In fDi’s Polish Cities of the Future 2015/16, Warsaw ranked in first place. The country’s capital topped four of the six categories – Economic Potential, Human Capital and Lifestyle, Business Friendliness, and Connectivity. According to greenfield investment monitor fDi Markets, Poland’s most populous city attracted the highest levels of FDI in the country between 2003 and 2013, with a total of 504 projects.
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Warsaw receives FDI from a wide range of sectors, but the highest proportion of inward FDI in this period – 15.3% – was in business services. Major investments have been made by companies such as Ireland-based management consultancy Accenture, which announced the creation of 500 jobs in the city in 2012; France-based advertising company Publicis Groupe, which established headquarters in the city in 2008; and US-based aerospace company Boeing, which established a training facility in the city in 2007.
The city’s real estate and financial services sectors were the next best performing sectors in the past decade, attracting 14.5% and 12.7% of total FDI, respectively. But it is the communications sector that is proving to be the rising star in Warsaw. Investment in this sector peaked in 2013, when it accounted for approximately 16% of the city’s total FDI. In the same year, the UN’s International Telecom Union, a specialised agency for ICT, decided to host its 2013 global symposium in Warsaw, reflecting the city’s growing reputation in the industry.
To further highlight Warsaw’s position as the economic heart of Poland, the Polish capital’s GDP and GDP per capita figures far surpass those of any other city in the country. Warsaw also has the highest level of retail sales in the country, and attracts the highest number of workers.
The Polish pull
Krakow ranked second in fDi’s Polish Cities of the Future 2015/16 ranking. The southern Polish city is the country’s second largest, not only in terms of population, but also in economic terms, with a GDP of more than 45bn zlotys ($12.13m). The city’s airport, John Paul II International Airport, permits good connectivity, with almost 2 million tourists and business visitors annually. Ranking second in the Human Capital and Lifestyle category, Krakow is a lively student city – one in every 17 residents are students.
Of those investors that cited their motives for choosing Krakow, more than 50% cited the skilled workforce availability as a determinant in their decision. UK-based online grocery company Ocado credited its decision to open a software development centre in the city to Krakow’s abundance of IT graduates. At the time of opening the centre, chief executive Tim Steiner said: “Because we do not have enough computer science graduates in the UK, we are looking to open a base in Poland, which produces 10 times the number of relevant graduates.”
Krakow also proved an attractive location for reinvestment, with 29 FDI expansion projects recorded between 2003 and 2013. In December 2013, Netherlands-based Royal Dutch Shell announced plans to create 150 jobs with the expansion of its financial centre in the city, while UK-based Serco, which operates as a service and outsourcing company, expanded its Krakow offices in August 2012 with the addition of 450 staff.
Poznan, located in western Poland, ranked third in the overall rankings. The city performed well in the economic potential category, generating a high level of GDP per capita, thanks in part to its low unemployment rate and high level of economic activity. Poznan is home to more than 6200 companies in knowledge-based sectors, supported by a high level of graduates in the city. More than 600,000 students at primary and secondary level are enrolled in language learning programmes, an asset to many foreign investors.
Germany-based optical systems company Carl Stiftung credited its decision to expand in Poznan – creating 100 jobs – to the city’s “highly qualified and multilingual staff”. Again, Poznan is a favourable location for reinvestment – 24 expansion projects were recorded in the city between 2003 and 2013.
As would be expected, large cities in Poland proved to be the most expensive locations for investment, commanding higher property and labour costs. Of the cities making up the top 10 locations in the Cost Effectiveness category, the only one not classified as a small city was Sosnowiec, a city with a population of more than 200,000 in the south of the country.
Meanwhile, Lodz topped the voting in an additional, subjective category, FDI Strategy, which does not feed into the overall results.
The Polish economy has grown substantially since the country’s transition from communism to democracy, doubling in size since 1989. According to international economic organisation Organisation for Economic Co-operation and Development (OECD), Poland’s GDP has increased year on year since 2000, increasing at the highest level of any EU country.
This trend is set to continue, with OECD forecasts predicting 2.3% and 2.6% growth in 2015 and 2016, respectively. However, with high levels of emigration and an ageing population, the question is, will this predicted growth be widespread? Or will economic growth be disparate, and serve to drive a gulf between more affluent, modern cities and older, less fortunate ones? Only time will tell.
MethodologyTo create a shortlist for fDi’s Polish Cities of the Future 2015/16, the fDi Intelligence division of the Financial Times collected data using the specialist online tools fDi Markets and fDi Benchmark. The list of 50 locations was drawn up to include the top 50 locations in Poland in terms of inward FDI projects on fDi Markets.
Data was then collected for these 50 locations under five categories: economic potential, business friendliness, human capital and lifestyle, cost effectiveness, and connectivity. Locations scored up to 10 points for each data point, which was then weighted by importance to the FDI decision-making process to compile both the subcategory rankings, as well as the overall ranking.
A sixth category, FDI strategy, is the only qualitative category, and does not feed into the overall result. For this category there were 31 submissions – locations submitted details about their strategy for promoting FDI, which was then scored by fDi’s judging panel. In previous rankings, FDI strategy had been included in the overall ranking, however in order to separate totally qualitative and quantitative data, we chose to list FDI strategy as a standalone ranking.
Cities in the study were categorised according to population. In total, 11 cities were classed in the ‘large’ category. This included locations with a population greater than 250,000. In addition, 16 cities were classed as ‘mid-sized’, with a population between 100,000 and 250,000. ‘Small’ locations (23 locations) had a population of less than 100,000.
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