This article is a part of Poland Unpacked. Weekly intelligence for decision-makers
Interactive chart The chart above shows the relative GDP per capita of selected countries compared with the United States. “Year 0” is defined as the year in which this ratio was at its peak. For Japan, that year was 1996, and for Italy, 2001.
Catching up is not automatic
What lessons can Poland draw from this chart? First, the process of economic catch-up is never guaranteed. Italy’s economic miracle – particularly associated with the postwar reconstruction of the 1950s and 1960s – came to a halt at the turn of the next century. A similar story unfolded in Japan after the stock market and real estate bubbles burst in the 1990s. The peak of relative economic development came at slightly different times for the two countries. Italy reached it in 2001, at 75 percent of U.S. GDP per capita, while Japan peaked in 1996 at 88 percent.
Hypotheses on Japan’s stagnation
Several competing explanations have been proposed for why Japan stopped growing. I would group them into two categories. The first emphasizes poor macroeconomic management: an overly loose monetary policy that allowed imbalances to accumulate, and a reluctance to restructure unprofitable post-crisis firms. Artificially sustaining “zombie companies” was part of a social safety net that effectively substituted for the lack of individual-level support. At least, that is the view of one of the foremost experts on the Japanese crisis, economist Takeo Hoshi.
Interactive chart Another group of economists places demographics at the center of Japan’s stagnation. When GDP is recalculated for the working-age population in major Western economies, differences in growth rates between 1991 and 2019 (Italy aside) are small – at most around 0.3 percentage points. Yet the differences in real GDP growth over the same period are up to threefold (U.S. 2.58% vs. Japan 0.83%). In other words, according to J. Fernandez-Villaverde, demographics account for a substantial portion of Japan’s stagnation.
Anti-development connections in Italy
Italy, too, has multiple competing explanations for its anemic productivity growth. Among them are the adoption of the euro, trade shocks stemming from competition with Central and Eastern European countries and China, and a lack of capital accumulation. Of particular interest are the studies of Luigi Zingales at the University of Chicago. The economist showed that Italy failed to seize the opportunities presented by the IT revolution of the mid-1990s. The reason, he found, was that managers in Italian firms were promoted not on the basis of skills and performance, but through personal connections and family ties.
A non-unique miracle
Moreover, comparing the development paths of Italy and Poland in the chart below shows that our growth trajectory in recent decades is not unique.
Poland’s economic expansion over the past 25 years almost perfectly mirrors Italy’s postwar economic miracle. This should serve as a warning: the catch-up process is not automatic. The closer an economy gets to the technological frontier, the more likely it is that growth will slow – or even reverse. In Japan, this process is far more pronounced than in Italy. In 2023, GDP per capita, adjusted for price differences, stood at 58 percent of the United States, compared with 68 percent in Italy.
Interactive chart 
Key Takeaways
- Economic catch-up is not automatic. Poland’s growth in recent decades mirrors Italy’s postwar miracle, but history shows that progress can stall or reverse once an economy approaches the technological frontier.
- Structural and institutional factors matter. Japan’s stagnation highlights the impact of demographics and macroeconomic mismanagement, while Italy’s slow productivity growth was shaped by corporate networks and promotion based on connections rather than merit.
- Policy and reforms are essential for sustainable growth. Rapid GDP expansion alone is insufficient; maintaining momentum requires effective macroeconomic management, demographic adaptation, and institutional reforms that foster innovation and efficiency.