E P D F I Esp Translate.     Highly recommended!: Space Night (D,E) Bayern 3 TV - print and hang Bookmark! This sign signifies support of the Red and Blue Ribbon Campaigns:

Poland´s way to the membership in the European Union
and in the European Monetary Union.

Text copyright ©1996 Piotr Kraczkowski
(for an error free loading of the figures wait before Scrolling. Status - 24.02.97. TD, TP - translation from German or Polish by the author)
The European Union as an optimal integration area for Monetary Union and Euro - by P. Kraczkowski
Planspiel - "East Enlargement of the European Union " (D, E)
Download - 35 PowerPoint-overheads (D) of the Commercial Counsellorīs Office of the Embassy of the Republic of Poland in Vienna (D, E)
from 31.01.2000 about polish economical development (1,4 MB, all important developments).

"The EU countries endeavour that the union (with the countries in Eastern Europe - P.K.) will come about as quickly as possible. I think it will take place in the case of Poland in all likelihood at the beginning of 1997. We have two years of the common work left. It is very little considering the diversity of the economic and political problems which are to be solved before this time."
Rolf Timans, Ambassador of the European Commission in Warsaw (Zycie Gospodarcze, no. 21/21.05.95, p.5, TP)

I. Introduction

Even if this prognosis is too optimistic and can possibly be explained with the positive surprise after the personal contact with the Polish economic and state structures then the date around the year 2000 is being called more and more frequently as the date of Poland´s entry into the European Union. In view of the discussion over the Core-Europe one can assume Poland will fulfill the convergence criteria to that extent around the year 2000 so that it will qualify if not to the hard core, so at least as a member state of the EU. A broad, above party lines, social and political consent exists in the question of the entry in Poland. According to the Public Opinion Research Centre CBOS (E) 80% of Poles supports the entry to the EU and 13% are undecided (Polityka, no.33/17.08.96, p.10). The membership in OECD, the association agreement concluded with the European Community 1991, the application for accession from 08.04.94 and the economic development support this consent with facts.

"As regards the political forces of the country then there are actually no decided European Union opponents. ´The Polish Farmer Party´ advocate it certainly (...) Beyond that some right-wing parties want to work against a ´sellout´ of the Polish identity. However, agreement over the course pro EU prevails in the government coalition and it is one of the avowed targets of president Kwasniewski to lead Poland in EU and NATO" - Polish government spokeswoman, Aleksandra Jakubowska, ("Die Presse", 08.10.96, international special supplement - Poland, p.1, TD).

II. The economic development of Poland

While evaluating the Polish economy it is worth clearing up two myths: first of all the crisis of 1989-1991, after the collapse of the planned economy, is noway a unique appearance in regard to the fall of the most important indicators, secondly it looks much better with this economy than one was still believing not long ago. The table 1 compares the crisis 1989-1991 with 1978-1982 one.

In contrast to the fall from 1978-1982 the collapse 1989-1991 had a creative character. Polish economy is on upgrade continuously since then and all prognoses predict the retention of this trend up to the year 2000 at least. This development is illustrated with the most important economic parameters. The GNP grows on average by 6% annually, inflation was still 18,4% in 1996, but tendency falling - one must consider further the shadow economy which gains amount to at least 20% of the gross domestic product and which emerges increasingly with the enlargement of firms in the offical statistics. The GDP increased by 7% (6%) 1995 (1996) (Polityka, 6/08.02.97, p.12), first of all by investments (21,6%), consumption (8,2%), and foreign trade, with unemployment of 14,9% (13.5 %) (Zycie Gospodarcze, 7/14.02.97, p.4, 45), and inflation 21,6% (18,4%) (Zycie Gospodarcze, 5/31.01.97, supplement - Raport o Gospodarce, p.VIII). The inflation rate has been too high by around 3 to 7% so far, because of the 1995 abolished exporters´ duty to sell the foreign exchange to the state. The investments of the native enterprises increased by 21,6% 1996 (Polityka, 6/08.02.97, p.12), therein in the private sector by 50% 1995 already, and those of the foreign ones amounted to around 10,155 billion US-$ according to the State Agency for Foreign Investments (PAIZ) since 1989 to 31.07.96. The investments under 1 million US-$ of the approx. 22.000 foreign joint ventures were not taken in account (Polityka 40/05.10.96, p.65). This development is illustrated by fig. 1.

Fig. 1 Foreign direct investments in Poland (accumulated, in millions US-$)

________________________________________________________________
Millions US-$ Year	8 1989	105 1990	324 1991	1408 1992	3041 1993	4321 1994	6832 1995	12800 1996E

According to PAIZ foreigners have invested in all 5,2 billion US-$ in Poland in 1996 and approx. 14 billion US-$ in the last 7 years. (Polityka, 6/08.02.97, p.61). As an example one may name the purchase of the autofactory FSO in Warsaw by Korean Daewoo - an investment of in all approx. 1.1 billion US-$. According to Polityka (6/08.02.97, p.61) the Japanese autocompany Isuzu has confirmed the decision to build an automotor factory for 250 million US-$ in the economical special zone Katowice. Fig. 2 presents the selected foreign investments in Poland according to the countries of origin.

2 399.4 USA

1 467.3 international corp.

1 335.6 FRG

953.1 Italy

839.1 Netherlands

657.4 France

393.8 Great Britain

316.4 Austria

298.1 Australia

290.5 Switzerland

250.5 Sweden

216.7 Denmark

139.5 South Korea

105.7 Ireland

88.3 Spain

According to analyses of the Institute for the Research over Democracy and Private Enterprise the foreign investments have contributed in 39 % to the economical growth in Poland in the last years. One US Dollar invested in Poland produced on average a 6,3 Zloty increase of the Polish export. 10 US Dollars which were reinvested from the profit have brought a 350 Zloty increase of the Polish export and the occupation by around 2 people. The investments of the selected foreign enterprises are shown in fig. 3. The Polish Commercial Counsellor in Vienna offers further information about the foreign investments in Poland.

	702 FIAT             -	129.5 Daewoo
	608 EBRD	112 Michelin
	343 Group ING	112 SHV Macro N.V.
	341 Inter. Paper Corp.	112 Goodyear Tire and Rubber CO.
	316 Poland USA Fund	108.1 Philips
	277 Inter. Finance Corp.
	275 Coca Cola
	227 Philip Morris
	210 Nestle
	185 Thomson
	168 Pilkington
	160 ABB
	137 Unilever
	130 Procter & Gamble
	130 Reemtsma

Only in January and February 1995: Exports increased by around 40,4 % and imports increased by around 43,5 %. Poland is the most important partner of the Federal Republic of Germany, before Russia, in Eastern Europe regarding the volume of trade - Polish exports to Germany increased by around 29,8% and imports by around 21,7% in the first half of the year 1995.

                             

Fig. 4 Foreign trade of Germany with the selected Easteuropean countries and PR China

Foreign trade volume - millions DM PRCh - People's Rep. of China RP - Poland R - Russia CR - Czech Rep. H - Hungary

1993

1994

1995

_____________________________________________________________________________________________________________

18116 PRCh

18341 RP

22113 R

14090 CR

9684 H

20274 PRCh

20474 RP

23909 R

18144 CR

11784 H

26596 PRCh

25101 RP

23869 R

22392 CR

13932 H

Source: Ostausschuß der Deutschen Wirtschaft Gro., (According to AussenWirtschaft, special edition 1996, p.7)
                    Source for PR China: Year 1993, 1994 - Wirtschaft in Zahlen ´95, Federal Ministry f. Economics, p.94-95
Year 1995 - AussenWirtschaft, August 1996.                       

The security of german exports to Poland by Hermes Guaranty is not subject to any restrictions, they rose by around 6,7% 1994 to about 10.4 billion DM.
More than 60% of all people employed work in the private sector which produces more than 50% of GDP already. The Economist wrote in its Poland Survey, p.13, on 16.04.94:

"Poland is no tiger. Asians tigers have high rates of savings and investment, low rates of inflation, small budget deficits, (...) Poland has none of these."

In the meantime the american government has classified the Polish economy among the 10 countries with Big Emerging Markets. The sale of the securities of the 15 National Investmentsfonds (NFI) (E, P) to which 514 of the state enterprises belong, began within the framework of the program of the general privatisation on 22.11.95. And it can be said about the still national enterprises:

"Managers of the national enterprises have got accustomed to the market conditions and recognized that their future and their reputation are inseparably connected with the success of the company, whether this was denationalized now or continued in unchanged form." (Hume, M.I., Pinto, B., "Vorurteile und Fakten bei der Transformation der Industrie in Polen", in: Finanzierung und Entwicklung, June, 1993, p.19, TD.)

After the reduction of the debts by Paris Club and London Club the Polish indebtedness is being served correctly. "Die polnische Wirtschaft - the Polish Economy" seems to be thus one of the most important supports of the reforms in Poland.

III. Perspectives of the entry of Poland into the European Union

From the Polish view the perspective of the entry to the European Union is

"a realistic chance on a fundamental change of the development policy and strategic, civilizatory orientation of Poland in favour of the consistently european option that ensure better conditions of the state security and more favorable perspectives of the economic development." (Polish minister of foreign affairs D.Rosati before its office entrance, Polityka, no. 17/29.04.95, TP.)

Poland has made adequately enormous efforts in order to seize this chance. It would be perhaps exaggerated to repeat the winged words of the numerous press comments about "Polish economic miracle" however the dynamics of the economic development is not bad at all. The basic statistical data of Poland and other East European countries can be found under the following links:

Poland and other Easteuropean countries	Poland
Gross domestic product (GDP)	Population
Distribution of the purchasing power	Economical indicators
Inflation rate	Economic activity of the inhabitants
Industrial production	Foreign trade
Unemployment rate	Agriculture

There are however still substantial doubts regarding dates and ways for Polish membership in the countries of the EU:

"One must talk about who and how will pay for further Union of Europe. One has to put the question to these member countries, which take the funds of the EU in first place, whether they are ready to move together around the family table in order to make place for our friends from Poland, Hungary or Czech Republic." (Former Chairman of the European Commission, Delores, Polityka, no. 45/11.11.95, p.13, TP.)

The membership of the states of Central and Eastern Europe is absolutely not possible according to Detlev Samland the chairman of the budget committee of the European Parliament

(...)"around 2000 (...). The household of the EU will be blown up in case of the enlargement by more than two thirds to 261billion Marks without reform of the structure funds and the agricultural policy of the European Union. Germany would have to take over around 32 billion of it additionally." (Focus, 1995, no. 27, p.192, TD.)

It is stressed that the countries of Central and Eastern Europe differ too much structurally and institutionally from the European Union states and are too underdeveloped and too large. As it seems however, these sceptical voices are moulded by the static point of view. The Polish gross domestic product per head amounted in 1994 to 35-37% of the avergage of the 12 European Union countries (calculated according to the purchasing power). As said above already, the Polish GDP grows annually by approx. 5% and this speed might still increase, if the shadow economy was merged gradually in the normal economic cycle. One can count realistically that the Polish GDP per head will achieve about 50-55% of the European Union average by the year 2000. It would be around 10% more than the same value for Spain and Greece in 1986 and 1981 at their admission in the EEC. (Polish minister of foreign affairs D.Rosati before his office entrance, Polityka, no. 17/29.04.95, TP.). According to the former Polish Minister of Finance Professor G. Kolodko (Polityka, no. 45/11.11.95, p.83, TP.) Poland can double its GDP in 7 to 8 years. European Union Commissioner Wulf-Mathies maintains beyond that rightly:

"We have a long-term reform requirement with the agricultural policy without the enlargement, too." (Focus 1995, no.27, p.193, TD.)

It would be in the interest of Poland then to accept lower aids at least temporarily. It is to be assumed also that Poland can use these means comparatively effectively.

"Funds are hardly efficiently used in Greece where the administrative structures are missing. Greece is given the money because it was a bulwark against communism, because it was the cradle of Europe, but not because the economic convergence is being advanced with this money." (Gaude, B., " Europäische Währungsunion und finanzpolitische Konvergenz", p. 13, 1992, Arbeitspapier no. 25, Universität Trier, TD)

Psychological prejudices in the European Union seem to be behind the resistance regarding the as quick as possible admission in the EU: Poland and other countries of Central and Eastern Europe are seen often further as "Eastern Bloc countries". Unjustly.

It would be however favourable perhaps to formulate convergence criteria for the admission of Central and Eastern Europe countries which would be similar to those of Maastricht. According to the disciplining theory it would help these countries to gather the necessary determination. The clearer and positive statement of the European Union regarding the admission would be surely also a positive signal for foreign investors who consider a commitment in Central and Eastern Europe.
"The White Paper" of the Commission of the European Communities (1995, TD) indicates in chapter 6, point 1:

"The transition to the political and economic systems which are compatible with those of the European Union is a complex process in Central and Eastern Europe. The promotion of the democracy and the civil society, a stable macro-economic policy, the privatisation and restructuring of the industry, the adjustment of the legislation and the institutions belong to it as well as the liberalisation of the trade with the target of free trade with the Union and the neighbour states."

IV. The convergence criteria of Maastricht

Although Poland is still no member of the European Union it is worth to check whether and which of the criteria it fulfills.
Inflation causes very large problems for the Polish economy: The Ministry of Finance forsees 13% for 1997. (Zycie Gospodarcze, 5/31.01.97, supplement - Raport o Gospodarce, p.VIII) However it is not possible to fulfill this criterion at present because the economy depends very strongly on the demand increases.

"The instruments fighting the inflation harm in a certain degree the economic growth. If they were to harm the economic development I would be against using them." (Director of the Central Planning Office (CUP) M. Pietrewicz, Zycie Gospodarcze, no. 45/05.11.95, p.11, TP.)

Fig. 5 compares the inflation in the European Union countries and Poland 1996.
Fig. 6 compares the interest in the European Union countries 1995 and Poland 1996.

Fig. 5 Inflation	Fig. 6 Interest
1.1 Finland	6.2 Luxembourg
1.1 Sweden	6.5 Austria
1.3 Germany	6.6 Germany
1.4 Luxembourg	7.2 Netherlands
1.4 Netherlands	7.5 France
1.8 Austria	7.6 Belgium
1.9 Belgium	8.0 Finland
2.1 France	8.3 Ireland
2.1 Ireland	8.3 Great Britain
2.3 Denmark	8.4 Denmark
2.6 EU - criterion	9.6 EU - criterion
2.9 Portugal	10.1 Sweden
3.0 Great Britain	11.1 Spain
3.6 Spain	11.4 Portugal
4.2 Italy	11.7 Italy
8.3 Greece	18.4 Greece
18.4 Pol- and	26.5 Poland

Source: Abb. 5, Eurostat - status: End of 1996 (according to Der Spiegel, no. 8/17.02.97, p.33), Abb. 6 EU - Commission, November 1995 (according to Mittelfränkische Wirtschaft, no. August, 1996, p.6)
Source for Poland: Abb. 5, Zycie Gospodarcze, no. 5/31.01.97, supplement - Raport o Gospodarce, p.VIII, fig. 6, p.III.

Prices of the sold industry production grew in Poland by 13,6 %. (Polityka, no. 30/22.07.96, p.67)

Fig. 7 Budgetary deficit (in % of GDP)		Fig. 8 National indebtedness (in % of GDP)
- 0.9 Luxembourg		7.8 Luxembourg
- 1.4 Denmark		54 Poland
- 1.6 Ireland		56.2 Great Britain
- 2.4 Poland		56.4 France
- 2.6 Netherlands		60.0 EU - criterion
- 3.0 EU - criterion		60.8 Germany
- 3.3 Belgium		61.3 Finland
- 3.3 Finland		67.8 Spain
- 3.9 Sweden		70.2 Denmark
- 4.0 Germany		71.1 Portugal
- 4.0 France		71.7 Austria
- 4.0 Portugal		74.7 Ireland
- 4.3 Austria		78.7 Netherlands
- 4.4 Spain		78.1 Sweden
- 4.6 Great Britain		110.6 Greece
- 6.6 Italy		123.4 Italy
- 7.9 Greece		130.6 Belgium

Source: Abb. 7, fig. 8, Eurostat - status: End 1996, (according to Der Spiegel, no. 8/17.02.97, p.33)
Source for Poland: Abb. 7, Zycie Gospodarcze, no. 5/31.01.97, supplement - Raport o Gospodarce, p.VI, fig. 8, p.VII.

The household discipline is being hold with an iron hand in Poland: Deficit in % of GDP 1995 - 2,6%, 1996 - 2,4%, 1997 - 2,7% planned (Zycie Gospodarcze, no. 5/31.01.97, supplement - Raport o Gospodarce, p.VI.)

Money stability

The Polish currency was noted 3,0065 Zloty for 1 US-$, 3,5321 Zloty for 1 ECU, and 1,8200 Zloty for 1 DM on 05.02.97. The very good results in the foreign trade 1995 as well as the frontier traffic have contributed to the increase of the currency reserves and strengthen the stability of Zloty. The diagram points the development of Zloty course to DM and US Dol. in Nov.96 - Apr.97.

V. Summary

The most important target of Poland remains the entry into the European Union. Nontheless it tries to fulfill also the convergence criteria of Maastricht as they became on the one hand an important reference point as well as yardstick of the evaluation in international relations now already and they are to be kept on the other hand sooner or later. They have become in Poland an axis of the economic discussions. While fulfilment of all criteria is still a question of some years. They are however not questioned in Poland. The possibility of the softening of application of the convergence criteria is seen by Polish government not as something positive but as a danger, also for Poland. The former Polish Prime Minister Professor G. Kolodko:

"The political discussions over Monetary Union become livelier in the states of the Union as it is clear that not each of them will fulfill the hard criteria in time. Softening of them, and such real danger appears, would threaten with a deceleration of the adjustment processes what can have a demobilizing effect for the Europe economies which undergo the transformation process." (Polityka, no. 35/31.08.96, p.65, TP.) and further
" If considering the today's status of the Polish economy, the prognoses of its development (...) and the implementation of the most important economic programmes of the government one can assume rationally that it will be capable, to master the requirements connected with the membership in the European Union around the year 2002 and those connected with the membership in the European Monetary Union around the year 2006 thus within ten years." (Zycie Gospodarcze, no. 5/31.01.97, supplement - Raport o Gospodarce, p.IV, TP.)

According to H. Zschiedrich ("Binnenmarkt Europe",1993, p.199, TD.)

"(...) it became (...) visible that also after the conclusion of the association agreements - sure under influence of the deterioration of the economic situation - the readiness for the consistent opening of the markets in the EEC for some products of Central and Eastern Europe is still weakly pronounced".

Thus there is still much to do for both sides if one wants to avoid the alternative costs of the progressive integration.

Selected links to Polish economy:

International Fair Poznan - MTP (D,E,P)	Poland as Big Emerging Market
Academy f. Economics in Poznan (P,E)	AIESEC in Ak. f. Economics in Poznan (P,E)
Poznan: Information arranged according to topics (E)	Poznan by Institute of Computing Science
Teleadreson Database: firms, institutions (D,E,P)	Warsaw Bussines Journal
The Warsaw Voice	The economical news from Poland
Promotion of Poland	Polish Zloty converter - all currencies
Polish data and analysis	Country Profile/Poland - EBRD
The Polish Foreign Office	Essay: German-Polish relations
Polish Commercial Counsellor Vienna info (E, D, P)	Mathesis Universalis (philosophy)
POLAND info - Chamber of Economics, Austria	Map of Poland
Central Europe OnLine Poland	Poznan City Guide
Explore Poland - Guide	President of Republic Poland (P, E)

Internet search:

Virtual Poland - search machine/catalog (P)	Polish World - search machine/catalog
Polish Home Page - search machine/catalog (E,P)	Polish Bussines (E,P)
Links of the Polish Commercial Counsellor in Vienna (D)	Map of Polish WWW Servers
WOW! - search machine/catalog (p)	Polish Home Page - Economy and Bussines (E,P)

German and international search machine/catalogs:

Dino - search machine/catalog (D)	Web.de - catalog (D)
Fireball - searchengine	AltaVista - searchengine

Polish and international companies in Poland:

Siemens Nixdorf (P)	Ford (P)
Mitsubishi Poland (P,E)	Toyota (P)
Citroen (P)	Karen - Notebooks California ACCESS (P)
Centertel - Handys (P,E)	Comes - Notebooks Aristo (P)
Okocim beer (P,E)	Poznan region info. (P, E)

This page hosted by Get your own Free Home Page