, especially the tax system, center
on the lack of clarity and often-draconian penalties for minor errors.?
Sources: Financial Times (accessed through: www.ft.com); U.S. Department of
State (accessed through: www.msz.gov.pl)
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