The Rise of an Underdog: How This European Nation is Quietly Dominating the Global Stage
Poland is on the verge of becoming a great global power.
The Polish economy has proven resilient to multiple global shocks, including the 2020 recession, the war in Ukraine, the energy crisis and tighter global financing conditions. What insights can this remarkable success story offer to other countries, and what can UK businesses do to emulate this success?
History & geography
Located between two rival superpowers, Germany and Russia, Poland has not had an easy past. However, since the collapse of communism in 1989, Poland has powered ahead to become the fastest-growing and most successful of all the former communist countries in Europe.
Mateusz Urban, Senior Economist at Oxford Economics, believes Poland has benefited strongly from leveraging its structural advantages.
“Foremost, it has inherited a decent primary and secondary educational institutions and norms from the communist era, which it has then successfully adjusted to more modern challenges and used to notably boost the tertiary educational attainment. This has resulted in a relatively young and skilled graduate regularly adding in to the labour force since the late-1990s. As the STEM-focused universities are particularly good at equipping their students with ample skillsets, this facilitated foreign investments in a number of IT and increasingly high-tech manufacturing sectors.
“Secondly, joining the EU and removing barriers to trade was a game-changer and has boosted GDP growth since 2004 by around a third. Naturally, the outsized public investments in infrastructure – with the EU money instrumental in financing it – helped immensely and turned Poland into a very close economic partner of Germany and a key supplier for a number of industries (especially automotive). On top, Poland’s still relatively low labour costs (coupled with highly-educated labour force as mentioned above) have continued to attract investments in eg business services (especially financial market institutions),” he adds.
Superpower in the making?
Poland’s rise as a potential global superpower can be attributed to a combination of factors that have set the stage for its success.
“First and foremost, Poland has made significant strides in creating a favourable business environment – they have embraced economic reforms, fostered innovation, and established a robust infrastructure that attracts both domestic and foreign investment, says Charles Bellwood, Owner and Managing Director at Bellwood Rewinds Ltd.
“Additionally, Poland’s recent focus on education and skills development has helped them cultivate a talented workforce, which is a crucial asset in today’s competitive global landscape and I think crucial to their rise as a European powerhouse.
“Poland’s strategic geographical location at the crossroads of Europe has also positioned them as a gateway for trade and investment, further fuelling its growth, especially with the Ukraine-Russian war changing the scope of global trade with Russia,” he adds.
Group CCO of emagine Consulting, Martin Hartley believes there are further factors that contribute to Poland’s ever-growing power and influence.
“One of the main indicators of Poland’s success is the high level of education and knowledge of Polish specialists. Poland has many prestigious technical universities educating great consultants that bring 15,000-16,000 graduates to the market every year, providing top talent exactly where they need it.
“Price competitiveness also gives Poland an edge. Rates in the IT market grow continuously, but prices are still at a very reasonable level,” he adds.
Urban thinks that the economy will continue to catch up (and surpass) its Western peers.
“Accounting for the purchasing power, the GDP per capita has already surpassed those of Portugal and is on track to beat the Italian (late-2020s) and even French levels (early-2030s),” he says.
The Polish economy is growing so fast – by 4.9% last year – that it is set to overtake Britain’s by 2030.
The Polish economy expanded by 5.1% in 2022, after growing 6.9% in 2021. The Statistics Poland (GUS) agency said last month, revising upward its previous estimates for both years. In per capita terms, if Poland can maintain its current average of 3.6% GDP growth and the UK stays at its average of 0.5%, then it will indeed have a higher average income by 2030. Between 1990 and 2018, the country’s GDP increased almost eightfold.
In January 2023, the Central Statistical Office reported that Poland’s average corporate monthly wage was up by 10.3% compared to last year, with corporate employment rates also up by 2.2%. Furthermore, as the economy continues to grow and the job market remains buoyant, wages are predicted to rise by a further 5.9% by 2025, according to data collected by Statista.
Russia’s war against Ukraine has prompted long-lasting changes. Poland’s alliance with Ukraine strengthens them both from a military and economic standpoint. Poland is becoming the EU’s top military power, akin to traditional economic powerhouses Germany and France.
Having upped its defence budget to $30bn — at 4.25% of GDP the highest proportion in all of NATO – Poland is on a frantic spending spree that will entirely reshape the balance of power in Europe. From 250 American M1A2 Abrams tanks on order to 500 HIMARS, as well as 96 Apache attack helicopters, by the end of the decade, Poland will possess by some margin Europe’s most powerful land army.
Poland is not just becoming an economic power, it is becoming a strategic military power too. It is predicted that by 2035 it will have the largest army in Europe with 300,000 personnel. Currently, it has an above-average EU military expenditure at 2.4% of GDP which is the third highest in NATO after the US and Greece. This is expected to rise to 4% next year which would make it the highest in the EU and NATO.
The start-up ecosystem in Poland experienced steady and consistent growth since the country joined the European Union in 2004. Poland’s capital Warsaw is a tech hub where Google and Netflix are among the big US firms setting up offices.
Poland has surfaced as a leading location for technology investment, start-ups and entrepreneurial talent in Europe. The nation’s recent economic growth, wealth of software development talent and appeal to venture capital firms cement its place as a promising European tech hub, and its population is full of optimism for the future.
Poland ranks in the top three most competitive IT markets in Central and Eastern Europe, with exports of IT services nearing €10bn, or 1.7% of GDP. The IT sector is steadily growing in importance with over 3,000 start-ups active in Poland. The country is also home to more than 100 start-up incubators and accelerators.
Hartley goes on to describe the flourishing sector and why his company have chosen to operate there.
“IT services are one of the pillars of the robust Polish economy and they account for 8% of Poland’s GDP. More than 400,000 IT professionals are available in the market. This makes Poland the leading country in the CEE region in terms of programming and other IT competencies and enables it to successfully compete with other European countries.
“This is why we operate our Nearshoring service in Poland, where we have a strong network of highly skilled IT professionals,” he says.
How UK businesses can reach the same heights
Poland’s political and economic strategies offer valuable lessons for UK businesses. To make their mark on the global stage in the same way as Poland, they first need to embrace innovation and keep a pulse on emerging trends in their industry.
“One aspect that stands out is Poland’s emphasis on fostering a business-friendly environment. They have implemented policies that promote entrepreneurship, reduce bureaucracy, and provide incentives for innovation that I think will see the country become a more dominant figure on the global stage, and I think UK businesses could benefit from adopting similar measures to encourage a vibrant startup culture and stimulate economic growth,” offers Bellwood.
“Moreover, Poland’s commitment to investing in infrastructure and technological advancements has played a significant role in their rise and I think that UK businesses should follow suit and prioritise upgrading their infrastructure and leveraging emerging technologies to remain competitive in the global market,” he concludes.
The business landscape is constantly evolving, and being adaptable is essential for success and the key to Poland’s success. Bellwood advises that the UK needs to invest in the workforce.
“Talent is a valuable asset, so providing opportunities for skills development, fostering a culture of continuous learning, and empowering employees can contribute to an organisation’s and the UK’s growth.
“UK businesses should also never underestimate the power of relationships, as even though we are still such a global superpower, we cannot rest on our laurels. Networking, partnerships, and collaboration can open doors to new markets and opportunities and building strong connections within our industries and beyond can be a game-changer for expanding our global presence,” he adds.
Not without challenges
The former Soviet colony has a bright future ahead, but it has its challenges. Economic activity in Poland is likely to decelerate markedly this year due to high inflation, monetary policy tightening, the ongoing fallout from Russia and slowing demand in key trading partners, according to the World Bank’s Economic Update for Europe and Central Asia.
Urban expands on these challenges.
“This includes primarily the fast-ageing population, which, in conjunction with the low retirement age, will gradually curb the labour force available domestically. This calls for a comprehensive migration policy, which – despite the inflow of over a million Ukrainian and Belarusian migrants and refugees to date – Poland still lacks.
“Further, Poland faces a formidable challenge on the energy transition front as it has the most fossil-fuel-heavy energy mix in the EU. If the necessary investments are delayed, this will hit the competitiveness of the Polish industry, the primary engine of growth to date,” he says.
Poland is stalling from an environmental standpoint too. It is the only EU member state yet to commit to reaching climate neutrality by 2050.
Though there may well be some way to go to reach superpower status, Poland teaches us that who dares, wins.