Poland And The EU: Happy Precedents?

Nick has a quicklink to a piece in Business Week which is worth the read. One passage in particular struck me:

There are precedents for a happy entry into the EU from which Poland is trying to learn. Spain boomed after joining in 1986 because successive governments spent the funds they received from the EU shrewdly, restructured state finances successfully, and continued to liberalize and deregulate the economy. The results were rapid growth, rising living standards, and, after a period of painful restructuring, lower unemployment. Spain’s per capita GDP is now about $22,500, almost 90% of the EU average. Polish GDP per capita, in contrast, is less than $6,000. “If we could do what the Spanish did, I’d be very happy,” says Janusz Onyszkiewicz, senior fellow at the Center for International Relations in Warsaw and a former Defense Minister.

I’ve already been having a bit of a problem this week with simplistic arguments: looks like I just found another one.

Spain most certainly did benefit enormously from joining the EU. Whether or not they spent the EU structural funds ‘wisely’ is a rather tendentious point, but one which is without great importance here. The central point is that these two nations are in no way comparable historically in their moment of accession.

In 1986 Spain was facing what the UN calls the demographic ‘window of opportunity’. That is the fertility rate was dropping sufficently for savings rates to rise, but the pyramid structure was still sufficiently sound for a large supply of cheap labour to keep arriving on-line.

At the same time Spain was able to make the transition from fairly low productivity agriculture to relatively higher productivity industry, and, leveraging all that cheap labour, develop a development model out of being a sort of ‘Mexico’ for the EU.

Now this prospect is simply not available for Poland. The demographics are completely different, Poland has low fertility and a rapidly ageing population. It is a population where many are arriving towards retirement age with precious little in the way of accumulated wealth, and thus where the fiscal deficit can only be reduced sharply by threatening the elderly with increasing poverty.

OTOH the arrival of China and other developing economies on the global scene means the old ‘Mexico’ model is increasingly questionable. Poland can compete with China, but it cannot do this and increase per capita income significantly. It faces a different kind of ‘poverty trap’ here.

Indeed this ‘trap’ once entered, may be difficult to break out of, as the Portuguese and the Spanish are now discovering. Meantime, as the BW article explains, there are really two Polands, and one of them is already much more dynamic than the Spanish ‘role model’. Just an anecdote: listening to the radio last night I learnt the surprising fact that the Polish enterprise already invests a higher percentage of net earnings in R&D than the Catalan equivalent does, and the Catalan enterprise, it should be noted, has a much better performance in R&D than the Spanish average. That is to say that one of the two Polands may do much better in the ‘value added’ activities than any of the Mediterrenean 3.

One other little detail: there are apparently 100,000 blogs in Poland (see this, and this ). Poland may in fact be the fourth country in the world blog rankings. This may not be entirely devoid of significance when thinking about Poland’s future.

This entry was posted in A Fistful Of Euros, Economics and demography by Edward Hugh. Bookmark the permalink.

About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".

9 thoughts on “Poland And The EU: Happy Precedents?

  1. Hi Lance,

    I saw your post :).

    I got it in a mail from I guy called Adam who owns http://www.blog.pl/.

    He is a member of the Living in Poland community, and it only came out when I dropped the clanger of suggesting that maybe there weren’t too many blogs in Poland. He came back saying: ‘you joking mate’.

    I can’t vouch for the precision of the 100,000, I doubt anybody can,( that is why I use apparently and may be) but I assume he knows what he is talking about when he says they are number four. He does have one of the blog portals.

  2. Please visit Maria’s blog: http://jej.notanik.net
    Marysia attended Webtalk conference in Vienna last year, at the conference (among other things) they count blogs from different countries (the 100 000 were true even before blog.onet.pl existed).

  3. Thanks Gabriel and Adam for clearing that up. Whatever the exact number its clearly a hell of a lot. Many more than I imagined, and I’m sure more than most Fistful readers thought.

    Nice to see the Catalans coming in twelth too. I already had the impression that there was a lot of blog activity in Brazil and Iran. But the China, Japan, Korea numbers surprise me. I thought there were a lot more. Anyone clear this up?

  4. Some reasons are:
    1. Censorship in China
    2. Maciej’s method of blog indexing may be inappropriate for indexing multibyte character language blogs.

  5. Please could you inform me at what date is the the Polish Zloty expected to change to Euro currency. Expected tourist.

  6. IIRC, it should be in no less than 2 years. That if eveything goes well.

    DSW