Poland’s average annual growth rate was above 4% between 1995 and 2005 and growth of GDP exceeded 6% in 2006 and 2007, the second-best performance among OECD countries. It had a strong drop in unemployment, from 18% in 2005 to less than 10% at the end of 2007. Poland stands out as a relatively successful example of a transition from a partially state-directed economy to a primarily privately owned market economy, with above 75% of total output now produced in the private sector. Over a short period, it has diversified towards services (in particular business services) and more labour-intensive manufacturing. It has retained its position as a world leader in manufacturing and has specialised in rapidly growing sectors such as pharmaceuticals and electronic components. Poland has also become a very attractive location for foreign direct investment (FDI) and is now among the top ten OECD countries in terms of FDI flows as a proportion of GDP. Its FDI rose from 2.9% to 4.1% of GDP between 1996 and 2006. Owing to its geographical position – at the heart of the European continent and surrounded by Belarus, Czech Republic, Germany, Lithuania, Russia, the Slovak Republic and Ukraine – Poland has the potential to play a strategic role between western and eastern Europe, with Russia and Asia and within the Baltic Sea Region.