In the words of Benjamin Franklin: “No nation was ever ruined by trade.” Indeed, the ability to trade freely is the foundation of economic prosperity. And even the EU, in its own rather bureaucratic dirigiste way puts trade at the top of the agenda. We could, of course, debate endlessly the difference between the single market and the free market, but not today. The point is that all countries recognize the importance of exports and in 2012 the British government set as a target the doubling of exports to £1 trillion by 2020. Whether the target will be met remains to be seen but one country with which the UK runs a trade deficit, Poland, for one, is (and the two are not unrelated) its own performance.
In the 25 years since the economy was freed from the dead hand of the communists (ironically, also keen exporters – hence the empty shelves) Poland has become a strong exporter, exporting goods worth almost PLN 800 billion to more than 200 markets in 2013. Impressive is the rise in exports since the early 1990s from some 10 percent of Poland’s GDP 47.8 per cent today. The figure may be lower than in some other smaller countries in the CEE region, for example Lithuania (83.8 percent) or Slovakia (95.6 percent) but it does compare well with other large European countries. For the United Kingdom the share of exports to GDP is 31 per cent., for Italy 28.9 per cent., for France 29.5 per cent. and Spain, 32.4. Germany remains the European power house with exports totalling Germany 50.9 per cent. of GDP.
According to PKO BP economist Piotr Bujak, in an interview with Puls Biznesu, “the condition of Polish exports 25 years after the transition is a cause for satisfaction,” with the Polish economy having created a solid, increasingly technologically advanced production base. “This was especially visible in the past few years, when the situation in the Euro zone was very difficult and Polish exports fared well,” Bujak added. While exports grew quickly, foreign investment has grown more slowly. In 2013 Polish firms invested almost PLN 4 billion zloty abroad, which was the lowest amount since 2004. Exporting goods is simpler than establishing new investments, as Bujak explained, and “there is nothing to be ashamed of. Polish foreign investments in the EU are higher than Russia’s, for example.”
Of course, one man’s export in another man’s import and, despite Poland and Germany now being Good Neighbours, German furniture makers have complained to the EU that Polish companies are beating them in a price war with the help of EU subsidies. The Association of the German Furniture Industries (VDM) has complained to Brussels that Polish manufacturers are flooding the market with cheap furniture, arguing that the low-cost production is only possible because of EU funds provided for the modernization of Polish production.
Jan Kurth, of the Head Association of the German Woodworking and Plastic industries of which VDM is the largest member, told Rzeczpospolita that a complaint had been sent to Brussels because of doubts whether these payments were in accordance with EU regulations. According to the VDM almost 60 per cent. of furniture sold in Germany is now imported, a fourfold increase during the past decade. Poland is the main source for German furniture imports, ahead of China and Polish exports of furniture to Germany rose by 9 percent in the first half of this year to Euro 1.3 billion. Polish manufacturers claim that their competitive advantage is due to lower labour costs and not EU funds.
Be that as it may there is, perhaps, a sort of historic poetic justice. After all, if Germany once extended the doctrine of lebensraum (living room) to Poland it seems only fitting that Poland should now reciprocate by furnishing German wohnzimmer (living room). Which reminds me of the old joke: why don’t heralds pun – because they cant.