Poland would make a beautiful but difficult wife
By Kamil Tchorek
Poland has jumped up the world league of countries that are attractive to foreign direct investment (FDI), according to AT Kearney's FDI Confidence Index(r) 2003. But the report contrasts wildly with a World Bank study released a few says earlier, simultaneously with Leszek Balcerowicz's article 'Toward a Limited State'. The World Bank, and the National Bank of Poland by association with Mr. Balcerowicz, slam the Polish bureaucracy and suggest that it will continue to choke FDI until it is reformed.
"It's like choosing a perfect wife," says Tatiana Kałużniacka, spokeswoman for AT Kearney. The metaphor is derived from an explanation by Jan Maciejewicz, the head of the AT Kearney Warsaw office, to explain that AT Kearey's optimistic results - which show that Poland has moved from eleventh to fourth position as an intended destination for FDI - are an expression of relatively irrational investor intentions, rather than of raw investment data.
"When you look around, looking for a perfect wife, you would like to have a beautiful woman," continues Kałużniacka. "But when it comes down to tying the knot, it is more important that a future wife has other qualities; such as good character; the ability to bring money to the home; the ability to cook. In this case, Poland is the beautiful potential wife, she is very good-looking - everyone is saying that they would like to invest in Poland. But the truth is that Poland may not be able to cook, and she may have a difficult character."
'Character,' to interpret the metaphor, means the regulations that tend to constrain business investment, the very same regulations that the World Bank criticizes in its somewhat oppositional report on Poland. Michael Klein, chief economist at the International Finance Corporation who presented the World Bank report, "Doing Business in 2004: Understanding Regulation" at a press conference a week ago, pointed out that Poland's 17.5 percent unemployment is partly caused by the relatively high cost of hiring and firing.
According to the World Bank report, it takes 1,000 days to put a Polish business contract into effect, which is four times longer than the European Union average. Both bankruptcy procedures and business registration in Poland cost twice as much as the European average.
This leaves one wondering what makes Poland so superficially 'beautiful.' It is possible to speculate that there will be increased merger and takeover activity next year, phenomena that tend to attract FDI in spite of the red tape odds. The bureaucracy hits smaller businesses harder, and while this is bad for Poland, it is not necessarily as bad for foreign, large businesses in Poland.
AT Kearney ranks Poland third after China and Russia for destinations most likely to receive future first-time investments. Given that aspects of the AT Kearney report are not based on firm business commitments, it logically will have a certain amount of emotional content. In these terms, the 'beautiful Polish wife' has loyally stood by Uncle Sam during the difficult past year. For some time, US investment into Poland has been smaller than one would expect. Now that the masses of American investors think about this loyalty, they are dreaming of rewarding it.
