Is Poland ever catch up with developed countries? – Interia

In other words, the great convergence is a process of permanent or only a temporary whim of history?

• Poland is too low investment, against the background of the region and the countries which caught up in terms of standard of living in developed countries (see also: Report fOR “Next 25 years”). Deputy Morawiecki rightly draws attention to the need for investments and further build national capital, instead of consumption financed by debt, particularly foreign. Unfortunately, the government under the “500+ Family” is planning to just drive consumption increasing debt. more »

This great convergence can be seen even in the diversity of income levels in the world – from the industrial revolution to the age of 70s, diversity grew, because the rich to the poor fled. Since the 70s, differentiation rapidly decreases because the poorer began to catch up with the rich.

The dominant view in international financial institutions is such that a great convergence will continue. Well give a forecast of the International Monetary Fund. They show that the average growth in emerging markets in the next five years will amount to 5 per cent., Which is 0.4 percentage points. faster than the average for the years 1980-2015. As many as two-thirds of this growth will be generated in Asia, particularly in large economies such as China, India and Indonesia. Emerging Asia is to grow at 6.2 per cent., Which is only 1 percentage point slower than the average of the years 1980-2015, which was cosmically high.

Many economists, however, disputes this optimism. Last Robert Barro, who became famous for research on economic growth, published a study in which warns that the long-term China can grow at 4 percent. or lower (3.5 per cent. per capita, but for that you need to add population growth, which over the next decade should be positive) – compared to more than 6 per cent., which provides for the IMF and 6.5 percent. assumed by the government in Beijing. Recently, a similar study published Lawrence Summers (the hypothesis of secular stagnation) and Terry Pritchett. They claim that, in general forecasts for major Asian countries are too optimistic.

Both models are themselves quite similar, in the sense that they try to estimate possible to achieve growth as a function of the level of development (convergence – countries poorer they grow a little faster) and a small number of additional structural factors. They walk in the footsteps of literature, which flourished especially in the 90s U Barro These factors include investment rate, the quality of the rule of law, and trade openness. Summers and Pritchett are even simpler approach. In their opinion, an attempt to find the exact determinants of growth is pointless, because there is such a group of factors for which there would be any consensus. They argue that statistically the best forecast is a weighted average between the long-term global growth, historical average for the country as well as the effect of convergence.

Both models also have one common conclusion: the very rapid growth of emerging markets over the past 20- 30 years there is absolutely no guarantee that the same fast pace reached in subsequent years. On the contrary, better forecasting that the extraordinary performance of a country will not be continued. This does not mean that convergence is completely stopped, but that the pace may be disappointing, especially against the background of recent decades. Barro argues that the biggest challenge for China may lift the political consequences of the economic slowdown. This argument can be transferred to other countries. The dream of a quick catch up with developed countries may not be achievable and Political carry the dreams of the emerging middle class can be extremely difficult.

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warning that growth in emerging markets may be lower than expected, also applies to other regions outside of Asia? The models Barro and Summers ‘put’ data from other countries to see how they see their future in the mirror. It turns out that applications can sometimes be reversed. In some cases, these models show better results than the IMF forecast – it happens for example in the case of Russia, Brazil, the Czech Republic and Hungary. Especially the first two countries are interesting because around them had grown in recent years the atmosphere of deep pessimism. It is possible that this excessive pessimism permeating medium-term forecasts, which do not appreciate the structural growth potential of these markets. This potential is obviously low, but it does not necessarily mean stagnation.

• Mateusz Morawiecki, Deputy Prime Minister and development Minister, has repeatedly stressed that either we have in Poland innovative economy, or just any. “Polish road to prosperity” – a development plan for the country of his authorship – even anticipates commissioning trillion investment. In a similar vein spoke PiS leader Jaroslaw Kaczynski has already during the election campaign. Interia asked experts, entrepreneurs and analysts what they think of the economic proposals of the ruling party. more »

Poland while the case is particularly interesting. Models Barro and Summers show exactly the same increase as the IMF forecast – 3.5 percent. This compatibility is unique in so many other countries, as well shown in the attached diagram. One might be tempted to say that either side does not look on the Polish economy, it develops in accordance with its potential. In 2014. The average GDP growth was 3.6 percent.

It’s neither much nor little. A lot, because it allows systematically improve the quality of life. Hardly, because the expectations are much higher. In the public discourse often a desire to Poland quickly caught up with the West in terms of income and living standards.

With the 3.5 percent growth rate of GDP per capita will be a very arduous process, which probably will not live to the end of the majority of people living today. Given that Germany will increase GDP per capita at a rate of 1.5 percent. per year, our 3.5-percent growth would catch up with western neighbors for approx. 40 years. If we increased growth to 4.5 percent. Dogonilibyśmy Germany in less than 25 years. But lowering the Polish growth to 2-3 percent. makes it virtually impossible to achieve the target.

In Poland, a date is, therefore, attention Robert Barro, that accepting a moderate rate of growth can be a big political challenge. Policymakers will have to be careful not to cross the fine line between betting ambitious goals, and erecting purposes impossible. The former can mobilize society, the latter – cause the growing frustration of delayed development.

Author: Ignacy Morawski

20,02,2016 year