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Economic balance

Send Print Download added: Anna Mackiewicz | 2015-04-01 17:02:56
poland, lower silesian, economy

The Lower Silesian economy is supported by three pillars: services, industry and trade, with particular stress placed on the first two items.

The authorities of the region, analyzing the economic potential of the Lower Silesia during the development of a strategy for the region, specified that trade is important, but it is a natural complement to other sectors of the economy. It was considered that the dominance of trade over other sectors in the long run will lead to stagnation of the region.

Industry, services, trade

That is why the Lower Silesia region authorities care about appropriate emphases in the local economy. According to the data presented by the Lower Silesian Governor’s Office, trade generates here more than 28 percent of revenue. For comparison: industrial production gives over 37 percent, and other sectors generate nearly 35 percent of revenue.

The widely understood industry is the most important pillar of the Lower Silesian economy. Industrial traditions of the region date back several hundred years, but of course, are not limited only to the mining industry, for which Lower Silesia has been and is known.

Currently, this region boasts, among others, plants of the following industries: automotive, pharmaceutical, wood, furniture, metal, and textile. According to the Lower Silesian Governor’s Office, more than half (52 percent) of industrial enterprises operate in the last three sectors.

The services sector, on which the Lower Silesia also put strong emphasis, has several advantages. First of all – it is industrially varied. Secondly – it is a complement to other sectors, such as industry or commerce. For example, a car factory needs a number of suppliers who do not necessarily produce the components, but who perform services for the factory.

Thirdly – services is a sector characterized by high dynamics, and its importance has been growing for years. There is another aspect, which in recent years has become very beneficial for the Lower Silesia and its capital – Wrocław. The services sector includes also real estate administration, and the city has become the Polish center of modern information technology and outsourcing. Companies of this type operating in the city needed appropriate offices. It is the service sector (property management) could meet these expectations and thus develop.

However, one should not think that the local authorities have completely abandoned the actions supporting trading companies, and are not interested in this sector in general. It is completely a different story, but all the time the authorities stress that it is a supporting sector.

A proof that the Lower Silesia is proud of its trading companies is the fact that nearly 40 percent of the largest companies in the region engage in commercial business. Lower Silesia has in Poland an opinion of a region highly specialized, economically attractive, successful in this field and hence, effectively attracting large foreign projects. There is some truth in this, but it is also a mistaken belief that local authorities focus only on large projects, abandoning the small and medium-sized enterprises.

Lower Silesia, as is the case across the country, is dominated by micro-enterprises with a relatively short experience in the market. There is also a lot of mid-sized companies that operate in the market longer and successfully.

Innovation is and is not

The downside of the Lower Silesian SME sector is that most of these companies operate in the market conservatively and are not willing to carry investment risk. According to the Lower Silesian Governor’s Office, 71 percent of such companies are planning development (investments) based solely on their own resources. The potential and mechanisms of the financial market are under-utilized in this case.

Only one in five Lower Silesian SME company has in its budget funds earmarked for research and development. More than 30 percent of such businesses, if take development efforts at all, it is not on a large scale. In addition, they are mostly direct competition forced actions, not derived from internal needs of the company, striving to develop and improve their services and products.

Despite these few bitter words, Lower Silesia, as compared to other regions, is a province with a high level of innovation. This was confirmed by the Polish Agency for Enterprise Development study (“Regional innovation systems in Poland”), in which the Lower Silesia was third in the country (after Mazovia and Silesia).

If we accept a definition of an innovative enterprise as one that has introduced one process or product innovation during a year, the Lower Silesia is 12th in Poland (the innovators group includes 15 percent of companies).

Such discrepancy in the results of studies that on the one hand show the region as innovative, but on the other, indicate a small number of innovative companies, may be due to the fact that the companies do not adequately draw from the offered help and funds. And here again there is a discrepancy, because the data shows that “little innovative” businesses only in 2011 made expenditures on innovation in the amount of PLN 141 million (computer, electronic and optical sectors), PLN 133 million (vehicles production) and PLN 114 million (glassware, mirrors, etc.). Of such results many Polish regions can only dream.

In 2012, in Lower Silesia on R & D was spent a total of over PLN 971 million (6th place in Poland).

Copper and Japanese cars

Many companies are associated with the Lower Silesia, not only those of national, but also of European and world renown. Moreover, these companies do not only stimulate the development of the region, but they play a significant role in the Polish economy. Another advantage of the Lower Silesia is that many foreign companies have their Polish headquarters precisely in this region, mostly in Wrocław, but also in Lubin, Polkowice, Wałbrzych, Bogatynia or Legnica.

The leading companies in the Lower Silesia include: AmRest (the owner of a network of well-known restaurants, Wrocław), GK AB (IT industry, Wrocław), ECO (a network of department stores, Nowa Wieś Wrocławska), KGHM Polska Miedź (copper mines, production of copper and other noble metals, Lubin), LG Electronics (manufacturer of electronics, Biskupice Podgórne), Toyota Motor (several offices and factories dealing with, e.g. production of engines and gearboxes, Wałbrzych), Volvo Polska (car manufacturer, Wrocław), Cersanit (tiles, sanitary fittings, Wałbrzych), Bridgestone (rubber parts for machines, Żarów) or Oleofarm (diet supplements, Wroclaw) and even IBM (IT service center, Wrocław).

It should be clearly noted that the Lower Silesia draws a number of benefits from having such renowned brands in its area. First of all – a matter of image, because these are companies which place high standards to themselves and their partners. In addition, their presence in the region shows that the competence of the local government of Lower Silesia stands on a high level.

Secondly – this is obvious – these are jobs. Thirdly – many of these companies have a large share in exports not only from the region, but also the entire country. It is estimated that companies from the automotive sector alone have a 30-percent share in the Lower Silesian exports.

Region of young people

Great potential of Lower Silesia are also young people. One can see it easily at the Lower Silesian universities, and it should be noted that the Silesian schools are able to meet the needs of almost every employer and quickly respond to signals from the labor market.

In total, the whole province operates 20 public universities (including the University of Wrocław, Wrocław University of Technology, Wrocław Medical University, or the General Tadeusz Kościuszko Military Academy of Land Forces) and 31 non-public (including the School of Social Sciences, University of Banking and Management and the University of Lower Silesia).

All of them generate over 40,000 graduates every year. The answer to the demand of the labor market is the fact that most of the graduates completed the majors in economics and administration (approx. 12 thousand people), technical-engineering (more than 3 thousand people) and information (more than 1.5 thousand people).

When analyzing the data from the universities, it is clear that the Lower Silesia is a region of young people. 2.9 million people in the region include up to 155,000 students. The region has also lower than the national average (over 54 per cent) percentage of non-working age population.

The dynamic development of the province and its capital makes Wroclaw begin preparing for the possible lack of young, talented, educated people to work.

Hence such actions, such as the Wro Day in Lublin. In the autumn of 2014. Wroclaw advertised itself at meetings with the students of the Technical University of Lublin. The message of Wro Day was clear – Wrocław wants to encourage the arrival of the brightest and best young people from other Polish cities. It offers them jobs and a good place to develop.

To encourage Lublin students to take an interest in Wroclaw, young people were hosted by representatives of the companies operating in Lower Silesia. These included REC Global (software engineering), Viessmann (heating systems), Nokia (the largest center of research and development and information technology in Poland is in Wrocław).




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