Poland threw off the yoke of Communism 35 years ago. At that time, the economy was in ruins as the Soviet Union exploited the productive capacity of Polish workers, skimming the cream off the economy, leaving the people with little hope.
Since then, Poland's transformation has been jaw-dropping. Poland's nominal GDP per capita was approximately $1,630 in 1990, the year after the end of the Warsaw Pact and Russian rule. The $1,630 per capita GDP was similar to Brazil's at the time and significantly lower than that of developed nations like Japan, whose per capita income was nearly three times higher.
By 2025, Poland is projected to become the 20th largest economy in the world, with a GDP of over $1 trillion. How did they accomplish this economic miracle?
Poland has a population of 37 million, the fifth-largest in the European Union. "Over the last two decades, Poland definitely outperformed," Katarzyna Rzentarzewska, chief macro analyst for Central and Eastern Europe at Erste Group, told the German daily Deutsche Welle (DW). At the time the country gained its freedom from Soviet Russia, Poland had a strong industrial base and not much else. Since then, its economy has exploded into a diverse, dynamic capitalist dynamo, featuring small, independent businesses in industries like craft brewing, restaurants, and tourism.
"The country's transformation isn't just visible in gross domestic product figures; it's on every street corner and in every bite," writes Reason's Katarina Hall.
Poland and the other former Communist countries in Eastern Europe have benefited handsomely from European Union subsidies.
"If we look at the broad concept of integration, Poland did it really well," she said. Although it has not joined the eurozone, it has benefited from extensive EU funding since joining the bloc in 2004.
"We cannot deny that the access to European funds was huge — a major contributor to the growth," Rzentarzewska said.
Jacob Funk Kirkegaard, nonresident senior fellow with the Peterson Institute for International Economics in Washington, D.C., says that Poland "has gotten the basics right."
"They have used EU funding to significantly improve their infrastructure," he said. "They have completely eradicated street-level corruption that was rampant during the Communist years. They have fundamentally succeeded in generating a very welcoming business environment. They have a generally well-educated workforce."
Kirkegaard summarized, "Poland is a poster child for successful EU integration. They needed to get it right because they are so big. And they got it right."
Would Poland do better outside of the European Union? Many in Poland believe it would.
For much of the past two decades, Poland has been politically divided between a large right-wing bloc, led by the national-conservative Law and Justice (PiS) party and by a liberal bloc, currently led by Prime Minister Donald Tusk's Civic Coalition.
Tusk's coalition is more pro-EU, and his group's victory in the 2023 parliamentary elections was seen as helpful to securing longer-term EU funding for Poland, given that Law and Justice regularly got into disputes with Brussels over judicial independence when it was in power.
Weeks after taking power in 2023, Tusk was able to convince the European Commission to release €137 billion in funding, provided he bring Poland's justice system back into line with EU norms and rules.
Tusk's attempts to consider the possible removal of judges appointed during PiS's period in government is bringing him into direct conflict with Nawrocki.
Yet, Rzentarzewska said, despite Poland's political divisions, the country has made economic progress under both blocs. "Poland is a good example of how you can have progress and dynamic growth under different political parties or orientations, be it conservative or more liberal," she said.
Poland is one of the few NATO countries to hit the 2% of GDP defense spending target. In fact, Poland spends closer to 4.5% of its GDP on defense. A lot of that money is spent buying weapons from America and other EU countries.
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Poland's growth is driven by private consumption, rather than exports.
"When you see a global downturn, then obviously first to be hit are the smaller, export-oriented economies because that's how the value chain works," Rzentarzewska said. "In Poland's relatively closed economy, consumption remains strong."
The European Union is trying to claim Poland as an EU success story. The amount of investment by the EU in Poland pales next to the explosion in private sector investment that has transformed Poland into a capitalist society in less than two generations.
