Bilateral Trade And Investments Between China And Poland

Applied economics not only provides the tools for trade analysis, but also is a way to extend our understanding of the world. We can make use of traditional trade theory to explain the economic relations between two countries, and even between a number of economically related groups. Although traditional trade theory (i.e. the Gravity Model, H-O Theory) is able to explain the trade between China and Poland, in this paper I would like to exceed beyond these models, and in the context of21st centuries globalized and diversified world, explain the economic relations between these two countries. As Ray Barell suggests:"Globalization is an economical process, as well as a political one". What this means is that contemporary economic trends are set by politics. Poland is still a country of relatively small economical significance. Therefore compliance to trends established by bigger countries, is what guarantees its new trade possibilities, but also brings new risks. In the past, this political affiliation, not only influences the inner policy, but also multilateral trade connections, including those with China. In the face of the end of the20th centurie’s economical stiffness, these relations have proved to be an impulse for promoting trade and investment. Especially in the light of Poland becoming a part of the EU in2004, and China accessing the WTO, we can observe fast growth in cooperation on these two platforms. This paper analyzes the vastly understood trends of relations between the People’s Republic of China and the Republic of Poland, and emphasizes the influence that politics and globalization have on trade and investment between these two countries.In order to set a strong foundation for the rest of study, at first I would like to summarize the economic relations between China and Poland from a historical and political point of view. Secondly, using this framework, I would like to introduce the trade and investment flows, and use an econometrical analysis to determine the relation between trade and investment. Consequently, I will show the advantages, opportunities, and risks that the participation in UE and WTO brings to these relations. Finally, I will introduce the trade barriers that still exist between these two countries.