Poland Foreign Investment
Sources: The Library of Congress Country Studies; CIA World Factbook
By the end of 1991, Poland had obtained US$2.5 billion from the World Bank and other international financial organizations and US$3.5 billion in bilateral credits and guarantees of credit from Western governments. In 1992, however, the limited absorptive capacity of the country still restricted the amounts of foreign cash and credit that could be used. Only US$428 million was utilized in 1990, about US$800 million in 1991. A significant increase was expected in 1992.
Poland's net balance of payments deficit, calculated as the difference between credits used and the amount paid to service the national debt, was more than US$1.3 billion in 1989, US$312 million in 1990, and US$449 million in 1991. In the long run, even investment credits and continued growth of exports could not maintain a balance of payments equilibrium without a substantial inflow of direct foreign investments.
Cooperative enterprises with foreign firms also offered access to advanced technology, better export trade, improved management and training, and attractive job opportunities for younger members of the work force. The first year of postcommunist rule brought an initial surge of investment in which permits for formation of foreign companies more than doubled. A number of United States, British, French, Swiss, Swedish, Dutch, and Japanese firms started Polish enterprises. Significantly, the share of permits issued to German firms dropped from 60 percent in 1989 to 40 percent in 1990, and that figure was expected to remain at about 30 percent after 1991.
Despite the adoption of very liberal investment legislation in the middle of 1991, however, the year did not bring the anticipated investment increases. In 1991 and 1992, major inhibiting factors were real and perceived political instability, conflicting and slow changes in economic policy, a faulty system for taxation of foreign enterprises, and a steep decline in the GNP. In spite of the increase in registered foreign direct investment projects between 1989 and 1991, the registered foreign capital involved in these projects was only US$353 million in 1990 and US$670 million in 1991. The actual investment amounts were not more than 40 percent of those amounts. At the end of 1991, some 4,800 partnerships operated with foreign participation. Of these, 43 percent were in industry, 24 percent in trade, and 6.6 percent in agriculture; about two-thirds of foreign ventures were concentrated in the economic centers of Warsaw, Poznan, Gdansk, Szczecin, Katowice, and ód --meaning that foreign investment was not benefiting many of Poland's less prosperous regions. Altogether, the foreign partnerships generated less than 1 percent of Poland's total national income in 1991.
Data as of October 1992
NOTE: The information regarding Poland on this page is re-published from The Library of Congress Country Studies and the CIA World Factbook. No claims are made regarding the accuracy of Poland Foreign Investment information contained here. All suggestions for corrections of any errors about Poland Foreign Investment should be addressed to the Library of Congress and the CIA.