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Communist and Post-Communist Studies 46 (2013) 79–93
Contents lists available at SciVerse ScienceDirect
Communist and Post-Communist Studies
journal homepage: www.elsevier.com/locate/postcomstud
The importance of geopolitics in firms’ international location
decisions: The Polish case
Aurora A.C. Teixeira a, *, Mariana Dias b
a
b
CEF.UP, Faculdade de Economia, Universidade do Porto, INESC Porto, OBEGEF, Rua Dr. Roberto Frias, 4200-464 Porto, Portugal
Faculdade de Economia, Universidade do Porto, Portugal
a r t i c l e i n f o
a b s t r a c t
Article history:
Available online 11 January 2013
Despite connections and common traits between geopolitics and International Business
based on geography and location, literature on this matter is scarce. This study aims to
contribute to this literature gap, by assessing the importance of Poland’s geopolitical
factors in FDI location decisions. By applying a hybrid methodology which combines
qualitative and quantitative analyses we conclude that there is a connection between
Poland’s geopolitical factors (stable, variable and interactional) and the volume, origin and
distribution of the FDI received.
Ó 2012 The Regents of the University of California. Published by Elsevier Ltd. All rights
reserved.
Keywords:
Geopolitics
International business
International markets
International location decisions
Poland
1. Introduction
Researchers have long ignored the ties between the fields of International Relations (IR), Economics and International
Business (IB), which are frequently accepted as compartmented areas (Strange, 1970). This scenario has recently experienced
some changes. From the perspective of IR, the emergence of disciplines such as Geo-economics (Luttwak, 1990; Correia, 2004)
has contributed to the growth of the literature on the matter, by studying the international economic situation from the
viewpoint of Geopolitics (Luttwak, 1990; Duarte, 1997; Correia, 2004; Vesentini, 2007). In the field of Economics and IB, the
relevance of geography and location factors has garnered greater interest among academics (Hofstede, 1980; Kotler et al., 1997;
Dunning, 1997, 1998, 2000; Holmes, 1998; Minifie and West, 1998; Buckley and Ghauri, 2004; MacCann and Mudambi, 2004;
Peng, 2009), although in the past they have been somewhat underrated and circumscribed to the economic mainstream
(Smith, 1776; Ricardo, 1817; Vernon, 1966; Knickerbocker, 1973; Krugman, 1991, 1998; Venables, 1998). However, literature
related to the influence of Geopolitics on IB is almost nonexistent (As-Saber et al., 2001).
Thus, in the present work, we aim to test the application of geopolitical concepts to the analysis of international markets
and their influence on Foreign Direct Investment (FDI). We intend to contribute to the existing literature on this matter and
highlight the significance and meaning of the relations among IR, Economics and IB. More specifically, we also intend to
provide answers to the following research questions: 1) How important is Geopolitics in international location decisions? 2)
Which factors have relatively more impact on the volume of FDI received by a country and what is its influence (positive/
negative) on it?
To answer these questions, the case study methodology will be followed, and hopefully our conclusions may contribute to
the construction of an emerging field of study (Yin, 2004).
* Corresponding author.
0967-067X/$ – see front matter Ó 2012 The Regents of the University of California. Published by Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.postcomstud.2012.12.006
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The study is structured as follows. In Section 2 we review the literature related to Geopolitics, International Economics and
IB. Section 3 explains the methodological options and Section 4 analyzes the case of Poland. Finally, the main conclusions are
drawn.
2. Relations between geopolitics and international economics: a theoretical overview
Geopolitics arose at the beginning of the 20th century as a multidisciplinary approach that brought together political,
strategic, geographical, historical and economic studies. Its conceptual field has been surrounded by a haze of ambiguity that
has generally led to misinterpretations and unclear views about its definition (Tuathail and Toal, 1994; Correia, 2004; Drulák,
2006), vacillating between a historical and reconstructive science that aimed to explain geopolitical events that had already
taken place in international setting, and a predictive science, that was able of anticipating and conjecturing States’ geopolitical
moves before they really happened (Retaillé, 2000). The most accepted definition of geopolitics is that of Kjellen (apud
Correia, 2004), who defines it as “the theory of the state as a geographical organism or phenomenon of space”. In other words,
geopolitics studies the influence of space and location on human action and, consequently, on political action, supporting the
argument of Defarges (2003) that geographical backgrounds frame and distinguish mankind’s intrinsic ways of life.
Nowadays, there is a new group of authors arguing towards the decreasing importance of military power in relation to
non-military means, such as commerce (Luttwak, 1990; Duarte, 1997; Fernandes, 2002; Couloumbis, 2003; Gagné, 2007;
Mercille, 2008). In a truly Realistic1 manner, Lacoste (1988) states that Geopolitics is, generally, a line of reasoning that aims to
overcome adversity having in mind the circumstances and availability of resources and means. This reasoning is particularly
analogous to the strategic and competitive action of multinational enterprises (MNEs) and, in general, to the dynamics of
international economics. Hence, States and MNEs share a common purpose: strategic use of space as a way to achieve major
influence in the international system and, therefore, leverage their power. Questions such as: ‘What is power?’2, ‘Where is it
located?’ and ‘Which factors increase the potential attractiveness3 of a certain location in relation to another?’ (Eva, 2000;
Fabry and Zeghni, 2002) are at the very core of both the actions of States and MNEs (Correia, 2004). Thus, the methodological
employment of Geopolitical Power Factors (GPFs) (stable, variable and interactional) (cf. Table 1), normally used to classify the
power of a State, is justified in the analysis of an international market, in this specific case, that of Poland.
The geopolitical perspective of spatial understanding and its strategic use meets the economics literature which supports
the significance of geography in MNE strategy (Porter, 1998b; Dunning, 1998, 2000; Daniels and Radenbaugh, 2001; Jiménez,
2002; Mellinger et al., 2003; Buckley and Ghauri, 2004). It also fits into the rationale of geopolitical Possibilism, which argues
Man’s ability to adapt to his geographical surroundings and his ability to use it advantageously, despite existing constraints
and limitations (Lacoste, 1988; Correia, 2004). In a transposition to the economic literature, Schoenberger (2003: 322) follows
the same line of thought claiming that “the earth is not merely a natural surface on which we play out our social and economic
lives” but it is instead “a necessary background” where Man acts and intervenes actively. Schoenberger (2003) adds that the
management of time and space is interconnected, becoming a key aspect of MNE strategy.
The geopolitical situation is also determined by time and space (As-Saber et al., 2001). Even though the Geopolitics-IB
literature is almost inexistent, the articles by As-Saber et al. (2001) and Sethi (2007) provide a stimulus to academic
debate on the matter. These authors discuss the literature gap on this issue, highlighting the lack of awareness of the
connection between geopolitical changes and IB dynamics.
In the last twenty years, a new trend that underlined importance of location and space has emerged among academics,
discussing new factors of influence on the action of MNEs (Hofstede, 1980; Kotler et al., 1997; Holmes, 1998; Wei, 2000;
Kirkmann et al., 2006; Sanyal, 2008; Demirbag et al., 2010). This tendency is closer to Economic Geography (Dicken, 2003)
which has a more comprehensive point of view, emphasizing social, political, cultural and institutional aspects, and contrasts
with New Economic Geography, which attempts to integrate geography into the mainstream through economic models
(Krugman, 1991, 1998; Venables, 1998; Bosker et al., 2010).
Dunning (1998, 2000), a contemporary author of location studies with his Eclectic Paradigm, stresses the relevance of the
geographical dimension in internationalization processes, complementing the characteristics and macroeconomics of
enterprises described as FDI determinants by the mainstream. Other authors (Porter, 1998a; Jiménez, 2002) position
themselves in the same line of thought as Dunning, as they value a country’s distinctiveness and place emphasis on location
and the competitive advantage of the countries, that is, the strategic and unique characteristics of a country that provide it
with an advantage over other countries.
In addition, and mainly in the IB literature, we found more wide-ranging authors who extend the factors that influence
a country’s competitiveness, such as: culture (Hofstede, 1980; Sivakumar and Nakata, 2001; Kirkmann et al., 2006), corruption
1
Realism is a positivist perspective of International Relations Theory that argues that world political scenario is driven by competition and the pursuing
of self interest. The main assumption of the realist’s theory is the inexistence of an entity above States capable of regulating their interactions. International
anarchy self imposes and State interrelations are managed by different levels of power. The pursuing of national interests becomes the main driver of States
international actions and the objective and instrument of states participation on international setting, since no cooperation or alliance can endure or be
trusted (Cravinho, 2006).
2
To Correia (2004), power is today rooted in economy, at the global, state and business levels.
3
We can define a location’s attractiveness as the “dynamic process that reflects both the ability of the host country to build and manage its attractiveness
and the multinational enterprises’ (MNEs) willingness to invest abroad” (Fabry and Zeghni, 2002: 292).
A.A.C. Teixeira, M. Dias / Communist and Post-Communist Studies 46 (2013) 79–93
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Table 1
Geopolitical power factors.
Class of factor
Geopolitical factor
Examples:
Stable
Geographical extent
Position
Physical structure and configuration
Climate
Population
Resources
Social, economic and political structure
Technology
History, ideology, power and strategy
Ecumene/anecumene; sense of space; Effective National Territory.
Boundaries; geopolitical position.
Distance to capital city; geographical isolation (transports).
Climate type.
Dimension; human capital.
Availability of resources; strategic meaning.
Type of social, economic and political structure.
Knowledge questions.
History’s influence; Foreign Policy; International positioning;
International recognition.
Variable
Interactional
Source: Adapted from Célerier (1961); Cohen (2003).
(Wei, 2000; Egger and Winner, 2005; Sanyal, 2008), transports and infrastructures (Asiedu and Esfahani, 2001; Limao and
Venables, 2001; Khadaroo and Seetanahb, 2007), or institutional aspects (Henisz, 2000; Meyer, 2001; Yiu and Makino,
2002; Bevan et al., 2004; Demirbag et al., 2010). Also, we found a lack of literature on the impact of physical geography
(climate, coastline) on the analysis of international markets with internationalization purposes (Mellinger et al., 2003; Buckley
and Ghauri, 2004).
Another group of arguments related to the geographical question explains the drop in importance of ‘distances’ within the
context of the globalization process. In opposition to the former perspective, which advocates location and reviews the factors
that make it unique, this more recent “Born Global Literature” (Brock et al., 2010) highlights a “Borderless World” (Levitt,
1983; Ohmae, 1990; Bell et al., 2001; Cravinho, 2006). This approach suggests that technological improvements in
communications and transports shorten distances and render them irrelevant. On the contrary, some authors still place
emphasis on distance, not only physical (Ghemawat, 2001; Dow and Karunaratna, 2006; Ellis, 2008) but also psychological
and cultural (Lim et al., 2004; Brock et al., 2010).
Porter (1998a: 11) sums up the debate and, although defending the local dimension, he assumes that the faster flows of
communications and transports have a preponderate effect on IB. He finishes by saying that “anything that can be efficiently
sourced from a distance has been essentially nullified as a competitive advantage”. Therefore, it is possible to state that
a country’s geopolitical situation cannot be transferred or replicated since it does not represent a fixed condition like the
existence of resources or a market condition, but a specific circumstances of a region, resulting from a combination of factors.
Consequently, our work does not aspire to formulate the optimal geopolitical situation but rather determines whether
geopolitics can be useful in international market analysis.
3. Methodological considerations
In this study we intend to provide an answer to the question ‘How important is Geopolitics in international location
decisions?’ by analysing the relationship between the geopolitical situation of Poland and the FDI it has received. Based on our
study goals and the aim to develop a multidisciplinary approach we believe that the best methodological option is to combine
quantitative and qualitative methods. We will also look for the answer to the question ‘Which factors have relatively more
impact on the volume of FDI received by a country and what is its influence (positive/negative) on it?’
The option for the case study method is based on the need to provide a solid basis of reasoning through comprehensive
data gathering (Yin, 2004), in an area of study where the literature and information are clearly insufficient (As-Saber et al.,
2001; Sethi, 2007).
The choice of Poland as the case study is strongly linked to the profound geopolitical changes the country has undergone in
the last two decades. The fall of the USSR determined the end of its dependence in both internal and external matters. Therefore,
Poland had to follow its own path as a sovereign country and to manage its new independent geopolitical situation in terms of
domestic structure and foreign affairs. The Polish situation is also worthy of analysis from the perspective of economics.
Although it is a recently open market, it has become a case of success in FDI attraction, having currently a stock of FDI as
a percentage of the Gross Domestic Product (GDP) that is equivalent to that of major European economies (cf. Section 4.1).
Our timeframe covers the period from 1990 to 2010, given that we can only consider Poland as an independent and selfdetermining country after the fall of the USSR, when the centrally planned economy was replaced by an open market, highly
receptive of foreign capital (Fabry and Zeghni, 2002).
The present study develops two channels of data gathering, which work in a complementary manner. We review the
literature (scientific articles, journals) that serves to frame the Polish geopolitical situation from the perspective of its
Geopolitical Power Factors, GPFs (Célerier, 1961). At the same time, we collect statistics that will facilitate the FDI analysis
(stock and flow) and support qualitative information.
Having framed the geopolitical situation of Poland based on qualitative and quantitative data, we compare it with
statistical information about the FDI received. In this way, it is possible to assess whether or not there is a connection (positive
or negative) between the volume, distribution and origin of the FDI received by a country and one or more GPFs.
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The GPFs represent the guidelines of the analysis conducted in Section 4 where we establish the Polish geopolitical
situation. The latter is conditioned by multiple circumstances and can be described as more or less favourable, as having
a greater or lesser impact on the international setting and its upgrading potential, and so on. The framing of a country’s
geopolitical situation involves the combination of multiple GPFs (cf. Table 1): stable (geographical extent, position, physical
structure and configuration, climate), which remain the same over time; variable (population, resources, social, economic and
political structure), which can suffer alterations; and interactional (technology, history, ideology, power and strategy), which
result from the combination of stable and variable GPFs.
4. Empirical analysis of the Polish case
4.1. FDI evolution in Poland, from 1990 to 2010
The end of the Cold War brought a broad array of growth opportunities with the opening of the thus far inaccessible Polish
market to the international economy and foreign capital (Deichmann, 1998). In the early 1990s, Poland supported FDI
attraction as the main strategy of its transition to an open market (Kornecki, 2010). FDI became a key factor not only to attract
capital but also to access management competencies, know-how and technology (Chidlow and Young, 2008). The Polish
commitment to the open market is clear in certain moments, such as the entry into force of the Balcerowicz Plan (Hunter and
Ryan, 2009; Deichmann, 1998) or the fulfilment of institutional adjustments that favoured FDI attraction. One example is the
Business Activity Law of 1999 which gives Polish and foreign enterprises equal rights to take up and conduct business
activities in Poland (UNCTAD, 2002).
Some characteristics of the Polish market, such as its dimension, central location in the European Union (EU) and low cost
of the workforce and suppliers, seem to maintain foreign investors in the country even in a context of crisis such as that of
2009. The Polish effectiveness in attracting FDI and the importance of foreign capital can be placed on the same level as that of
other countries in terms of the ratio of FDI stock as a percentage of the GDP. Poland is on par with the EU average and goes
beyond the Russian case (cf. Fig. 1).
4.2. Geopolitical factors
4.2.1. Stable factors
4.2.1.1. Geographical extent. The extent of a country’s territory is the first GPF we analyse with the purpose of framing the
Polish geopolitical situation. We cannot say that the larger or smaller size of a territory is in itself synonymous of greater or
lesser state power. It is how the territorial extent is managed, revealing its sense of space or not,4 that can bring strategic
returns in terms of the FDI it attracts.
To outline the Ecumene5 of Poland is no easy task. Most of the Polish population lives in the central and southern region of
the country. The northern and eastern regions however tend to be under-populated (cf. Fig. 2a). Located in north of the Polish
territory, Gdansk represents the exception in the Ecumenic pattern. Although isolated, this city can also be considered an
Ecumenic point given its population density and the importance of its seaport as a door to the Baltic. Therefore, the Polish
ecumene is not constituted by a single, congregated zone. It is instead formed by several Ecumenic points including the urban
centres of Warsaw, Katowice, Poznan, Krakow, Wroc1aw and Gdansk (cf. black circles in Fig. 2b). These cities and their
surroundings represent economic, cultural and scientific centres (Wisniewski, 2004), which means that only these areas can
be considered true Ecumene. Similarly, the Effective National Territory (ENT) is also fragmented and spread out away from the
Polish Ecumenic centres (cf. grey circumferences in Fig. 2b). Bearing in mind the definition of ENT as a moderately populated
area, with economic development potential (Cohen, 2003), we realize that the Polish ENT corresponds to the areas
surrounding the Ecumenic cities and their future expansion. Furthermore, there are no anecumene.6 Although being sparsely
populated, the northern and eastern regions cannot be considered as Ecumenes since they do not fit the definition of an
inhospitable territory for human settlement.
After having made these primary geopolitical considerations about the Polish territory, we now analyse how it is managed
and organized. There is an obvious pattern of disparity in Poland in geographic, demographic and developmental terms. This
inequality is evident in three dimensions: eastern and western regions; Warsaw and the rest of the country; and urban and
rural regions (OECD, 2008). We examine these dimensions separately.
First, the development levels of the different Polish regions illustrate the country’s historical evolution, inexistent as
a unified state until 1918 (cf. Fig. 3). The territorial division among the German Empire on north and west (cf., Fig. 3, delimited
4
We define a State’s sense of space as the ability to perceive the territory and exterior space in such a way that they can be strategically potentiated. This
means that entire territory is occupied without significant density disparities and that even anecumenic zones can be strategically managed or converted
into Ecumenic.
5
An Ecumene is an area with high population density and high concentration of economic activities (Cohen, 2003).
6
An anecumene is an under-populated or totally uninhabited area, normally because of inhospitable climate (Arctic) or geographically hostile conditions
(deserts).
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83
Fig. 1. Stock of FDI as a percentage of the GDP, 1990–2008. Source: UNCTAD, 2011.
by a black line); the Russian Empire on east (cf. Fig. 3, delimited by dotted line) and the Austro-Hungarian Empire on
southwest (cf. Fig. 3, delimited by dashed line) until the end of World War One reflects the contemporaneous development
pattern (Wisniewski, 2004).
Currently, the territory that belonged to the former German and Austro-Hungarian Empires (southwest and west)
aggregates the most developed and productive regions (cf. Figs. 3 and 4), while the zones that were part of the Russian Empire
tend to be more rural and less developed, with little impact on GDP, with the exception of the Warsaw region (cf. Fig. 5). These
inequalities are a challenge to Poland’s growth strategy since they make the harmonization of regional development difficult.
FDI aggravates regional disparities since MNEs select the most developed regions (central, western and southern), where
the transition process is well-developed, as the destination of their investment. Consequently, even though FDI has played an
important role in the modernization of the productive structure and in job creation, its regional impact was adverse, since it
has leveraged the development of some regions at the expense of others.
Linked to regional disparity, we find differences between the urban and rural zones that reflect different socio-economic
realities. These asymmetries lie in population density as we saw previously, but also in regional contributions to GDP,
Fig. 2. Poland: Population density, Ecumene and Effective National Territory (ENT).
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Fig. 3. Polish territorial division among the German Empire, the Russian Empire and the Austro-Hungarian Empire before 1918 (estimated areas). Note: Map from
d-maps.com, in http://d-maps.com/carte.php?num_car¼15037&lang¼en, accessed on April 21st, 2011. Source: Authors elaboration based on Wisniewski (2004).
Fig. 4. Regional share of GDP, in 2001. Note: Map from d-maps.com, in http://d-maps.com/carte.php?num_car¼15037&lang¼en, accessed on April 21st, 2011.
Source: Authors’ compilation based on Wisniewski (2004).
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Fig. 5. Geographical origin of the main MNEs established in the Mazowieckie region (Warsaw). Source: Grochowski et al. (2006: 218).
depending on their urban or rural condition (cf. Fig. 4). Therefore, we find urban areas such as Mazowsze (Warsaw), Silesia
(Wroc1aw) or Malopolska (Krakow) that respectively represent 20.5%, 13.7% and 7.2% of the national GDP, and rural areas like
Podlaskie, Lubelskie or Warminsko-Mazurskie that account for only 2.4%, 4.0% and 2.8%, respectively. Naturally, the urban
areas tend to attract the attention of foreign investors leading to disparities in consolidation.
The last level of disparities is based on the differences between Warsaw and the rest of the country. Warsaw has a greater
ability to attract FDI in view of the fact that, as the capital, is has a dominant position in relation to other urban centres
(Wisniewski, 2004; Grochowski et al., 2006). Other factors that maintain Warsaw as a leading receptor of FDI are its privileged
geographical location, somehow central (although not entirely equidistant to its frontiers), and a good-quality transport
infrastructure that brings the capital city closer to foreign investors. As a result, the Mazowsze region, where Warsaw is
located, attracts more than half of the total FDI received, accounting for 52.9% (Wisniewski, 2004). However, other regions,
such as the north-west, may be “more attractive to foreign investors if low input costs as well as the availability of labour and
resources are considered to be important motives for investing in Poland” (Chidlow and Young, 2008: 20). Hence, considering
the Polish international strategy of coming closer to the EU and the United States, it is to be expected that the FDI received by
the Mazowsze region comes from Western countries (cf. Fig. 5). The symbolic meaning of investing in Poland, and specifically
in Warsaw, meets the Western countries’ geopolitical conceptions of Eastern Europe, where they seek to achieve major
influence, gaining ground on a similar Russian strategy.
In conclusion, we can state that there is a strong connection between how the Polish territory is structured and the
volume, distribution and origin of the FDI it has received. It is clear that Ecumenic points are favoured by foreign investors as
they coincide with the main urban centres, contrasting with the rural areas. When we talk about Effective National Territories
(ENT) zones, which irradiate from Ecumenic points, the rationale is analogous and suggests the increasing importance of
these areas for MNEs in the future. Warsaw acquires particular relevance in this argument as a political centre and geopolitical
strategic point.
It should also be noted that the asymmetries between the central, western and eastern regions have historical roots.
Furthermore, these inequalities are emphasized by ‘neighbouring’ questions. Therefore, regions bordering Germany take
advantage of this proximity, strengthening economic and financial ties. In contrast, the Eastern regions do not benefit from
their Byelorussian, Ukrainian and Lithuanian borders.
4.2.1.2. Position. Poland’s position is critical in this geopolitical analysis. Historically speaking, Poland’s geographic location
has converted the country into a key location for two centres of power, Europe and Russia, not only from geopolitical and
geostrategic points of view but also from economic and financial perspectives. These two views are intimately correlated and
follow the same rationale of competition for the Polish territory. From the Russian perspective, Poland represented a military
position functioning as an important buffer state against European invasions. The fall of the USSR brought Russia’s direct
control over Eastern European countries, including Poland, to an end. The consequence was the loss of Russia’s ‘protection’
barrier against Western influence. Poland’s accession to both NATO and the EU guaranteed the Western flank (Unge et al.,
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2006) and symbolically ‘ended’ Russia’s power in this region. The integration of Poland in the Atlantic Alliance was seen by
Russia as a hostile action (Ozbay and Aras, 2008).
Nowadays, Poland’s membership of the EU favours both parts economically and geopolitically. On the one hand, the EU
reinforces its power by extending its territory to areas previously hidden behind the ‘iron curtain’. The EU benefits from
enlargement, taking advantage of new and unexplored market potentialities. On the other hand, Poland gains from its
transition process, economic growth and FDI attraction fostered by EU mechanisms even before 2004, the date of Polish
accession (Bevan et al., 2001). FDI confirms the importance of the Polish market to Europe: in 2002, 84.6% of the initial foreign
capital invested in this country came from the EU (Wisniewski, 2004), and in 2009, this figure rose to 92%, from which 21.7%,
14.0%, and 12.7% came from Germany, France and Luxembourg, respectively (Polish Information and Foreign Investment
Agency, 2010). On the list of the top 27 countries investing in Poland, there are only three non-Western countries, South
Korea, Japan and Singapore, with 2.6%, 0.17% and 0.07%, respectively, of the share of initial foreign capital (Wisniewski, 2004).
Thus, we can conclude that the Polish borders have great impact on the geopolitical situation of the country and,
consequently, on the FDI it receives. Some authors, such as Lansbury et al. (1996), Bevan et al. (2001), Walkenhorst (2004) and
Ersoy (2006), point out geographic proximity as one of the most important FDI determinants in Poland, highlighting its
European economic partnership. But more than that, the Polish geographic location and its positioning regarding other
countries, specifically the European bloc and Russia, had influenced Poland’s post-1990s economic and political evolution.
Poland’s positioning towards the West and integration in Western institutions have favoured FDI coming from EU countries,
in particular. In terms of FDI, we can conclude that Poland’s location has great impact on incoming international investments,
since a major part of foreign investors is from the Western bloc, as we saw earlier.
As a result, Poland is influenced not only by its ‘physical’ boundaries, with Germany, Byelorussia and Ukraine, but also by its
‘real’ boundaries, with the entire Western bloc. We conceptualize the latter not as the frontier between two countries, but
rather as a boundary between two geopolitical zones that are positively or negatively correlated. ‘Real’ boundaries may exist
even when there is a physical separation between the countries/zones considered. In the modern globalized world where
distances are shorter, ‘physical’ boundaries lose importance in relation to ‘real’ boundaries. Thus, Poland’s positioning is mainly
affected by its ‘real’ boundaries, which incorporate the country into the EU and the surrounding geopolitical Western bloc.
4.2.1.3. Physical structure and configuration. As far as physical configuration is concerned, Poland has a compactly shaped
territory that facilitates the management of its spatial organization, communications and infrastructure networks, and
ensures political control over the different regions. After the fall of the Berlin Wall, the infrastructures that were formerly
suitable to the social, economic and geopolitical situation of the COMECON countries (Komornicki, 2005), and appropriate to
the operation of Poland’s national economy, became inadequate to meet new internal and external conditions. The need to
advance its economic transition, adjusting the country to a new reality, was heightened with Poland’s entry into the EU in
2004 (Michalska, 2009). Infrastructure modernization, often considered a determinant in international location decisions
(Asiedu and Esfahani, 2001; Limao and Venables, 2001; Khadaroo and Seetanahb, 2007), arose as a strategic aspect of capital
importance to FDI attraction. Nevertheless, several studies (Komornicki, 2005; ECORYS, 2006; Michalska, 2009; OCDE, 2011)
claim that the Polish transport infrastructure has not kept pace with economic growth and acceleration, raising efficiency
questions and comprising a barrier to FDI.
We can use the Accessibility Problem Index (ECORYS, 2006) to better understand the Polish physical structure and
configuration, and the relation between the existing transport infrastructure and questions of accessibility (cf. Fig. 6).
First, we note that accessibility in the Polish territory is below the European average, especially in terms of its rail network.
Second, the rail and road networks are less developed in the south-eastern and eastern areas, standing out as the regions with
the most serious accessibility problems, in comparison to the western regions. Once again, poor infrastructures in border
areas illustrate the influence that a less developed neighbour, in this case Ukraine and Slovakia, has had on regional development. Confirming this idea, we find that the western region bordering Germany is economically boosted and presents
accessibility results at the level of the European average.
Thus, in what concerns physical structure and configuration, although the transport network has full territorial coverage, it
presents some weaknesses at the quality level, and there is a lack of highways and high-speed rail (ECORYS, 2006). The
existing infrastructure does not provide enough quality to the secondary and tertiary sectors of the economy, constituting
a barrier to the country’s development and FDI attraction. We argue that quality improvements are required on infrastructures in cities like Warsaw or Krakow when comparing these to the standards of European economic centres. Nevertheless,
these are preferred as investment locations in detriment of the more isolated and less accessible rural eastern zone.
Therefore, the Polish physical structure and configuration clearly highlights the need for investment in transport infrastructures that can come from both European funds (KPMG, 2010) and FDI. As long as accessibility problems persist in Poland
in comparison to European standards, the GPF ‘physical structure and configuration’ will remain a constraint to the advantages of ‘position’ and ‘geographical extent’. Until this obstacle is overcome, Poland will remain a well-located territory
(cf. ‘Position’) but inaccessible to its European partners and foreign investors.
4.2.1.4. Climate. The Polish climate has a transitional character between maritime and continental, with very cold winters and
warm summers (Experience Poland, 2003). In this country, as in others, climate can have a negative impact on economic
activities, such as the agricultural sector, for example in periods of drought or heat waves (Szwed et al., 2010). According to
forecasts, the climate’s impact on the economy will probably grow with the global warming phenomenon (Szwed et al., 2010),
A.A.C. Teixeira, M. Dias / Communist and Post-Communist Studies 46 (2013) 79–93
87
Fig. 6. Accessibility Problem Index, road and rail network, comparison between Poland and Europe, in 2006. Source: ECORYS (2006: 36–37).
ski et al., 2000). Even though climate has some impact on the
but it can be mitigated through anticipation measures (Stuczyin
Polish geopolitical situation, since geographical backgrounds frame and distinguish Man’s intrinsic ways of life (Defarges,
2003), its preponderance is quite minor when compared to the other GPFs analysed earlier (e.g., ‘Geographical Extent’,
‘Position’). Due to the lack of evidence to the contrary, we can conclude that Climate is not a GPF of capital importance in the
formulation of the Polish geopolitical situation.
4.2.2. Variable factors
4.2.2.1. Population. During the Polish transition process, some changes took place regarding the population and human capital.
The adaptation of the country to the new market economy, more open to international flows, has reoriented human capital
from the more technical sectors to the tertiary sector, especially business and services (Jeong et al., 2008). The latter currently
dominate foreign capital with 68% of the stock of received FDI in 2008 (Zimny, 2010). The large amount of FDI received during
the economic transition process has accelerated technological changes and, as a result, it had prompted the need for human
capital improvement and reorientation to innovation sectors, giving answers to new market needs (Pastore, 2005).
Accordingly, the Polish workforce has some characteristics that draw the attention of foreign investors. On the one hand, it
aggregates a good amount of qualified human capital that results from government investment in the education sector. In
2006, the Polish government spent 5.3% of its GDP on education expenditures, surpassing Russia’s investment of just 3.9%
(UNDP, 2012). In 2009, 66.8% of population aged 25-64 had attained an educational qualification and 21.2% had a higher
degree (OECD, 2012). Thus, Poland features a good deal of human capital, complemented by the fact that this is relatively
cheaper than that existing in Western Europe and the USA. This combination of factors turns the Polish workforce into
a determinant of FDI attraction.
Additionally, the workforce in Poland is characterized by a good productivity, quick adaptation to investors’ expectations
and different corporate cultures (Sinnathamby and Czernicka, 2009). Finally, the existence of a young population, more open
to mobility and who struggles to constantly improve its qualifications, raises Poland’s attractiveness among foreign investors
(Sinnathamby and Czernicka, 2009).
In cities conditions for the creation of human capital remain high, when compared to rural areas. The weak system of
scholarships and subsidies creates barriers to access to higher education for those who live outside the urban agglomerations
and, therefore, have greater financial difficulties (Cichy and Malaga, 2006). Consequently, it is easier for MNEs to invest in urban
regions, where they can effortlessly find an adequate workforce, highlighting both the MNEs inclination to locate in these areas
as a destination of investment and the aggravation of the disparities that we have seen before (cf. ‘Geographical Extent’).
4.2.2.2. Resources. In what concerns resource analysis and its influence on the Polish geopolitical situation, attention must be
given to the energy question. As a small producer and consumer of energy (except for coal), Poland is generally an energy
importer. Bearing in mind the relevance of energy issues as real geostrategic ‘tools’ that preponderate in the international
power of each country, Poland has to know how to manage its lack of sufficient domestic energy supply in such way that it
does not weaken its geopolitical situation further.
Poland is a prominent producer and exporter of coal which constitutes the main domestic source of energy, supplying
about 90% of the electricity consumed internally (Spencer et al., 2011). Owning a small amount of proven reserves of oil and
88
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natural gas, Poland is highly dependent on importing these types of energy, mainly from Russia, which satisfy 30% of the
primary energy consumption. This dependence is motivated not only by the shortage of these types of energy in the Polish
territory, but also by the Soviet heritage. This legacy of energy dependence, promoted by the USSR as a ‘mechanism’ of control
over the countries under its influence, continues and, although it has positive effects on improving the quality and development of natural gas infrastructures, it also holds disadvantages in terms of political action and national sovereignty. Indeed,
Poland, as a Western-oriented and independent country (cf. ‘Position), may see its political action in international affairs
regarding Russia conditioned and constrained by the threat of energy supply cuts.
Considering that finding alternative energy suppliers have turned out to be quite expensive, especially when it comes to
natural gas, it has become critical to look for other sources of energy (Ürge-Vorsatz et al., 2006). Thus, from a long-term
perspective, renewable energies may be a feasible investment both for the public and private sectors. Although alternative
energy such as biomass, geothermic energy, hydroelectric energy or wind power represent only 1.6% of the total energy used,
the legal basis to develop the sector is established, surpassing the initial barriers to investment in these forms of energy (Taler
et al., 2007). Several strategies and regulations have been created since the Energy Law of 1997, aligning the Polish legislation
with EU norms.
Summing up, we can say that the energy issue affects the Polish geopolitical situation since it comprises a dependence
factor regarding Russia. While every other GPF promotes a Western-oriented Poland, ‘Resources’ (energy) remains the only
GPF that connects this country to its former ‘metropolis’. Meanwhile, the investment in renewable energies can gain
importance in the future, benefitting from the government’s strategy to supporting these energies, establishing legislation
and favouring FDI in the sector.
4.2.2.3. Social, economic and political structure. The Polish social, economic and political structure is one of the most important
GPFs when we think of its preponderance in the formulation of the geopolitical situation over the last twenty years. The
transition process that entailed the shift from a planned and closed economy to an open market and capitalist economy, with
all the inherent political and social consequences, has not ended yet and still influences the way in which Poland manages
both its domestic and foreign affairs. Since the Polish transition process has coincided with the globalization process and the
trans-nationalization of the world economy, its background and evolution is incredibly different from what it would have
been if the transition had taken place in another period of time. Transnational transition, which includes the liberalization of
trade and flow of capitals through open markets, was the natural path for a country like Poland, which aimed to enter the
global market. In this way, although the transition process was based on Poland’s own initiative, it was leveraged by external
factors, for example FDI (Jensen, 2006). The transnational process adjusted national policies and practices to global economic
requirements (Shields, 2004).
The adaptation of the Polish market and its restructuring with the objective of entering the global economy has facilitated
the attraction of FDI (cf. Section 4.1). Nowadays, Poland’s social, economic and political structure provides an institutional
framework that guarantees a safe business environment to foreign investors and facilitates their fixation in the Polish
territory even in a scenario of crisis (cf. Section 4.1).
We can conclude that Poland is a modern country (cf. Table 2). Although there are some Polish characteristics that cannot
be included in the general traits of the modern sphere, for example, infrastructural and communication problems, Poland has
come much closer to this standard since entering the EU, having become fully integrated in the European social, economic and
political model.
4.2.3. Interactional factors
4.2.3.1. Technology. Technology transfer is crucial to economic growth and to the transition processes that have occurred in
Eastern and Central Europe (ECE) after the fall of the USSR in 1990. Access to technology and its profitable use in national
Table 2
Types of spheres according to their social, economic and political structure.
Type of space
Modern
Static
Monolithic and controlled
In transition
Characteristics
Democratic and dynamic sphere;
High GDP;
Ease of communications
and mobility;
Consumer society,
Great social mobility
Education and importance
of the role of women;
Perception of equality;
Trust in politic power.
Western and Northern
European countries; USA.
Pre-industrial sphere;
Low GDP;
Limited communications;
Agriculture as principal
economic activity;
Predominance of
rural population;
Little social mobility;
Age hierarchy
Dictatorial sphere; Existence
of censorship;
No freedom of expression;;
Mentalities subject to the
dominant ideology;
Corruption and strong
influence of dominant classes;
No perception of equality;
Distrust in political power.
Mixed characteristics.
Sub-Saharan
African countries;
medieval society.
USSR; Nazi Germany;
North Korea, Zimbabwe.
Russia, India, China.
Examples
Source: Own elaboration.
A.A.C. Teixeira, M. Dias / Communist and Post-Communist Studies 46 (2013) 79–93
89
economic dynamics are decisive in determining the Poland’s competitive position in the international division of work
(Gurbiel, 2002). Since technology is a key aspect of the transition process, we question if the latter was followed by technological improvement (Arogyaswamy and Nowak, 2009). Poland’s technological status does not yield encouraging results,
since it lags somewhat behind its OECD partners (cf. Table 3).
As we can see in Table 3, the Polish Gross Domestic Expenditure on Research and Development (R&D) as a percentage of
the GDP is one of the lowest among ECE countries, exceeding only Slovakia. This fact shows that the technological and
innovation sector is rather unimportant in terms of Polish investment, both in the public and private sectors. Bearing in
mind that Poland cannot count on a sudden increase of budgetary funds targeting the R&D sector, new means of funding
should be found and encouraged, for example, in the private sector. Therefore, it is important that the Polish government
increase the incentives to the private sector, both national and international, to invest in the technological and innovation
sector. This can be achieved by granting benefits on bank loans, fiscal benefits and limiting bureaucracy (Gurbiel, 2002;
OECD, 2004).
The technological and innovation profile of Poland lags behind the average of countries in dimensions such as triadic
patents per million population or scientific articles per million population (cf. Fig. 7 and Table 3).
The number of patents with foreign co-inventors is below the ECE countries’ average and above the EU and OCDE
countries’ average (cf. Fig. 7 and Table 3), which reveals the importance of foreign initiative, especially FDI, in knowledge
transfer and innovation processes. In fact, Poland benefits significantly from transfer of technologies accumulated in more
developed economies (Kolasa, 2008). Gurbiel (2002) argues that the spill-over effects verified in local industries since the
establishment of MNEs are a case of success of the Polish transition process and the deepening of its relations with the EU. The
transfer of technology originates mostly from FDI and foreign trade relations as “there is a lack of effective technology transfer
between research and the industry sector” (Gurbiel, 2002: 14). The almost inexistent channels of communication between
these two sectors are one of the greatest flaws in the Polish R&D system.
Summing up, Poland presents potential for technological leverage if some difficulties are overcome. The combination of
Poland’s central geographical position, intensive foreign trade relations with France and Germany, qualified workforce,
longstanding entrepreneurship tradition and availability of organizations that support the activity of companies are the main
starting points to the development of the technological sector (Gurbiel, 2002; Arogyaswamy and Nowak, 2009). These
characteristics can also be determinant in attracting future FDI intended specifically for the innovation sector, since in the last
twenty years, the latter has only indirectly benefited from the knowledge transfer of FDI in other areas of activity.
4.2.3.2. History, ideology, power and strategy. The last GPFs, history, ideology, power and strategy, are intensely related to the
way Poland is situated on the global balance of power. These GPFs influence a country’s foreign policy and how it is strategically formulated, bearing in mind its historic path and ideology. The influence of these factors on geopolitics is quite
significant because they represent the more heightened international expression of Poland’s geopolitical situation, which is
created also by the remaining GPFs (Geographical Extent, Position, Population, Technology). Due to the existence of
subliminal connections between foreign policy and strategy and the volume of FDI received, it becomes important to analyse
the former to understand its linkages to the latter.
Polish foreign policy only appears as autonomous and self-sufficient after the end of the USSR in 1990. Until then, Soviet
Russia dominated the foreign relations of all its satellite nations, imposing common principles and conceptions in terms of
Table 3
Some technological and innovation indicators, Poland vs. other countries.
Group of countries
Country
GDERD % GDPa
(2006)
Triadic patents,
per million
populationb (2005)
Scientific articles,
per million
population (2003)
Patents with foreign
co-inventors (2002–2004)
ECEc
Poland
Czech Rep.
Hungary
Slovakia
Germany
France
United Kingdom
Netherlands
Spain
Portugal
USA
Israel
0.56
1.54
1.00
0.49
2.53
2.11
1.78
1.67
1.20
0.83
2.62
4.53
0.34
1.54
4.06
0.53
76.38
39.35
27.41
66.94
4.55
1.07
53.11
60.28
177.25
289.17
247.10
175.29
536.90
516.22
810.83
830.61
400.58
251.41
725.60
1037.57
35.97
38.85
36.44
56.03
12.90
17.16
23.90
45.26
21.38
25.70
12.49
16.21
EUd
Other OECD
countries
a
GERD % GDP: Gross Domestic Expenditure on Research and Development as a % of the GDP.
Triadic patents are a group of patents registered at both the European Patent Office, Japan Patent Office, and US Patent and Trademark Office such that they
can simultaneously protect the same invention (OECD, 2008: 176).
c
The represented ECE countries belong to EU. Their differentiation regarding other EU countries represented on the table aims to provide a clearer
comparison between ECE and Western countries.
d
The EU group includes large economies (e.g., Germany, France and the United Kingdom), medium economies (e.g., the Netherlands and Spain) and small
economies (e.g., Portugal).Source: OECD (2008: 180–181).
b
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A.A.C. Teixeira, M. Dias / Communist and Post-Communist Studies 46 (2013) 79–93
Fig. 7. Science and innovation profile of Poland. Source: OECD (2010: 211).
international affairs. In the last twenty years, Polish foreign policy has proved to be the direct product of its history as
a subjugated country, aiming to achieve self-determination (Reeves, 2010).
Poland establishes a Western-oriented positioning as the first pillar of its foreign policy (cf. Position), which confirms its
desire for total emancipation with regard to its former geopolitical zone, that is, Eastern Europe and Russia. There are several
reasons for the priority given to the EU in Polish foreign policy and they are all extremely illustrative of the willingness of
leaving the dynamics of ‘old Poland’ behind. Apart from the direct and material benefits of Poland’s entry into the EU
(economic interests), it also symbolizes a very important step towards the country’s transformation into a democratic and
liberal state, coming closer to the Western paradigm. Although some scepticism and pragmatism persists in the Polish
standing regarding the supranational element and there is still a lack of flexibility in negotiations inside the EU, it is possible
to say that the inclusion of Poland in the European community has leveraged the geopolitical transition and its subsequent
benefits, namely in terms of FDI flows.
In short, Polish foreign policy is characterized by a certain level of pragmatism and the need for independence and
international affirmation. These features arise from Poland’s past as a dominated and dependent country whose internal and
external decision-making power was constrained to another country’s will. Poland’s foreign policy formalizes the proTable 4
Geopolitics and FDI: final synthesis.
Type of factor
Geopolitical factor of
power (GPF)
Examples
Stable
Geographical extent
Sense of space
Territorial disparities
(economic development)
Position
Variables
Physical structure and
configuration
Climate
Population
Resources
Interaction
process
Social, economic and
political structure
Technology
History, ideology,
power and strategy
Borders and relations
with the world
Infrastructures and
transports
Human capital
Cheaper workforce
No renewable energy
Renewable energy
Modern space
Foreign Policy
Ecumene
NET
Other areas
West
East
Warsaw
Rest of the country
Urban
Rural
Europe and Western bloc
Rest of the World
Accessibility disparities
Transition
process þ trans-nationality
Western orientation
Relevance
to present FDI
Good potential
for future FDI
U
U
No potential
for future FDI
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
U
– Very unimportant; – Unimportant; – Indifferent; – Important; – Very important.Source: Authors’ compilation.
A.A.C. Teixeira, M. Dias / Communist and Post-Communist Studies 46 (2013) 79–93
91
Western orientation at the expense of the country’s relations with Russia, which brings positive results in terms of the FDI it
receives (cf. Position). Even though Poland has reached the status of Western partner essentially through entry into the EU, its
alliance with the USA is often prioritized (Reeves, 2010). The USA is the international power that has provided the highest
level of support to Poland’s independence and antagonism regarding Russia.
5. FDI and geopolitical factors: overview of the Polish case
The Polish geopolitical situation is not, at the outset, embodied with exceptional characteristics. Nevertheless, some GPFs
have certain positive impacts on increasing FDI inflows by setting a pro-Western orientation and the country’s integration.
Poland’s ‘Geographical Extent’ and ‘Position’ spatially sustains this Western reorientation which has developed since 1990.
‘Geographical Extent’, with territorial organization centred on certain Ecumenic, urban and pro-Western points, and ‘Position’, distinguished by its centrality and versatility, are two of the main reasons for Poland’s progressive integration in Europe
and alienation from Russia, its former metropolis. To this natural condition of physical space, typical of the stable factors, we
add the variable factors and interaction products that corroborate the approximation to the West by strategically managing
space towards this geopolitical zone. In this way, factors such as ‘Social, economic and political structure’ and ‘History,
ideology, power and strategy’ embody the great geopolitical reorientation of Poland in the late 20th century.
Thus, we find that Poland’s pro-Western geopolitical reorientation is at the source of massive FDI inflows, comprising
a major determinant in the country’s present geopolitical condition. This circumstance is a result of the stable factors
(‘Geographical Extent’ and ‘Position’) and of its strategic management, evident in the analysis of some variable factors
(‘Population’ and ‘Social, economic and political structure’) and interaction products (‘History, ideology, power and strategy’).
Hence, the more connected the GPFs are to its pro-Western geopolitical orientation, the larger their impact on the FDI
received, as we can see in Table 4.
6. Conclusion
In present work we analysed the existence of connections among distinct fields of study: International Economics,
Management and Geopolitics. Reaffirming the importance of an interdisciplinary approach in the study of international
matters, such as FDI and Geopolitics, this study aimed to highlight the existing affinity between International Economics,
Management and International Relations. In concrete, we seek to overcome the lack of literature on the Geopolitics-IB
connection, by framing Poland’s geopolitical situation and establishing connections between the latter and the FDI it has
received.
We can draw two main conclusions. First, in the Polish case study, there is no natural geopolitical advantage, although the
possibility remains of strategically managing the territory and resources (natural, energetic, human, technological), aiming to
maximize the potential benefits – Search for geopolitical affirmation. Consequently, it is the way in which countries position
themselves and manage their more or less favourable geopolitical situation, boosting or not the different GPFs, that will
determine the impact of geopolitics on the volume, origin and distribution of inward FDI. Some positive features such as its
significant geographical extent, central position, qualified workforce or well-organized social, economic and political
structure, will only be validated as FDI determinants if they are potentiated as such. Second, due to the Polish strategy of
geopolitical leverage based on its Western orientation, several GPFs are managed having this objective in view. In this way, the
GPFs that are more closely related to Poland’s inclusion in the Western geopolitical bloc are those which have more impact on
the present levels of inward FDI (cf. Table 4).
The GPFs that have more relevance on the volume, origin and distribution of FDI in Poland are ‘Geographical Extent’,
‘Position’, ‘Population’, ‘Social, economic and political structure’, and ‘History, ideology, power and strategy’ (cf. Table 4).
Based on the Polish case study, we can conclude that a country’s geopolitical situation is relevant to international location
decisions. The interconnections between Geopolitics and IB, tested in this study, are strong and corroborate the review of the
literature made previously. Location and the distinctive features of specific places continue to be crucial pillars of the
Economics and IB fields of study. Our results meet this argument, showing the extent to which the geopolitical situation, with
its specific particularities and distinctive character, matters to international location decisions.
Thus, a new common element to Geopolitics, International Economics and International Business stands out: the strategic
element. Both in politics and IR studies and in Economic Sciences and IB, we find that the major players (States or MNEs) seek
to leverage their power/profits and to overcome adversity, bearing in mind the circumstances and availability of resources
and means (Lacoste, 1988). Strategy bounds the two academic areas and brings them closer than they appear at a first glance.
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