An useful tool for efficient economic policy

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Piotr Brzózka

An useful tool for efficient economic policy

Piotr Brzózka

Interview regarding Łódź Special Economic Zone with Prof. Zbigniew Rau, Governor of the Łódzkie province

Let’s imagine that things had turned out differently to what they did 20 years ago and that the government had not created the Łódź Special Economic Zone. How would the region’s economy look today without the Zone? Would we have overcome the deep crisis of the 1990s without the state aid given to backers who invested in the Zone?

It is hard to speculate about what could have been. Nevertheless, it must be noted that the Zone has proven to be an effective tool in bolstering the economic development of our region given the economic situation we have experienced in the last 20 years. The preferential terms offered by the Zone were attractive to investors. It was most definitely one of the factors which determined the dynamics of the development of the Łódzkie province and helped the local economy survive during a difficult era of economic transformation. The current government policy, in particular the Responsible Development Plan, is aimed at bolstering and stabilising economic growth by expanding into new markets and attracting foreign investment. Special economic zones, not least including the one in Łódź, are an excellent tool for effective economic policy.

Which of the industries active in the Zone do you believe to be of particular importance to the development of theŁódzkie province?

We have been able to attract companies from different industries, from chocolate manufacturing to logistics and IT. In my opinion, investments which could significantly lower the unemployment rate are currently of key importance. Of all the large province capitals in Poland, Łódź has the highest unemployment rate. It is as high as 8%, whereas Poznań’s unemployment rate is just 2% and Kraków’s is 3.5%. I hope that the efforts of the management team behind the Łódź zone can be supported by responsible policies introduced by the local government, aimed at remedying previous omissions in preventing unemployment. I appreciate the Zone’s efforts to expand its area and cooperate with the province’s government. It is a responsible economic policy that seeks to restore the balance between Łódź as the dominant centre and other towns in the region such as Sieradz, Zduńska Wola, Rawa Mazowiecka and Łowicz. I do not believe that we should favour certain investors over others. Everyone who wants to do business in our province should be treated on an equal footing, one that fosters a business-friendly environment. I believe that the Łódź zone has been meeting this high standard.

Most of the businesses set up in the Zone’s early years were manufacturing plants. In recent years, however, there has been a rise in the number of investments in the services sector. The Zone has also recently been focusing on the development of smaller companies, including start-ups. Are these trends positive?

I believe so. The start-up sector is particularly promising. Investing in modern technologies improves the appeal of our region and, in the future, can become an important factor in increasing the competitiveness of the Łódzkie province on both domestic and foreign markets.

What do you prefer to see - an increase in foreign investment or the fact that local companies are also investing in the Zone.

I am happy with both of these trends. Both foreign investors and local companies bring benefits to our region. Foreign investment is an integral factor in the development of local economy and we can only be happy that foreign companies are interested in doing business in our province. Foreign investment has definitely helped create new jobs but, thanks to the implementation of suitable regulations, medium and large Polish businesses are now able to keep up with foreign companies. Investment by local businesses is definitely a good thing from a patriotic view of economics as it acts as an impulse for rapid economic development. Additionally, local companies have a better perspective of the needs and expectations of our region.

Special economic zones are based on the principles of government intervention into the economy. Simply put - is it worth it? Do you believe that state aid given to companies investing in the Zone has produced adequate results?

The fact that the existence of the Zone has been extended until 2026 is proof enough that the results have been satisfying . Investments in the Zone have produced tangible benefits, not only in the form of new jobs leading to a decrease in unemployment rates, but also in the form of funds obtained through selling and taxing real estate located within the Zone and through lowered spending on social welfare. The Zone was created to foster economic development and state aid given to businesses as part of this development and an effective form of aid. This does not, of course, preclude changes aimed at improving the Zone’s efficiency and introducing a better incentive system for investors.

In a few years’ time, the Zone will conclude its activities and local authorities will no longer be able to utilise the simple tool used to attract investors in the form of tax relief. In your opinion, how should the region prepare for this? How will the province attract investors when it will not be able to offer tax relief?

I do not think we should be afraid of this. The aim of the Zone was to stimulate the economy and attract investors. We were able to achieve this objective. The government is working on a new policy

that will regulate the relations between businesses and public authorities. The intent is for tax relief to apply to individual investments, provided that certain benefits are met and not solely to special economic zones. This approach may bring greater benefits and encourage more businesses to invest in our country. Our province is seeking to attract businesses not only through the special economic zone, but also through human capital in the form of skilled and educated workers. It is a great asset of huge value to businesses seeking to invest in Łodzkie. The city’s central location in Poland and excellent transport connections are other advantages that attract capital. That is why I do not believe that our region will become less attractive to investors after the Zone ceases its operations.

Piotr Brzózka

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