Poland and Belarus

Group members: Jianxiong Zhang; Xiaobao Chen; Sara Abouhilal

Introduction

1990s - the newly independent states, that were established as a result of the dissolution of the Soviet Union
began independent economic policymaking.
➔ The majority of CIS countries decided to pursue liberalization and privatization.

Poland - followed the liberalization and privatisation route

➔ the sixth-largest economy in the EU
➔ currently Poland's income level is among the highest in the region
➔ the country is also one of the largest recipients of foreign direct investment in Eastern Europe.
➔ considered as a model of reform since the opening up of Eastern Europe in the early 1990s - quickly
recovered from recession after a hard adjustment process, resulting from so-called "shock therapy"
(quickly transforming the country from a centrally-planned economy to a market-oriented one)
➔ Despite the Asian financial crisis and the Russian political and economic turmoil in the late 1990s and
the slower global and EU economy in the last couple of years, the Polish economy has continued to
expand steadily.
➔ a reputation as a business-friendly country with largely sound macroeconomic policies.
➔ During the 2008-09 economic slowdown Poland was the only EU country to avoid a recession ->
loose fiscal policy.
➔ As of September 2018 it is classified as a Developed Market (FTSE Russell)

Belarus - focused on maintaining a centrally planned economy with limited forays into privatisation
➔ socially oriented economic policy has continued to preserve the main elements of that policy
approach through the present
➔ general result of a dominant state presence in agriculture, healthcare, education, limited private sector
and low FDI inflows.
➔ High energy, economic, and financial dependence on Russia
➔ Member of Eurasian Economic Comission – uniting it Russia and Kazakhstan.

Investment and market access (regulation)

Investment

❖ Poland
­ FDI: attracted significant levels of inward investment since its accession to the European Union in 2004,
boosted by Poland’s integration into the European Single Market – FDI 48.5% of GDP (2017)
­ foreign direct investment into Poland have increased much faster since joining the EU than in the rest of
OECD countries over the same period
­ According to the World Bank, the Polish business climate is good and it has been ranked as 27th out of
190 countries in its 2018 Doing Business ranking.
­ In the years 2014-2020 Poland will be the biggest EU funds beneficiary among all the member states
­ government founded PAIH (polish investment and trade agency) to improve conditions for FDI
­ Private enterprises - re-structuring of the economy, enhancing the country's efficiency; currently
contribute to > 60% of the GDP, up from 20% in 1989
­ the WSE is acting as a regional hub for local enterprises wishing to access equity capital. The exchange
witnessed the third-largest number of Initial Public Offerings (IPOs) of any European stock exchange
during 2017, and fifth amongst all European exchanges in terms of the number of listings (see the charts).

The Future?
 Poland and Belarus
Group members: Jianxiong Zhang; Xiaobao Chen; Sara Abouhilal

­current conservative government - increase the percentage of domestic ownership in banking and retail -
currently dominated by foreign companies; spending on social welfare programs - might negatively
contribute to foreign investment.
Market access
­ Used to have slow administrative procedures (pre 2011 was 120th country for the speed of starting a business
according to the World Bank)
­ July 2011- Act Limiting Administrative Barriers for Citizens -> series of measures designed to diminish the
burden of Poland's state bureaucracy. 1st January, 2012 – registration of legal liability company in 24 hours.
­ Polish law is rather favourable to foreign entrepreneurs. The government offers investors various forms of state
aid, such as: CIT tax at the level of 19% and investment incentives in 14 Special Economic Zones (among
others: income tax exemption, real estate tax exemption, competitive land prices), technology parks, and EU
structural funds.
­ To survive the economic crisis and support long term foreign investments, the Polish Government has
formulated a stabilisation and development plan of EUR 24 billion, mostly to grant credit to small and
medium sized enterprises and investments in renewable energy sources
- deregulation and small-scale privatisation helped to develop small private enterprises
­ Visa-free entry for majority of nations

❖ Belarus
­ FDI: Foreign capital inflows increased sharply in the first half of the 2000s. However, they have been
declining since 2008 due to the global economic crisis and the difficulties of the Russian economy on
which Belarus remains strongly dependent. FDI only around 36.2% (2017)
­ government focusing economic strategic orientations towards SME support: reform packages focused on
strengthening the business environment; creating a positive image of SME sectors; promoting
infrastructure projects for SMEs - the government expects the share of SMEs in total value added to
reach 40% in 2020 and 50% in 2030.
­ Country still depends heavily on state-owned enterprises and the environment for private sector
development had for long been neglected. A few businesses, which had been privatized after independence,
were renationalized - private sector currently only around 25% GDP
­ Attempts to encourage investment through Council for Entrepreneurship or programme offering
preferential conditions for investor in rural areas.
­ System of free economic zones introduced, but not as widespread as in Poland – 6 economic zones present.
­ Absence of visible and publicly discussed private sector development strategy risks jeopardising the
effectiveness of the efforts underway
Market access
­ characterised by heavy regulations and administrative procedures, Belarus ad not attracted many foreign
investors -> majority of foreign citizens must obtain a visa (to enter Belarus
­ market access is limited – Aleksandr Lukashenko first elected in 1994 has consolidated his dictatorial
power through authoritatian means, centralised economic system (around 75% of industry still in state
hands)
­ Weak governance (high levels of corruption, legal system provides little protection)
Poland and Belarus
Group members: Jianxiong Zhang; Xiaobao Chen; Sara Abouhilal

Monetary structure
● Currency
o Poland: Poland zloty, which will eventually be replaced by euro
o Belarus: Belarusian ruble
● Central Bank
o Poland: National Bank of the Republic of Belarus
o Belarus: Narodowy Bank Polski, which will eventually be replaced by the European Central
Bank
● Central Bank Transparency (indices range from 0 to 15)
▪ Poland: 3 to 9 (1998 – 2010)
▪ Belarus: 4.5 to 5.5 (1998 – 2010)
● Central Bank Independence (indices range from 0 to 1)
▪ Poland: 0.32 to 0.37 (2001 – 2010)
▪ Belarus: 0.24 to 0.24 (2001 – 2010)
● Total reserves
▪ Poland: 6.02 billion to 113.267 billion (1994 – 2017)
▪ Belarus: 100 million to 7.32 billion (1994 – 2017)
● Foreign exchange
▪ Poland: no foreign exchange control
▪ Belarus: “all residents are required to sell 10% of foreign cash received from foreign
trade transactions”
Conclusion: The monetary structure of Poland is friendlier towards cross-border economic activities than that
of Belarus. Both countries maintain their own types of currency and monetary policy, while Poland is expected
to join the euro zone with no specified timeframe. Poland’s central bank transparency and independence have
increased in the 2000s, while Belarus has remained less transparent nor independent. Poland possesses 15
times more reserves in size than Belarus. Poland’s advantage in reserves and foreign exchange freedom makes
it more advanced in cross-border exchanges.

Trade
● Export (current US$)
o Poland: 17.11 billion to 280.05 billion (1990 – 2017)
o Belarus: 9.95 billion to 36.26 billion (1990 – 2017)
● Import (current US$)
o Poland: 12.77 billion to 259.10 billion (1990 – 2017)
o Belarus: 9.45 billion to 36.45 billion (1990 – 2017)
● Tariffs (weighted mean, all products)
o Poland: 4.01% to 1.60% (1996 – 2016)
o Belarus: 8.85% to 1.65% (1996 – 2016)
● Status in institutions
o Both are former Soviet bloc
o Poland: WTO member since 1995; EU member since 2004
o Belarus: non-WTO-member and non-EU-member
Conclusion: Poland exceeds Belarus in trade volumes. Both countries practiced import substitution in the late
1990s, and both lowered tariffs since then with Belarus still having a slightly higher tariff rate than Poland.
There’s no comprehensive report on export substitution. Poland benefited from its acceptance to the WTO and
EU.

Demographic and Infrastructure

Poland and Belarus
Group members: Jianxiong Zhang; Xiaobao Chen; Sara Abouhilal

Belarus
Demographic:
● Belarus has a population of 9.5 million. The population is largely urban (77.6%), with around 2
million people living in Minsk and its satellite cities.
● Adults and seniors are the predominant age groups, and this trend was strengthened by a declining
birth rate in the 1990s.
● Belarus has a high level of literacy (99.9%), and a relatively high percentage of the population has
higher education (29.4%).
● disturbing social, demographic, and medical trends in Belarus.
1. urban and aging population: since the start of the 1990s, there had been a sharp drop in the
national birth rate, combined with the continual rise in mortality, had promoted an "aging" of
the population.
2. General decline in health: all types of illness have increased since 1991. Causes includes
health problems, environmental factors, accidents, suicides, pervasive alcoholism, drug
addiction, and heavy smoking. and the country's health services are chronically underfunded.
3. social problems: alcoholism strikes relatively young people; alcohol during the working days,
the use of drugs; the high unemployment rate
Infrastructure:
● outdated infrastructure: about 11 percent of all roads are unpaved; dependent on imported energy;
telecommunications services are inadequate
● geographical advantage: Important transit corridor between Europe and Asia.
● Russian assistance: to maintaining the flow of natural gas from Russia to Gazprom’s European
customers.
● World Bank’s assistance
1. Electronic tolling stations
2. Transit Corridor Improvement Project

Poland
Demographics:
● Poland’s demographic outlook is unfavourable:
● 1. lowest total fertility rates in Europe
● 2. Emigration of young people
● 3. Aging of society: The population is aging and living longer, the birth rate is down, and the share of
people working will be shrinking soon.
Infrastructure:
● after the accession to the EU, the infrastructural investments have accelerated. 75% of the Programme
funds were directly from the EU.
● new investments in motorways: main goal is to complete the road network in Poland and connect the
main cities to reduce the travel time by a minimum of 15%.
● large investment in the airport infrastructure for rising demand for air travel; the polish
telecommunication infrastructure is developing continuously; about 90% of the polish inhabitants used
the internet.
● the existing infrastructure is still developing and modernizing, which will boost economy in the
forthcoming years.
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Poland and Belarus
Group members: Jianxiong Zhang; Xiaobao Chen; Sara Abouhilal

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Poland and Belarus
Group members: Jianxiong Zhang; Xiaobao Chen; Sara Abouhilal

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