INTERVIEWS AHEAD OF KRYNICA FORUM 2023
Jakub Kwaśny, PhD: For the Polish business in these difficult times, legal stability and clear rules of the game are paramount
‘Some are gaining, others are losing, while globally our economy is doing quite nicely. Its resilience and our position as beneficiaries of the nearshoring trend are definitely turning us into a green island yet again,’ says Jakub Kwaśny, PhD, the head of Cracow School of Business at the Cracow University of Economics, who will be a Krynica Forum 2023 speaker.
The pandemic, war, inflation are the factors which have made business operations a lot more difficult in the past few years. What can we expect in the nearest quarters of the year when it comes to the results of Polish businesses’ stress test in the face of the crises?
As it happens so often in economics, the answer is, ‘It depends’. We are watching some sectors gain, in a sense, namely the industries dependent on international supplies are growing, for a start. Both the pandemic and the war disrupted some supply chains. In effect, multinationals noticed that the then-dominant offshoring model, that is shifting part of production abroad to other entities, often dependent but – more importantly – distant from the home country, can heavily disrupt business operations if unforeseen circumstances arise. In effect, we are now observing in economics a nearshoring trend, that is moving the production from remote corners a bit closer. And Poland is profiting from that. It is visible in the soaring value of Polish exports over the last two years for starters – nominally a 50 per cent increase. But then there are industries which are losing. By and large, these are fossil fuel-based. I’m talking about petrochemical companies, with poorer outcomes for the Azoty Group as an example.
It bears remembering that the economy is largely based on small enterprises. What challenges in times of crises are related to them?
From the small and medium-sized enterprises, the stable, clear rules of the game are paramount; regulations which are not changed once a year or even more often. I mean the laws that concern running a business and those that form the tax system. You operate the worst in the situation of large volatility in terms of factors that directly impact the enterprise functioning. An element at play is also a change-prone currency exchange rate. For long-term planning, we should have a serious debate on adopting the common currency. This is not so much something we pledged to do but a shift that would be very beneficial in terms of business-making. Especially considering that 80 per cent of exports from the European Union member states goes to other EU states. In the case of Poland, we would bury the exchange rate risk for good. But today this is a theoretical topic, as we are not meeting the criteria, for example in the matters of inflation.
And what should tangible tools to support the entrepreneurs look like this year and the next? During the pandemic, what was offered were the shields. Do we need them now?
Bringing the inflation to heel should be the absolute priority. All actions that feed the inflation should be extremely well thought through. The sort of inflation economists deem desirable ranges from 1.5 to 2 per cent, which matches the National Bank of Poland’s inflation target. The other momentous task is to make use of European funds. This means a lot at the local scale. Small and medium-sized businesses would benefit, e.g. construction companies, renovation companies, but also startups and innovative enterprises. We also need action for revving up innovation, preferential loans, innovation vouchers, educational support. As for education, the Polish Deal, a new tax reform, did introduce an interesting solution. The so-called sponsoring rebate allows the entrepreneur who sends an employee to post-graduate studies to deduct 150 per cent of the cost of studying from the tax base. This option should be more publicised. In the difficult times it is our education that lets us improve, remake, broaden, and modernise our operations.
Education can also be useful with regard to artificial intelligence. There is now a lot of discussion surrounding the topic of AI influence on the economy and the labour market of the future. What are your forecasts?
Artificial intelligence, already present in the world around us, is definitely a challenge. It is going to revolutionise many sectors of our economy, making consumers’, manufacturers’, and companies’ lives easier. Yet, problems and dilemmas linked to its use are bound to appear. I hope that in the future people are still going to oversee AI. The economy in itself is going to benefit.
How should economic patriotism in its modern-day incarnation be understood?
The concept is very broad and complex. In my lectures, I often show Pola to the students – an app developed by the Jagiellonian Club – and encourage them to turn it on when shopping. The app lets you scan the product barcode to learn if it was produced by a Polish business. Choosing Polish products is part and parcel of economic patriotism. We can promote it every day. Let’s remember that we are operating in the European Union, in a competitive market, consequently the availability of commodities may not be curbed. But it is on us, the consumers, if we pay attention to buying a Polish product, domestically produced by a Polish company. We can have preferences for local companies in public tenders, and wherever it is clear we can’t buy Polish products, we can circle back to the offset agreement tradition, in which a large order placed abroad will be tied to, for instance, the stipulation to reinvest part of the profits in Poland.
Jakub Kwaśny, PhD, the head of Cracow School of Business at the Cracow University of Economics, will be a Krynica Forum 2023 participant. The conference agenda will include the questions of economic patriotism and entrepreneurship.
