Starting an academic debate about the issue of the “middle-income trap”, the Kosciuszko Institute’s initiative aims at proposing effective solutions for the economic strategies of the V4 countries, which are threatened by an economic slowdown in a mid-term perspective. Considering this common challenge, it is important that recommendations are not only supported at the national level but also by a regional cooperation on the subject. Consequently, the Kosciuszko Institute is working closely with experts from Czech Republic, Hungary and Slovakia.

The Association for International Affairs, the Századvég School of Politics Foundation and the Center for European Affairs are the Kosciuszko Institute’s institutional partners for this project.

Poland and the other countries of Central Europe need a long-term, effective and consequently realized economic strategy, in which public policies have a key role to play. Today we initiated an open debate, to which we invited all the interested stakeholders, strongly believing that we can influence the economic future of our countries – declared Izabela Albrycht, Chairperson of the Kosciuszko Institute.

Policy recommendations will be prepared in cooperation with economic experts and representatives from leading business sectors of Central Europe, including national champions who have the potential to boost the further development of the economy and its convergence towards a high-income model. The results of this brainstorming will be published and directed towards political decision-makers, opinion leaders and civil society representatives of the region. An opening report has been published by the Kosciuszko Institute, released on the conference’s day. It is available for download and sharing on the Institute’s website.
As underlined during the expert conference, the Visegrad Group needs to rely on its comparative advantages – namely its human capital. Labor capabilities are indeed as important as natural and energy resources. The allocation of this potential is of capital importance and cannot be underestimated. Moreover, public policies supporting a positive demographic balance for our region cannot be omitted.

The economic growth of the region should be based on human capital. The role of education will be therefore extremely significant in the process of generating a virtuous mechanism of growth. One cannot forget about supporting the investment climate for business leaders, through effective legislation directed towards entrepreneurship – claims Theo Thomas, Leading Economist at the World Bank Group.

Professor Witold Orłowski, member of the Economic Council of the Prime Minister of Poland is sharing a similar opinion: First and foremost, we must invest in new technologies, so that our region may strive to be an innovative one. To avoid the middle-income trap, we also have to remember about the creation of human capital as the engine of the V4 economies – says Professor Orłowski.

Cheap labor is not a comparative advantage for the region anymore, neither is the tax regime. We must start to think in a long-term perspective and choose a path that will support the competitiveness of our economies. The business climate of growing national markets is a strategic aspect to develop, following the model of more dynamic economies. At the same time, it is necessary to ensure the stability and attractiveness of economic assets for foreign investors. Another important point to emphasize is the collaboration of businesses and academia, especially in the field of research and development, to enhance the innovativeness of the region.

Finally, the establishment of innovation centers should be dependent not only from public institutions, but also from the initiative of private investors keen to build them here. In the process of reforming the structure of the economy, the state has an important role to play. The raise of public spending should not be a goal in itself. In order to avoid the middle-income trap, a fundamental modernization of public institutions should be conducted, while developing active economic policies.

To be competitive on the global market, or at least in Europe, V4 countries have to reform their institutions, as their current structure is one of the burden slowing down the economy. It is equally important that the governments of Central Europe take into consideration the need for R&D investment and for business-friendly climate. Spain is a good example of active cooperation between the state, local authorities and companies. – says Krzysztof Domarecki, Chairman of the Board of Selena FM.