| Summary: | After a long period of economic transformation that included introducing a series of market-oriented reforms and joining the European Union (EU), Poland was one of the fastest-growing economies in the world by 2020. This report investigates differences in productivity dynamics across economic segments and attempts to derive policy recommendations to improve the Polish economy's productivity performance. First, the authors estimate firm-level total factor productivity (TFP), compute labor productivity indices, and analyze the main productivity patterns between 2009 and 2019. Second, the authors decompose aggregate productivity performance into the within, between, and net entry components using the Melitz Polanec decomposition method to understand the underlying response behind the observed productivity growth in Polish sectors and industries. The efficiency of resource allocation (measured by the between effect) worsened over time in manufacturing and was responsible for the sector's productivity slowdown while allocative efficiency gains improved productivity performance in construction and services. To boost Polish productivity, the empirical evidence provided in the report indicates certain areas for policy actions as well as a few directions for necessary further investigation
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