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Analysis 2/2019: Deglomeration - Costly Redistribution of Prestige

  • Poland remains a relatively poorly urbanised country, and Warsaw is growing slowly compared to European metropolitan areas. The low level of urbanisation is a problem, because it is large cities, thanks to economies of scale and specialisation, that offer the best paid jobs and the highest standard of living. At the same time, only large cities provide sufficiently deep labour markets, a high concentration of economic activity and the speed with which innovation is spreading, that they are able to serve as a base for the growth of large Polish companies to international and future global significance.
  • Deglomeration, understood as the transfer of central offices from Warsaw to small towns, is the wrong direction. It will slow down the development of Warsaw and weaken its international competitiveness, while at the same time not cause young people to stop leaving smaller towns. Between 2000 and 2014, the population of Warsaw grew much slower than the fastest growing metropolises in the countries to which young Poles emigrated at that time - only 6%, compared to 14% in Amsterdam, 15% in Munich, 18% in London, 23% in Oslo and 34% in Dublin. Therefore, it can be assumed that the decline in the population of small towns was more related to the emigration of young people to foreign metropolises than to their "being sucked out" by Warsaw.
  • Deglomeration will also be costly for taxpayers:
    • In Sweden, the deglomeration of the Consumers' Office and the National Institute of Public Health from Stockholm to smaller towns cost SEK 1.1 million per job transferred. Only 1% of the officials decided to move along with their jobs. This resulted in high personnel costs of relocation and several years of disruption of the work of the offices. An analysis of the Swedish equivalent of the NIK (Supreme Audit Office) shows that these costs will not be reimbursed despite the less expensive operation of offices in smaller cities.
    • Central administration activities require regular contacts with ministries and parliament as well as other foreign offices and organisations. That is why the location of the Polish Space Agency in Gdańsk was a failure. The agency was forced to establish a branch in Warsaw, which employed 65% of its officials and in which its president worked. The seat is to be moved to Warsaw. An alternative is the costly regular travel of officials in the country for taxpayers.
  • Deglomeration should not be confused with decentralisation. Poland needs decentralisation, which consists in transferring decisions to a lower level of administration, closer to the citizens. Unfortunately, deglomeration does not change the influence of citizens on the decisions taken, but is only a facade action that redistributes prestige from Warsaw to small towns. It will lead to locating individual offices according to electoral needs and lobbying, instead of providing the highest quality public services to citizens, and hamper cooperation in public policy-making at the central level.


Rafał Trzeciakowski, economist

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