by Angel Gurría, OECD Secretary-General
delivered during his official visit to Poland, at a conference celebrating 10 years of Polish Membership of the OECD
23 November 2006
I am honoured to be in Warsaw celebrating the 10th anniversary of Poland’s accession to the OECD, a decade of mutually beneficial co-operation between Poland and the Organisation.
Poland’s contribution to the OECD
Poland entered the OECD ten years ago, when Europe was just emerging from the shadows of the Cold War. After years of stagnation under communism, Poland experienced five years of rapid and wide-ranging structural change. These difficult changes in the early 1990s laid the foundations for the future, but success then was far from assured. By joining the OECD in 1996, Poland was seeking to better integrate itself into global policy making circles. It was also gaining access to a wealth of experience from the OECD Secretariat and policy makers in its member countries.
Poland was also a potent symbol of a changing world. Poland joined the OECD at about the same time as other successful Central European countries, as well as Korea and Mexico, my home country. Together, they represented the beginning of the transformation of the OECD into a more outward-looking organisation, a process that continues to this day, with a steadily increasing policy dialogue, not only with China, India, Brazil, Russia, but also with many other countries in all continents.
Today, as we discuss further enlargement of the OECD and an enhanced policy of global dialogue and outreach, we still very much have the example of Poland in mind, an economy and a society that have, peacefully and democratically, accomplished one of the most remarkable transitions in modern history.
That this transformation was so comprehensive and so successful is a testimony to the determination and energy of the Polish people.
Poland is catching up in many ways: economic growth rate of over 4% per year since 1995; a skilled and resourceful workforce; and the high level of foreign investment that is pouring in. Poland has emphasised its strong commitment to education. The number of students in higher education is nearly five times what it was in 1991. By continuing to increase its investment in education, Poland is laying the foundations for future growth and greater competitiveness to come.
The OECD’s role in economic policymaking in Poland
Ever since Poland chose the path of adopting global standards and best practices in every sector of its economy, and achieving rapid economic integration in the global economy, the OECD has helped with policy development and implementation. Co-operation in fact began before membership, as Poland was a key participant in the OECD’s Partners in Transition programme, designed to help central Europe to move to a market economy.
OECD recommendations not only set forth the direction of reform, but helped persuade domestic interest groups to accept changes. Most of the OECD recommendations are not legally binding. But the fact that they are based on in-depth analysis and supported by all member countries gives them considerable weight. They have proved to work in Poland and elsewhere.
Let me offer some specific examples:
The OECD has contributed to the development of a modern tax system in Poland, helping for example in the design and implementation of the value added tax.
Our advice has contributed to the development and strengthening of competition law and to pension reform.
The OECD was an early advocate of inflation targeting and of central bank independence, a bulwark against the debasement of the currency that was enshrined in the Constitution in 1997. The success of the National Bank of Poland in combating inflation shows that our policy advice was right.
Co-operation has also been very fruitful in the financial and corporate sectors, in education reform, the labour market and in the public governance domain.
Looking ahead, the OECD will continue to work with Poland as it pursues its reform agenda and integration in the European and world economy. Currently, Poland faces difficult choices, as it struggles with stubborn unemployment, high levels of public expenditure and taxation, and the issue of emigration, which illustrates both the opportunities offered by Poland’s accession to the European Union in 2004 and the need to make it a more attractive place for the creation of businesses and employment.
Poland has traditionally given much importance to the social safety net, and high public social spending reflects this. Clearly, preventing poverty and easing the social consequences of structural change are important policy objectives. At the same time, it is important to try to reduce the extent to which public social spending and the resulting high tax burdens create work disincentives and poverty traps.
The OECD stands ready to support Poland in all those areas where progress is lagging. Rapidly growing trade and a revival of inward direct investment shows that Poland continues to integrate successfully into the world economy. But further deregulation and privatisation and better enforcement of competition rules will encourage investors – including returning Polish emigrants – to expand output and employment.
Another area where further progress is needed is the fight against corruption. There are no easy solutions, but some straightforward reform measures can at least reduce the opportunity for corruption in economic life: legislation, especially on tax and regulation, should be clear and unambiguous, leaving no room for misinterpretation by civil servants. It should impose a simple and transparent structure, with clear lines of responsibility for implementing the rules and equally clear but separate means for citizens to appeal against decisions. Public administration and the courts need to be staffed with well-qualified and adequately remunerated people, with clear codes of conduct.
These reforms are not easy to advance and implement. There is an increasing awareness of the importance of the political economy of reform. This is an area where the OECD has received an important mandate from our member governments: make reforms happen without losing the support of voters.
In conclusion, we are proud to have Poland as a member of the OECD. Poland has greatly enriched the policy debate within the OECD and its perspectives and experience in structural reform are a great example for countries that are now embarking in their own transition.
Poland’s convincing economic performance during the past ten years is due to its willingness to embark on structural reform. The OECD is very pleased to have played a part in advising on best practice.
But Poland faces the continuing challenge of adapting its workforce to new realities and structural changes, while trying to maintain a high growth rate in an increasingly competitive and globalised world economy. It must do this while balancing the benefits of economic growth on the one hand and the maintenance of equity on the other – a subject which we will all discuss at length at the next Ministerial Council Meeting in 2007.
The OECD stands ready to assist Poland in meeting these challenges.