How To Determine A Geographical Diversi Ca On Of Investment A Rac Veness

Transcription

1 THE INVESTMENT ATTRACTIVENESS OF THE REGIONS AND THE SUB-REGIONS OF POLAND

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3 THE INVESTMENT ATTRACTIVENESS OF THE REGIONS AND THE SUB-REGIONS OF POLAND 2011 EDITED BY MARCIN NOWICKI AUTHORS ANNA HILDEBRANDT MARCIN NOWICKI PRZEMYSŁAW SUSMARSKI MACIEJ TARKOWSKI GDAŃSK 2011

4 EDITORIAL STAFF MARCIN NOWICKI TEAM OF CONTRIBUTORS ANNA HILDEBRANDT MARCIN NOWICKI PRZEMYSŁAW SUSMARSKI MACIEJ TARKOWSKI TRANSLATION WOJCIECH WOŹNIAK THE GDAŃSK INSTITUTE FOR MARKET ECONOMICS 63, DO STUDZIENKI STR., GDAŃSK POLAND PHONE FAX KONRAD-ADENAUER-STIFTUNG POLAND OFFICE 63, J. DĄBROWSKIEGO STR., WARSAW POLAND PHONE FAX THIS STUDY WAS PERFORMED BY THE GDANSK INSTITUTE FOR MARKET ECONOMICS IN THE FRAMEWORK OF CO-OPERATION WITH THE KONRAD ADENAUER FOUNDATION FREE COPY

5 TABLE OF CONTENTS SUMMARY 5 1. INTRODUCTION THE OBJECTIVES, SCOPE AND METHODS OF RESEARCH This report aims to: The scope of research The source data and the methodology of research THE FACTORS OF INVESTMENT ATTRACTIVENESS IN THE REGIONAL PERSPECTIVE The accessibility to transport Labour resources The absorp on capacity of markets The economic infrastructure The social infrastructure The level of economic development The condi on of the natural environment The level of public safety The investor-oriented ac vi es of the voivodships INVESTMENT ATTRACTIVENESS OF SUB REGIONS The industrial ac vity The services sector Advanced Technologies INVESTMENT ATTRACTIVENESS OF VOIVODSHIPS The signi cance of individual loca on factors The Labour cost and resources Investor-oriented ac vi es Transport accessibility The absorp on capacity of the market The economic infrastructure The social infrastructure Public safety Investment a rac veness a synthe c perspec ve...60

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7 Summary This is the seventh report in a series whose aim is to capture di erences in the investment a rac veness of the regions (voivodships) and the sub-regions of Poland. Investment a rac veness (IA) is understood as a capability to a ract investment through a combina on of business bene ts linked to loca on. The areas that produce an op mum combina on of loca on factors o er the best condi ons to business operators and hence a ract investment. As in the earlier edi ons of the report, we have performed here a synthe c assessment of IA of voivodships and an assessment of IA of sub-regions against three criteria: industrial ac vi es, services and advanced technologies. In this regard we analysed several dozen variables which form the basis for the assessment of geographical diversi ca on of speci- c loca on bene ts (factors), including accessibility to transport, cost of labour, quan ty and quality of labour resources, absorp on capacity of the output market, the level of economic and social infrastructure, the level of economic development and of public safety. Di erent weights were a ributed to these factors depending on the type of business ac vity. The Silesian ( l skie) voivodship con nues to be the leader in investment a rac veness. A high degree of IA is evinced by the Mazovian (mazowieckie) and the Lower Silesian (dolno l skie) voivodships. An above average investment a rac veness is clearly seen in the Ma opolskie, Wielkopolskie, Western Pomeranian (zachodniopomorskie) and the Pomeranian (pomorskie) regions. All of the aforemen oned regions rank high or average against the majority of IA aspects. However, the combina on of these bene ts can vary across the regions. Among the most a rac ve sub-regions are two compact areas in the South of Poland. One of them is located around Upper Silesia (Górny l sk) and the Western part of Ma opolska whereas the second one is found around the industrial ci es of Wroc aw, Jelenia Góra and Wa brzych in Lower Silesia (Dolny l sk). These areas are characterised by long-standing industrial tradi ons and a well-developed produc on sector, a specialised labour market and a rela vely high transport accessibility owing to the A-4 motorway. There are only four sub-regions outside of this area that show a rela vely high level of industrial development and a good access to transport, i.e. the sub-regions of ód, Pozna, Bydgoszcz-Toru and Szczecin. Metropolitan sub-regions emerge as the most a rac- ve with respect to investment in services. These are centred around the largest ci es of Poland and feature plen ful resources of highly-trained workforce of diverse competencies, highly absorp ve large-scale output markets. Moreover, the largest Polish ci es o er a very good transport accessibility and a well- 5

8 -developed economic infrastructure. Metropolitan sub-regions dominate the group of sub-regions that show the highest level of investment a rac veness in the eld of advanced technologies. This is where infrastructure and R&D personnel are concentrated. The labour resources comprise specialists who originate from the local academic establishments as well as those who are a racted by high living standards and a vibrant cultural life. These centres show the best developed ICT infrastructure and a rela vely high access to passenger transport. 6

9 Table 1. Investment a rac veness of voivodships in 2011 Transport accessibility Labour market Market size Social infrastructure Public safety Economic infrastructure Investor-oriented ac vi es Investment a rac veness of voivodships Value Rank Value Rank Value Rank Value Rank Value Rank Value Rank Value Rank Value Rank Weights l skie 0,46 1 1,38 1 1,32 2 1,19 2 2,30 1-1, ,43 6 0, Mazowieckie 0,37 5-0, ,96 1 0,71 3 0,38 4-0, ,31 2 0, Dolno l skie 0,43 2 0,03 5 0,45 4 1,43 1 0,82 3-1, ,37 1 0, Ma opolskie 0,23 8 0,62 2 0,29 5 0,15 6 1,74 2-0,24 9 0,05 7 0, Wielkopolskie 0,41 3 0,13 3-0,07 8 0,21 5-0, ,38 6 0,85 4 0, Zachodniopomorskie 0,39 4-0,11 9-0,17 9-0,33 9-0,05 6-0, ,04 3 0, Pomorskie -0, ,03 8 0,86 3-0, ,08 5-0, ,62 5 0, ódzkie 0,22 9 0,10 4-0, ,12 7-0,19 7-0, ,21 8-0, Kujawsko-Pomorskie 0, ,00 6 0,02 6-0, ,21 8-0,09 8-0,37 9-0, Lubuskie 0,37 6-0, ,05 7-0, ,32 9-0, , , Opolskie 0,23 7-0, , ,33 4-0, ,23 7-0, , Podkarpackie -0, ,03 7-0, ,32 8-0, ,38 1-0, , wi tokrzyskie -0, , , , , ,01 2-0, , Warmi sko- Mazurskie -0, , , , , ,43 5-0, , Lubelskie -0, , , , , ,89 3-0, , Podlaskie -0, , , , , ,73 4-1, ,68 16 Source: GIME research 7

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11 1. Introduction The Gda sk Ins tute for Market Economics (GIME) completed its seventh study of the geographical diversi ca on of foreign investment a rac veness of Poland. This report en tled The Investment A rac veness of the Regions and the Sub-regions of Poland re ects the facts and ndings of our research. As before our overriding objec ve was to portray, with a maximum of precision, a me-graded geographical diversi ca on of investment a rac veness of Poland. To this end we needed to modify some of our research methods and, in par cular, the choice of indices and weights, due to the evolu on of investors preferences and the socio-economic changes in the regions. In order to maintain the comparability of results in the successive reports, we assumed to restrict the modi ca on of research methods to the degree that would make it possible to analyse changes in the synthe c IA indices between the years. As in the earlier reports of , we performed a synthe c assessment of IA of voivodships and an assessment of IA of sub-regions against three criteria: industrial ac vi es services advanced technologies Based on the aforemen oned assump ons and our research methodology it is possible to trace changes in the geographical diversi ca on of foreign investment a rac on of the Polish voivodships. These are further re ected in the IA ra ng lists compiled for the years While analysing the ndings of the report it is important to keep in mind that they present an average a rac veness of the regional centre and the periphery. This is crucial as IA is quite o en iden ed with the a rac veness of the regional capital, which is an unwarranted simpli ca on. To give a closer look at the IA diversity within voivodships, an addi onal sub-regional study was done. Despite using a narrower range of criteria, this level of analysis gives a far more accurate picture of geographical and func onal structure of Poland, and, in consequence, more precisely re ects the country s IA territorial diversity. The experience of the earlier edi ons of the report shows that our ndings are o en taken to signify the success or the failure of a regional or a local policy. It should be noted that the investment policy whose key goal is to increase investment a rac veness forms part of a broader development policy of regions and sub-regions. The investor-centric perspec- ve adopted in this report is not the only and the most important aspect of the development strategies of regions and ci es. Therefore the making of investment a rac veness is not an aim in itself (although this happens to be the remit of our report) but should rather be appreciated as a tool used in the overall vision of development. Let us note further that the investment policy cannot directly shape all the loca on factors that follow from long-term and complex processes of the socio-economic nature. This report cannot be taken as a review of the regional development strategies operated, in par cular, by the regional governments. Even the category of investor-oriented ac vi es of the regions cannot pertain solely to the voivodship governments as the investment o er and the promo onal and informa- on ac vi es are, in a signi cant degree, operated 9

12 by local governments, businesses or private individuals or specialised organisa ons (such as special economic zones /SEZ/, regional and local development agencies etc.). This report is an e ect of the annual research project carried out by the team of GIME in coopera on with the Konrad Adenauer Founda on. 10

13 2. The objectives, scope and methods of research 2.1. This report aims to: iden fy geographical di erences in the level of investment a rac veness and to grade voivodships and sub-regions in this respect; indicate strong and weak points of individual territorial units in terms of IA factors; analyse changes in the investment a rac veness of voivodships and sub-regions The scope of research The substan ve scope of the report follows from the no on of investment a rac veness. IA is understood as a capability to a ract investment through a combina on of business bene ts linked to loca on. These bene ts stem from the speci c features of the area in which business ac vity is developed and are referred to as loca on factors. Therefore a set of loca on factors determines the investment a rac veness of a given area. The areas that o er an op mum combina on of loca on factors a ract investment. They make it possible to reduce investment expenditures and the current costs of business while enabling the maximisa on of pro t and reducing the risk of investment failure. This report assumes the investor-centric perspec ve. This does not mean, however, that our conclusions are immaterial to the local and regional actors. The understanding of strong and weak points of one s own region as well as those of the compe ng regions will facilitate the crea on of compe ve advantages in investment a rac on. It should also be noted that the interests of a prospec ve investor are not the only ones to be accommodated in the pro-development strategies. Thus the conclusions of the report are material to the making of the local or regional development policy but are not synonymous with it. Business ac vi es come in all forms and shapes that translate into diverse loca on preferences. Consequently, there is no investment a rac veness of an area in the absolute sense. Our assessment of investment a rac veness is therefore a two-track process: with respect to sub-regions we discuss loca- on factors concerning the three most important types of economic ac vity i.e. the industry, services and advanced technologies; with respect to voivodships the universal loca on factors are discussed. The substan ve scope of the report is condi oned by: the necessity to apply a wide range of indicators that describe, as precisely as possible, the individual loca on factors; the necessity to apply di erent weights to the individual loca on factors to highlight the varying importance of these factors to the placement of diverse types of investment projects. In this framework we analysed several dozen variables which form the basis for the assessment of the 11

14 geographical diversi ca on of speci c loca on bene ts (factors), including accessibility to transport, blic safety. Various weights were a ributed to these ture, the level of economic development and of pu- the cost of labour, the quan ty and quality of labour resources, the absorp on capacity of the output wagi. factors depending on the type of business ac vity. market, the level of economic and social infrastruc- Table 2. Factors and their signi cance to investment a rac veness of sub-regions and voivodships Industry Sub-regions Services Advanced technologies Voivodships Factors Weights ( in %) Transport Accessibility Cost of labour Quan ty & quality of labour resources Absorp on capacity of output market Level of economic infrastructure Level of social infrastructure Level of economic development Level of protec on and the condi on of natural environment Level of public safety Ac vi es of regions towards investors 20 Total Source: GIME research The geographical scope of the report covers the territory of Poland and subdivides into: 16 voivodships (regions); 54 sub-regions (formally, there are 66 sub-regions but for the purposes of the report large ci es that cons tute sub-regions, including Katowice, Cracow, ód, Pozna, Szczecin, Tri-City (Trójmiasto: Gda sk, 12

15 Gdynia, Sopot) and Wroc aw were grouped together with their respec ve surrounding areas which are func onally linked to them). The availability of data determines the me-frame of the report as di erent categories of recent data are released with a varying degree of me-lag. Therefore the temporal structure of data used in the report is as follows : 2009: the composi on and volumes of added value, investment outlays and structure of employment; 2010: the majority of indicators obtained from public sta s cal sources; 2011: chie y, transport accessibility, investor-oriented ac vi es, unemployment, the land available in special economic zones The source data and the methodology of research The report relied on the quan ta ve data obtained primarily from the public sta s cal sources and was complemented by other data. The key sources of informa on were: Regional Data Bank of the Central Sta s cal O ce; Polish Agency for Informa on and Foreign Investment (PAIiIZ); Managers of special economic zones; Departments of Trade and Investment Promo on (WPHiI) at the Polish embassies in the countries with the highest share of foreign investment in Poland. The principal methodology of IA assessment remained unchanged and consisted in the pseudo-monovariate procedure of classi ca on. This approach e ec vely means that the assessment of investment a rac veness is rela ve. The point of reference is the average value of the set of voivodships or sub-regions. Changes to the set of indicators have been limited to minor technicali es in this edi on of the report. The methodology which was developed earlier on in our research relies on the sources of data now available. No new possibili es have presented themselves in this respect. In spite of the e orts made by the researchers this report does not exhaust all the signi cant aspects of IA. This is due to the unavailability of some quan ta- ve data or the di culty in the quan ca on of the qualita ve data which was only fragmentary. Therefore the results of this report can only be interpreted in the speci c framework of data used in the analysis. 13

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17 3. The factors of investment attractiveness in the regional perspective 3.1. The accessibility to transport The role of transport accessibility in IA is the following: the supply of raw materials and components necessary in produc on and the reduc on of supply costs, the supply of nal goods to consumers and the reduc on of supply costs, provides passenger tra c and enables direct mee ngs between suppliers, collaborators, customers and advisers. The assessment of transport accessibility requires a point of reference against which it is de ned. The following benchmarks were adopted for the purposes of IA assessment: loca on rela ve to the Western border, loca on of voivodships and sub- -regions rela ve to Warsaw, loca on rela ve to regional centres, loca on rela ve to interna onal airports (sub-regions), with respect to their importance (voivodships), loca on rela ve to major mari me ports (Szczecin, Tri-City). centres, output markets and transport hubs. The signi cance of transport accessibility factors varies according to the type of business ac vity. For example, accessibility by road as well as a general level of the transport and logis cs sector are vital to the industrial ac vi es whereas airports are important to the hi-tech business Labour resources The workforce impacts investment a rac veness as it enables business operators to recruit an adequate number of employees, recruit employees of adequate professional skills and experience, recruit employees of the appropriate a tude (reliable, responsible, honest, entrepreneurial), op mise labour costs to ensure the pro tability of investment. In our assessment of labour resources in regions and sub-regions the following factors were taken into account: the number of employed persons, the number of unemployed persons, the number of vacancies, The above criteria were adopted with considera on to the structure of the Polish foreign trade, the role of the capital city and regional capitals as economic the in ux of secondary and ter- ary schools graduates, the level of remunera on. 15

18 In this framework it is possible to obtain both a quan- ta ve and a qualita ve assessment of labour resources. Depending on the type of business, prospec ve investors will seek di erent characteris cs of the workforce. The produc on sector tends to employ graduates of the voca onal schools while the services sector relies to a greater extent on persons with secondary and ter ary educa on The absorp on capacity of markets The absorp on capacity of markets in uences IA by enabling prospec ve investors to sell their goods or services on the regional market. The higher the absorp on capacity the greater bene ts of scale can be obtained and the sooner investment outlays can be recovered. A high absorp on capacity of the regional market can reduce the nal cost of goods through a reduced cost of transport. In order to assess IA the following aspects of market absorp on were factored in: the size of output market, the wealth of households, investment outlays of business operators. The signi cance of market absorp on varies according to the type of business. This factor tends to be less important in the industrial ac vity whose products are distributed to many markets. In the case of services, which are typically sold on the local market and which require a direct contact with customers, a great importance is a ached to the absorp on capacity of the regional market The economic infrastructure The economic infrastructure impacts the level of IA through facilita ng the investment process and the opera on of the investment project. The following components of infrastructure were considered in the IA analysis: the density of ins tu ons in business environment, the presence of R&D centres, the number of fairs and exhibi ons, the opera on of special economic zones (SEZ). These factors can play di erent roles in the placement of business ac vi es. The land available for investment projects will be vital to the produc on ac vi es in the special economic zones. Hi-tech business will in turn look for the proximity of R&D establishments The social infrastructure The social infrastructure in uences IA indirectly it creates bene cial condi ons of life and a racts immigrants, which enhances the quan ty and the quality of labour resources, it creates a climate of openness to the exchange of ideas, which favours crea vity and innova on, it facilitates the organiza on of training courses, conferences and mee ngs between clients. The following components of the social infrastructure were taken into account: the number and the ac vity of cultural establishments such as theatres, ci- 16

19 nemas, culture/crea vity centres, the density of the hotel and catering infrastructure. The social infrastructure is important to the services sector and, in par cular, to the hi-tech services which depend on the availability of high-quality human capital and a social climate that favours innova on The level of economic development The level of economic structure and development bears on IA as it shapes the technical environment which may be required by the investor. It makes it possible for the investor to obtain the required services and supplies and provides for an op mum opera- on of the investment project. The following factors linked to the level of economic development were taken into account: the produc vity of labour, the share of non-agricultural ac- vity in the economy, the presence of companies with a foreign capital. cost of business as it requires the implementa on of recycling/treatment installa ons, causes an increased rate of absenteeism due to sickness and, in extreme cases, may lead to the accelerated wear and tear of - xed assets (e.g. through corrosion), a high level of pollu on lowers the standards of living and bears nega vely on the quan- ty and the quality of labour resources. The following aspects of the natural environmental have been taken into account: the size of areas protected by law, the level of air pollu on, emissions to the surface and the underground waters. The condi on of the natural environment has diverse e ects on the loca on of di erent types of business. As regards the industrial ac vity, the presence of protected areas will limit the possibility of loca ng an investment project. A sound natural environment will favour investment in services or high technologies The condi on of the natural environment The condi on of the natural environment has a two- -fold e ect on IA: the presence of a highly valuable natural environment protected by law is a serious impediment to the placement of an investment project, a high level of pollu on generates a nancial 3.8. The level of public safety The level of public safety translates into the nancial performance of an investment project in a limited degree. A low level of public safety leads to the increased cost of protec ng the property and the employees. The role of this factor in shaping IA a ects to a greater extent the percep on of personal safety and the responsibility for the fellow employees or business partners. In addi on. a low level of public safety may reduce the quan ty and the quality of 17

20 labour resources due to migra ons caused by the deteriora ng standards of living; exempli es a de cit of the social capital which, in turn, may impede the investment process and the opera on of the project; signals social pathologies or inadequate public governance. The following aspects of public safety have been re- ected in our assessment: the level and the structure of criminality the rate of crime detec on. The level of public safety is slightly more relevant to the investment in services and advanced technologies which are more dependent on the quality of labour resources The investor-oriented ac vi es of the voivodships. The ac vity towards investors is understood as the ability of the regional/local authori es to build and promote the image of the region as well as to create an investor-friendly climate. This is the least measurable of all the factors and it is therefore not easy to analyse. In fact, the analysis can capture only a frac- on of the wide range of marke ng ac vi es implemented by the administra on. The local and the regional authori es apply diverse tools and strategies in this respect, which makes them di cult to compare. With this reserva on in mind, the following aspects of investor-oriented ac vi es were included in our study: a number of investment o ers in the data base of the Polish Agency for Informa on and Foreign Investment; the informa on and promo onal ac vi es targe ng foreign investors in their country of origin co-performed by the regional authori es and the Polish diploma c service, i.e. the Departments for the Promo on of Trade and Investment at the Polish embassies. These variables are not free from some shortcomings (i.e. regional authori es may di er in the degree to which they use such promo onal ac vi es) but they have one major bene t in that they present a rela- vely consistent system of data collec on which enables comparability. The case of investor-oriented ac vi es of the regional administra on exempli es an important rule, i.e. the results of the study re ect investment a rac veness measured by means of a speci c set of indicators and can be interpreted only in the framework of these variables. 18

21 4. Investment attractiveness of sub-regions 4.1. The industrial ac vity The importance of individual loca on factors The investment a rac veness of sub-regions is shaped by seven groups of component indicators. Four of these directly in uence the cost of produc on which is a key parameter determining the loca on of business. This category of indicators includes the quan ty of labour resources the accessibility to transport the cost of labour the level of economic infrastructure. The impact of the three remaining groups of indicators is indirect in nature and concerns, for example, the possibili es of business co-opera on or the limita on of loca on opportuni es due to the legal protec on of an area. A possible con ict related to the use of natural resources in the proximity of the protected areas may tarnish the image of the investor. However, it is di cult to quan fy the nancial impact of such incidents as a cost of produc on. Such indirect factors of IA include: the level of protec on of the natural environment; the level of public safety; the level of economic development. A geographical diversi ca on of investment attrac veness The aforemen oned criteria were used to assign individual sub-regions to one of ve equinumerous classes (of 11 elements with the excep on of the last class of 10 elements) of investment a rac veness. Among the most a rac ve sub-regions are two compact areas in the South of Poland. One of them is located around Upper Silesia (Górny l sk) and the Western part of Ma opolska whereas the second one is found around the industrial ci es of Wroc aw, Jelenia Góra and Wa brzych in Lower Silesia (Dolny l sk). These areas are characterised by long-standing industrial tradi ons and a well-developed produc on sector, a specialised labour market and a rela vely high transport accessibility owing to the A-4 motorway. There are only four sub-regions outside of this area that exhibit a rela vely high level of industrialisa on and a good accessibility to transport, i.e. the sub-regions of ód, Pozna, Bydgoszcz-Toru and Szczecin. At the bo om of the IA ra ng list there are ten sub- -regions characterized by a low level of industrializa- on. They show a rela vely low accessibility to transport and limited resources of the quali ed workforce. Some of them may bene t from low labour costs and the presence of the special economic zones. 19

22 Map 1. Sub-regional investment a rac veness with respect to industrial ac vi es in trójmiejs ki szczeciński koszaliński słupski starogardzki elbląski olsztyński ełcki suwalski 9 stargardzki pilski grudziądzki bydgosko-toruński 6 białostocki gorzowski włocławski ciechanowsko-płocki ostrołęcko-siedlecki łomżyński poznański 7 leszczyński zielonogórski legnicko-głogowski wrocławski jeleniogórski 4 11 wałbrzyski nyski Highest High Average Low kaliski koniński opolski rybnicki 2 sieradzki 1 skierniewicki łódzki 3 piotrkowski częstochowski katowicki warszawski radomski kielecki sandomierskojędrzejowski krakowski oświęcimski 10 8 tarnows ki bielski 5 nowosądecki puławski tarnobrzeski krośnieński bialski lubelski rzeszowski przemyski chełmsko-zamojski Lowest Source: GIME research There has been no change in the ve top-scoring sub-regions compared to The Bydgoszcz-Toru sub-region was promoted from the 7th to the 6th place, while the Pozna sub-region was demoted to the 7th. The Szczecin sub- -region was promoted from the 10th to 9th place, while Cracow brought up the rear in the top ten. The Jelenia Góra sub-region moved up one rung to 11th posi on, which was primarily due to the improved economic infrastructure. The Wa brzych sub-region le this year s ranking, as it was moved from 11th to 13th place. 20

23 Table 3. Sub-regional investment a rac veness with respect to industrial ac vi es between 2010 and Sub-region Ranking in 2011 Ranking in 2010 katowicki 1 1 rybnicki 2 2 ódzki 3 3 wroc awski 4 4 bielski 5 5 bydgosko-toru ski 6 7 pozna ski 7 6 o wi cimski 8 8 szczeci ski 9 10 krakowski 10 9 jeleniogórski Source: GIME research The most a rac ve sub-regions. Despite some traits in common, each sub-region is characterized by a slightly di erent make-up of a rac on factors. Below are the dis nc ve characteris cs - both strong and weak points of the IA top-scorers with regard to industrial ac vity. 21