The Trade-Off Between Wealth and Power: Understanding Polish Economic Nationalism

Poland has enjoyed tremendous economic gains in the run-up to the country’s accession to the EU in 2004 and also after. It is close to seventy percent of the EU-28 average in terms of per capita income adjusted for purchasing power. Poland is now the 6^th largest economy in the EU. And it was the only EU member-state to escape recession during the devastating US financial crisis in 2009. Despite these successes and the policies of economic openness and foreign investment that helped pave the way for such successes, the Law and Justice Party nevertheless ran on a platform of economic nationalism rather than liberalism, and prevailed in the 2015 national elections. Why have countries that have materially benefited from the economically-liberal policies of EU integration in more recent years rejected comprehensive economic openness in favor of economic nationalism instead? We argue that Poland, among other new EU member-states, is revisiting the trade-off between wealth and power. While economic openness has delivered substantial material gains, states have long sought to simultaneously preserve economic policy discretion. Thus while economic nationalism in East Central Europe is not new, the movement is ascending in light of perceptions of lost policy control, and with it, diminished power position in the European and global economies. We test the argument in Poland through foreign investment policies in banking and defense manufacturing.