Poland: From Crisis Resilience to Robust Growth
data typically restricts the analysis to a fairly aggregated level. Finally, the framework assumes that output is primarily supply constrained, which makes it difficult to accommodate episodes such as the global financial crisis or the subsequent recovery process where capacity utilization is increasing. Growth accounting for Poland highlights two issues. First, economic growth is mostly due to TFP rather than to increases in capital and labor (World Bank 2008a; Burda and Severgnini 2009). From 1992 to 2009, TFP contributed 2.7 percentage points or 60 percent of the 4.5 percent average growth rate. This compares to 1.2 percentage points for capital, spurred by FDI and financial market integration in Europe, and 0.5 percentage points for labor and human capital. Second, similar to other EU10 countries, the drivers of TFP changed since early in the transition (World Bank 2008a). During the 1990s, the transition to a market economy involved a substantial reallocation of labor and capital from low- to high-productivity sectors. In addition, high TFP reflected heavy firm turnover, including the entry of new, more productive firms and the exit of obsolete firms. Furthermore, firms began using their excess labor and capital, which had become idle during the deep transitional recession; consequently, output increased, and this is captured in TFP estimates. By contrast, in the early 2000s, TFP reflected increasing productivity gains within firms. Furthermore, the EU accession boom from 2003 to 2008 relied more on larger contributions from labor, while the post-transition boom from 1996 to 2000 relied more on improvements in TFP (figure 10.3). The growth contributions from labor improved during the early 2000s for two reasons. The entry of baby boom cohorts from the early 1980s into the labor market expanded the labor force and led to higher growth. In addition, the education reforms launched in late 1990 improved the quality of human capital during the opening decade of the 2000s. A key driver of TFP in the early 2000s was trade integration. While exports of goods and services remained at around 25 percent of GDP during the post-transition boom in the second half of the 1990s, the EU accession boom of the early 2000s was fueled by rising exports, which reached 40 percent of GDP in 2008. The increase in exports contributed to a decline in the trade deficit of about 1 percent of GDP, which in turn supported GDP growth during the EU accession boom even though
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