Page 4 | Emerging Markets Journal | Spring 2013

Comeback Kid

After years of stagnation, Poland is emerging as

one of Eastern Europes strongest economies

By Professor John Karaagac

he Czech-born Realist writer 19th century. Lodz, southwest of an economic time of troubles in
George Liska argued that the Warsaw, was a Polish equivalent of the 1970s and 1980s (relative to the
East-West relation is far more Manchester, England: a town turned prosperous 1960s). This positioned
important than the North- into a 19th century industrial city. them for making tough market choices
South dynamic, if only because the sun The Polish economy, like the country after 1991. It was easier for a state
rises in the east and sets in the west. of Poland itself, has always been a such as Poland that had Martial Law in
Liskas vision certainly holds true in the hybrid between an expanding central 1981 to put the memory of Moscowemerging markets of eastern Europe: European economy in the west and a imposed communism, and the market
the lands east of Germany and west of
deprivations, behind it.
Russia (except for the Baltics).
The nature of the Polish
BEHIND ITS SUCCESS
We instinctively look at the
transition was critical. The
Central European economies
communist party members
in a west-east continuum, not
managed to engage in renta north-south one.
seeking behavior by joining
One
country
interests
the boards of foreign firms,
us here: Poland. This short
in effect, getting co-opted to
Some of Polands biggest economic contributors are
policy sketch will put forth
the new market economy.
agriculture, oil, banking, and most recently, services.
some observations that may
Such insider deals arguably
prove crucial in developing a
constituted the Polish tax on
CIA WORLD FACTBOOK/SOURCE
geo-economic map of Poland,
transition to the market. One
helpful either for political
need only look at Warsaw to
analysts, market watchers or investors.
less industrialized one in the east.
see this at work. The old headquarters of
History is critical. Poland, like the
A more contemporary historical the Polish KGB is now a well-appointed
Czech Republic and Hungary, was issue is how Poland exited communism. office building with trendy bars and
a sovereign state only after World From the perspective of the last forty fashion houses outside.
War I. Before that, they were part of years, some of the economic stars
History explains the development
surrounding empires. Poland proved of the former Soviet system tended but it is not the central question
doubly unique it was partitioned to fade somewhat as post-communist for investors. What makes Poland
into German, Habsburg and Russian emerging markets. Those communist economically unique?
zones. Because it was at the confluence economies that found a secure niche in
Far larger in territory than its Czech,
of three empires, Poland became the 1970s were not always prepared for Slovak or Hungarian neighbors, Poland
a focus of economic development, post-communist realities.
has a market economy of scale, with a
with an extensive rail network in the
Poland, by contrast, went through large population and growing demand

History of Poland
1919

Poland gains
indpendence
after World
War II

1939

1945

Poland
regains
independence
Germany
conquers
Poland

1970s-80s

1989

1991

End of communist
Polish
rule in Poland
recession

2004

Poland joins the

European Union

Poland forced
to make tough
market decisions