Economy

The economic potential of Lower Silesia

The economic structure of the Dolnośląskie Voivodeship is based on three primary pillars: services, industry and trade. The first two types of business activities play a significant role in shaping the economic potential of the region. The trade sector should play a complementary role for the key businesses, for the regional economic growth, industries and services which shows the existing economic balance. Any trade dominance could attest to an economic stagnation of the region. The trade in Lower Silesia generates 28.1% of sales revenue (the corresponding figures for industrial processing is 37.2%, while for the other sectors, including services – 34.7%). The trade activity has therefore an appropriate place in the economic structure.

Services

The systematic strengthening of the role of services in the economy of Lower Silesia has been observed in recent years. The number of entities in the sector, as well as the dynamic and steady employment growth is the confirmation of positive, dynamic development trends. The sector of services various significantly. One of the basic characteristics of this sector in Lower Silesia may be the level of development and the growth rate of real estate services. The region has not only small, local businesses, but also those belonging to the national giants, the number of which is steadily growing. A strong territorial concentration of this type of business is characteristic here compared to other regions in the country.

Trade

This sector plays an important complementary role for the development of the regional economy industries and services, reflecting the balance of the existing business. The potential advantage of trade could provide economic stagnation to the region. Trade is therefore in appropriate place in the economic structure. Important is the fact that it is not limited to small businesses and branch offices of large Polish companies domiciled outside the region, but it creates the conditions for the development of effective local leaders in the domestic market; 38% of the largest companies in Lower Silesia (classified in the 2000 ranking of the largest companies in the country by “Rzeczpospolita” daily) running a business activity (44 companies in total). The ranking therefore indicates an effective pattern of trade in Lower Silesia.

Industry

As a sector of the economy, industry is still leading in Lower Silesia and has higher share in generating revenues compared to trade and services. The traditional branches, such as wood and furniture, metal and textile, continue to play a dominant role. Approximately 52% of industrial enterprises operate in indicated three areas. The phenomenon of concentration is also typical for other regions of the country. Detailed analysis allows the identification of growth sectors, concentrated in the region, such as non-metallic mineral, electronics and electrical industries. In terms of exports volume, the automotive industry (transport), which provides one-third of the revenues from exports in the region, should particularly be emphasised here. A positive trend is the inflow of foreign investments.

Small and medium sized businesses

There is a dominance of small operators, mainly the sub-group of micro-businesses, in the economic structure of Lower Silesia. The research shows that the majority of small and medium-sized businesses are entities with established market position and operating for more than 5 years. There is a significant correlation between age of companies and the extent of their business activity – nearly 9 out of 10 medium-sized companies operate more than 10 years, compared to the rate for micro-businesses, it is less than 50. Most small and medium-sized enterprises in the region is characterized by caution with regard to development activities, up to 71% is planning to invest solely on the basis of equity, limiting the potential of the region. If the SME sector entities decide to enlist foreign capital for this purpose, they usually establish relations with banks. Much less common are leasing, insurance and consulting companies. The SMEs do not fully take advantage of the strengths of the financial market and do not show any willingness to explore new technologies, preferring proven solutions, but thus more prone to rapid wear. Only one in five SMEs include expenditure on research and development sphere in its budget. The developmental action is marginal in about one out of three small and medium businesses. SMEs face difficulties in selling their products / services, pointing to insufficient demand on one hand (nearly 50% of responses) to the pressure of competition on the other (competitive struggle for customer). Almost every fifth entrepreneur included the need to develop imposed by the market / competition. The current activities of SMEs is associated with many problems, such as: lack of financial resources for development (45%) and current activities (32%), competition on the market (44%) and lack of demand (38%), excessive tax burden (47%), complexity of regulations (36%) and stress (35 %).

 

source: www.umwd.dolnyslask.pl