Poland's competitiveness - worldwide and in the EU

Hamburg University of Economics and Politics

Political Economy of Transition
winter semester 2003/04
Reintegration of CEEC´s Economies
into World Economic Structures:

Poland´s competitiveness - worldwide and in the EU

by

Joanna Mastalerek

Euro Master Programme

Table of Contents

1. The concept of national competitiveness by Porter  p. 3

2. Assessing Poland´s competitiveness by means of Porter´s “competitiveness” concept   p. 3
2.1. Assessing Poland´s competitiveness by means of the Global Competitiveness Index 2003/04   p. 4
2.2. Assessing Poland´s competitiveness by the 2002 Regular Report of the European Commission   p. 5

3. Poland´s competitive weaknesses  p. 5

4. Poland´s competitive strengths  p. 7

5. Future prospects of Poland´s competitiveness: threats and opportunities  p. 8

6. References  .. p. 10

1. The concept of national competitiveness by Porter

Competitiveness is nowadays one of the central preoccupations of governments and industries wordwide. Especially for reintegrating Central and Eastern European Countries (CEECs) into the world economy these countries´ national competitiveness plays a crucial role. Even if national competitiveness has become a widespread concept, there still exists no final definition, as scientists point out¹.

Though a first orientation about the concept of competitiveness can provide Michael E. Porter´s approach, in which he explains:

“The only meaningful concept of competitiveness at the national level is national productivity. […] No nation can be competitive in everything. A nation´s pool of human and other resources is necessarily limited. The ideal is that these resources be deployed in the most productive uses possible.” ²

Using Porter´s definition as a first anchor for the assessment of Poland´s competitiveness, one has to closer examine Poland´s level of national productivity.

2. Assessing Poland´s competitiveness by means of Porter´s “competitiveness” concept

In the period of 1992 to 2000 Poland racked up average growth rates of nearly 5% annually. Thus in eight years the country has managed to double its gross domestic product (GDP), leaving other CEECs like Hungary or the Czech Republic far behind, whose GDP rose only about 2% in the same time period³.

After Poland´s economy has slowed down from 2000 on, with GDP decreasing to 1,5% in 2002, mostly due to the world economic slow down, the GDP is expected to pick up again to 3% in 2003⁴.
Moreover Poland has witnessed a remarkable increase in terms of GDP per capita, that leapt from 4,500 Euros in 1990 to 8,500 Euros in 2000, which corresponds to 40% of the EU average⁵.

When comparing the data of Poland´s productivity with Porter´s definition, a rather high degree of competitiveness can be assumed. This assumption shall now befurther verified by assessing Poland´s competitiveness with use of the Global Competitiveness Index 2003/04 (GCI) elaborated by the World Economic Forum⁶.

2.1. Assessing Poland´s competitiveness by means of the Global Competitiveness Index 2003/04

The World Economic Forum´s Global Competitiveness Index splits up into two categories: The first category is the Growth Competitiveness Index, which evaluates the possibility for mid-term growth, including for example information about public institutions, the macroeconomic environment, the effectivity of the financial system, investment rates, education and technology, such as math and science education. The second category of the GCI is the Microeconomic Competitveness Index, which contains information about a nation´s companies′ strategy and operations, the quantity and quality of managerial skill technology, physical capital as well as the quality of a country′s business environment: the quality of the infrastructure, administrative rules and regulations to name a few examples.

According to Porter, who has been one of the founding fathers of the GCI, the two categories of the competitiveness Index can be explained as follows:
A sound macroeconomic, political, legal and social context creates the potential for competitiveness, but it is not sufficient. Competitiveness ultimately depends on improving the microeconomic capability of the economy and the sophisitication of local companies and local competition⁷.

Poland´s GCI 2003 ranking concerning its growth competitiveness is 45th out of 102 industrialized and emerging economies. This means an improvement compared with 2002, where Poland ranked 50th. In the category of microeconomic growth though Poland achieves rank 47th, dropping one place compared with 2002.
However in both categories Poland lies behind other CEECs like Estonia, Slovenia, Hungary, Latvia, Czech Republic, Lithuania or the Slovac Republic⁸.

After all the GCI confirms Poland a fair macroeconomic competitiveness, but indicates its slight weakness in terms of its microeconomic competitiveness. To discuss this fact, a third tool will be used to assess Poland´s competitiveness, namely the EU Copenhagen Criteria, on which the focus will be put next.

2.2. Assessing Poland´s competitiveness by the 2002 Regular Report of the European Commission

[....]

1 Michel E. Porter: The Competitive Advantage of Nations. London: Macmillan 1990, p.1.

2 Porter 1990: p.6-7.

3 Deutsche Bank Research: EU Enlargment Monitor May 2001, p.1. http://www.dbresearch.com/PROD/DBR_INTERNET_EN-PROD/PROD0000000000032550.pdf

4 World Bank: Poland Country Brief 2003, p.1. http://www.worldbank.org.pl/

5 European Commission: Regular Report 2002 on Poland´s progress towards accession, p.36. http://www.europarl.eu.int/meetdocs/delegations/pola/20021023/09.pdf

6 World Economic Forum: Global Competitiveness Index 2003/04. http://www.weforum.org/site/homepublic.nsf

7 Porter 1990: p.71.

8 World Economic Forum: Global Competitiveness Index 2003/04.