Why didn’t you invest in Eastern Poland?

March 12, 2013 in Business News, General, International, Investments, Markets, News, Polish Business, Polish Matters

invest in eastern poland 300x103 Why didnt you invest in Eastern Poland?

(C) by whyeasternpoland.com

Most of you have probably already seen the ad or at least some of its more funny internet mems and reproductions. The child, as presented here, makes an impression and also makes for a ridicule of the idea, as most internet campaigns do. Let’s take a look at the idea to invest in Eastern Poland.

 

The “Invest in Eastern Poland” campaign started last year and has since travelled the world with posters and ads all over the main cities such as London, New York or Seoul. It has become a source for many internet mems and other signs of ridicule as it does catch attention and provides an easy way to mock the general idea. You can see some of the mems at somethingawful.com both here and here – personally, I like many of them.

Funny or not, the question remains whether the campaign is just a weak attempt on driving some international business to invest in Eastern Poland, or if it really presents an interesting offer that many can take advantage of. The Polish news service tvn24.pl claims that the campaign has caused the organization responsible for the ad (which can be found under www.whyeasternpoland.eu) to receive numerous phone calls and invitations to join business fares all over the world. So it must be a success at least in that respect.

I have found two great articles, one by Matthew O’Brien from theatlantic.com commenting on reasons to invest in Eastern Poland and another, by Matthew Yglesias on slate.com showing a quite contrary view and pointing out that such an investment may make no sense at all.

I think my overall view is somewhere in-between. O’Brien makes a great point at the fact that Poland is a rapidly developing economy and as such, it is less prone to global market movements and crises with which we are being scared over and over again. It is also worth noting that Poland as a whole is still requiring development with the eastern part being in a much greater need than the western counterpart. On the other hand, Yglesias claims that the catch-up of poor regions to the neighbouring richer ones does not happen in the real world and points to Eastern Germany as an example. He also points out that this is due to the migration of people, who will, quite naturally, move from the poor and underdeveloped regions to the ones which are better off. So does it make sense to invest in Eastern Poland or not?

I still think it does, but it needs to be smart and Yglesias’ viewpoints should be clearly kept in mind. There are quite a few reasons, though, why the comparison with East Germany is not quite relevant. First of all, the division of Germany was artificial and ended less than 30 years ago whereas the division of Poland ended with World War One and the nation was united ever since (the periods of German occupation and communist rule only reinforced that unison). Furthermore, the German nation is in my opinion much more prone to travel and movement than the Poles.

This is not to say that migration of Poles, both internal and external, does not happen. Qualified staff move from poor (or small) cities to larger ones, in particular to Warsaw, Krakow and Gdansk. But this happens everywhere. Young talent will rather live in New York than Minnesota and choose London City over Billund. It’s not just the salary, it’s everything. On the other hand, that does not imply that all remote regions in the world are left under financed and with no investment money whatsoever.

In general – you probably would not open the headquarters of a bank or a high tech design office in Eastern Poland (although, mind you, some companies like Pratt and Whitney have, and I believe they’re happy with that choice). You should, however, take a look at all sorts of manufacturing plants and outsourcing (for instance call centers or service centers). The workforce in Eastern Poland, also the part that actually stayed there, is often well qualified with foreign languages (especially English) quite common among young people. And their expectation towards renumeration are quite low. This, combined with several government subsidy programs and cheap land does present a great opportunity to invest in Eastern Poland.