Looking for evidence of the middle-income trap. The case of Polish trade in high-tech goods with Germany

Abstract

Research on the transition of post-communist economies has long been aimed at the identification of obstacles to growth. The idea behind this article relates to the paradigm of the middle-income trap and its characteristics. We adopt this conceptual framework because the economic position of Poland is determined by the nature of global value chains, its geographical proximity to Germany and the inflow of foreign direct investments which sustain cost and efficiency advantages and foster technological dependence. We embark on an analysis of trade in high-tech goods with a particular emphasis placed on Polish–German relations in the most significant sectors: machinery, electrical and electronic equipment. The results show tendencies typical for the middle-income trap, which has particular implications for the development of the semi-peripheral Polish economy.

Keywords:

• International trade
• Poland
• middle-income trap
• high-tech goods
• technological change

Acknowledgements

The author would like to acknowledge insights provided by the participants of the 18th Annual Conference of the European Trade Study Group in Helsinki (8–10 September 2016), where the preliminary version of this paper was presented. My particular thanks go to my university colleagues Dominik Kopiński and Alan Cook, who have shared their incisive comments, as well as to two anonymous referees. I am responsible for any remaining errors and deficiencies.

Notes

1. According to Pruchnik and Toborowicz (2014, p. 154) primitive growth engines, such as the low-cost labour and productivity increases achieved through imports of know-how and innovations which have fuelled the Polish growth so far, have essential limitations.

2. The question is whether and how to copy–paste the Western model of economic development designed by technocratic EU-elites (see Bugaric, 2014).

3. However, referring to the GDP per capita, PPP adjusted, the gap between Poland and Germany between 2001 and 2015 was reduced only by 17% (see World Bank, 2017) which cannot be seen as a satisfactory pace.

4. See the concept of the smiling curve illustrating the creation of added values in the production chain (Ye, Meng, & Wei, 2015).

5. A specific consequence may be then a commodification of higher education. Academic degrees are treated as certificates legitimising the aspirations of younger generations of graduates to better, cleaner and nicer jobs posted by multinational companies. They are perceived as the only environments (‘brave new worlds’) where professional careers can fully develop.

6. Due to growing exports of meat, vegetables, fruits, tobacco products and petroleum oils.

7. See especially the case of the product clusters HS 8528 and HS 8529 (cf. Trade Map, 2016).

8. As of the year 2015 German shares in the Polish exports in chapter HS 84 were 24.4% and in the imports 30.9%. In chapter HS 85 they were 27.6% and 26.5%, respectively.