Investing in Poland is not just about a ‘cheap production market’ – it is a country that has attracted approximately USD 390 billion in foreign direct investment since the beginning of its transformation, and almost half of this capital has remained in place as reinvested profits. This is a clear signal: companies are not only entering Poland, but also consistently developing their operations here. For foreign entrepreneurs who already have a business in Poland or are just planning to enter the market, this is an argument that Poland is a market where long-term strategies can be built – from production and logistics to services and projects with higher added value.
In this article, based on an analysis by the Polish Economic Institute entitled ‘The Polish economy on the road to investment maturity’ – we show why investing in Poland remains attractive, how Poland is assessed in the Investment Development Path (IDP) concept, and what conclusions can be drawn from this for foreign companies planning a long-term presence in the region.
Investing in Poland in numbers – market, capital and scale of foreign direct investment (FDI)
One of the most important arguments in favour of Poland as a business destination is the scale of the market and the dynamics of capital inflows. Since the beginning of its economic transformation, Poland has attracted a total of USD 390 billion in foreign direct investment (FDI). Importantly, almost half of this capital remains in Poland in the form of reinvested profits, which is a strong signal that investors do not treat Poland solely as a short-term production location, but are building a long-term presence here.
Poland also stands out in the region in terms of the size of its internal market: 37.3 million consumers and an economy worth approximately USD 1 trillion in GDP (as cited in the report). For foreign companies, it is not only an export hub, but also a very real and absorbent end market.
Investing in Poland and the Investment Development Path (IDP) – where is Poland today?
The PIE report is based on the Investment Development Path (IDP) concept, which shows how a country’s role in investment flows changes with economic development: from a capital importer, through a stage of intensive FDI inflows, to a situation where the expansion of domestic companies abroad is growing and the economy is reaching investment maturity.
According to the PIE analysis:
- Poland has fully entered phase II of the IDP – a stage of dynamic FDI inflows thanks to its locational advantages (proximity to EU markets, competitive costs, growing human capital, access to the single market).
- Poland is currently between phases II and III. Phase III would mean a greater role for innovation and R&D as a locational advantage and dynamic growth in outward investment (Polish companies abroad). This turning point has not yet been clearly reached.
What does this mean in practical terms for foreign entrepreneurs? It means that Poland is at a stage where it continues to attract foreign capital very strongly, while at the same time developing towards an increasingly advanced economy – creating an attractive environment for reinvestment, higher value-added projects and long-term regional strategies.
Why has investing in Poland worked – and continues to work? Key locational advantages
1) Proximity to and integration with the EU: stability and market access
One of the main factors behind Poland’s success has been its proximity to Western European markets and, since 2004, full membership of the European Union. This has made Poland a natural location for manufacturing and service projects for companies serving the entire EU market. Membership has also enabled the use of EU funds and the development of physical and regulatory infrastructure.
2) Labour costs and the growing quality of human capital
For years, labour costs have been one of the main attractions for investors. However, the report indicates that over time, the quality of human capital has become increasingly important, as evidenced, among other things, by the trend of locating business service centres in Poland. This is an important signal: Poland is no longer just a place of ‘cheaper production’, but increasingly a location for processes based on competences and specialisations.
3) Large domestic market: a unique advantage in the region
The PIE report emphasises that a large and absorbent domestic market is a factor that distinguishes Poland in the region and attracts FDI focused on satisfying domestic demand. This is a key advantage over the smaller economies of Central and Eastern Europe.
Investing in Poland after 2004 – Poland as a ‘catapult’ for expansion in the EU
The PIE report describes Poland’s accession to the EU in 2004 as a moment of modernisation and breakthrough. FDI inflows increased sharply – Poland became part of the single market and began to attract more ‘efficiency-seeking’ investments, treating the country as a platform for export and expansion into EU markets.
For foreign entrepreneurs, this is still relevant today: Poland functions as a natural regional hub – both for manufacturing and services – with the advantage of its location at the centre of European value chains.
Investing in Poland and reinvestment – why companies stay and expand their operations
One of the most underrated indicators of investment attractiveness is the level of reinvested profits. If approximately half of the capital remains in the country as reinvestment, it means that investors:
- have stable conditions for conducting business,
- achieve satisfactory results,
- see prospects for further growth and scaling of projects.
In the context of decisions on further stages of expansion (e.g. adding a new production line, expanding an SSC/GBS centre, locating R&D or transferring part of the supply chain from Asia), Poland is a market where reinvestment is well justified.
Why is Poland ‘between phases II and III’ – and what does this mean for foreign companies?
The report highlights a key feature of the current situation: the asymmetry between investments flowing into Poland and investments made by Polish companies abroad. Poland continues to attract capital, while at the same time building the expansion of Polish companies in the FDI formula at a relatively slower pace.
What does this mean from a foreign investor’s perspective?
1) Still plenty of room for foreign investment
Since Poland has not yet reached full ‘investment maturity’ (phases IV-V of the IDP), in practice it is still at a stage where:
- foreign capital has a significant impact on modernisation,
- there is a broad ecosystem of suppliers and partners for incoming investments,
- and incentives and competition for international projects are still visible.
2) Poland can be a ‘safe haven’ for nearshoring
The report indicates that Poland’s status as a ‘connector’ and a relatively safe location for production relocation (nearshoring/reshoring) may further strengthen its role as a recipient of capital. In times of geopolitical uncertainty, this is a very practical argument, especially in the manufacturing and logistics sectors.
Challenges – what barriers could slow down investment in Poland (and how to prepare for them)?
The substantive picture must also take risk factors into account. PIE points out that Poland is experiencing an erosion of some of its existing cost advantages, including rising energy and labour costs. At the same time, Poland is only just building more advanced locational advantages based on innovation and R&D.
This means that investors should:
- shift their thinking from ‘cheap location’ to ‘strategic location’,
- take into account the growing importance of skills, automation and productivity in their plans,
- consider the energy transition (renewable energy sources, stability of energy supply) as an important element of competitive advantage in the next few years.
Investing in Poland 2025+: where will the greatest opportunities be?
The PIE report clearly states that in order for Poland to move on to the next phases of investment development (III→IV), it needs to strengthen its advantages based on innovation and the development of its own strategic assets, including ‘cultivating’ technological champions and closing the innovation gap.
From the perspective of a foreign entrepreneur, this means that investments with the following characteristics will be particularly promising:
- higher added value (advanced services, competence centres),
- supporting technology transfer and the development of local ecosystems,
- contributing to energy modernisation and Industry 4.0,
- and related to the development of long-term supply chains in the EU.
