Poland's economic miracle: from poorer than Jamaica to richer than Japan in 35 years

our first guest. Yes. Let's do it. Um welcome to the stream. Uh how do I pronounce your name? Martin. Hi Marin. I know it's difficult, but marching goes a long way. Thanks. Thank you so much for joining us to meet you. Thank you for staying up late. Uh we know that you are over in Europe.

Uh if you could please give us an introduction on yourself and uh some of the research that you've done. We'd love to kind of explore some of the ideas that you've been writing about. Sure. Sure. Thank you for having me.

Uh so I'm I'm professor of economics at Kosmis University in Warsaw, which is the highest ranked business school in Central Europe. It is sort of the Stanford of Central Europe, if you will. I also wrote a book that uh claimed the Polish economic miracle.

Uh the the fact that Poland has been the fastest growing economy in Europe and worldwide except for China over the last 35 years. And I've also worked and advised over the past 20 years almost 20 governments around the world including most recently India and China.

So that also brings a bit of a global perspective to what has been happening in Poland, in the US, and around the world. Yeah. What what are the key ingredients to to Poland's economic success broadly if you were to kind of rank the the few key choices that were made or investments? Yeah.

Every it feels like at least once a month a chart pops up of of Poland's like GDP growth relative to a bunch of other countries and it's just absolutely remarkable, right? Yeah. Yeah.

So, it's in a remarkable sort of Hollywood Netflixlike story or you can call it a California-like unicorn because it is an economy that was bankrupt, backward and broken in 1899 at the at the end of communism and and and was poorer than Jamaica, Surinam, Gabon and a couple of other um countries and 35 years later it is now richer than Japan and it will be richer than Spain and Israel next hair which is a remarkable story um of sort of unicorn and phoenix-like growth and I think there were a number of ingredients but one is definitely the the grind the work habits even now 35 years into this economic miracle uh polls are the hardest working people uh among all the rich countries an average pole pole puts in 700 more hours of work per year than an average German like 12 hours per week.

That's incredible. Speaking our language speaking our language. Is there take me one click upstream from that? Like I can imagine uh a a population is more hardworking if you ban things that make it hard to you know do leisure.

So I I I are there anything is are there any pieces of the of the the what the government has done to make hard work more easier to pick or or more likely for the population to lean towards.

I'm thinking of like Singapore has banned a ton of like drug use for example and so I would imagine that Singaporeans work harder because the alternative of going and uh you know to a rock concert or to like the equivalent of Burning Man isn't on the table.

Is there anything like that that's actually been co like cognizant the government said we want our folks to work harder and then it happened or is it just like chance luck of the the Polish people? No, it's it's not Singapore.

It's a democracy with, would you believe, 20 different governments over the past 35 years from left-wing Democrats to right-wing Republicans, from Bernie Sanders to Ron Paul and and all of them, I think they represented a society that is just hungry for success and a society that just wants to be richer or at least as rich and then richer than the than the fat cats in Western Europe.

And that's exactly what's been happening. There's been a choice of polls who have moved from one-third of German income uh 35 years ago to 75 80% of German level of income now and they want to get to 100 and 120 and one way of doing it is obviously working hard.

So an average pole per week works 12 hours more per week than an average German and even six hours more. And what's the what's the exact uh the exact number? Is it is it 50 hours a week? I don't know how how much time Germans spend working. Uh it's a I don't know. I don't want to pick on Germans.

I say hi to all my German friends. But uh you know Poland continues to believe that that working hard and and there's a lot of opportunities. You know Poland is part of an open global economy, part of the West, part of the European Union where you have 450 million consumers with no borders, no tariffs, no nothing.

If you have a good idea, you can win and conquer these markets, particularly from the incumbent, Western European players who very often just lost the hunger for success. What's the lesson from the roll out of the internet?

I've heard uh a lot of countries sort of were able to pull forward economic growth by leaning in on high-speed internet, making it more accessible, extra infrastructure investments.

How much uh does the rise and roll out of the internet and like getting that right play into the Polish growth story over the last three big part and then so a Poland is a late comer and also a beneficiary of being backward uh you know when I came to the US for the first time in 1997 I did not know where checks were I I just never never knew they existed.

So Poland moved from a backward communist country straight into swiping credit cards and and sort of WeChat like payment systems which we have right now. Uh so and also brand new 5G and and fiber optics. So I think this is the what they call a rent of backwardness which is what exactly Poland has leveraged.

It has not had any s cost in the old infrastructure which again uh has happened in in Western Europe. For instance in Germany one of the reasons they seem to be losing the the battle to be competitive in in electric vehicles is that all the BMWs and Mercedes they did not want to cannibalize the good business.

Um and so they were late to compete with the Chinese. Poland never had this sos and it went straight into the into technology uh technological frontier. How do you how are how are you counseling or thinking about sovereign AI?

I feel like uh giving every country if you want your country to succeed in the uh in the 2000s in the 2010s, you definitely want every citizen to have access to Google or every access or to Google search to uh you know cloud documents the cloud broadly.

But you don't need necessarily a data center in your country to access Google or to search the web or have access to the internet. Um it wasn't it wasn't that critical to have the actual infrastructure in your borders.

Now it feels like there's a whole new discussion around you need sovereign AI, you need to be doing the inference within your borders for some reason. And I just I'm I don't know that I fully believe that.

I feel like uh you you want your citizens to use AI, but uh whether they use it, whether they, you know, jump through a fiber optic cable across the border and access it somewhere else, that doesn't seem like I think the push for the push for sovereign AI is partly out of a fear of this sort of fast takeoff scenario, right?

Yeah. But yeah, I've never bought that. But yeah, but and I it does not need to be mutually exclusive.

So in Poland actually every single players players in the market you know Google, Amazon, Microsoft these guys uh have the largest data centers and they ready to provide AI services to every is whoever is interested but at the same time the the government is also building uh redundancy.

It's it's building additional infrastructure including to host uh apps that do not even exist in the US. Like for instance, I don't have to have any plastics on me, any ID when I drive for instance. It's all on my phone.

There's a Polish app uh called, you know, citizen where you virtually have most of the things you have needed. It's all on your phone. So it's it's again it's an example of how some countries have just moved on and increasingly a lot of public services will be done uh from the phone.

It also helps that there's a lot of Polish talent that has actually helped create AI in the first place. I mean a Polish guy is a chief scientist at Open AI. Onethird of the founding engineers of Open AI were Polish.

So you know these guys called their moms and called them ex-girlfriends and tell them look you really want to look at Chad GBT and what we doing because that's the future. Yeah. How how is uh how is Poland's university system helping to uh accelerate you know all these different priorities?

It feels like the US is at a unique moment where we've had a very uh robust um uh you know academic system but currently uh our our uh there's somewhat of a well not even somewhat certainly a kind of a conflict between uh the the government in our university system but then um also like a a broad sort of distrust of of a lot of our institutions.

Yeah, that that is true. And you know for all people uh most people around the world including myself a lot of I got my you know PhD in Poland. I became a professor in Poland but I did my pre-dog and post dog at Harvard and I know the US well and it's obviously still the best place to get the top quality education.

Most Nobel Prize winner winners come from the US but but some other countries sort of hustle. So Poland has not only outworked its competitors, it has also outed educated its competitors. So for instance, half of young Poles age 25 to 34 have university education. In Germany is only onethird. So that gives you an idea.

They do not do not only work hard, they're actually pretty well educated. It might not be Stanford and Harvard all the time, but this is solid education as reflected is in these open AI guys. And finally, Poland also out competes because you you get this talent for half price for what you would pay for it in Germany.

You know, a top-notch computer scientist in Poland whom you can put at Silicon Valley any day will cost you 75 grand. Uh I guess back where you're sitting, it would be 200 plus.

So, it's it's really this combination of human capital and and low labor cost and being located in in the heart of Europe and getting increasingly increasing interest from global um global investors who who look at 11 Labs and I saw just a guy who who was there just before me. I think he had a hat. That's right.

Tyler's rocking the hat right now. Right. What about uh what about on the on the regulation front? uh what what are the ways that uh Poland has you know what break down Poland's decision-m around uh regulation versus you know maybe other members of of the EU.

Uh so in the U you cannot really have much of your own voice on digital matters. So it's actually all been consolidated in Brussels and the European Commission puts up ideas on behalf of everyone else. That's the same for trade.

So for instance when the European Union cut a deal with Trump it was the EU that was negotiating on behalf of everyone not Poland Germany on Spain on digital is pretty much the same and there's ongoing debate whether Europe is just overregulating and I including AI and I agree we are overregulating or at least there's a perception that Europe is overregulating which is killing AI.

So I'm I'm hoping that the the perception will change and again newcomers new guys on the block like Poland uh now the 20th largest economy in the world you know richer richer than than Japan with more than1 trillion dollars of GDP Poland will be one of the countries that will be pushing for their regulating for opening up because this is exactly what has worked well for this country.

Did you have to ask Brussels if you could come on our podcast? No. Uh, I'm here as an academic author of [laughter] this book if anyone is interested. No, but no. Okay, good. Okay, good. Good. You're like, I had to apply. It was a, you know, 10-hour application to go on the on the podcast. No, it's not quite that.

the the advantage of the EU is that for instance there's now this debate about creating a a new regulatory system where you could set up a company which could immediately work all across Europe under the EU laws. So I think they called it sort of the 28 regime.

You you could sell your products and services everywhere in the EU without worrying about local regulations. And I think this is the way to go. And I think Poland and our region, all countries in the region will be pushing for these kind kind of solutions. We don't want Europe to be sclerotic.

We want Europe to be successful and polls who are the most pro-american society in Europe and proudly also in the world will be one of the big supporters of these changes. Uh awesome.

What's the mood in Poland around energy or or what's the uh is is there any place where Poland differs from Europe like other European countries broadly in terms of uh energy strategy or where energy is going when I when I think about the sovereign AI thing um a lot of countries it's just if you have cheap energy you should set up an AI factory uh even no matter where you're wind up selling the tokens uh that's just a great use of energy these Um, but how is Poland thinking about the current energy mix and where that's going and various incentives and tradeoffs that might differ from other countries?

So, Poland has originally and traditionally been a coalbased country, but has really moved quickly. Now, about only half of the all energy use comes from coal and Poland has decided to go all in on on nuclear and on renewables.

M so the plan is to pretty much minimize or even eliminate the use of coal within the next decade plus and and Poland has already decided to build one nuclear plant then and actually with Westinghouse American technology but renewables is is the is the other part of the answer so there's probably not enough of a surplus now to make Poland into a data center hub but it's pretty much but it's pretty much coming in other ways Poland is a hub like a lot of Belarusians Ukrainian Czech Slovak Virtually the whole region is increasingly moving into Warso and Poland because this is where things happen.

If you want to scale up, if you want to internationalize, if you want to find capital that's not vill that's not means for sure, uh you really want to come to Warso because that's where all the interest is and that's where the action is. Cool. Very very cool.

Well, I cannot wait to at some point I'm sure we will do this show from Warsaw and uh that will be a fun moment. Thank you so much for joining and breaking it down. Anytime anytime Poland is in the news, uh, feel free to jump back on the show. It' be great to to talk through it. Thank you so much. Great.

Thank you for having me. Great to meet you. We'll talk to you soon. Cheers. Bye. [applause] Let me tell you about Vanta. com. Automate compliance, manage risk, improve trust continuously. Vanta's