The events of the past three years appear to be more than just the start of a new economic cycle. The unnerving combination of events such as the global coronavirus pandemic that began in 2020, Russia’s 2022 invasion of Ukraine, and geopolitical tensions fueling energy deficiencies, fierce inflation, and economic downturns, could signify the end of one era and the beginning of another.
To many, these events feel like a cluster of earthquakes that is reshaping our world. Although we cannot predict the future, similar “earthquakes” have struck before—including the immediate aftermath of World War II (1945–46), the oil crisis (1971–73), and following the collapse of the Soviet Union, when countries in Central and Eastern Europe were regaining independence (1989–92). All of these events gave rise to more positive eras: the Postwar Boom (1945–71), the Era of Contention (1971– 89), and the Era of Markets (1989–2019).
To better understand the direction the world is now headed, we consider five key dimensions of economic and social development: the world order, demographic processes, technology platforms, resource and energy systems, and capital resources:
- From a geopolitical standpoint, the world is moving towards a multipolar, regional, and polarized world.
- In terms of global demography, the average population age and the burden of noncommunicable diseases are both rising, while social contracts are being revised.
- Technologies now permeate the globe, with the role of transversal technologies such as artificial intelligence (AI) in particular, becoming more prominent.
- After decades of environmental neglect, multiple countries are now prioritizing climate protection and increasing investments into replacing fossil fuels with renewable energy sources.This will lead to a competition for the resource required to develop green technologies.
- Following a period of hyper-growth, fast-paced economic growth is normalizing, while growing debt increases countries’ financial burden. While the 20th century was dominated by the Organisation for Economic Co-Operation and Development (OECD) the 21st may be dominated by Asia.
Poland is an undisputed winner of the previous era. Since the era’s onset, Poland has tripled its economy with one of the fastest growth rates in the world. To continue on this growth trajectory Poland needs to face both global and country-specific challenges.
In terms of the world order, Poland is strongly connected to one pole of the multipolar world, demonstrated by its alliance commitments (including those to NATO) and certain directions of trade. On the other hand, Poland’s international reputation, which ranks as one of the lowest compared to that of other European Union (EU) states, may pose a risk to Poland’s ability to leverage the nearshoring trend and the movement of production from the Far East to Europe.
In terms of demographic processes, Poland’s population recently peaked, reaching 41 million people in 2023. Going forward, however, the challenges will be: the expected decline of the working-age population from 27 million in 2023 to 20 million in 2050, an increased burden on Poland’s healthcare system due to the rise of patients suffering from noncommunicable diseases, as well as the relatively low-quality of higher education.
Although technological progress has been one of the drivers of Poland’s economic growth, Poland has not yet reached the point of technological saturation. In addition, investment in innovation and the materialization thereof, as measured by the number of patents per capita, is much lower than in the rest of Europe. Despite delayed development of transversal technologies, Poland has the potential to enhance its position among some of these, such as clean energy, bioengineering and bio-medical technologies, as well as next generation software.
Regarding resource and energy systems, Poland’s share of energy from carbon-emitting sources in the energy mix dropped from 97 percent in the early 1990s to 79 percent in 2022, which is still more than double the EU average of 37 percent. The development of renewable energy sources (RES) requires Poland to enhance its energy storage capacity, in particular durable solutions (storage over 72 hours) that are not yet being developed in the country. Like the rest of Europe, Poland lacks an abundance of mineral deposits that are crucial for green technology production. Another challenge is infrastructure, namely transport infrastructure and the highly loaded power grid, which requires significant modernization and extension.
In terms of capital resources, Poland has experienced some of Europe’s fastest growth in gross domestic product (GDP) and currently ranks as the sixth largest economy in the European Union. However, the share of low-productivity sectors, such as agriculture and construction, accounts for as much as 25 percent of GDP, versus less than 19 percent in the EU. Moreover, investment in Poland amounts to 18 percent of GDP, which is 3 percent lower than the EU average and 9 percentage points. The savings of Polish people amount to 3 percent of GDP, while the EU average is above 6 percent.
Whether Poland lifts its ambition and continues its above average economic development depends on decisions made today. To this end, we propose five critical steps that Poland can take:
- Increase economic productivity by strategically developing and implementing innovations in selected transversal technologies and state-of the-art digital solutions—to a value of 75 €/h in 2050.
- Increase investment in Poland, by introducing funding mechanisms that will allocate funds to priority projects and encourage more risk taking among business entities—by 21 percent of GDP by 2030.
- Provide a stable, sustainable and accessible energy system by developing and using innovative technologies—achieving and maintaining energy prices for enterprises amongst the five lowest in the EU.
- Provide a strong talent pool for the labor market through continuous education, improving the skills required for the jobs of the future, and attracting talented people with key skills—growing the number of professionally active people by 5 million by 2030.
- Strengthen the country’s reputation as a magnet for investment and talent, and build social awareness to increase support for actions aimed at addressing key challenges ahead—to include actions to lift Poland’s ranking in the Worldwide Governance Indicators to among the top 10 in the EU.
