Poland Final Paper

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POLAND

Business environment and Investment opportunities
Prepared By:
Fotios Psaltidis (email: fopsalt@less.gr) MAP 535 Dr. Gupta Fall 2006

Table of contents 1. Abstract 2. General Information 3. Infrastructure 4. Economy Overview 5. Human Capital 6. Business Climate 7. Establishing Business Presence 8. Real Estate 9. Investment Opportunities 10. Conclusions

1. Abstract
After the fall of communism in 1999, Poland has made remarkable progress in an effort to reform its economy pursuing liberalization and stabilization. Since mid1990’s Poland has been the leader in central Europe in terms of Foreign Direct Investment ($ 73 billions, 78% from EU countries and 11% from US), has joined NATO (1999) and EU (2004), economic indexes have improved, demand and supply mechanism has been reactivated and capital and labor market started to operate. An overview of the latest changes in Polish business environment will be given in this paper; investment opportunities will also be explored both in terms of financial aid available and taking advantage of: Poland’s strategic geographic position (member of EU in Central Europe, proximity to other markets such as Russia and Ukraine) its market size (population is about 38M) low labor cost combined with a well trained and young workforce (median age is 37 years)

Some problematic factors will also be reviewed such as the high unemployment rate, lack in infrastructure and communications, stalled privatization efforts in “sensitive” sectors and existing resistance from the society regarding changes in health care, education and pension system. One fundamental priority of successive governments has been economic growth and the means of achieving this goal is EU membership. Such a policy gives potential investors a great opportunity: EU firms can establish business presence in Poland while operating under EU terms and regulations, lowering costs and secure their position in a growing consumer market of 38M people. Non-EU companies can benefit from Poland’s access to EU markets without having to deal with higher production costs in the “old” EU countries.

In an effort to compare Poland and other countries, some economic data will be given in comparison with the other Eastern European countries that joined the EU in 2004. Sources 1. https://www.cia.gov/cia/publications/factbook/index.html Poland 2. http://business.poland.com 3. http://epp.eurostat.ec.europa.eu Eurostat 4. “Doing Business in Poland: A guide to doing business in Poland”, new 2005 edition, report by Ernst & Young 5. Reliasoft Corporation (this is a Tucson based company developing engineering software in the Reliability field, and they operate a corporate office in Warsaw, Poland)

2. General Information
Poland became an independent country in 1918 but during World War II was overrun by Germany and the Soviet Union. Following the war became a Soviet satellite state, though its government might be seen as more tolerant and progressive compared to other countries under the Soviet influence. Starting 1980 the independent trade union “Solidarity” became more and more powerful and finally in 1990 it gained parliamentary elections and the government. In early 1990s an economic reform process – an extremely tough one – was selected as the only solution to transform Poland to a free-economy state. Prices of goods and services have risen on average by 78% (and some by an extreme 600%) but demand and supply mechanism was activated, banking and lending policies were reformed, and capital and labor market started to operate. Though some Poles still disapprove this “shock therapy” program there is little doubt that this was the only path to reform polish economy at a minimum cost and to prepare the country to join the EU. The first priority of successive governments has been economic growth and EU membership has been chosen as the mean to achieve this goal. Finally, Poland joined NATO in 1999 and EU in 2004. Despite its...
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