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Foreign Affairs Asks the Experts
In his recent essay “Poland” (January/ February 2014), Mitchell Orenstein correctly recognizes the centrality of foreign investment in Poland and the country’s close cooperation with Germany. But foreign enterprises account for only ten percent of Poland’s work force, and Orenstein does not discuss the country’s large domestic economy. Poland’s bureaucratic repression of domestic businesses keeps wages down and makes it difficult for innovative and high-tech companies to develop. This dynamic has led to high unemployment, low wages, and the lowest labor participation rate in Europe. Small enterprises make up a smaller proportion of Poland’s economy than they do in the EU as a whole.
If Poland’s bureaucracy is reformed, both foreign and Polish businesses will benefit. Employment will pick up, and wages may rise. Still, Poland cannot compete on labor costs alone. It will thus have to rely on its other advantages as well, including its access to the EU, the high quality of its labor force, and its large domestic market.
LUCJA SWIATKOWSKI CANNON
Former adviser to the Polish government on privatization
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