European Emerging Markets – Investment Incentives in Eastern Poland

Eastern Poland is the poorest and less developed region in the country; upon entrance to the European Union in May 2004, five Eastern voivodeships (administrative name describing Polish provinces) made up the region with the lowest GDP in the entire European community. It is also the most religious – with the highest rate of Sunday mass attendance [1] – and conservative part of Poland, something which is visibly reflected in the political map of the country. The region massively supports the biggest Polish right-wing catholic party, which received over 40% of votes in the last parliamentary elections (PIS-Law and Justice).[2]

Poor infrastructure, a high unemployment rate, and traditional, conservative social patterns have all created a negative image of the Eastern part of the country. Its inhabitants are often pejoratively called “słoiki” (jars) by the population of Warsaw or other big Polish cities, where many Easterners migrate to in order to find a better job or to study.[3]

Is this region doomed to be forever called “Poland B”, the poor sister that can offer beautiful landscapes, but no employment or professional future? Not necessarily. [protected]Thanks to a vast development programs, Eastern lands of Poland can soon become one of the most attractive investment places for both local and international players.

Development projects which may boost local economy can be divided into two major categories. The first branch is made up of governmental grants which offer many privileges to strategic investors.  A good example of such investment incentives are special economic zones. Currently five of them are located in the region.

The second branch of regional development policy is consists mainly of European structural funds. The European Union, together with Polish government, implemented a very dynamic project called The Program of Economic Promotion of Eastern Poland, which is nested under the management of the Operational Program Development of Eastern Poland. Its main aims are to:  attract foreign and Polish investors to the region, boost export of regional services and products, and develop business tourism.[4]

One of the business sectors that will likely expand rapidly and be of high investment potential is Business Process Outsourcing (BPO).  BPO centers are currently among the biggest employers in the Warsaw, Cracow, Wroclaw and Silesia regions. There is speculation that the ongoing financial crisis will push many of them to relocate in order to find friendlier – and cheaper — operational locations. The Eastern macro region offers many assets to keep them in Poland. First of all, the East has a highly-qualified workforce (each year, over 65,000 young people graduate from Eastern universities). Secondly, incomes are lower than average compared to other parts of Poland. Lastly, the region has attractive incentives for investors.

Eastern Poland is not only focused on “hard” economic factors boosting its economy.  It also launched a “new image” strategy.  CNN, BBC and other international news channels frequently broadcast short movies presenting Eastern Poland as a modern, open to investors, friendly place. The message of these films is very simple – “Why haven’t you invested in Eastern Poland?” Hopefully, these and other awareness techniques will encourage investors to recognize the potential of Poland and take the jump.

[1] Having recently launched a global campaign to boost its image as an international economic player, only time will tell how effective these strategies will be in convincing investors to jump into the “Eastern adventure”.,1293537,229

[3] Jars (słoiki)- there is a common  habit in Poland to store homemade food in jars. People, who study or work outside their hometowns, often take readymade food in jars from their homes to the job/university towns.