Case 2 !!

• Bedrijfseconomie
• WO
• Studiejaar 3

Case 2

Poland: Eastern Europe's Economic Miracle 

Summary of the Case

Joined the EU in 2004

Impressive economic growth during 2008-2009:

1. Market-based economic policies

2. Fiscally conservative

3. Contractionary monetary policy

Market-based economic policies

Poland shifted away from the centrally planned Soviet model

Implemented market-based economic policies -> Shock Therapy

• Opened it's market to international trade
  
• Liberalization of prices
• Elimination of subsidies
• Introduction of a new currency (the Zloty)

Fiscally conservative

Poland kept public debt in check -> investor confidence

When debt is kept in check:

• Positive signal to investors
• Poland manages it finances responsibly
• Keep inflation under control

No large outflow of funds in 2008-2009

Contractionary monetary policy

• Decrease the money supply
  
• Raise interest rates
• Reduce inflation

Poland was able to prevent the formation of an asset bubble

Challenges for Poland

1. Aging workforce

2. Changes in social transfer policies

3. Poland maintains a mixed economy

Aging workforce

As a result:

• Shortage of labour
• A decline in economic growth

Therefore Poland needs immigrants

Changes in social transfer policies

• Lowering the retirement age
•  Rasing social security payments
•  Younger workers will bear the burden

This can even exacerbate the existing labor shortage

Poland maintains a mixed economy

Privatization: transferring ownership of state-owned -> private sector

• Still significant state-owned businesses

       - Major banks, mining, energy etc. 

Private ownerships:

• More efficient management 
• Better financial performance
• Increased competition

Questions

1. Thinking about what we learned about national differences in the class, please briefly

explain how Poland is similar to or different from the Netherlands?

2. What are the potential losses for Poland to join the European Union? In your opinion, has

the Polish government efficiently managed such costs since its EU membership in 2004?

Why or why not? Please briefly explain how your conclusion can be justified.

3. In a more anti-globalization era nowadays, what economic headwinds might Poland face

going forward and what additional economic policies can the government pursue to keep

the economic growth sustainable? Please be practical but not overly general about the

potential economic policies.

Q1. Thinking about what we learned about national differences in the class, please briefly explain how Poland is similar to or different from the Netherlands?

Political System

Legal System

Economic System

Political System

Collectivism or Individualism

Totalitarian or Democratic

Economic System

Market Economy

Command Economy

Mixed Economy

Legal System

Common Law

Civil Law

Theocratic Law

Physical Issues

Collectivism

Democratic

Judges interpret law

Individualism

Civil Law

Mixed Law

Mixed Economy

Market Economy

Question 2 

What are the potential losses for Poland to join the EU? In your opinion has the polish government efficiently managed such costs since its EU membership in 2004? 

Potential Losses of joining the EU

•  Loss of sovereignty  
  
•  Economic and legal adjustments
  
•  Outflow of workforce 
  
•  Loss of cultural identity
  
•  Political tensions between country and EU
  

Government actions to deal with potential losses

Loss of sovereignty

• all member states give up some of their sovereignty 
  
• foreign investors buying away polish agriculture land
• connected to the cultural differences between members
  
• actively influencing  EU laws  
• actively blocking EU laws (EU Foreign Policy, AI Strategy)

Conclusion:

• no significant loss of sovereignty 
  

Government actions to deal with potential losses

Economic and Legal Adjustments

• economic system change (planned economy -> market economy)
  
• adjust legal framework to match EU  
  
• adjustment of agricultural policies to meet EU standards 
  
• no euro currency 
  

Conclusion:

• good job at making the changes necessary to avoid losses 
  

Government actions to deal with potential losses

Outflow of Workforce 

• working in member states through bilateral agreements 
  
• more migration than expected before joining 
  
• highest percentage of citizens living abroad in EU 
• massive workforce problems 
• tax reductions and increase of pension funds 
  

Conclusion:

• really bad job at keeping the workforce in Poland 
  

Government actions to deal with potential losses

Loss of Cultural Identity 

• fear of western influence 
  
• fear of losing christian identity 
  
• increased through immigration 
  
• nationalistic parties using it to spread fear
  

Conclusion:

• little loss of cultural identity 
  

Government actions to deal with potential losses

Political Tensions

• criticism on stance on different topics 
  
• concerns connected to the misuse of EU funding and corruption
  
• potential to harm reputation
  

Conclusion:

• tensions raised but were moderated in a good way 
  

Benefits of joining the EU

Question 3

Q3: In a more anti-globalization era nowadays, what economic headwinds might Poland face going forward and what additional economic policies can the government pursue to keep the economic growth sustainable? 

 Potential Economic Headwinds Poland

• Trade Barriers
• Reduced Foreign Investments
• Slowdown in Global Growth

Potential economical policies 

• Diversification of exports
  
• Investment in innovation
  
• Attracting foreign investments
  
• Increasing domestic consumption
  
• Strenghten regional trade agreement

Thank You!