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Polish Information and Foreign Investment Agency PL 00-585 Warsaw, 12 Bagatela Street, phone: (+48 22) 334 98 00, fax: (+48 22) 334 99 99;

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Presentation on theme: "Polish Information and Foreign Investment Agency PL 00-585 Warsaw, 12 Bagatela Street, phone: (+48 22) 334 98 00, fax: (+48 22) 334 99 99;"— Presentation transcript:

1 Polish Information and Foreign Investment Agency PL Warsaw, 12 Bagatela Street, phone: (+48 22) , fax: (+48 22) ; Attracting FDI as a Tool for Technology Transfer and Strengthening Innovation: Poland Barbara Łoboda, Acting Director Business Intelligence Department, Polish Information and Foreign Investment Agency Warsaw, June 2006

2 Polish Information and Foreign Investment Agency PRESENTATION AGENDA I.R&D activities in Poland II.Attracting R&D investment projects to Poland III.Challenges for the future

3 Polish Information and Foreign Investment Agency R&D activities in Poland

4 Polish Information and Foreign Investment Agency R&D activities I.Example of countries that have achieved sustained growth shows that investing in and exploiting technology is indispensable in this process. II.One of the sources of innovation is research and development (R&D) activity. III.R&D internationalisation opened the door not only for the transfer of technology created elsewhere, but also for the technology creation process itself. IV.OECD definition: research and experimental development comprises creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of knowledge to devise new applications.

5 Polish Information and Foreign Investment Agency R&D centers in Poland ≤ > Wrocław Szczecin Bydgoszcz Gdańsk Warszawa Kraków Poznań Katowice Kielce Bielsko-Biała Częstochowa Zielona Góra Gorzów Wielkopolski Gliwice Garwolin Radzymin Skawina Bielawa Roughly 40 R&D centers created by foreign investors. Total employment: more than people. 2005: 7 new R&D centers created. Warsaw: Krakow: Wroclaw: NUMBER OF CENTERS

6 Polish Information and Foreign Investment Agency R&D centres in Poland I.Among R&D centres identified by PAIiIZ, the majority work for the following sectors: telecommunications, IT, automotive, electric equipment, chemicals, aviation and food processing. II.Foreign affiliates conducting R&D activity in Poland originate mainly from the European Union, and the USA. There are also centres owned by Asian companies. American investors have located at least as many as 18 R&D units here. The next on the list are the Netherlands (4 centres) and Germany (3 centres).

7 Polish Information and Foreign Investment Agency Kraków Warszawa Bydgoszcz Gdańsk TNCs’ R&D CENTRES IN POLAND Source: PAIiIZ Wrocław Zielona Góra Poznań Bielawa Bielsko -Biała Częstochowa Garwolin Katowice

8 Polish Information and Foreign Investment Agency Examples of TNCs investments in R&D in Poland TNC and localization R&D activityEmployment Siemens, Germany Wroclaw Centre of software development for mobile telecommunication for Siemens Center and other branches on the world. In 2005 agreement on cooperation with Politechnika Wroclawska. 100 employees in 2000, 700 in 2006 Motorola, USA Krakow Software for mobile telecommunication systems, protection systems and new mobile phone generation: projects, development and application. Cooperation with other Motorola R&D centers. 100 employees in 2004, 380 in 2006 Delph USA Krakow Technical Centre of parts and subassemblies for automotive: shock absorbers, mufflers, expiratory systems, electrics and software. Current employment 560 persons. Source: Zbigniew Zimny basing on PAIZ materials.

9 Polish Information and Foreign Investment Agency R&D INVESTMENTS AND TNC I.Among the top 20 firms by R&D expenditure in the world, at least 7 have their R&D centre in Poland II.TNCs are the source of: 46% of world R&D expenditures 69% of world’s business R&D expenditures III.R&D expenditures of large TNCs are bigger than states’ outlays. IV.New trend: R&D activities carried out outside „home state” of TNC. The top 20 firms by R&D expenditure in the world, 2003 (USD, billions) Source: UNCTAD, WIR 2005

10 Polish Information and Foreign Investment Agency Attracting R&D investment projects to Poland

11 Polish Information and Foreign Investment Agency The most important attributes in determining R&D investment locations (% of responses) Source: A.T.Kearney, (2005), FDI Confidence Index Main factors taken into consideration in the R&D location process: -lower R&D costs, -availability and quality of local R&D labour, -intellectual property protection, -quality of universities and research centres, -IT and local infrastructure.

12 Polish Information and Foreign Investment Agency POLISH POPULATION IS LARGER THAN IN OTHER NEW EU MEMBERS COMBINED Source: Eurostat, 2004 In millions Population on 1st January 2004 Number of people aged 15 or less (in millions; 2002;2004)

13 Polish Information and Foreign Investment Agency In Poland there is a large number of possible locations Cities with more than 100,000 inhabitants Source: GUS Polish statistical office Poland42 Czech Rep.5 Slovakia2 Hungary9 Population per 1 sq km by poviats

14 Polish Information and Foreign Investment Agency Competitive labour costs SLOVAKIA POLAND CZECH REP. HUNGARY 3.09 USD 4.41 USD 4.94 USD 5.80 USD The average cost of work in 2005 * (in USD per 1 hour) and average annual increase of cost of work in * (in %) + 7.0% + 6.0% + 7.0% Source: Economist Intelligence Unit, Feb Boston Consulting Group * FORECAST Poles are among the most hard working populations in the world. According to OECD Employment Outlook 2004 annually Poles work 1984 hours which gives Poland second position in the world. SOUTH KOREA2390 POLAND1984 CZECH REPUBLIC 1882 HUNGARY1777 USA1777 SLOVAKIA1770 UK1652 FRANCE1393 GERMANY1362 Source: OECD

15 Polish Information and Foreign Investment Agency Percentage of pupils in general secondary education by foreign language FOREIGN LANGUAGES’ KNOWLEDGE 44% of Polish society is able to communicate foreign language 33% of them speak two foreign languages Source: Public Opinion Research Centre, June 2004 Percentage of Poles speaking foreign languages in age groups (in %)a Learning of the foreign language is obligatory in Polish education system English is the most popular foreign language in Poland Source: Eurostat

16 Polish Information and Foreign Investment Agency MAIN ACADEMIC CENTRES Education in Poland 2004:  Students mn  Graduates thous  Higher education schools Source: Central Statistical Office Gdańsk Warszawa Kraków Poznań Wrocław Katowice Łódź Szczecin Białystok Olsztyn Lublin Rzeszów Toruń Bydgoszcz Kielce Number of students in 2000/2001

17 Polish Information and Foreign Investment Agency The Polish graduate pool are dwarfing other near shore countries Process Available new graduates per year per business process (thousands) Poland Hungary UkraineRussia RomaniaBulgaria Czech Rep. Slovakia Software development F&A services Voice-based inquiry call center Data center operations Graduates in Science, mathematics & computing Graduates in social sciences, business and law Language students with German as major at university Graduates in engineering, manufacturing and construction Assumption n/a

18 Polish Information and Foreign Investment Agency STATE AID- SPECIAL ECONOMIC ZONES There are 14 Special Economic Zones in Poland CIT tax exemptions: For the new investment projects Tax exemption cannot exceed 50% of the investment expenditure. Investment expenditures (qualifying costs) include: 1) cost of purchase of land 2) outlays on buildings and structures 3) outlays on fittings and fixtures for the facilities 4) cost of purchase of intangible assets - up to 25% of the investment expenditures mentioned in points 1-3 For new jobs creation Tax exemption cannot exceed 50% of the value of the two-year’s labour costs for the company (gross salaries and other mandatory charges related to employment). Other privileges  Plots prepared for investment, available for a competitive prices  Assistance in all formal procedures related to the new investment  Exemption from real estate tax (granted by local authorities at the commune level)  Support for hiring the unemployed

19 Polish Information and Foreign Investment Agency SINCE MARCH 2005 BPOs’ PROJECTS CAN BE LOCATED IN THE SPECIAL ECONOMIC ZONES Coucil of Ministers’ resolution dated on 8 February 2005 including the services into the SEZs Services admitted in SEZs: - IT services - R & D services in the area of natural and technical sciences - financial and accounting services - bookeeping services (excluding tax returns) - call centers services SEZs: Kamiennogórska Katowicka Krakowska Legnicka Łódzka Mielecka Pomorska Słupska Suwalska Tarnobrzeska Wałbrzyska Warmińsko-Mazurska Kostrzyńsko-Słubicka 9 March 2005

20 Polish Information and Foreign Investment Agency Technology park is an entity managed by specialists, whose main goal is to amend the living conditions of the society through promotion of innovation culture and competition of associated companies and institutions. A park should stimulate and facilitate the flows of knowledge and technology between universities, institutions, companies and markets. Parks should facilitate development of innovative enterprises by the process of incubation and hosting spin-offs. A park should provide suitable services and high quality offices. Every park has a unique character that mirrors the specification of the local scientific and economic environment, industrial traditions and cultural differences. Technology parks are most often directed at SMEs. Technology parks

21 Polish Information and Foreign Investment Agency Technology parks in Poland Currently there are at least 45 industrial and technology parks in Poland. Projects of parks development are supported by the local Regional Development Agencies as well as Industry Development Agency.

22 Polish Information and Foreign Investment Agency POLISH INFORMATION AND FOREIGN INVESTMENT AGENCY Co-operation with Polish Embassies abroad Single point of contact for information and advice PROMOTION OF POLAND PMs team with sectoral expertise Network of regional offices (Investors’ Servicing Centres) Co-operation with SEZs, central and local authorities Testimonial visits with investors After-care services SERVICESSERVICES INFORMATIONINFORMATION Investment climate Incentives system Sectoral statistics Suppliers and subcontractors FDI statistics Governmental agency formed in June 2003 as a successor of former investment promotion agency PAIZ Investment offers database Source: PAIiIZ 2005 Division responsible for R&D R&D investment marketing Information needed to run R&D centers

23 Polish Information and Foreign Investment Agency POLAND Strenghts Summary Warsaw Area:9th in Europe, 63rd in the world (312 th. km 2 ) Population:8th in Europe, 29th in world (38.3 million) Currency: Polish Zloty (USD 1  PLN 3.7) GDP: 46% of EU GDP per capita (PPP) (USD 11,090) GDP growth: 5,3% (2004) Membership: OECD, NATO, EU Large domestic market Young and well- educated workforce Central location in Europe Perspectives for dynamic economic development International legal and business standards

24 Polish Information and Foreign Investment Agency Challenges for the future

25 Polish Information and Foreign Investment Agency TNCS’ PLANS TO INCREASE R&D RELATED FDI ABROAD Prospects of TNCs locating R&D abroad, (per cent of responses) Source: World Investment Report 2005 According to UNCTAD most TNC’s will increase R&D abroad rather than in parental country.

26 Polish Information and Foreign Investment Agency REASONS BEHIND MOVING R&D ACTIVITIES INTO DEVELOPING COUNTRIES I.Push factors: Strong competition Lack of research manpowerin homecountries Rising costs and complexity of R&D II.Pull factors: Growing overseas markets Growing availability of manpower (1/3 of technical universities’ students live in China, India and Russia) Lower costs (Chip designer annual employment cost: $300,000 in USA, $24-65,000 in Asia) III.Politics: Improving innovation systems in R&D host countries (knowledge institutions, R&D performing enterprises and institutional framework for R&D and innovation) Investment incentives Protection of intelectual property rights IV.Enabling factors Advances on ICT and investment Trade internationalisation Source: World Investment Report 2005

27 Polish Information and Foreign Investment Agency THE MOST ATTRACTIVE LOCALISATIONS FOR R&D ACTIVITY BETWEEN 2005 AND 2009 (PER CENT OF INDICATIONS) Belgium, Italy, Malaysia, Korea, Thailand Czech Rep, Poland, Ireland, Israel, Norway and other Holland, Canada, Singapore, Taiwan Increase of investments flows in R&D activity is a challenge for countries from Central and Eastern Europe Source: UNCTAD „World Investemnt Report 2005”

28 Polish Information and Foreign Investment Agency Key policy areas for fostering innovation Majority of factors making a country more attractive for R&D can be influenced by government’s decisions. Key policy areas that need to be addressed while describing the potential for fostering innovation and for benefiting from it include: 1. Strengthening the institutional framework for innovations (human resources development, research capacities of the public sector, policies related to intellectual property rights, competition policy). 2. Enhancing benefits from FDI in R&D (industrial policy, small and medium enterprises (SME) policy, incubation, promoting linkages). 3. Promoting FDI in R&D (investment promotion, performance requirements, R&D incentives, science parks). 4.Home country policies (promoting R&D internationalisations, strengthening the national innovation systems of developing countries)

29 Polish Information and Foreign Investment Agency OECD Guidelines for Multinational Enterprises OECD Guidelines for Multinational Enterprises encourage enterprises to: I. Adopt, where practicable in the course of their business activities, practices that permit the transfer and rapid diffusion of technologies and know-how, with due regard to the protection of intellectual property rights. II.When appropriate, perform science and technology development work in host countries to address local market needs, as well as employ host country personnel in an S&T capacity and encourage their training, taking into account commercial needs. III.When granting licenses for the use of intellectual property rights or when otherwise transferring technology, do so on reasonable terms and conditions and in a manner that contributes to the long term development prospects of the host country. IV.Where relevant to commercial objectives, develop ties with local universities, public research institutions, and participate in co- operative research projects with local industry or industry associations.

30 Polish Information and Foreign Investment Agency We invite you to our website PL Warsaw, 12 Bagatela Street, phone: (+48 22) , fax: (+48 22) ;


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