POLAND Competitiveness Report 2010

This is the 25th edition of the annual report on the Polish economy published by the World Economy Research Institute at the Warsaw School of Economics. The report analyzes Poland's competitive performance in 2009, comparing it against other European Union countries, in particular new member states and Poland's main trading partners. Competitiveness is defi ned here as a country's ability to achieve a sustainable increase in the standard of living, along with an improvement in the country's role in the global marketplace and its enhanced investment attractiveness. This defi nition constitutes a general framework for examining various economic and social issues in this report, which is made up of seven chapters.

In the fi rst chapter, Poland's economic performance is benchmarked against that of other countries. As sustained economic development is the eventual outcome of competitiveness, the current GDP growth trends in Poland are analyzed. This study is supplemented with an assessment of the scope of real income convergence and existing income disparities along with a look at incomes below the poverty line.

As international transportation and telecommunications systems are continually upgraded, Poland is becoming increasingly integrated with the global economy in terms of trade, foreign investment and migration. In Chapter 2, we look at how international transactions infl uence the Polish economy. Business ties with foreign countries contribute to economic growth and help boost the standard of living in the country.

Therefore, Chapter 2 offers a detailed evaluation of Poland's position in world trade and investment fl ows, and examines the role of transactions with foreign countries in shaping Poland's competitive performance.

Chapters 3 and 4 focus on the determinants of Poland's competitive performance in 2009. The framework for this assessment goes beyond a growth-accounting breakdown of economic performance. Two groups of factors that can boost competitiveness are distinguished here: (1) assets and their productivity, and (2) the quality and effectiveness of policies and institutions. Both groups of determinants have been described quantitatively and qualitatively, and their importance for Poland's competitive performance in 2009 has been evaluated.

Chapter 5 draws on the main fi ndings of the previous chapters and provides a concise assessment of Poland's competitive position in the world economy at the end of 2009, including its major strengths and weaknesses. Furthermore, challenges that Poland has to face in 2010 have been pointed out.

The last two chapters of this report highlight the growing role of clusters in shaping Poland's competitive performance. Although clusters are still at an early stage of development in Poland, there is a strong potential for creating competitive cluster structures in the country. Chapter 6 offers an overview of emerging cluster initiatives, arguing that clustering has become an important incentive for innovation today. The widely recognized need for an appropriate cluster policy in Poland goes in line with recent trends at the European Union level.

Chapter 7 is dedicated to an in-depth analysis of specifi c types of agglomeration structures, that is, knowledge-oriented clusters and their role in enhancing cooperation between science and business. Effective ties between science and business are important for building long-term competitiveness as they facilitate knowledge transfers and the use of research results for commercial purposes, thus fostering entrepreneurship and upgrading the technological capability of the economy. Therefore, the report examines the conditions necessary for the emergence of knowledge clusters in Poland and highlights key policy priorities.

The last part of the report offers some preliminary conclusions about Poland's possible paths of development and economic priority choices that are necessary for enhancing competitiveness and achieving a better-endowed society at a time of recovery after a global economic crisis. This issue has recently been the subject of substantial debate. The report aims to encourage further discussion about Poland's economy in the context of the latest turmoil in the global marketplace.

Preface

Executive summary

PART I. POLAND'S COMPARITIVE ECONOMIC PERFORMANCE AND

COMPETITIVE POSITION AT A TIME OF GLOBAL CRISIS

Chapter 1. Economic Development and Real Convergence

1.1. Comparative Analysis of Economic Performance in 2009 - Zbigniew Matkowski, Ryszard Rapacki, Mariusz Próchniak

1.2. Real Convergence or Divergence in GDP Per Capita - Zbigniew Matkowski, Mariusz Próchniak

1.3. Income Inequality and Poverty in Poland - Patrycja Graca-Gelert

Chapter 2. Competitive Position in External Economic Relations

2.1. Poland's Foreign Trade Performance and Competitiveness in 2009 - Józef Misala

2.2. Recent Developments in Poland's Intra Industry Trade - Elżbieta Czarny, Katarzyna Śledziewska

2.3. Balance of Payments, Official Reserve Assets and External Debt - Józef Misala

2.4. Poland's Investment Attractiveness - Marzenna A. Weresa

PART II. DETERMINANTS OF POLAND'S COMPETITIVENESS IN 2009

Chapter 3. Assets and Their Productivity

3.1. Human Resources - Mateusz Mokrogulski

3.2. Physical Capital and Its Productivity - Piotr Maszczyk

3.3. Infrastructure - Ireneusz Bil

3.4. Science, Technology, and Innovation - Beata Michorowska

3.5. Total Factor Productivity - Mariusz Próchniak

Chapter 4. Policies and Institutions and Their Quality

4.1. Political and Social Environment - Janusz Gołębiowski

4.2. Assessment of Poland's Economic Policy and Reforms in 2009 - Jan W. Bossak

4.3. Financial System and Capital Market Developments - Oskar Kowalewski

4.4. Quality of Business Environment - Aleksander Sulejewicz

Chapter 5. Positioning Poland in the World Economy

5.1. Poland's Competitiveness in 2009 According to the International Institute for Management Development (IMD) and the World Economic Forum (WEF) - Bogdan Radomski

5.2. Overall Assessment of Poland's Competitiveness and Its Drivers in 2009 - Marzenna A. Weresa, Ryszard Rapacki

5.3. SWOT Analysis of Poland's Competitive Position in 2009 - Ryszard Rapacki

PART III. THE ROLE OF CLUSTERS IN SHAPING POLAND'S COMPETITIVENESS

Chapter 6. The Development of Clusters in Poland

6.1. Mapping Clusters in Poland - Katarzyna Kładź, Arkadiusz M. Kowalski

6.2. Clusters as Drivers for Attracting FDI and as Tools For Improving a Region's Attractiveness: The Case of Poland's Mazovia Region - Marta Götz

6.3. Cluster Policy: A Challenge for Poland - Mariusz-Jan Radło

Chapter 7. Knowledge Clusters: Designing a Modern Architecture for Competitiveness

7.1. The Role of Clusters in Enhancing Ties between Science and Business - Arkadiusz M. Kowalski

7.2. Development of Research Clusters in Poland - Renata Zagórska

Summary and Conclusions - Marzenna A. Weresa

Statistical Annex - Filip Kamiński