Introduction
The republic of Poland is a country that in Central Europe. This country is a member of the World Trade Organization, the United Nations, the European Union, NATO, European Economic Area, G6, and The Organization for Economic co-operation and Development, among other organizations. Thus, Poland being a member of all these organizations clearly shows that it is a country that is fully committed to its economic development and because of this there is a favourable environment for business activities. The business climate in this country is friendly as it is open to enterprises and people from the other nations whose aim is to conduct economic activity in this country. The economic and legal policies in Poland are favourable for conducting businesses. This has therefore been the reason why Poland has been performing well economically.
The economy of Poland
The economy of a state is a major determinant of the business activities that are carried out in that state. The Poland economy is actually a high income economy and in the EU it is the 6th largest. Before the 2000 recession, is yearly growth rate continues to be over 3% hence it is regarded as among the fastest growing economies in the Europe. In addition, is the only European Union member to have avoided the GDP decline and this means that in 2009 the country created the most Gross Domestic Product growth in the European Union. As of December in this year the economy in this country had not contracted or entered recession. Throughout the 1990s, Poland has steadfastly pursued economic liberalization policy with various positive results for its economic growth. The medium and small state-owned companies’ privatization has in fact encouraged private business sector development in Poland and this development is considered as the main drive for the economic growth in Poland.
Poland’s economic freedom
The country’s economic freedom score stands at 66.0 score and this makes the country’s economy to be the 57th freest in 2013 index. This score is 1.8 points better than that of 2012 with significant in financial freedom, government spending management, freedom from corruption, and business freedom. Advancing its economic freedom for the 5th consecutive year, the economy of this nation recorded 10th largest score improvement in the index of 2013. The state’s economy in fact performs relatively well in many economic freedom areas. The reason as to why it has been possible to do business in Poland is because of the quite low barriers to free trade. Furthermore, the nation’s commercial operations are essentially aided by the regulations, which support open market policies. Therefore, the business climate in Poland is favourable and transparent as the political stability in the country supports it. Due to this, the country has created an environment that is dynamic for the entrepreneurs and this has led to ease of conducting businesses in this nation.
The banking sector in Poland
Banking sector is crucial for the business operations in a country because this sector provides the required financial resources in business. The country’s banking sector is regarded as largest in eastern and central Europe. In terms of the country’s financial markets, the banking sector is the most highly developed sector. The regulation of the banking sector by the Polish financial supervision authority has made this imperative sector in the business operations most reliable source of business finance. In 1992-1997 periods, the Polish government privatized various banks, introduced legal reforms, and recapitalized some banks which made the banking sector become competitive. The Polish government did this to transform the entire country to be a market oriented economy. In fact, these reforms, and the sector’s relative stability attracted various strategic foreign investors who invested in various sectors of the economy.
The country’s industry
The Mazowiecki government in 1990 started a comprehensive reform program aiming to replace centralized command economy with the market oriented system. Until the present day, the overall results have been very impressive albeit various state owned industrial enterprises like mining, railroad, defence sectors, and steel are still resistant to change. The success in the industrial activities of this nation has been very significant in the development of its business activities.
International business
The law in Poland is favourable to the foreign entrepreneurs. The Polish government offers the country’s investors a variety of state aid like CIT tax at 19% level in addition to investment incentives in the 14 special economic zones. The others include income tax exemption, competitive land prices, and tax exemption in the real estate. This is actually aimed at encouraging the foreign investors who contributes to the development of various business activities that are vital for the overall economic growth of the country. According to Young and Ernst report, the country ranks 7th globally in investment attractiveness.
On entering the European Union, Poland introduced the European Union legislature. This means that the general rules of conducting businesses are not different from those that are in force in other European Union states. Therefore, the lack of trade barrier allows companies outside Poland and within it to move freely to the other EU nations to do business. The act on Freedom and Economic activity guarantees transparent and equal conditions to all the entrepreneurs who will to do business activities in this nation. This has been significant in developing the international business.
On the other hand, the success of doing business in this country has greatly been contributed by the legal systems. The Polish government provides various avenues that have contributed to the ease of doing business in this country. The Poland law defines the business activity legal forms, sets out the procedures of the registration of companies and in addition lists all the activity areas that require permission or official licence.
Poland rule of law
The Polish legal system protects individuals’ rights to both acquire and dispose of property. This has actually contributed to the success of businesses throughout the nation. Public office abuse and bribery are in fact punishable under the country’s criminal code. This has essentially led to the overall decrease in the rate of corruption that is a major hindrance in doing businesses. For that reason, the country’s legal system through protecting the rights of the individuals to acquire and dispose their property has actually contributed to the growth of businesses in this country.
Regulatory efficiency
The entrepreneurial framework in this country has been enhanced by various regulatory reforms in recent times. The launch of a business by an individual takes only six procedures. In addition, completing the licensing cost has been cut drastically almost by half. The process of bankruptcy has in fact become more efficient and straightforward. The labour regulations in this country in addition have become more stringent than the regulations in the other countries within the region. Furthermore, the rate of inflation has been kept under control.
This regulatory efficiency in Poland has in one way or another developed the business the country’s sector. For instance, business launching is very simple where an entrepreneur only needs to follow procedures that are not complicated. These entrepreneurs are also motivated in their entrepreneurial activities by the least cost in licensing. Moreover, the rate of inflation that discourages the conduct of businesses have been put under control hence this encourages business men to continue with their activities as they do not face this major hindrance in business.
Open markets
Open markets are vital for the success the business activities in any nation. The Polish government has formulated a variety of laws that encourage the establishment of open markets. The rate of the trade weighted average tariff is low as it stands at 1.6%. In addition, the non tariff barriers are relatively few hence this encourages open markets. The domestic and foreign investors are actually treated equally. Capital markets are expanding because of the banking sector that is growing at an alarming rate as a result of the competition.
However, public finance prudent management and fiscal consolidation are ongoing concern as this country has to further reduce its budget deficit in addition to curbing the growth of public growth. Although the perceived corruption level has gone down, rule of law has remained challenged by a judicial system that is inefficient. Therefore, the economic conditions together with the legal systems in Poland have been very helpful to the development of business activities as they provide the necessary avenues where the business operations take place.
References
Myant, M. R., & Cox, T. (2008). Reinventing Poland: Economic and political transformation and evolving national identity. London: Routledge.
Reuvid, J., & Terterov, M. (2005). Doing business with Poland. S.l.: GMB Pub.
Kissel, N. (2000). Passport Poland: Your pocket guide to Polish business, customs & etiquette. Novato, CA: World Trade Press.
