Poland Gangnam-style

Barry Eichengreen

FOR the last quarter-century, the Polish economy has been an underappreciated success story – underappreciated certainly in my country, the United States. Gross domestic product (GDP) per capita tells the tale. In the early 1990s, at the outset of the transition, average income, in purchasing power parity terms, was barely a quarter the European Community average. Three decades later, on the eve of the Covid-19 pandemic, Polish GDP per capita had risen to more than two-thirds the euro area average. Income per capita, again in purchasing power parity terms, tripled over the period. Few economies outside of East Asia can claim something similar.

Poland accomplished this by developing a diverse and dynamic manufacturing base. Agriculture and services played a part, to be sure, but the main way Poland achieved rapid growth is by expanding and upgrading its manufacturing sector, the part of the economy where value added per worker is relatively high. The range of manufacturing subsectors is impressive – everything from food and beverages to automotive parts, metal products, rubber and plastics, chemicals, machinery and electrical equipment.