The Baltic States; Estonia, Latvia andLithuania and Poland are situated along strategic tradecorridors within Europe, constituting the EUs eastern borderwith Russia and other CIS countries. EU membership hastriggered rapid economic growth for the Baltic States andPoland due to the removal of trade barriers and reducedtransaction costs. A heavy influx of EU grants has targeteddevelopment and improvement of transport infrastructure, andthis support will continue until 2015. The EU grants arelargely used for development of international corridors,which play a key role in strengthening the competitivenessof these new member states. Since their accession to the EUin 2004, these countries enjoyed remarkable growth. Whilethe countries underwent varying degrees of contractions in2009, signs of recovery are showing albeit with considerableuncertainty in the future. Growth in Estonia, Latvia andLithuania in recent years has been unsustainable and wasdriven by a disproportionate increase in the non-tradablesector (construction, financial intermediation, realestate). This has had negative implications forcompetitiveness. The global economic crisis in 2009 hasended Poland?s fast economic expansion over the recentyears, but in contrast to its neighbors Poland has avoided adecline in economic activity. Over the medium term, growthin Poland is expected to accelerate steadily in line with animproving external environment. The Baltic States and Polandare relatively competitive in trade logistics and haveinitiated reforms to facilitate trade, compared to theireastern neighbors, particularly Russia. Despite the plungein 2008, freight transport and logistics development in theregion has potential to continue to grow in the medium-termas some signs of recovery have begun to appear. The currenteconomic situation has triggered a significant overcapacityof transport and warehousing which is characterized by verylow prices for these services. While Poland remainsrelatively stable, Estonia, Latvia, and Lithuania areexhibiting higher vulnerability to external shocks. The mostcritical bottlenecks of transport logistics in the BalticStates and Poland are found in the deteriorating conditionof their transport infrastructure, particularly that of roadnetworks, lessdeveloped intermodal connections, andinefficiency of custom processing at border crossing points.Deteriorating road condition in these countries is largelydue to inadequate maintenance and a comprehensive assetmanagement system, albeit improving. Intermodal connectionsthat are often inefficient are partly attributed toinstitutional arrangement that lacks inter-agencycollaboration at the level of policy development and publicinvestment. Custom procedures are particularly cumbersomeand inefficient at the borders to non-EU member states.Nevertheless, the Baltic States and Poland have relativestrengths in efficiency of domestic transport/logistics,cost-efficiency of trucking industry, and price-competitiveport operation. The report various recommendations forstrategic policy priorities for the Baltic States and Polandto leverage their own strengths to respond to variousopportunities and challenges.
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