Politicians from across the ideological spectrum around the world continue to fall for the illusion that complex systems like national economies—which themselves operate within an even more complex international framework—can be effectively managed through administrative decisions.
For a Polish economist specializing in theories of enterprise and competition, few dreams are more fulfilling than studying the success of Polish entrepreneurs competing on national and global markets. It’s no less rewarding than when a Dutch economist studies ASML, a Danish economist analyzes Novo Nordisk, or a French economist examines Dassault Aviation.
Corporate assets have a nationality. But valuable assets that serve national interests are rare. They must be professionally managed and capable of attracting and synergizing with foreign assets close to the so-called Global Technological Frontier (GTF). This enables countries—not just developing ones—to enhance the prosperity of their households.
There’s no doubt that many foreign companies providing Poland with assets close to the GTF have benefited from strong diplomatic support from their home countries, as well as effective legal protection in the form of international courts and arbitration. This has given them a competitive edge not only in technology, management, and marketing—but also, as Donald Trump once called it, through “non-tariff support mechanisms.” Many Polish entrepreneurs have been more vulnerable to domestic political turmoil than their foreign competitors.
In most cases, due to one of the highest shares of state-owned enterprises in Europe, Poland continues to experience a heavy-handed “Polonization” of economic activity—often implemented with a hammer rather than the scalpel of a refined industrial policy. Adding the prefix “re-” to this Polonization, and exempting such firms from the goal of profit maximization, bodes poorly for the economy.
Reducing foreign competition for highly concentrated Polish enterprises (with dominant or even monopolistic positions) doesn’t just mean moving away from the GTF; it also means eliminating one of the last levers for driving efficiency. It reinforces negative phenomena well-known in economic literature, such as:
- X-inefficiency (a drop in pressure to improve productivity and management),
- Arrow’s laurels (demoralization through privilege),
- Moral hazard,
- “Oileness hazard” (rewarding sycophancy),
- Adverse selection (settling for less ambitious solutions),
- Hidden actions (pursuing activities unrelated to enterprise development),
- Innovation blockages and spillover suppression between domestic and foreign firms.
Despite clear evidence to the contrary, policymakers around the world keep believing they can steer economies made up of millions of businesses and households through government mandates. In Poland, that means trying to control 2.8 million businesses, 12.5 million households, and over 100,000 domestic markets to behave in a way that delivers politically desirable outcomes.
Donald Trump and his advisors in the U.S. quickly and painfully learned that the responses of households, businesses, and markets—especially international ones—cannot be effectively controlled, even by the strongest and most capable administrations. The positive and negative effects of interventions like repolonization in a complex national economy are often exaggerated or minimized based on ideological bias, rather than objective outcomes.
Foreign companies and trade have played a crucial role in Poland’s economic transformation—and continue to do so. In rigorous statistical and empirical studies, their contributions are still significantly undervalued, especially regarding:
- Moving Poland closer to the GTF,
- Generating positive spillover effects,
- Applying competitive pressure that boosts efficiency and innovation.
In public debate, however, disproportionate attention is paid to the pathological involvement of foreign capital, which, though it should be scrutinized by prosecutors and courts, has been relatively minor compared to the historical experience of nearly every country that has—often brutally—built capitalist market economies over centuries.
In his classic 1990 book “Between MITI and the Market: Japanese Industrial Policy for High Technology”, Daniel Okimoto debunks the myth of the famous Japanese MITI (Ministry of International Trade and Industry). He shows that along with celebrated successes, there were massive failures, and that the public bore high costs of Japan’s state-directed economic model. China’s success story came at an even steeper price: forced savings and low consumption for its population.
Such sacrifices would not be acceptable in a liberal democracy—especially in Poland, where higher levels of consumption were enabled by imported capital. However, the repolonization of enterprises, coupled with waiving the profit-maximization principle for state-owned firms, risks repolonizing costs and exporting value abroad—a dynamic already noticed by the stock market, and one that will soon be felt by society at large.
Author: Adam Noga – Professor of Economics at Kozminski University and a member of the Polish Economic Society (TEP)
Source: ceo.com.pl
