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Key findings „Internationalization of the Metropolitan Area"

Profesor Krystyna Gawlikowska-Hueckel

Key findings  „Internationalization of the Metropolitan Area"

 Krystyna Gawlikowska-Hueckel, Stanisław Umiński

Key findings

1. Metropolitan Area has relatively stable share in Poland exports: increase from 4,7% to 5,7% between 2008 and 2013. It occurred in a difficult period of crisis, in which volume of international trade fell down. This shall prove high adaptive abilities of enterprises having sits in Metropolitan Are.

2. Export of Metropolitan Area is predominantly generated by industrial sector. Services play smaller role, agriculture sector - the lowest. This reflects the nature of economy three sectors, industry being the most internationalized one. It shall be stressed that large exports can contribute to enhanced role of industry in the economy, which reflects the reindustrialization plans formulated for EU countries. As The European Commission (2012) shows, 80% of innovations are generated by industry, as well as 75% of total exports. One workplace in industry creates another workplace in services.

3. There is specific exports structure by products in Metropolitan Area, in which maritime vessels, boats and other floating constructions dominate. In these products Metropolitan Area reveals the highest comparative advantages in comparison to other exporters from Poland. The second most important product group in exports is: mineral fuels, oils, bituminous products and mineral waxes.

4. Exports is dominated by relatively low processed products. Foreign sales are well diversified in terms of exports destinations.

5. In comparison to other metropolitan areas, intra industry trade intensity is low. According to Castells theory, it proves relatively low engagement of enterprises in business projects carried on within networks. A larger resilience to economic shocks stemming from production drops in cooperating enterprises can be a positive result of low intensity of intra industry trade.

6. For exporters having sits in Metropolitan Area, EU countries share in total foreign sales is relatively low. Higher share of the EU in exports is observed for counties – outside Trójmiasto. The main destinations in exports are: Norway, Germany, the Netherlands, USA and Sweden. Between 2008 and 2013 changes in geographical structure of exports occurred: the most important increases were registered in sales to Singapore and USA.

7. Most of the exporters are concentrated in Gdańsk, Gdynia and Tczew. In 2013 enterprises having sits in these counties accounted for 88,8% of total Metropolitan Area’s exports. Between 2008 and 2013 domination of these counties has increased.

8. Sea is the most important mean of transport used by exporters.

9. There were 81 foreign direct investors operating in Metropolitan Area in 2013. Most of them (64) were localized in Trójmiasto (calculations based on Polish Information and Foreign Investment Agency data). 61 companies belong to the group of the so called “largest investors”. In Metropolitan Area there are 4160 business units registered with foreign capital – 85% out of total number of such business units registered in Pomorskie region.

10. Most of exports (77,3%) comes from domestic enterprises (without foreign capital). It is a clear signal that domestic enterprises are doing well on international markets.

11. Most of foreign direct investments account for section C (manufacturing). Investors come mainly from: USA, Germany, Finland, UK, Canada, Denmark, Sweden, Switzerland and the Netherlands.

12. Internal diversity is a characteristic feature of Metropolitan Area. Exports and foreign direct investments are concentrated in the core. This is also observed in other metropolitan areas in Poland. Diversity also relates to exports by destinations, product concentration and product structure of exports.

13. Educational offer in the English language is another aspect of internationalization. It attracts foreign students. Universities of Metropolitan Area offer 20 types of courses - BA and ME level (for comparison: Poznań Metropoly 27, Kraków 76, Wrocław 57 and Warszawa 230).

14. Also branding is an important aspect of internationalization. Image of metropolis is promoted as there are cultural and fair&exhibition events organized. In Metropolitan Area there are several events of this kind organized, for example: The Shakespeare Festival, International Organ Festival, St. Dominic’s Fair, Amber Art Fair and Open’er Festival.

15.“Invest in Pomerania”, one of the most efficient agencies responsible for attracting and servicing foreign investors in Poland, operates in Pomorskie province. However, the region lacks comprehensive system of exports promotion. This shall change, as the „Pomeranian Exports Broker” will be established.

16. Potential, overall investment attractiveness of the Metropolitan Area is high (B class of attractiveness). Real attractiveness – assed on the grounds of investments inflow – reveals Metropolitan Area relative high position in following categories: labor and fixed assets productivity, self-financing of territorial units and investment outlays. Sopot, Pruszcz Gdański, Tczew, Gdańsk, Gdynia, Wejherowo, Puck, Kolbudy, Reda received the highest scores in investment attractiveness ranking (Godlewska-Majkowska, et.all., 2012). The priority branches, as regards investment policy, are: ICT, energy sector, pharmaceuticals and cosmetics, modern BPO services, logistics, motor vehicles and parts thereof industry.

Main conclusions

1. Exports of Metropolitan Area in 2030 perspective will be determined by both business-cycle and structural factors. The concurrent crisis is a test for the condition and performance of exporters. Their good performance and resilience to external demand shock has been proved. For exporters, crisis is a lesson and signal, that situation in open, global economy is volatile. In a longer perspective, situation of exporters will be influenced by: world’s economic centre shifting to Asia, falling down international transport costs and changes on the world energy market.

2. Exports from Metropolitan Area undoubtedly shall be described as having maritime character. Conclusions in this respect in “internationalization” diagnosis are similar to conclusions in “key sectors for development” – maritime advantage is permanent, ought to be strengthened and deepened according to the concept of intelligent specialization. It will not be the prove of undesired inertia if long-term strategy will rest on investing in innovativeness and competitiveness.

3. Exports are based predominantly on industrial products. They are more tradable than services. There is an argument formulated in a public debate, that efforts shall be taken in order to stimulate exports of services (medical, educational, cultural and business oriented ones). It is justified. However one shall take into account that EU economic policy priorities are being changed towards promotion of industrialization. Service centers established in Metropolitan Area are an important element of high settlement attractiveness. They also contribute to exports growth. This sector would saturate in the forthcoming years. Moreover, service centers can relatively easy be delocalized to other regions/countries (for instance offering lower labor costs). In long run, it is industry that will constitute ability to compete of foreign markets.

4. Relatively low internationalization rate that has been identified for Metropolitan Area deserves a comment – as it does not reflect a conventional wisdom. Regional statistics available in Poland are poor. Rate of exports to total sales has been calculated from F01 financial reports. Calculations show that other metropolitan economies are more open.

5. Low innovativeness that has been identified in “key sectors for development” is also visible in exports structure, in which share of high-tech products is decreasing.

Policy recommendations:

1. The gap towards other regions in Poland shall be filled, in terms of establishing in Metropolitan Area comprehensive system of export promotion, based on an enquiry into exporters’ needs and strengths. Such a system shall correspond with promotion of Metropolitan Area as a place for location of investments (incl. FDIs). For Poland, attraction of FDIs – to large extent – equals promotion of exports.

2. Transport accessibility to Metropolitan Area shall be improved, which will result in increased investment attractiveness and will decrease peripherality, compared to other metropolitan areas of Poland.

3. Actions promoting and disseminating knowledge on benefits from exporting activity shall be initiated. This shall help to unblock export potential of many small and medium size enterprises.

4. Also a positive correlation between innovations and exports shall be promoted. Innovation policy – as stems from current world research in international economics – is treated as an alternative for traditional exports promotion policy.

5. Risk associated with exports potential development – shall be diversified. Excessive (overshooted) specialization is not recommended – it will be however difficult to avoid it in a scenario of dynamic exports expansion. For Poland’s regions, as so far, high dynamics of exports growth was accompanied by increased specialization. Risk reduction will be done by diversification of exports destinations, ownership structure (foreign vs. domestic capital) and exporters size.

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