The Development Strategies of Poland and the Engine of Polish Economic Growth

In this paper, authors analyze the changes in the national development strategies of the Polish government since the First World War, the state investment that became the driving force of economic development, the trends and positions of foreign capital, and the changes in the economic environment surrounding the Polish economy. In the Second Republic, economic liberalism was a widely supported philosophy in the business world and academic society. However, in order to support very weak economic fundamentals, the government seized the key industry and tried to rebuild the economy. Although foreign capital played a very important role in economic development, Polish people’s distrust in foreign capital was strong. After the Great Depression, the Central Industrial District（ CUP） was built under the leadership of the government. However, with the outbreak of World War II, the formation of a strong core industrial base was suspended. After the Second World War, the government initially aimed to build a Peoples Democracy system based on pluralism. However, when the Cold War sharpened, rapid industrialization and collectivization of agriculture were forced. The Stalinist economic development strategy failed in a few years. Nevertheless, from the end of the 1950s, mining development and industrialization based on the mechanical and chemical industries were carried out again. This industrialization of capital goods sector-oriented production has distorted the people’s consumer life. However, in the long run, it cannot be denied that the industrialization of that time became the basis for the formation of the wide promising fields of the Polish industry. Since 1970, an open economic strategy has been adopted. Modernization was attempted by introducing licenses from the west. However, new investments did not lead to expansion of export, and cumulative debt increased. During the economic crisis, the“ Solidarity” movement quickly grew into a national movement, but this did not lead to a fundamental economic system change. Economic reform was also attempted in the 1980s. However, the socialist economic system was unable to adapt to the new global economic system driven by innovation. The inflexible system lost its growth potential. After the collapse of socialist system in 1989, radical liberalization policies drastically improved economic imbalances, and the economic policy enabled high growth. During the transition period, foreign capital greatly contributed to growth. The automobile industry is a good example. This industry is associated with wide parts production. Many domestic intermediate goods manufacturers increased their orders, and their technical capabilities were rapidly improved through the guidance of foreign capital. In addition, export has improved significantly due to the expansion of production by foreign-affiliated companies. In contrast to the Second Republic, foreign capital played a major role in nurturing domestic industries. By the end of the 1990s, the Russian economy had had no effect on the Polish economy. At the transition period, the Polish industry shifted rapidly to the EU. At the same time, since the manufacturing field was the foundation of Polish growth, the impact of the 2007 global financial crisis wasn’t serious. Not only that, Poland maintained positive growth in 2008 as most countries in Europe fell into negative Currently, low-wage, low-value-added production based on FDI inflows and abundant labor force is the driving force for growth. In the medium and long term, the Polish economy cannot grow if it stays in the current subcontract production status of industrialized countries. The key to Poland’s escape from the “middle-income trap” is how to develop“ new Polish companies” that produce high-value-added products and services under global competition