Transcript Fueling Competitiveness and Growth in Poland Through

Raising Poland’s Competitiveness:
Macro and Sectoral Context
Dr Marcin Piątkowski
The World Bank
ROUND TABLE
An Integrated Industrial Policy for the Globalisation Era
Putting Competitiveness and Sustainability at Centre Stage
27 June 2011
Main messages
• By 2020, Poland is likely to achieve the highest level
of income relative to Western Europe in its history
• But the in short-term, GDP growth rate will decline
relative to the pre-crisis rates and other emerging
markets
• There is large scope for productivity improvements
on the sectoral level
• Reform momentum will need to be sustained to
ensure continued convergence
Poland’s new Golden Age
Figure: GDP per capita in Poland relative to EU-15=1, in percent, PPS
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
Source: Maddison (2008) and Eurostat (starting 1995); illustrative projections 2012-16
But post-crisis growth is likely to decline
Figure: Poland’s Past and Projected Growth Rates, 2005–16
6.8
6.2
5.4
5.1
3.8
3.6
1.7
Source: IMF 2011
3.8
3.6
3.7
3.7
3.9
3.9
3.8
More than in other emerging markets
Figure. Projected Average GDP Growth Rates for Poland and selected regions, 2011-16
7.0
6.0
5.9
5.0
4.6
4.5
4.1
4.0
3.9
3.8
3.0
2.1
2.0
1.0
ASEAN-5
World
Advanced
Asia
Latin
America
CEE
Source: IMF World Economic Outlook database April 2011.
Note: Advanced Asia: Korea, Hong Kong, Taiwan, Singapore. Other definitions as in the IMF’s World Economic Outlook.
Poland
EU
And decline further in the long-term
Figure. Projected Long-Term Growth Rates for Poland, EU-10, and EU-15, 2004–50
5
Growth in GDP pre capita
4
3
2
1
0
2004-2010
2011-2020
Poland
Source: Carone and others 2006.
2021-2030
EU-10
2031-2040
EU-15
2041-2050
Enteprise productivity is still low
Figure: Labor productivity levels relative to the euro area (euro area=100)
Source: Bijsterbosch and Kolasa 2009
Also relative to non-EU countries
Polish Economy 2005
Value-add per
labor hour *1
(Euro)
Poland
overall:
14.9
US Economy 2005
US
overall:
37.6
76%
gap
60%
gap
Labor hour share
in total economy
(%)
Agri, forestry,
Finance, insurance, Hotels, restaurant
Utility
Agri, forestry,
Mining,
fishing, hunting
real estate,
fishing,
hunting
quarrying
Hotels, restaurant
business service
Manufacturing
Wholesale and retail trade
Finance, insurance,
Utility
Wholesale and
Public, military, education, health
real estate,
Public, military,
Construction
retail trade
business service
education, health
Manufacturing
Transport, storage, Construction
Transport, storage,
communication Mining, quarrying
communication
*1 Output
8 deflated to 1997 price level in local currency, and converted to Euro with industry-level PPPs for 1997
Source: World Bank based on Amable et al. (2008) for mehtodology, EU-KLEMS database for productivity indicators, Timmer et al. (2007) for industry-level PPPs
Low share of mid- and high-tech sector
Employment share of high-tech and
medium-high-tech manufacturing *1
% in economic active population
Employment share of knowledge intensive
service sectors *2
% in economically active population
12
35
Germany
Czech Rep.
11
Germany
10
Slovakia
9
Slovenia
Hungary
8
Hungary
30
Slovenia
Czech Rep.
25
Poland
Slovakia
7
20
Bulgaria
15
Romania
Romania
6
Poland
5
Bulgaria
4
10
3
2
5
1
0
2000
2002
2004
2006
2008
2010
0
2000
2002
2004
2006
2008
2010
*1 OECD definition; chemicals, machinery, electrical equipment, motor vehicle, other transport equipment, electronics, medical instruments
9
*2 Eurostat definition; telecommunications, IT services, R&D services
Source: Eurostat
Low private sector R&D spending
Private sector R&D spending
% of GDP
2.0
Germany
1.5
Slovenia
Total R&D spending
% of GDP
Czech Rep.
1.0
Hungary
3.0
Germany
Slovakia
0.5
2.5
Poland
Romania
2.0
Slovenia
Czech Rep.
1.5
Bulgaria
0.0
2000
2002
2004
2006
2008
2010
Hungary
Poland
1.0
Bulgaria
0.5
Slovakia
Romania
0.0
2000
2002
2004
2006
2008
Public and scientific sector R&D spending
% of GDP
Germany
0.9
0.8
0.7
Slovenia
0.6
Czech Rep.
2010
Poland
0.5
Hungary
0.4
Bulgaria
0.3
Slovakia
0.2
Romania
0.1
10
Source: Eurostat
0.0
2000
2002
2004
2006
2008
2010
Poor innovation performance
Innovation Turnover in Industries
% of firms’ turnover from products new to the
enterprise and new to the market
28
Innovation Turnover in Services
% of firms’ turnover from products new to the
enterprise and new to the market
Germany
26
28
26
24
Slovakia
22
Romania
20
24
22
20
Czech Rep.
18
Slovenia
16
18
16
Romania
14
Germany
12
Czech Rep.
10
10
Slovenia
8
8
Slovakia
6
6
Poland
4
4
Bulgaria
2
2
Hungary
0
0
Bulgaria
14
Hungary
12
2004
Poland
2006
11
Source: Community Innovation Survey, published through Eurostat
2004
2006
Productivity growth at the macro level has
not been impressive recently
Labor productivity growth (GDP per hour, annual average, percent), 2005-2010
6
5
4
3
2
1
0
Source: Conference Board (2011)
Affecting the speed of catch-up
Figure 4. When Could Poland Catch Up with the EU-15?
5.0
GDP growth rate, in %
4.5
4.0
3.5
2028
2031
2035
2041
3.0
2051
2.0
2010
Source: World Bank 2011
2132
2030
2050
2070
2090
2110
2130
2150
So, what to do?
Raise employment
Figure: Average Employment Rates in EU-10 and EU-15 Countries, 2000–09
80.0
EU10
75.0
EU15
Bulgaria
Czech Republic
70.0
Estonia
Latvia
Lithuania
65.0
Hungary
Poland
Romania
60.0
Slovenia
Slovakia
55.0
2000
15
Source: Eurostat
2001
2002
2003
2004
2005
2006
2007
2008
2009
Women and the elderly represent the
highest potential
Figure : Poland: Effect of 10% Fall in Inactivity on Total Employment Rate (by Age and Gender), 2008
percentage point
0.50
0.45
0.40
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
15-19
20-24
25-29
30-34
35-39
40-44
age group
16
Source: World Bank
Men
Women
45-49
50-54
55-59
60-64
Higher employment= faster GDP growth
Increase in value added if inactivity among older workers in Poland
were reduced to the level of selected countries
as % of GDP
2008
7
6
5
percent
4
Women
3
Men
2
1
0
Germany
-1
Source: World Bank
United Kingdom
Lithuania
Korea
Chile
Spain
Selected Policy Directions
– Enhance the productivity and employability of older
workers through focused training programs and
private sector involvement (such as Germany’s
Initiative New Quality of Work)
– Increase retirement age and decrease worker
disincentives resulting from pre-retirement benefits
– Rationalize disability pensions
– Reduce tax wedge, subject to fiscal sustainability
– Encourage higher female labor force participation
– Promote active labor market policies
18
Improve skills
Figure : Newly Created Jobs in Poland Require Different Skills from Old Jobs, Giving Rise to the Skills Mismatch
The difference between the shares in job creation and in job destruction
by occupation
2009
Elementary
Machine operators
Craftsmen
Net job destruction
Sales workers
Personal service
Net job creation
Clerks
Technicians
Professionals
Managers
-15
-10
-5
0
percentage points
5
10
15
Enhance efficiency of R&D spending
Source: Economic Papers 382, DG Economic & Financial Affairs, July 2009.
2
Higher and more efficient R&D
would raise GDP
Table : Overall Effects on GDP Levels of Achieving Lisbon Targets in Selected EU-27 Countries by 2025
21
Selected Policy Directions
• Redesign public R&D funding systems to emphasize
applied research and collaboration with industry
• Reform state-owned research institutes, including
through commercialization and employee-led
privatization, to better align their outputs with the
needs of industry
• Strengthen the public institutional framework for
R&D and innovation
• Increase financing for start-up and innovative
companies
22
Promote inter-industry re-allocation
Source: McMillan and Rodrik (2011)
Improve business environment
Ease of Doing Business rank in 2011 and the change since 2010
80
3
70
19
-2
60
50
3
40
43
30
6
-1
33
20
3
3
23
24
LT
LV
-1
1
41
42
SK
SI
0
70
63
56
51
46
0
17
10
0
EU10 EU15
EE
Source: Doing Business in 2011, World Bank staff calculations
HU
BG
RO
CZ
PL
Emphasize monitoring for policy making
Growth of national supply and international demand for export products of Poland – 2009 *1
Are there ways to stimulate these sectors win
internationally? Does it take absorption or innovation?
Are there ways to stimulate these sectors scale up and grow? What financing
challenges do emerging firms in these sectors face?
Current internationally
competitive sectors are mostly in
mid-to-low tech, with
international demands growing
only moderately…
25 classification in the source used for this analysis does not coincide with the previous slide; sectors shown are not comprehensive
*1 Industry
Source: World Bank based on COMTRADE statistics
Other policy directions
•
•
•
•
•
Maintain macroeconomic stability (fiscal)
Increase domestic savings
Promote immigration
Control real FX appreciation
Diversify exports
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www.worldbank.org.pl
27
Indicators
Potential policy instruments
▪
▪
▪
Aggregated and industry-level shares in global export market (%)
Increase of export-oriented enterprise (% of firms)
Increase in micro or small enterprises growing to mid to large enterprises
▪
Control exchange rate appreciation
Increase in the global
export market shares
▪
Improvement in the
technology-level structure
of output
▪
▪
▪
▪
High-tech, mid-tech, low-tech structure of output (%)
VC/PE financing, total and to high/mid-tech sectors (% of GDP)
Seed / early-stage financing for high/mid-tech sectors (% of GDP)
Introduction of technological and non-technological innovations (% of firms)
Structural measures (barriers to
entry/exit, firm registration, insolvency
process, product market competition..)
▪
Science and technology graduates (total number/as percentage of total student
population),
improvement/maintenance of the high position in the OECD PISA study, above
average score in the upcoming OECD tertiary education quality assessment
etc
Intermediate objectives
Improvement in high-end
human skills
Higher R&D and ICT
spending in the private
sector
Reduced enterprise sector
energy intensity and
environmental footprint
Improved ethics and
corporate social
responsibility of
enterprises
28
▪
▪
▪
▪
▪
▪
▪
Private sector R&D spending (% of GDP)
Private sector R&D ratio to public R&D
Increase in enterprises engaged in R&D (% of firms)
Increase in R&D intensive FDI (% of GDP)
Improvement in Summary Innovation Index/Innovation Union Scoreboard
Number of European patents
▪
▪
▪
Reduction in industry CO2 emissions
Enterprises with environmental certificate (% of firms)
Decrease in penalties for enterprises for exceeding environmental norms
▪
▪
▪
Increase in the effective tax rates for foreign companies
▪
Reduction in enterprises avoiding payment of taxes
Reduction in enterprises manipulating the public opinion into buying overpriced
products
Alignment of remuneration packages of enterprise management with their
marginal productivity
Reduction in labor law court cases
Increase in enterprises spending on philanthropy
▪
▪
▪
▪
Skills improvement (education,
training, immigration)
▪
▪
Financing measures (public VC,
R&D matching grant, subsidized
loans for absorption, vouchers)
Tax incentives
▪
▪
RDI reform
Soft support (patent process,
incubation center, cluster
development…)
Specific regulatory measures