Poland 2015-2019

How Poland’s position in the rankings changed

Poland 2015-2019 2019-08-12
Under PiS, Poland’s position in economic and social rankings did not change much, as opposed to freedom and democracy rankings, which fell drastically.

Poland 2015-2019

Poland falls behind in openness to business. In the World Bank’s Doing Business (DB) ranking in 2016, which reflected legal status as of June 2015 (before PiS came into power), Poland ranked 25th among 189 countries. In the DB ranking in 2019 (which reflected the legal situation from May 2018), Poland sunk to 33rd place (190 countries were evaluated). For the first time, the synthetic indicator that measured openness to conducting business in Poland dropped year-on-year from 77.3 to 76.95 points. This does not mean that the PiS government failed to facilitate business for companies – as a result of an initiative led by the MinTech, a business constitution was created. However, one of the government’s goals was to seal the tax system, which increased budget revenue but forced the government to introduce new regulations. Poland’s position might improve in subsequent editions of the DB that include abolishing the need to file VAT declarations and dealing with payment backlogs.

High investment attractiveness. Poland still ranks high in the "EY Attractiveness Survey Europe," which ranks the European countries that are most often chosen by foreign investors. In the 2016 ranking, which reflected the situation in the previous year, Poland accumulated 211 new direct foreign investments and ranked seventh in Europe. In the latest summary, which includes 2018, Poland ranked sixth (with 272 projects). Last year, the PiS government introduced major changes for investors – the legislation introduced tax reliefs not only in special economic zones but also across all of Poland. For several years now, Poland has attracted more and more investments in the automotive sector, mainly in e-mobility (for instance, factories for electric car batteries built by LG Chem and Daimler).

Slow progress in social development. Eurostat data shows that in 2015, Poland’s per capita GDP (which includes purchasing power parity) stood at 69 per cent of the EU average, while in 2018 in amounted to 71 per cent. During that time, income inequality in Poland decreased, in part as a result of the 500+ programme. However, Poland did not record a significant rise in social development rankings. In the 2016 edition of the UN Human Development Index, Poland ranked 36th, scoring 0.855 (1 is the maximum level); two years later, it ranked 33rd and scored 0.865. On the other hand, Poland faltered in the Social Progress Index ranking created by The Social Progress Imperative, despite improving its score. In 2015, it was awarded 77.98 points (out of 100) and ranked 27th out of 133 countries. In 2018, it ranked 32nd among 146 countries (with 81.21 points). Poland was overtaken by Korea, Italy, Cyprus, Greece and Lithuania. This ranking takes into account many more variables than just the HDI; factors include environmental quality, personal freedom and social inclusion.

Innovation remains among the lowest in the EU. In the EurCom’s latest ranking "European Innovation Scoreboard 2019," Poland came at the bottom of the list, ahead of Romania, Bulgaria and Croatia. In 2015, the innovation index for Poland was 0.248 (the EU average was 0.490), while in 2018, it amounted to 0.295 (the EU average was 0.525). According to Eurostat, in 2017 expenditure on research and development (R&D) accounted for 1.03 per cent of the country’s GDP, two times less than the EU average (2.06 per cent). However, Poland wants to increase it to 1.7 per cent of GDP in 2020. The government has already made it possible, for instance, to deduct up to 100 per cent of tax-deductible costs incurred for R&D activities from the tax base (150 per cent in the case of R&D centres). On the other hand, IP Box (Innovation Box), which launched in 2019, introduced tax incentives for companies that generate income from intellectual property rights acquired through R&D.

Moderate level of corruption. During PiS’s rule, Poland's position deteriorated in the Corruption Perception Index created by Transparency International, which means that the estimated risk of corruption increased. In the last ranking for 2018, Poland ranked 36th out of 180 countries (the higher the position, the lower the risk of corruption) with a score of 60 points out of 100 possible (100 indicates minimal risk of corruption). In Portugal and Estonia, the risk of corruption is lower than in Poland, but it remains higher in the Czech Republic, Italy and Slovakia. To put it into perspective, in 2015, Poland ranked 29th among 167 countries (scoring 63 points). The Corruption Perception Index is based on the assessments provided by experts and business representatives as well as data collected from several different institutions. Poland’s deteriorating position may be related to changes in the financing of NGOs. In 2018, a high-profile corruption case was reported that involved the former head of the Polish Financial Supervision Authority (KNF).

Less freedom in Poland. According to Freedom House, which produces an annual report on the state of democracy and freedom in the world, recent years resulted in a deterioration of the situation in Poland, although it is still considered a fully free country (Hungary is only partially free). In the 2016 edition, Poland received 93 points out of 100 possible; a year later, it scored 89 points, in 2018 it scored 85, while in 2019 it accumulated 84 points. The organisation focused on the decrease in the transparency of public institutions in Poland compared to previous years, as well as increasingly more difficult access to information. According to Freedom House, the assessment of freedom in Poland is greatly underestimated by changes in the judiciary carried out by the PiS government. The organisation also awarded Poland 3 out of 4 points in the category of media freedom, which is in part a result of the politicisation of public media.

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Leszek Baj
Chief editor
(+48) 22 436 71 65
l.baj@politykainsight.pl
Leszek Baj
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