This chapter reviews the mix of policies in place for fostering FDI spillovers on the productivity and innovation of Polish SMEs. It discusses Poland’s policy framework for FDI promotion, SME development and knowledge-intensive linkages between the two, noting areas for policy reform. It also assesses the regulatory framework affecting the diffusion of knowledge from foreign to domestic firms, focusing on investment and trade openness, competition policy and labour market regulations.
Strengthening FDI and SME Linkages in Poland
Abstract
Poland’s policy initiatives primarily focus on enhancing the innovation performance of domestic SMEs, accounting for 62% of all policies assessed by the OECD as part of this review. These efforts aim to improve SMEs' capacity to recognise and utilise new knowledge by prioritizing access to finance, skills, and innovation resources. Although to a lower extent, several initiatives, including financial incentives and facilitation services, are also in place to attract knowledge-intensive investments and foster value chain linkages between foreign investors and domestic SME suppliers, facilitating the transfer of knowledge, technology, and skills. Policy interventions also emphasise sectoral targeting, with a focus on FDI-intensive manufacturing industries such as automotive, electronics, and ICT, although recent programmes have directed attention towards the services sector to capitalise on potential productivity gains. Moreover, there is a strong emphasis on targeting SMEs and non-corporate entities like universities and R&D organisations.
Poland remains moderately open to FDI, though certain restrictions, particularly in sectors such as real estate, transport, and media, make it slightly more restrictive than the OECD average, as indicated by the OECD FDI Regulatory Restrictiveness Index (FDIRRI). These limitations, along with high barriers to services trade can deter foreign investment and limit the potential for local supply chain linkages. Poland fares well in terms of regulatory barriers to competition, thanks to reforms such as the one-stop-shop (EKRS) and the SME Ombudsperson among others, which aimed to reduce administrative burden on business and streamline business registration procedures. However, further efforts are needed to streamline the insolvency regime and address distortions caused by public ownership to enhance Poland’s attractiveness for foreign investors and improve its business environment for SMEs.
Facilitating innovation spillovers from FDI requires targeted policy interventions to promote the protection and use of intellectual property rights in Poland. While a comprehensive legal framework is in place, the use of IP rights among Polish firms remains low. This indicates not only low levels of innovation in key sectors but also a lack of awareness among businesses—especially SMEs—about the strategic importance of IP protection in enhancing their firm’s capacity to engage in innovation-based collaborations. High costs associated with IP protection, including application fees, patent attorneys, and litigation costs, further exacerbate the problem, particularly for SMEs and academic researchers. These structural challenges, if left unaddressed, could continue to impede Poland’s efforts to harness IP as a key driver of innovation and economic growth.
Poland’s investment promotion agency (PAIH) focuses on attracting high-value-added, knowledge-intensive investments, particularly in manufacturing sectors such as electronics, pharmaceuticals, and automotive, as well as in digital services and R&D activities. While PAIH uses key performance indicators to prioritise investments that contribute to innovation, job creation, and skills development, the creation of a national investment promotion strategy could enhance co-ordination and better target quality investments. The use of financial incentives, including grants, loans, and tax relief by foreign MNEs has increased over the past few years, supporting investments in high-tech sectors and creating an increasing number of jobs. However, the potential negative impacts of these incentives, such as revenue forgone and economic distortions, highlight the need for regular evaluations to ensure their effectiveness and alignment with long-term economic goals.
Government support for business R&D in Poland remains below OECD and EU averages, representing 14.8% of GDP, though it has been steadily increasing since 2006. While 23% of R&D support comes from tax relief and 77% from direct grants and loans, SMEs face challenges navigating the R&D tax relief system despite the generous deduction of up to 200% of eligible expenses. In 2023, Poland had the second-highest implied tax subsidy rate among OECD countries, yet more streamlined processes could better support smaller firms. In parallel, policies enhancing SME productivity focus on financial support and technical assistance, with agencies like PARP and NCBR offering grants, loans, mentoring programmes, and online training platforms. However, SMEs often encounter administrative burdens accessing these schemes, suggesting the need for better awareness and easier access through one-stop-shops.
Supplier linkages and strategic partnerships between foreign investors and Polish SMEs are primarily facilitated through PAIH’s investment facilitation services. For large projects, PAIH co-ordinates meetings with local business support organisations and compiles supplier lists tailored to foreign multinationals' needs. However, regional IPAs often handle matchmaking services, and disparities in service quality and co-ordination affect their effectiveness. While initiatives like PAIH’s export training and financial support through PARP and BGK help SMEs access international markets, they are insufficient for building domestic supplier capacities that align with foreign investors' needs. Strengthening regional co-ordination, enhancing online platforms like trade.gov.pl, and adopting supply chain development programmes similar to Portugal's Supplier Clubs could further improve local SME integration into multinational supply chains.
Undertake regular impact evaluations of investment incentives to ensure their effectiveness in attracting knowledge-intensive FDI. While Poland’s investment incentives are being used by an increasing number of foreign multinationals and have managed to direct certain investments towards high-tech sectors and R&D activities, regular independent evaluations are necessary to ensure they continue to meet their goals and their net benefits outweigh the costs, such as revenue forgone and potential economic distortions. Periodic reviews would ensure that incentives remain relevant and aligned with Poland’s economic priorities.
Strengthen inter-agency collaboration to further enhance the accessibility of existing support packages that integrate business development, internationalisation, and innovation-funding services for SMEs. While programmes such as the European Funds for a Modern Economy (FENG) provide a comprehensive and tailored set of tools for companies at different stages of development, ensuring that SMEs across various sectors and maturity levels can fully navigate and benefit from available support remains key. Although PARP receives a high number of applications, uptake across the full range of available business advisory services could be further optimised by simplifying application processes where feasible and continuing to refine targeted awareness campaigns to reach specific SME segments more effectively.
Continue efforts to simplify access to R&D support for SMEs. While Poland’s R&D tax relief system is comprehensive, SMEs face challenges in navigating the application process, limiting their ability to benefit from available support. Tax relief accounts for only 23% of public R&D funding, compared to the OECD average of 58%, with the remaining support coming from direct grants and loans. Enhancing access to information, simplifying procedures, and introducing SME-specific incentives—such as faster refunds and higher rates, as seen in other OECD countries—could make R&D support more accessible for smaller firms.
Enhance investment facilitation and aftercare services to embed foreign affiliates in local economies and encourage the use of domestic suppliers. PAIH could expand its support by focusing on supplier linkages, identifying sourcing needs, and directing FDI projects to regions with high potential for local partnerships. Strengthening co-ordination with regional IPAs through matchmaking events, supplier databases, and business fairs could further enhance integration. The trade.gov.pl portal, which already lists Polish enterprises along with their products and services, should be further utilised and integrated into PAIH’s investment facilitation efforts to enhance these initiatives. Additionally, PAIH should offer training to regional authorities to standardise services and improve investment facilitation, particularly in lower-capacity regions.
Develop local supply chain capacities to better integrate SMEs into the supplier networks of foreign multinationals. While initiatives like export training and trade finance help SMEs enter international markets, they do not sufficiently strengthen domestic supply chain capabilities. Aligning local supplier standards with the needs of foreign multinationals requires targeted support, including certification and accreditation. Implementing a supply chain development programme, such as Portugal’s Supplier Clubs model, could further assist SMEs in upgrading their technological capacities and foster partnerships with foreign investors.
Further enhance access to upskilling and reskilling programmes for SMEs, building on ongoing sector-specific initiatives. Poland has a strong policy framework for workforce skills development, and PARP’s sectoral councils are actively tailoring training programmes to industry needs. As these efforts expand to cover 27 identified sectors, ensuring that SMEs across all regions and levels of digital readiness can fully participate remains key. Increasing the availability of flexible, modular training formats (e.g. online and hybrid courses) and strengthening outreach efforts could further support SME engagement, particularly in digital and knowledge-intensive industries where demand for skills is rapidly evolving.
Simplify IP protection procedures and promote the use of IP rights among SMEs. While Poland has made progress in recent years, the use of IP rights among Polish firms, in particular SMEs, remains low. High costs associated with IP protection, including application fees and legal processes, as well as slow patent examination procedures, are key barriers to broader IP use. Targeted reforms should focus on lowering these costs, simplifying procedures, and promoting the valorisation of IP held by universities and research centres.
5.2.1. Most policy initiatives in Poland focus on strengthening SME absorptive capacities
Poland’s FDI-SME policy mix focuses on developing the competitiveness of domestic firms and strengthening the role of small businesses in the economy. Most Polish policies (62%) primarily focus on strengthening SMEs’ productive and innovative capacities, which underpin how firms recognise and make use of new knowledge. Policies supporting these capacities may target firms’ access to and use of finance, skills, innovation, and other strategic resources. Approximately 17% of policy measures mapped for the purpose of this assessment focus on promoting productivity-enhancing FDI in knowledge-intensive sectors (Figure 5.1, Panel A). Less developed regions in Poland are generally less attractive to foreign investors, and local firms' ability to capture innovation spillovers tends to be more concentrated in urban centres. Several policies (17% of the policy mix) are addressing these economic geography factors and aim to promote agglomeration economies and industrial clustering around the activities foreign multinationals operating in Poland (OECD, 2023[1]).
The diffusion of spillovers from foreign-owned to domestically-owned firms is fostered through policies emphasising value chain linkages (26%) (Figure 5.1, Panel B). Encouraging the development of value chain linkages between SMEs and foreign affiliates can benefit firms in upstream sectors and activities. While lower emphasis towards other spillover channels may result in missed opportunities for small businesses in the host country, methodological limitations should be kept in mind when interpreting these findings (Box 5.2). Beyond the direct influence of targeted policies and programmes, broader regulatory and structural factors also influence outcomes in all spillover channels. For instance, labour mobility and competition outcomes are affected by the restrictiveness of laws and regulations affecting the labour and product markets (see Figure 5.5 for an assessment of regulatory conditions in Poland).
In % of mapped policy measures
Note: Shares are calculated as a % of the total of national initiatives in place. Total may be higher than 100% when policy initiatives respond to several policy objectives at the same time.
Source: Experimental indicators based on EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
The policy mix concept refers to the set of policy rationales, arrangements and instruments implemented to deliver one or several policy goals, as well as the interactions that can possibly take place between these elements. In the context of knowledge and technology diffusion from FDI to domestic SMEs, these policies often span multiple institutions and policy domains such as innovation, investment, entrepreneurship, science and technology, and regional development. These policies operate within intricate "policy systems," supporting various channels through which FDI spillovers occur, such as value chain relationships, labour mobility, competition, and imitation. Moreover, they also influence enabling factors such as FDI characteristics, SME absorptive capacity, and economic geography (Meissner and Kergroach, 2019[2]).
This chapter largely builds on a mapping of the policy mix supporting FDI-SME ecosystems in EU countries, conducted as part of a multi-year project jointly undertaken by the OECD and the European Commission (EC) in 2019. In this research, a comprehensive mapping of institutional environments, governance frameworks, and policy initiatives related to FDI and SMEs was conducted. The process involved utilizing keywords, concept searches, and text analysis to identify national and subnational institutions, categorise EU Member States based on institutional complexity, and understand the roles of different institutions (OECD, 2021[3]).
Official sources such as national strategies, action plans, and relevant ministry websites, along with OECD and EU reports, provided policy information on FDI-SME initiatives. Data collection occurred at both national and institutional levels through desk research and an online survey. This research builds upon previous OECD efforts, drawing on methodologies from projects like the “OECD Surveys of Investment Promotion Agencies” and the EC/OECD project on “Unleashing SME potential to scale up”.
Typically, a first challenge in policy mapping consists in defining the scope and identifying the relevant initiatives and policy mix components under analysis. How the exercise is designed can determine its outputs about the strategic orientations of the mix, its instrumentalisation, its governance, and shifts over time. Potential distortions are higher when the number of measures identified are small. In addition, the number of initiatives in place can be highly variable across countries, depending on the size of the country and the capacity of its public administration, the intensity of the policy interest given, or the maturity of the policy field and the likelihood of initiatives having piled up over time.
A second challenge for policy mapping and impact assessment arises from the question of quantifying policy initiatives. A simple counting presents the advantage to be easy to understand – albeit not necessarily easy to implement or to interpret – and the counting could be discriminated by policy area, instrument, target population, sectors, etc. Policy initiatives could also be accounted in terms of input (e.g. public budget allocated), output (e.g. new strategic partnerships between foreign affiliates and local SMEs) and outcome (e.g. net job creation). The lack of data at disaggregated level, i.e. at the level of the policy initiative, is a clear limitation in this statistical approach. The number of FDI-SME policy initiatives in place is therefore a partial measure of the intensity of a country’s effort in a given area, and other parameters matter.
Source: Authors’ elaboration based on (Meissner and Kergroach, 2019[2]; OECD, 2023[1]; OECD, 2022[4]).
Considering the number of policy initiatives that target these policy objectives is only a partial measure of policy focus in a given area. One policy could rely on more resources (e.g. higher budget) for its implementation, and therefore have greater impact, while several policies in another case could be underfunded and not sufficiently effective to achieve the pursued outcomes. For this reason, the policy mix analysis conducted in the following sections takes into account other aspects relating to policy design and implementation, including the sectoral and value chain targeting of implemented measures, the uptake of public support schemes, the number of beneficiaries, the quality of the regulatory environment, and the type of policy instruments used to achieve specific policy objectives, amongst others.
Poland primarily relies on financial support and technical assistance and facilitation services to strengthen FDI linkages with domestic SMEs. While financial support schemes are most common (51%) among the mapped policies, the share of policies involving technical assistance or information and facilitation services (43%) is higher than in comparator economies (Figure 5.2). Among the specified financial support schemes, grants and loans for R&D and innovation as well as vouchers for business consulting and training services and the adoption of new technological solutions were most common (Figure 5.3). However, the design and delivery of these programmes is somewhat fragmented. A more co-ordinated approach, incorporating mechanisms to adapt to beneficiaries’ needs would enhance their effectiveness.
Poland’s policy mix for investment attraction is broadly aligned with national priorities, reflecting key country-specific factors such as economic structure, regional development disparities, and institutional frameworks (OECD, 2023[1]). However, the emphasis placed on specific policy areas varies across countries, shaped by their unique economic and geographic contexts. For example, peer economies like Lithuania and Czechia allocate a higher share of their policies to enhancing economic geography factors (25% and 20%, respectively) and attracting productivity-enhancing FDI (32% and 27%) compared to Poland (17% in both categories). This suggests that in countries with more pronounced regional development divides, addressing these disparities plays a more central role in their FDI-SME policy agenda (Figure 5.1, Panel A). A more strategic approach to balancing investment attraction with regional development goals could further strengthen Poland’s ability to leverage FDI for productivity gains and economic cohesion (Box 5.3).
Note: Shares are calculated as a % of the total of national initiatives in place. Shares may be higher than 100% when policy initiatives respond to several policy objectives at the same time.
Source: Experimental indicators based on EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
% of mapped policy measures
Note: Shares are calculated as a % of the total of national initiatives in place. Shares may be higher than 100% when policy initiatives respond to several policy objectives at the same time.
Source: Experimental indicators based on EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
Governments have a diverse set of policy instruments at their disposal to support FDI-SME ecosystems. A policy initiative can make simultaneous use or various policy instruments, using them in complementary and mutually reinforcing ways to achieve the desired strategic objective.
Based on the type of instrument used, policies can be classified into:
Network and collaboration platforms and infrastructure, which refers to platforms, facilities and infrastructures that enable spatial and network-related knowledge diffusion.
Technical assistance, information and facilitation services, which aim to encourage the uptake of knowledge and facilitate interactions between foreign and domestic firms (e.g. matchmaking services and networking events).
Financial support schemes, in direct (e.g. grants, loans) or indirect forms (e.g. tax relief) to encourage (or discourage) certain types of business activities (e.g. investment tax incentives, R&D vouchers, wage subsidies for skilled workers).
Regulatory measures, which define the framework within which foreign and domestic firms operate and often use legal rules to encourage or discourage different types of business activities (e.g. lighter administrative and licensing regimes for certain types of investments, local content requirements for foreign firms and labour mobility incentives).
Governance frameworks, such as national strategies and action plans that lay out policy priorities and define the framework within which policy action on FDI, SMEs and innovation is organised. Some guiding instruments have co-ordination functions and ensure overarching policy governance (e.g. national strategies or action plans).
Based on this typology, the present chapter presents key findings on the instrumentalisation of the FDI‑SME policy mix in Poland and the selected benchmarking countries.
Note: This typology of policy instruments reflects the framework developed in the OECD FDI Qualities Policy Toolkit (OECD, 2022[5]) and the OECD SME and Entrepreneurship Outlook (OECD, 2021[6]; OECD, 2023[7]; OECD, 2019[8]). It was used in the country assessments of FDI-SMEs linkages in Portugal (OECD, 2022[9]) and the Slovak Republic (OECD, 2022[4]). It will also be used in the SME&E data lake knowledge infrastructure. This typology is aligned with converging classifications of policy instruments formerly used in environmental and innovation policy literature (Meissner and Kergroach, 2019[2]); (Rogge and K., 2016[10]); (Edler, 2013[11]); (Borras and Edquist, 2013[12]); (Flanagan, 2011[13]); (OECD, 2007[14]; OECD, 2010[15]); (Eliadis, 2005[16]); (Smits, 2004[17]); (Bemelmans-Videc and Rist, 1998[18]).
Source: (OECD, 2023[1]), OECD elaboration based on analytical framework and literature review.
Source: Authors’ elaboration based on (Meissner and Kergroach, 2019[2]; OECD, 2023[1]; OECD, 2023[1]).
5.2.2. Most Polish FDI-SME policies are highly targeted to specific groups
Poland’s emphasis on technical and financial assistance leads to a targeted approach, with nearly all FDI-SME policies (95%) targeting specific types of firms, priority sectors and geographic areas (Figure 5.4, Panel A). Some policies target multiple dimensions, though only 5% of policies are geographically targeted to a specific region or place (Figure 5.4, Panel B). Among policies targeting specific firm populations, SMEs and non-corporate entities are prioritised, while large firms are not the sole and explicit focus of any of the mapped policies (Figure 5.4, Panel C). Emphasis is also placed on supporting domestic firms (95% of policy initiatives) (Figure 5.4, Panel D), while only 5% of these policies target exclusively foreign companies.
Poland’s highly targeted approach can be effective, but it also creates risks of missed opportunities. Focusing on specific firms, sectors, value chains, and regions ensures that resources are directed toward areas with the highest potential impact. For example, prioritizing SMEs aligns with efforts to strengthen their absorptive capacities within Poland’s policy mix and leverages EU funding instruments that support national SME development initiatives. Targeting non-corporate entities such as universities and research centres also plays a central role in knowledge transfer from foreign firms, as well as in supporting technological upgrading and innovation more generally. However, a balanced strategy is essential to avoid overly narrow targeting that may limit broader economic spillovers and cross-sector synergies.
While Poland’s targeted approach can be valuable, it should be evaluated regularly to ensure that business support measures have a positive impact across the entire economy by reaching a sufficiently large number of beneficiaries. Consideration should also be given to whether the existing framework could be complemented with policies that have a general focus. Generic policies for all enterprises irrespective of their size, age, sector, or location can be effective in setting supportive framework conditions for business growth, or in countries where much of the business population is made of SMEs.
Note: Panel A: Shares of generic and targeted policies as a percentage of the total 64 policies mapped. Panel B: Shares of policies by target type, as percentage of total targeted initiatives (55). As policies can be directed at more than one type of target, the sum is above 100%. Panel C: Shares of policies by type of population targeted, as percentage of total population-targeted policies (44). SMEs-targeted policies include initiatives applying to SMEs only or providing preferential conditions to them. Other non-corporate entities include investors (business angels, venture capitalists or VC funds, banks, financing institutions, etc.); universities; research organisations; entrepreneurs; individuals with specific roles or skillsets (e.g. managers, highly-skilled, researchers); government institutions and sub-national governments (e.g. municipalities); and others. Panel D: Shares of policies by type of domiciliation targeted, as percentage of total domiciliation-targeted policies (30). It demonstrates distribution of policies specifically targeting domestic or foreign firms.
Source: EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
5.2.3. Administrative complexity and burden on business have decreased and regulatory restrictions are generally in line with the OECD average
The quality of the wider regulatory framework shapes the spillover potential of FDI and the capacities of local SMEs to absorb new knowledge and technology. Factors such as openness to foreign investment, fair competition rules, the protection of intellectual property rights, and a labour market policy regime that facilitates the mobility of skilled workers are essential prerequisites for economies to realise the benefits of FDI.
Poland maintains a relatively open economy within the OECD (Figure 5.5), and its performance in key regulatory framework areas is close to the OECD average. Poland has a strong business environment with business-friendly regulations and low barriers to trade (OECD, 2023[19]). Progress is also being made on some of the key regulatory coherence challenges. Recent regulatory reforms are facilitating the creation of new businesses and the operations of small businesses through the streamlining of administrative procedures (see Section on regulatory barriers to competition). Regulatory barriers to competition are primarily on par with the OECD average. There is scope to further improve Poland’s performance in easing distortions related to public ownership and address barriers in services and network sectors (Figure 5.5). Moreover, labour mobility is an important channel through which productivity spillovers from foreign to domestic firms take place. Poland’s performance in labour mobility is on par with the OECD average. Restrictive labour market regulations may have adverse impacts on SMEs’ capacity to retain and attract highly skilled workers as SMEs are often unable to match the wages of foreign – typically larger – firms (see Section on labour mobility) (OECD, 2022[4]).
Variation from the OECD average (measured in standard deviations, OECD average = 0)
Note: Data bars pointing left show lower regulatory restrictions than the OECD average, and data bars pointing right show higher restrictions.
Source: OECD elaboration based on the FDIRR, STRI, PMR and EPL indices.
5.3.1. Attracting and facilitating knowledge-intensive and productivity-enhancing FDI
Investment promotion and facilitation are key in supporting the transfer of knowledge and technology from foreign firms to local SMEs. These policies aim to attract FDI into sectors that are more productive, innovative, and possess strong absorptive capabilities, enhancing the potential for spillovers. The quality of the broader regulatory environment can also determine the extent to which foreign affiliates gain access to specific sectors and create linkages with domestic firms.
Poland is open to FDI inflows overall, despite restrictions in some sectors
Poland has a relatively open economy, according to the OECD FDI Regulatory Restrictiveness Index (FDIRRI), which assesses factors such as foreign equity limitations, screening and approval processes, restrictions on key personnel, and various operational restrictions. Foreign firms, in principle, have the right to establish business enterprises and engage in economic activities under conditions similar to domestic firms. However, it exhibits a higher degree of restrictiveness compared to many of its peers such as Czechia, Lithuania, and Germany, as well as the OECD average (Figure 5.6). Moreover, the majority of constraints on inward direct investment are in the form of equity restrictions for certain sectors; as opposed to screenings and approvals which are absent (OECD, 2020[20]).
OECD FDI Regulatory Restrictiveness Index, 2021 (open = 0, closed = 1)
Note: The OECD FDI Regulatory Restrictiveness Index only covers statutory measures discriminating against foreign investors.
Source: OECD FDIRRI database.
Foreign firms in Poland can establish business enterprises and operate under similar conditions as domestic firms, though certain sectors, such as real estate, transport, and media, remain subject to restrictions (Figure 5.7). The Act on the Acquisition of Real Estate by Foreigners requires foreign entities to obtain prior permission from the Minister of Internal Affairs for real estate investments. For agricultural property, approval from the Minister responsible for rural development is also required. While these restrictions may limit some FDI inflows, their impact on knowledge transfer and spillovers is likely limited, as real estate investment itself does not typically generate the same technology diffusion or skill development as FDI in knowledge-intensive sectors. Moreover, similar restrictions on agricultural land ownership exist in many EU countries, reflecting broader policy considerations related to rural development and food security (OECD, 2021[21]).
Note: The OECD FDI Regulatory Restrictiveness Index only covers statutory measures discriminating against foreign investors, and excludes policies motivated by the need to safeguard essential security interests (open = 0, closed =1). Chemical and material manufacturing includes the following: Chemicals, Rubber, Plastics, Fuel Products and Other Non-Metallic Mineral Products. Accommodation & other includes the following: Accommodation, Food Services, Arts, Entertainment and Recreation.
Source: OECD FDIRRI database.
Aside from FDI restrictions, other “behind-the-border” regulations – including restrictions in trade, barriers to competition and other discriminatory measures affecting market access conditions in different sectors and industries may influence the degree of FDI local embeddedness (OECD, 2024[22]; OECD, 2022[4]). According to the OECD Services Trade Restrictiveness Index (STRI), Poland is relatively more closed to trade in services in comparison to the OECD average (Figure 5.8). Much of Poland’s score is influenced by general regulations, including labour market tests, quotas on temporary workers, and authorisation requirements for foreigners acquiring land or real estate (OECD, 2023[23]). Furthermore, the OECD Digital Services Trade Restrictiveness Index (DSTRI) indicates that Poland is one of the more restricted countries compared to peer economies of Czechia, Germany, and Lithuania, suggesting a relatively restricted regulatory environment for digitally-enabled trade (OECD, 2024[24]).
Restrictions applied in services sectors and public procurement procedures may also impact foreign firms’ operations in downstream sectors. Poland’s public procurement framework grants preferential access to partners in regional trade agreements and members of the WTO’s Government Procurement Agreement, restricting participation from other foreign firms. Additionally, the legal services sector imposes relatively high restrictions on foreign entry and the movement of professionals (OECD, 2024[25]). These constraints may have wider economic implications, as trade-driven growth—particularly in services—plays a key role in productivity gains and economic competitiveness (WTO, 2023[26]). Easing policy barriers to services trade could strengthen sectoral performance in both domestic and international markets, while also creating positive spillovers for downstream industries (OECD, 2023[27]).
OECD Services Trade Restrictiveness Index 2023 (open=0, closed=1)
Note: The STRI indices take values between zero and one, one being the most restrictive. The STRI database records measures on a Most Favoured Nation basis. Air transport and road freight cover only commercial establishment (with accompanying movement of people). The indices are based on laws and regulations in force on 31 October 2023. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
Source: OECD STRI database, 2023.
Investment promotion policies target knowledge-intensive investments
The Polish Investment and Trade Agency (PAIH), plays a key role in promoting the country as an attractive investment destination and generating leads and investment projects that contribute to innovation. In recent years, PAIH has developed new initiatives to improve the quality of its investment promotion activities and pro-actively target FDI diversification. PAIH has primarily prioritised high value added and knowledge-intensive investments, especially in the manufacturing (e.g. electronics, pharmaceuticals, automotive), telecommunication (e.g. digital services), and scientific R&D sectors. Beyond measuring the value of investments supported, the agency utilises a set of Key Performance Indicators (KPIs) related to productivity, innovation, job creation, and skills development. The use of these types of indicators is common among OECD IPAs and reflects their priority investment areas.
The investment prioritisation criteria are defined by PAIH in co-ordination with the Ministry of Economic Development and Technology, and are in line with the priorities and “target sectors” described in the National Strategy for Responsible Development. Investment targeting and prioritisation can be a difficult function as it requires clearly defined criteria, strong co-ordination mechanisms to ensure alignment with the government’s sectoral strategies, and the ability to adapt existing investment promotion tools and focus on some firms and investment projects more than others. As highlighted in Chapter 4, the establishment of a national investment promotion strategy could provide PAIH with more organised structure and co-ordination efforts when it comes to the implementation of investment promotion and facilitation policies. While having a clear list of priority activities can be helpful, it should be the result of consultations with key stakeholders in the business community and specialised bodies that have thorough knowledge of challenges and opportunities in specific industries. It is important that the elaboration of the priority list be given due attention and subject to regular reviews, especially as it can translate into special treatment such as in the form of faster replies to inquiries and tailored investment facilitation solutions (OECD, 2023[28]).
A similar pattern in terms of sectoral targeting is observed in the overall policy mix; approximately 27% of policies enabling FDI spillovers on domestic SMEs target specific sectors, whilst 68% of policies target all sectors (Figure 5.9, Panel A). R&D intensive activities such as pre-production services and high-technology manufacturing are strongly prioritised in the delivery of public support (Figure 5.9, Panel B). The overall policy targeting of these sectors and activities closely aligns with PAIH’s strategic goals of fostering investment in the manufacturing and telecommunication sectors (Figure 5.9, Panel C). The attraction of productivity-enhancing FDI should be aligned with Poland’s goals of diversifying its production structure towards more knowledge-intensive and high value-added activities.
Note: The following value chain activities are considered: i) Pre-production services: R&D, concept development, design, patents; ii) Low and medium-technology manufacturing: production of simple, relatively unsophisticated goods such as basic metals, plastic products, food, textiles, etc.; iii) High-technology manufacturing: production of highly specialised, technologically sophisticated goods such as computer and electronic products, pharmaceuticals, chemicals, medical products, etc.; iv) Post-production services: marketing, sales, logistics, brand management, distribution and customer services. Peer EU is for the following economies: Czechia, Germany, Finland, Italy, Slovak Republic, Portugal, and Lithuania.
Source: EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
Financial incentives are widely used to attract quality investment, but their impact could be further evaluated
Poland’s policy mix for attracting FDI is less diverse in terms of type of instruments used than in most peer OECD economies. Policies for attracting FDI make relatively balanced use of technical support measures (56%) and financial support schemes (33%), complemented by collaboration platforms and infrastructure (11%) (Figure 5.10). The Ministry of Economic Development and Technology provides a wide range of tax and non-tax incentives which support enterprises in reducing investment costs. The schemes include incentives for business-to-business (B2B) partnerships, tax incentives for productivity-enhancing investments, tax incentives for R&D and innovation activities, as well as grants and loans for technology acquisition and internationalisation activities (Table 5.3).
% of all mapped policies supporting productivity enhancing FDI
Note: Shares are calculated as a % of the total of national initiatives aimed at attracting and facilitating productivity enhancing FDI. Shares may be higher than 100% when policy initiatives respond to several policy objectives at the same time.
Source: Experimental indicators based on EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
The Programme for Supporting Investments of Significant Importance to the Polish Economy (2011-2030) is Poland’s flagship scheme to promote knowledge-intensive investments. It was established to enhance Poland's economic competitiveness and innovation by promoting new investments from Polish and foreign enterprises, including SMEs and large companies (MRiT, 2022[29]). The Programme provides grants conditional on the number of jobs created and the amount of eligible investment costs, with a primary focus on projects involving R&D activities. Incentives are allocated based on an individual assessment of each project, conducted by PAIH and the Inter-ministerial Team for Investments of Significant Importance to the Polish Economy. An assessment of the annual reports published by the Ministry of Economic Development and Technology finds that the programme has been effective in promoting knowledge-intensive investments (Box 5.4). Between 2018 to 2022, the number of approved grant contracts increased from 96 to 148, the total value of support nearly doubled, and the number of jobs created has significantly increased.
The Programme for Supporting Investments of Strategic Importance for Polish Economy 2011-2023 provides subsidies for SMEs and large firms with domestic or foreign ownership. Innovation is prioritised in a number of the categories of investment targeted by the programme, including product and process innovation, provision of R&D services, and other activities related to modern business services. It provides direct grants for new investment projects, of up to 20% of the value of investment costs or up to PLN 20 000 for each new job created, depending on the type of project. Grants for employee training are also available, of up to PLN 7 000. It targets five types of investments: strategic investments in production, innovative investments that result in products or processes that are new to Poland, highly advanced service centres that conduct scientific research or development works, advanced business services centres, and business process excellence centres focused on processes in modern business services. By 2022, the programme supported the creation of more than thirty thousand jobs and total investments exceeding PLN 31.5 billion, having provided PLN 1.6 billion in total support, according to official evaluations (Table 5.2).
Note: Information on performance was not available for the year 2021.
Source: Ministry of Development, Labour and Technology, Report on Implementation: Programme to Support Significant Investment for the Polish Economy for the Years 2011-2030.
Source: EC/OECD Survey on Policies enabling FDI spillovers to domestic SMEs (2023).
In addition, in 2018, the Act on Support for New Investments introduced the Poland Investment Zone (PIZ), covering the entire territory of Poland, extending tax benefits that were previously only available in some special economic zones (SEZs) to the entire country (Box 5.5). Investors can benefit from tax exemptions of up to 50%, varying on the project’s location, when they meet qualitative requirements in areas such as sustainability, exporting, job quality, and R&D, and exceed certain minimum investment thresholds, depending on regional unemployment rates. Tax relief offers notable benefits for smaller firms in particular by helping them navigate operational challenges related to their size (Jasiniak and Koziński, 2017[30]). Moreover, financial incentives under the PIZ regime offer investment loans for purchasing new fixed assets, refinancing capital expenditure, real estate tax exemptions for up to five years, and financial and training support from local employment offices.
Zone benefits may have supported the attraction of new investment, particularly by large firms (Box 5.5). The PIZ has also been effective in driving employment and includes firms that are export- and innovation-intensive (Nazarczuk and Umiński, 2019[31]). Polish SEZs are widely regarded as being successful and well-managed; the Katowice Special Economic Zone has been recognised as the best zone in Europe and the Łódź Special Economic Zone received a “highly commended” designation (FDI Intelligence, 2023[32]). They are noted for their simple but comprehensive incentives and support services. Moreover, the majority of beneficiaries are large firms, with foreign firms accounting for approximately 60% of investment (Figure 5.11). Expanding Special Economic Zone (SEZ) incentives nationwide through the Polish Investment Zone initiative could support economic diversification and upgrading by attracting a broader range of investments with stronger potential for integration into the domestic economy.
Poland’s government could consider undertaking regular independent impact evaluations of the financial incentives they provide to ensure that their targeting and design remain effective in attracting knowledge-intensive FDI. The net benefits of support programmes are often context-specific and may change over time. Polish authorities could consider having systematic ex post evaluations to help ensure that the costs of tax incentives, in terms of revenue forgone and potential economic distortions, outweigh their benefits (OECD, 2022[5]; OECD, 2022[4]). Poland’s financial support measures should be reviewed periodically to assess their effectiveness in helping meet desired goals. For example, the Slovak Republic recently evaluated that their Regional State Aid scheme has been effective in reducing unemployment rates in economically lagging regions (Box 5.6). However, evidence from an evaluation of the direct and indirect effects of the scheme on FDI suggests that FDI inflows to the Slovak Republic have been significantly and positively influenced more by the grants and wage subsidies than tax relief, which was found to have a negative impact on inward FDI.
Introduced in 2018 through the Act on Supporting New Investments, the Poland Investment Zone (PIZ) replaced the Special Economic Zones, providing support for investment projects across the country. It offers income tax exemptions for up to fifteen years, with micro and small enterprises eligible to recover up to 70% of investment costs, medium-sized enterprises eligibly up to 60%, and large enterprises up to 50%. Between 2018 and 2023, official evaluation report 37 326 new jobs created through PLN 98.1 billion invested in 2 157 active projects (Figure 5.11). Most jobs (78.2%) and investment (83.6%) were concentrated across large enterprises, though MSMEs also participated. Foreign firms accounted for 59.8% of the investment under PIZ, which is used more often for expansion projects (55.1% of active projects) than for new projects (44.9%). Key investment sectors include transportation (16.3%), high quality food (13.3%), and professional electrical and electronic equipment (8.6%).
Source: Annual reports on PIZ operations, Ministry of Economic Development and Technology.
In 2022, the Slovak Ministry of Labour, Social Affairs and Family Policy concluded an empirical evaluation of the Regional Investment Aid scheme, which explored the impact of investment incentives on the unemployment rates in districts to which these incentives were targeted as well as potential spatial spillover effects into other districts. The study relies on the assumption that, while the incentives target only a single firm, the extra spending on wages or contractors will be absorbed into the district economy and, through its multiplier effect, will contribute to district-wide economic performance, in particular in economically lagging regions. The assumption invites a hypothesis that if there are fewer possibilities to affect growth and employment in economically lagging regions directly, the next best option might be to invest in districts with which these have the strongest ties and stimulate the local economies and employment rates by leveraging spatial spillover effects and inter-regional interdependencies.
By comparing districts, in which a firm has successfully applied for investment incentives to those which had no successful applicants, the study found that the effect of these incentives on regional unemployment varies by the level of development of the recipient district. While no significant effects were found in most Slovak districts, investment incentives directed into one of the twelve “least developed districts” (LLDs) shows significant improvements in unemployment within the treated LDDs compared to the treated non-LDDs. Investing in non-LDDs has not been shown to be effective in reducing unemployment in those districts and there do not seem to be spillover effects into other linked (non-treated) districts. These findings are consistent with the economic intuition of diminishing marginal returns, which would indicate that investing into districts that had enjoyed more investment and development in the past will not be as impactful as investing into districts with less investment in the past.
5.3.2. Strengthening the absorptive capacities of Polish SMEs
Policies that aim to enhance the absorptive capacities of local firms take on different forms, such as subsidies, grants, loans, tax relief, knowledge exchange infrastructure, and training programmes. These capacities are affected by a wide range of internal factors within the business environment. In Poland, most policies aiming to scale up the absorptive capacity of SMEs rely on financial support schemes (64%) and to a lesser extent on technical assistance (30%) (Figure 5.12). A smaller share of measures (9%) supports SME innovation through knowledge exchange platforms that facilitate business networking and collaboration. The policy mix does not substantially diverge from that of peer economies.
% of all mapped policies supporting SME absorptive capacity
Note: Shares are calculated as a % of the total of national initiatives aimed at supporting SME absorptive capacities. Shares may be higher than 100% when policy initiatives respond to several policy objectives at the same time.
Source: Experimental indicators based on EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
The fragmentation of the business support delivery system may pose challenges for SMEs seeking support
Poland has implemented a comprehensive set of policies to improve the innovation performance of Polish SMEs through technical assistance, information and facilitation services and the provision of financial support (Table 5.4). Significant targeting of SMEs and non-corporate entities is observed in the overall policy mix. Firms of all sizes are targeted by 54% of policies (Figure 5.13, Panel A). Approximately 34% of mapped policies target SMEs directly and 10% apply to all firms but offer preferential treatment to SMEs. The Polish Agency for Enterprise Development (PARP) is responsible for most of these initiatives that directly or indirectly relate to SMEs. Other non-corporate entities are the target of 27% of policies, most of which fall under the responsibility of either PARP or the National Centre for Research and Development (NCBR). Moreover, 43% of policies target all firms and 58% of policies target domestic firms (Figure 5.13, Panel B). Those targeting Polish-owned enterprises largely fall under the responsibility of NCBR or Bank Gospodarstwa Krajowego (BGK).
Note: Peer EU average is for the following economies: Czechia, Germany, Finland, Italy, Slovak Republic, Portugal, and Lithuania.
Source: Experimental indicators based on EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
In addition to policy efforts aimed at increasing the knowledge intensity of FDI, similar initiatives have recently been introduced by NCBR to help Polish SMEs diversify their activities. The European Funds for Smart Economy programmes provide grants and loans for R&D and innovation activities enabling Polish SMEs to diversify and expand into innovative industries such as AI, robotics, and hydrogen technology. PFR also provides financial support in the form of investment loans for firms wishing to strengthen their innovation and technological capabilities. Such investment loans are available for active SMEs with a turnover of at least PLN 4 million and positive results in the last financial year. The availability of financial support can potentially help diversify the sectoral composition of SMEs in Poland and create opportunities for productive and knowledge-intensive activities. However, financial support alone is not sufficient; its effectiveness depends on complementary measures, such as improving business capabilities, fostering skills, and enhancing regulatory conditions for market access.
A comprehensive set of technical support programmes is provided by PARP to enhance the innovation performance and absorptive capacities of Polish SMEs. Different programmes provide B2B consulting opportunities, along with matchmaking services and knowledge exchange platforms. Programmes like the Erasmus for Young Entrepreneurs, Enterprise Europe Network, and inno_LAB play a crucial role in increasing the reach of Polish SMEs and fostering a competitive environment. A combination of financial support measures with technical support (i.e. training and mentoring programmes) can enhance the internal capacities of SMEs, support organisational changes, and increase the overall competitive environment (OECD, 2023[1]).
The provision of SME development services is primarily delegated through PARP and NCBR which co-ordinate with one another on support programmes and implementation. Other governmental agencies, such as PFR also provide development support to SMEs. The provision of SME development services through multiple government agencies may increase administrative burden on SMEs, requiring them to navigate lengthy procedures to access different schemes. The slight fragmentation within the governance framework may also make it difficult for SMEs to identify and access available support. These findings suggest a need to raise awareness about the availability of support for SMEs. Moreover, strengthening the existing co-ordination mechanisms among the primary business support providers may reduce the potential overlaps in mandates and increase the efficiency of existing mandates.
Source: EC/OECD Survey on Policies enabling FDI spillovers to domestic SMEs (2023).
Efforts to simplify and facilitate access to R&D support for SMEs should continue
Government support for business R&D in Poland stands at 0.15% of GDP, higher than several OECD economies but below the OECD and EU averages. The Polish support to business R&D ranks far from top innovators such as the US, Canada, France and Portugal; yet, it has been steadily increasing since 2006 at a higher rate than most OECD economies. Difficulties in obtaining public funding are perceived as one of the most important barriers to innovation by SMEs, together with the lack of internal finance and the high costs of performing innovation (see Chapter 2). Tax relief for R&D activities accounts for only a small share (23%) of public support to business R&D, while direct support through grants and loans represents 77% of public support. In contrast, in the OECD area, there is an increasing reliance on fiscal incentives, especially among more innovative European economies. In 2022, in the OECD area, tax support represented around 58% of total government support compared to 42% for direct support. Tax incentives are generally available to all firms engaged in R&D activities and can be more easily claimed through the annual corporate income tax declaration process. Direct funding, on the other hand, is a more selective and discretionary form of public support, enabling governments to target specific research areas with high social returns.
Poland offers a comprehensive system of tax relief to incentivise R&D activities, which is accessible to all firms, including SMEs. The R&D tax relief allows companies to deduct up to 200% of eligible R&D expenditures from their taxable income, with enhanced deductions available for R&D centres. This includes a wide range of expenses, such as employee wages, materials, and the costs of intellectual property development. Additionally, Poland introduced reforms under the Polish Deal, allowing companies to simultaneously benefit from the R&D tax relief and the IP Box regime, which offers a reduced tax rate on income derived from intellectual property (Table 5.5) (OECD, 2023[19]). In 2023, Poland had the second highest implied tax subsidy rate on R&D expenditure among OECD economies, indicating that the average tax relief and its contribution to reducing the effective cost of R&D for firms is significantly higher than other OECD economies. These measures aim to promote innovation by lowering the financial burden of R&D investments, although the complexity of the application process and uncertainties around eligible activities remain a challenge for some firms. The Government of Poland could consider further adjusting the current framework to make it more attractive to smaller firms by ensuring that they have access to information and support for the application process.
As % of GDP
Note: For countries with an asterisk, data on subnational tax support is not available.
Source: OECD R&D Tax Incentive Database, April 2023.
While Poland offers a more generous tax relief for R&D than other OECD economies, the tax allowance applies to both SMEs and large firms in a similar way, without preferential treatment based on firm size. SMEs may face more difficulties in navigating the complexities of the R&D tax incentive system, which can be challenging without dedicated financial or legal resources. Such a structure could result in a limited use of the tax relief by innovative start-ups and other firms that seek to engage in innovative activities and may need it the most. Many OECD economies offer R&D tax incentives with preferential provisions for SMEs and loss-making firms. For instance, in France, a higher rate is applied for SMEs while startups and innovative SMEs can access faster cash refunds on unused tax credits, significantly boosting liquidity for smaller firms. Similar adjustments could be made in Poland’s R&D tax allowance to simplify and facilitate access for smaller firms.
Source: EC/OECD Survey on Policies enabling FDI spillovers to domestic SMEs (2023).
Some aspects of the regulatory environment are conducive to entrepreneurship in Poland, though administrative challenges and the cost of insolvency procedures hinder potential
Poland’s regulatory framework supports entrepreneurship and performs above the OECD median in terms of the simplification and evaluation of regulations, as well as the strength of its insolvency regime (Figure 5.15). In both measures Poland ranks among the top five OECD countries. However, high administrative costs remain a significant barrier to business creation in Poland. The administrative costs associated with establishing a new business and resolving insolvency are some of the highest in the OECD, with Poland ranking among the bottom five OECD countries (Figure 5.15) (Terrero-Dávila, Vitale and Danitz, 2023[34]). While the introduction of Poland’s one-stop-shop for administrative procedures (EKRS) streamlined many aspects of business establishment, not all procedures can be carried out through this platform. The utilisation of a one-stop-shop where entrepreneurs can carry out all administrative procedures at once, has a positive effect on enterprise creation (Terrero-Dávila, Vitale and Danitz, 2023[34]). In Poland, the complexities of bankruptcy processes further discourage entrepreneurial activity. These barriers can limit opportunities to improve productivity and efficiency through corporate restructuring and capital reallocation (OECD, 2022[35]). Unlike other OECD countries, Polish businesses do not benefit from the predetermined bankruptcy options that can simplify court proceedings and reduce costs facing SMEs (Goujard and Guérin, 2021[36]).
Entrepreneurship regulatory framework, index of performance
Note: Framework conditions for entrepreneurship are proxied by a number of indicators that measure i) the simplification and evaluation of regulations (composite index from 1 -the most complex- to 6 -the simplest-), ii) administrative burdens on start-ups (composite index from 1-the less burdensome- to 6 -the most burdensome), the cost of starting a business (% of income per capita), the strength of insolvency framework (composite index from 1 – the weakest- to 16 - the strongest-) and the cost of resolving insolvency (% of estate). The two first indicators are drawn from the OECD Product Market Regulation database (OECD, 2021[37]); the last four are drawn from the World Bank Doing Business 2020 report (World Bank, 2020[38]). The years of reference are respectively 2018 and 2019. All indicators are presented in the form of benchmarking indices and reported on a common scale from 0 to 200 (0 being the lowest OECD value, 100 the median value, and 200 the highest) to make them comparable. The benchmark charts highlight the position and dispersion of the top five (High) and bottom five (Low) OECD values. Poland’s relative position is marked with a dot.
Source: OECD SME and Entrepreneurship Outlook 2021.
To address constraints in Poland’s business environment, the government introduced a set of legislative reforms to improve its entrepreneurship framework. The Consultation of Business package aimed to improve the legal framework for business operations through reforms to Business Law and four other acts. Lowering administrative costs and requirements for new and smaller firms can facilitate business creation and growth. Despite these reforms, burdensome measures such as administrative requirements in setting up new firms continue to affect the establishment of new enterprises (Goujard and Guérin, 2021[36]). The SME Ombudsperson was established to ensure that the rights of SMEs are represented in government, and it has wide-ranging intervention powers. These include requesting information and explanations from public authorities, supporting entrepreneurs, lodging complaints with administrative courts, requesting legal clarifications, and referring legal discrepancies to higher courts (Ombudsman for Small and Medium-Sized Enterprises, n.d.[39]). The Ombudsperson works closely with ministries and agencies involved in SME policy, contributing to consultation processes, and supporting individual firms or groups in disputes with the public administration. Its independence is crucial in effectively advocating for SMEs (European Commission, 2019[40]). SME Ombudspersons are typically most effective when established by legislation and appointed by the president with parliamentary ratification, as is the case of Poland (Marchese and Potter, 2018[41]).
Poland has undertaken efforts to reduce red tape and financial costs associated with starting a new business (Terrero-Dávila, Vitale and Danitz, 2023[34]). The complexity of the tax system raises compliance costs for SMEs, though recent reforms have eased these challenges. The introduction of the e-Tax Office and the acceptance of Blik digital payments for taxes in Poland have significantly improved efficiency. These developments are part of a broader push towards making e-government tools more accessible (European Commission, 2024[42]). The implementation of e-government and digital tools can further strengthen SMEs’ ability to innovate and scale-up (OECD, 2023[1]). Moreover, reforms under the Easy Law package introduced new legal forms of business, while the SME package reduced administrative burdens for small firms. The 100 Changes for Enterprises reform in 2018 further eased bureaucratic procedures by simplifying registration, raising thresholds for full accounting obligations, providing social security exemptions during the first six months of operation, and promoting tolerance for errors by new firms. Ministries were also required to publish clear explanations of legislation and regulation, enhancing transparency and accessibility.
5.4.1. Promoting value chain linkages and strategic partnerships
Investment facilitation and aftercare services can be instrumental in encouraging greater embedding of foreign affiliates in local economies and building relationships that contribute to greater use of local SME suppliers. They often involve accompanying investors in their project definition, ensuring that they identify local suppliers and clients, providing additional assistance once the project is implemented and encouraging expansions and reinvestments through aftercare. Poland supports value chain linkages exclusively through technical assistance and financial support initiatives. Technical assistance, information and facilitation services feature in 71% of policies that aim to support value chain linkages (Figure 5.16, Panel A). Policies aimed at fostering strategic partnerships feature technical assistance and networking support. Two-thirds of these policies offer technical assistance, information and facilitation services, while the remaining initiatives relate to collaboration platforms and infrastructure (Figure 5.16, Panel B).
For large investment projects, PAIH helps foreign multinationals establish contact with potential suppliers by organising meetings with representatives of local business support organisations, and by compiling lists of potential business partners for specific products and services. In practice, matchmaking services between investors and local firms are primarily provided by regional and local investment promotion agencies. As highlighted in Chapter 6, there are large disparities in the availability and quality of services offered by subnational actors to foreign investors, while the dispersion observed in their provision raises the issue of co-ordination and standardisation. The Industrial Development Agency (ARP) operates a Technology Transfer Platform that lists technologies from startups that want to present their innovative technological solutions and look for implementation partners. The agency also implements Innovation Pitch workshops during which SMEs, startups and R&D organisations can present their products and technological services that meet the needs of large enterprises.
PAIH’s investment facilitation and aftercare services could be further leveraged to support supplier linkages. The agency should have sufficient resources and dedicated staff that is trained to identify the sourcing needs of foreign investors and steer FDI projects towards locations with the highest potential for supplier linkages and R&D partnerships. This can be done by exploiting synergies with subnational IPAs for the implementation of annual matchmaking events and business fairs throughout Poland and the joint development of an online suppliers database. To this end, the trade.gov.pl portal, which already presents a list of Polish enterprises with information on their products and services, could be further leveraged for that purpose and be integrated into PAIH’s investment facilitation work.
Efforts to improve the availability and quality of investment facilitation services in regions could increase. PAIH could provide training to regional and local authorities on how to effectively facilitate investments, in particular in regions with lower capacities. Such standardisation efforts are common in EU countries. In Croatia, for instance, national and regional business support organisations established an online educational platform (BOND network), which allows its members to communicate, exchange experiences, and undertake virtual trainings to standardise and improve the quality of their services (OECD, 2023[43]). Up until 2022, more than 22 thematic workshops and seminars had been organised throughout Croatia, with the participation of more than 1100 representatives of local entrepreneurial support institutions.
% of all mapped policies supporting the objectives
Note: Shares are calculated as a % of the total of national initiatives aimed at supporting SME absorptive capacities. Shares may be higher than 100% when policy initiatives respond to several policy objectives at the same time.
Source: Experimental indicators based on EC/OECD Survey of Institutions and Policies enabling FDI-SME Linkages (2023).
Beyond investment facilitation, several policies focus on promoting international exposure and networking for SMEs, while less emphasis is placed on local supply chain development. PAIH offers an export analysis service to help SMEs assess their potential for exporting and organises specialised export training programmes and online webinars to enhance their knowledge and skills with regard to market entry strategies, regulatory requirements, and risk management. PARP and BGK provide financial support in the form of grants, loans and guarantees to help SMEs expand their operations to international markets. While these initiatives are important to build SMEs’ knowledge on the needs and requirements of firms in foreign markets, they are not sufficient to build strong supplier capacities –in terms of product quality standards, certification and accreditation– that would allow them to integrate the supplier networks of foreign investors domestically. Beyond connecting foreign investors with domestic SMEs and providing information on foreign markets, effective supply chain development requires initiatives that align domestic supplier capabilities with the needs of foreign multinationals that operate in Poland.
To further integrate Polish SMEs in the supplier networks of foreign multinationals, PAIH could implement a supply chain development programme jointly with PARP. The Supplier Clubs programme implemented by the Portuguese SME agency, IAPMEI, in collaboration with the investment promotion agency, AICEP, is a good example of how public policy can mobilise actors across the business ecosystem to help local SMEs collaborate with foreign MNEs (OECD, 2022[9]). The programme combines matchmaking services to help foreign multinationals established in Portugal and domestic firms identify collaboration opportunities and agree on jointly implemented projects; business consulting services and training programmes provided by foreign affiliates to their suppliers based on an assessment of the latter’s performance; and financial support through EU-funded incentive schemes to help SMEs upgrade their technological capabilities for the implementation of the agreed joint projects.
Source: EC/OECD Survey on Policies enabling FDI spillovers to domestic SMEs (2021).
5.4.2. Facilitating FDI-SME spillovers through worker mobility
Labour market regulations affect workforce mobility and, thus, the potential for productivity spillovers to take place when skilled workers move from foreign MNEs to domestic SMEs. Achieving a balance between job security and labour market flexibility, while encouraging skilled workers to move between sectors with significant FDI presence, can lead to enhanced benefits for local economies. Targeted measures aimed at facilitating this mobility can be also used to harness the full potential of these spillovers.
Poland’s legal framework strikes a balance between employment protection and labour market flexibility
Poland has a comprehensive legal framework for employment protection, attaching equal importance to firm adaptability and job security. According to the OECD indicators of Employment Protection Legislation (EPL), restrictions to individual and collective dismissals of regular workers and rules for hiring temporary workers are on par with the OECD average (Figure 5.17). Poland does have employment protection mechanisms in place, particularly in terms of worker rights and job security. Recent labour reforms require employers to justify terminations of fixed-term contracts and, in some cases, consult with trade unions before taking such actions. At the same time, Poland has increasingly focused on making its labour market more flexible. New regulations introduced in 2023 formalised the framework for remote and hybrid work, giving employers greater flexibility in structuring work arrangements.
Recent policy efforts to encourage the uptake of permanent employment and limit the overuse of temporary contracts can lead to more and better upskilling opportunities for employees. Since 2016, Poland has introduced a series of reforms aimed at tightening regulations on temporary contracts, imposing a maximum duration, setting stricter limits on contract renewals, and aligning dismissal notice periods with those of permanent contracts (Lewandowski and Magda, 2023[44]). Following these changes, temporary employment in Poland decreased by 0.9 million between 2016 and 2021. Measures aimed at encouraging the uptake of permanent employment can have a positive impact on firms’ willingness to invest in job training of their employees, which is an important component of a firm’s absorptive capacity. Evidence on the role of employment protection regulations in shaping the incentives of firms to invest in formal training shows that stricter hiring regulations for temporary contracts, paired with more flexible rules for dismissing permanent employees, create stronger incentives for firms to invest in formal training (Almeida and Aterido, 2011[45]). In contrast, overly restrictive dismissal regulations combined with low regulation of temporary contracts (e.g. Portugal) may lead to reduced investment in job training.
Poland’s labour market regime is generally favourable for fostering FDI-SME spillovers from labour mobility, but these benefits are more likely to be realised in regions and sectors with high absorptive capacities among SMEs. Evidence from EU countries indicates that labour markets with strong absorptive capacities can better mitigate potential negative effects of FDI, such as the displacement of employees in domestic firms, either through direct competition for scarce labour or through foreign firms offering higher wages to attract skilled workers (Becker, B. et al., 2020[46]). To fully leverage FDI-SME spillovers through labour mobility, it is essential to examine how labour market regulations interact with other factors like SME absorptive capacity and the local availability of skilled workers. Despite regulatory improvements and an influx of foreign workers, labour mobility between foreign and domestic firms in Poland will remain limited unless the structural challenges related to the absorptive capacity of local SMEs are addressed.
Recent initiatives aimed at attracting foreign workers can help address skill shortages in FDI-intensive sectors. Amid the challenges posed by the COVID-19 pandemic and the war in Ukraine, Poland amended its regulations for employing foreign workers (European Commission, 2022[47]). Special provisions were introduced to facilitate employment for Ukrainian nationals and other foreign workers, simplifying administrative processes and extending temporary legal work statuses during the pandemic. Furthermore, the “priority path” was introduced for certain sectors deemed strategically important to the Polish economy, allowing for faster processing of work permits for foreigners employed in these sectors.
Note: The OECD indicators of employment protection are synthetic indicators of the strictness of regulation on dismissals and the use of temporary contracts. For each year, indicators refer to regulation in force on the 1st of January. Range of indicator scores: from 0 (low regulators protection) to 6 (high regulatory protection).
Source: OECD Employment Protection Legislation Database, 2019.
Access to workforce upskilling and reskilling programmes could be further facilitated for SMEs and address skill shortages in FDI-intensive sectors
Challenges to education systems during the pandemic and as a result of the recent influx of refugees have compounded previous issues with skill shortages in key areas of the Polish economy. Workforce training is supported by the government through multiple channels (Table 5.7). Assistance provided through PARP mainly targets human capital development in SMEs and is funded by the state budget and EU funds. The agency administers the PARP Academy, an e-learning platform that offers free-of-charge online training sessions tailored towards SMEs in areas related to setting up and running a business. The SME Manager Academy also finances training and advisory support for managerial staff in SMEs, while the Early Warning System assists firms experiencing periodic difficulties in running a business through training, consulting and mentoring. The National Training Fund (Krajowy Fundusz Szkoleniowy), which is financed through a combination of public funds and employer contributions, provides financial support for employee training with the intention of maintaining employment by adapting skills to changing needs. At the subnational level, various forms of co-financing are available to support skill development (OECD, 2023[19]). And firms are increasingly providing training themselves, though the rate at which training is provided remains relatively low, especially among small business.
While Poland exhibits a comprehensive policy framework to upgrade workforce skills, there is still room for facilitating access to upskilling and reskilling programmes and tailoring them to the needs of entrepreneurs. The uptake of certain training schemes implemented by PARP has been limited over the past few years and the average amount of financial support provided to enterprises for organising training activities through the KFS remains insufficient (OECD, 2023[19]). Financing support could be increased to further encourage participation in training for managers, particularly from SMEs. Upskilling programmes could also become more accessible to smaller firms and their employees through the adoption of modular formats (e.g. online courses) to allow for more flexibility and lower costs. To this end, individualised and tailored sectoral training programmes can be more impactful than general training courses as they reduce skills shortages in target sectors where FDI may crowd out competitors, including SMEs, unable to retain their talented staff. Awareness of available training opportunities should be enhanced by leveraging the business networks of sectoral skills councils, chambers of commerce and other industry organisations. Moreover, the introduction of individual training accounts can make training rights transferable from job to job, therefore upgrading skills (OECD, 2023[19]).
The monitoring and evaluation of skill development programmes could also be improved upon. Some progress has been made already, improving the collection and use of data on the impacts of these programmes. The Polish Graduate Tracking System (ELA) tracks information on the labour market outcomes for graduates from formal education programmes and a similar portal was recently established for the graduates of TVET programmes. However, there is still a need for more regular and rigorous analysis of this data in order to inform policy design and decision making on trainings at the level of the individual and firm.
If Poland wants to benefit from FDI spillovers through labour mobility, it needs to adapt its labour market institutions so that they can support the development of a broader set of workforce skills in line with the needs of foreign multinationals. This will require robust skills anticipation systems that involve both SMEs and the investment community and allow to design evidence-based and forward-looking programmes that match expected skills needs in emerging sectors, in particular digital and knowledge-intensive services. Poland has established sectoral skills councils that bring together representatives from the education sector, employers, and other social partners (Cedefop, 2023[48]). These councils aim to monitor and identify the skills required in various industries, ensuring that formal education curricula and market development services are aligned with industry needs. While PARP manages the sectoral skills councils, efforts to link their work with the investment community should be increased. For instance, PAIH could collect information on foreign firms’ operations and skill needs and be further involved in the skills anticipation assessments organised by the councils.
A more tailored approach that considers SME and FDI trends could help foreign MNEs find the skills they need. Experience from peer EU countries suggests that sectoral training programmes should be flexible enough to allow foreign MNEs to tailor them to the needs of their employees. For instance, IDA Ireland has partnered with Skillnet Ireland, the Irish public agency responsible for skills development, to facilitate foreign investors’ access to Skillnet’s talent development programmes. Sometimes, foreign MNEs create their own training centres, and many IPAs support them by ensuring that trainings are recognised by the relevant authority.
Source: EC/OECD Survey on Policies enabling FDI spillovers to domestic SMEs (2023).
In 2022, Ireland’s investment promotion and skills development agencies, IDA Ireland and Skillnet Ireland respectively, launched a strategic talent development partnership. The partnership aimed at supporting FDI companies who are looking to attract and retain talent by offering them access to tailored skill development initiatives implemented across Skillnet Ireland’s 73 networks nationwide. The programme combined the IDA’s business development and support services for foreign MNEs with Skillnet Ireland’s talent development expertise and delivery network to help drive companies’ growth.
Before the official launch of the partnership, the two agencies successfully piloted the programme by helping a selected number of foreign MNEs put together a strategic training and development plan to meet their business objectives. The programme involved coaching and mentoring to help companies assess their talent needs. External consultants were also assigned to work with them and help them address skill gaps and identify strengths and opportunities for further improvement. By the end of 2022, more than 20 companies had gone through the programme across different sectors such as financial services, biopharmaceuticals, aviation communications, manufacturing and software development.
Skillnet Ireland has previously teamed up with IDA Ireland and Technological University Dublin to develop its Transform programme, an accredited course designed to help companies equip their staff with automation and tech skills. The programme has had notable success for Dell Technologies in supporting the company to enhance the talent capacity of 600 members of its Ireland-based workforce and has resulted in the development of 190 business innovation projects. In 2021, Skillnet invested EUR 1 million to bring the programme to a wider network of businesses. This supports businesses in their adoption of digital transformation and propels their workforce to embrace digitisation as it applies to leadership, strategic business models and advancing human digital capital capabilities
Source: OECD based on IDA Ireland (2022[49]).
5.4.3. Creating market conditions for fair competition and knowledge exchange between foreign and domestic firms
Regulatory framework conditions that foster fair competition and encourage the exchange of knowledge between foreign and domestic firms can contribute to productivity growth and innovation. Competition rules that ensure a level playing field facilitate the entry of foreign investors and, at the same time incentive domestic firms to improve the quality of their products and services, adopt new technologies and engage in innovative activities. The protection of intellectual property rights is also an important means for SMEs to protect the value of their innovations and position themselves competitively vis-à-vis large firms in domestic and global markets. Strong IPR protection rules may also increase foreign MNEs’ willingness to share their technology and know-how with domestic firms, through joint ventures and licensing agreements.
While regulatory barriers to competition are moderate, there may be benefits in addressing issues with public ownership in some sectors of the economy
Overall, Poland performs better than most OECD economies in terms of regulatory barriers to competition. According to the OECD Product Market Regulation (PMR) indicators, which measure the degree to which laws and policies promote or inhibit competition, regulatory barriers are below the OECD average and have significantly decreased over the past decade (Figure 5.18). Poland performs particularly well with regard to regulatory impact evaluations and administrative burden on business, reflecting sustained efforts in recent years to streamline business registration procedures and lower associated costs for entrepreneurs. While Poland’s licensing and permit regime is less burdensome than in the average OECD economy, there is room to further align it with international best practices, for instance by making an inventory listing all licences and permits necessary to start a business available for online consultation.
Policy emphasis could be also placed on addressing potential distortions induced by public ownership and removing barriers in services and network sectors (see Section on regulatory barriers). The less competitive score on public ownership is partly due to the fact that, compared with other OECD members, state-owned enterprises (SOEs) are relatively common and important economic actors in Poland (OECD, 2017[50]). These are largely concentrated in extractive industries, the financial sector, and utilities (OECD, 2014[51]). Concerns about the roles of these firms and lower predictability may discourage some international firms from investing in these sectors (U.S. Department of State, 2022[52]). Strengthening corporate governance of SOEs, ensuring a level playing field, and improving transparency could help mitigate these concerns and foster a more competitive and attractive environment for foreign investors. Some improvements in SOE governance have been made recently; most notably, the re-centralisation of ownership through the new Ministry of State Assets, which replaced ownership by regulator line ministries. Further improvements may include the implementation of clearer distinctions between firms’ public service and commercial activities in order to encourage fairer market competition with other businesses and to increase transparency and predictability (OECD, 2017[50]).
OECD Product Market Regulation index, 2023 (most competitive = 0, least competitive = 0)
Note: The indicators refer to economy-wide regulation and are composed of the simple average of the sub-indicators on state involvement and barriers to entry. The indicators range between 0 (most competitive) and 6 (least competitive environment).
Source: OECD PMR Database, 2023.
The degree of regulatory restrictiveness varies considerably across sectors, with relatively high restrictions in place in retail trade and certain professional services, among others (Figure 5.19). Restrictions that affect competition in these sectors include regulation of fees for lawyers and notaries, restrictions on ownership of law firms, and barriers to the entry of architects and civil engineers with qualifications from outside of the European Economic Area (EEA) (OECD, 2021[37]). High levels of regulation in these sectors may discourage firms from making productivity-enhancing investments, partly because of the effects of these rules on reducing competitive pressures (see Section on FDI restrictions). As a result, firms may be less adaptable to market changes and less capable of innovation. In contrast, the regulatory framework for competition is more competition-friendly than most other OECD economies in the e-communications sectors and in digital markets. The quality of the regulatory environment in these sectors is important for promoting productivity growth and innovation since a new set of digitally-enabled data-intensive activities, such as search engines, online marketplaces, cloud computing, and app stores, is reshaping the environment in which business-to-business and business-to-consumer interactions occur (OECD, 2024[53]). As a member of the European Union, Poland participates in the EU's efforts to assess and address competition challenges raised by the development of these markets, including by introducing legislation to update their merger regime for the digital age and subject online platforms to fair trade and contestability measures.
OECD Product Market Regulation, 2023 (most competitive = 0, least competitive = 6)
Note: The indicators refer to economy-wide regulation and are composed of the simple average of the sub-indicators on state involvement and barriers to entry. The indicators range between 0 (most competitive) and 6 (least competitive environment).
Source: OECD PMR Database, 2018.
Despite having a governance framework similar to other European countries, further reforms are needed for intellectual property protection to benefit FDI and SMEs
Recent reforms have improved the legal framework for intellectual property rights protection in Poland. The protection of intellectual property is mainly governed by the Patent Office of the Republic of Poland, which is responsible for patents, trademarks, and industrial design issues, and the Ministry of Culture and National Heritage, which is responsible for copyright policy. Since 2020, specialised courts have heard cases related to intellectual property disputes. The legislative framework for IP is set out in the laws including the Act on Copyright and Related Rights and the Industrial Property Act. Passed in 1994 and amended several times since then, the Act on Copyright and Related Rights defines the scope of copyrights and rights of their holders. Similarly, the Industrial Property Act covers the regulation of patents, trademarks, industrial design, geographic indications, and other related topics. It was amended in 2007 to facilitate application processes and allow for electronic filing. Poland’s laws are similar to those applied in other EU member states. Nevertheless, foreign firms in particular are more likely to rely on EU institutions such as the European Patent Office (EPO) and the European Union Intellectual Property Office (EUIPO) (Clayton et al., 2023[54]). Poland also co-operates internationally on intellectual property issues through its membership in WIPO and has signed major multilateral treaties such as the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement).
While a comprehensive legal framework is in place, further improvements to Poland’s framework for IP rights protection are needed to catch up with its peers. Despite recent increases in R&D investments and growth in IP registrations, the use of IP rights among Polish firms remains low (Clayton et al., 2023[54]). OECD work on Poland’s IP system has found that only a small percentage of businesses rely on IP protection, with just 0.4% of firms applying for a patent between 2014 and 2018, and 1% applying for a trademark. Moreover, most Polish patents are not extended beyond national borders, with fewer than 7% being transferred to the European Patent Office (EPO) for international protection. This indicates not only low levels of innovation in key sectors but also a lack of awareness among businesses—especially SMEs—about the strategic importance of IP protection in enhancing competitiveness and commercialisation efforts. These challenges are reflected in the country’s performance in the World Intellectual Property Organisation’s (WIPO) 2023 Global Innovation Index where Poland ranks 41st globally out of 132 countries (WIPO, 2023[55]) – behind most advanced peer OECD and EU economies.
Another significant challenge lies in the underutilisation of IP by universities and research institutions. While these institutions are the main users of the patent system in Poland, their research outputs are rarely commercially exploited (Clayton et al., 2023[54]). The limited incentives for academic researchers to commercialise or license their inventions, coupled with weak collaboration between academia and the private sector, contribute to this issue. High costs associated with IP protection, including application fees, patent attorneys, and litigation costs, further exacerbate the problem, particularly for SMEs and academic researchers. Additionally, the current patent examination process in Poland is often slow and lacks transparency, leading to increased uncertainty and administrative burdens for applicants. These structural challenges, if left unaddressed, could continue to impede Poland’s efforts to harness IP as a key driver of innovation and economic growth.
Facilitating innovation spillovers and strengthening the knowledge base of the Polish economy will require targeted policy interventions to promote IP use and the establishment of an effective means of co-ordination, led by the Ministry of Economic Development and Technology. Key components of an effective IP strategy in Poland should include the promotion of IP use among economic actors and other stakeholders as well as information campaigns and training programmes to raise awareness and knowledge about the advantages of IP. Given the high barriers to IP use for smaller firms, the government of Poland could continue its policy efforts to lower the costs associated with IP protection and simplify IP-related procedures. Promoting the valorisation of IP held by universities and research centres could also enhance technology transfer to the business sector and foster business-to-business and science-business partnerships that involve foreign multinationals and domestic innovative firms.
To strengthen Poland's innovation landscape and foster greater economic growth, intellectual property (IP) protection and effective utilisation are critical. Despite an increase in IP registrations and investments in research and development (R&D) over the past decade, Polish firms, especially small and medium-sized enterprises (SMEs), as well as universities, face significant barriers to leveraging IP effectively. In 2023, the OECD conducted a comprehensive assessment of the strengths and limitations of the intellectual property system in Poland, offering policy recommendations to fully exploit the potential of IP to support an innovation-based economy. These include:
Enhance awareness of IP among businesses, especially SMEs, universities, and research institutions. Many firms are unaware of the benefits of IP protection, preventing them from securing the value of their innovations.
Strengthen IP education: Integrate continuing education programmes on IP into the broader innovation ecosystem to help researchers and enterprises understand how to exploit IP effectively and commercialise their inventions, both domestically and internationally.
Encourage commercialisation of university patents: Address the under-exploitation of IP by universities and research institutions by providing stronger incentives for researchers to commercialise or license their innovations. This includes improving access to finance, fostering collaboration with the private sector, and offering monetary incentives for successful technology transfers.
Reduce IP-related costs for SMEs and researchers: Alleviate the high costs associated with IP protection, such as application fees, attorney costs, and litigation expenses, which are prohibitive for SMEs and academic researchers. Financial incentives, patent litigation insurance, and low-cost dispute resolution mechanisms should be considered.
Support international IP protection: Provide more support for Polish innovators seeking international patent protection, especially for SMEs. This could include training for IP attorneys on international systems, subsidy schemes to reduce the cost of international patent applications, and access to international IP training materials in Polish.
Improve the patent examination process: Increase transparency and efficiency in the patent examination process to reduce costs and save time for applicants. Faster search and examination procedures would help reduce uncertainty and allow innovators to focus more on exploiting their innovations.
Promote the use of technology transfer offices (TTOs): Encourage the use of TTOs to improve the commercialisation of research outputs, enhance collaboration between academia and industry, and build skills related to IP management.
Source: Clayton, T., et al., (2023[54]), Enhancing intellectual property use for a stronger innovation ecosystem in Poland, https://doi.org/10.1787/42e389fa-en.
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