Transforming state enterprises in Poland : macroeconomic evidence on adjustment

Basing their report on repeat visits in late 1992 to 75 large state-owned manufacturing enterprises (which had been earlier surveyed in mid-1991), the authors present optimistic new evidence about the transformation of state-owned enterprises in Poland. This evidence shows state-owned enterprises in a much more favorable light than the stereotype of myopic, decapitalizing companies that dominates discussion of Poland's state manufacturing sector. Success stories are emerging, and the state sector is far from a write-off. Moreover, favorable evidence is drawn from all manufacturing sectors, attesting to thepotential for a diversified manufacturing base. The state-owned enterprises'operations are largely autonomous, so the positive adjustments indicate that decentralized approaches to transformation could work - if bolstered by appropriate managerial incentives. But several problems remain, and many issues have yet to be addressed. The authors examine various adjustment indicators (labor shedding, material and energy costs, bank borrowings, and export performance) and correlate these with firms classified by 1992 financial performance. (By 1992, presumably, the transitional measurement distortions of 1990 and 1991 had disappeared.) They show that significant differences exist between successful and unsuccessful firms. Managers in successful firms have tended to stress a change in product mix, have generally become more efficient in the use of materials and energy, have maintained labor productivity, and have shown restraint in setting wages and in borrowing from banks. The authors discuss key transformation issues: the disappearance of such safety valves as easy bank loans and interfirm credit, hardening of the microeconomic budget constraint, excess-wage tax reform, and, most important, managerial attitudes and incentives. To complete the picture, they correlate the results of manager interviews with the quantitative performance of firms. Essentially, firms have learned a good deal about operating in a market economy in the past three years, and managers have matured. The industrial revival showing up in economywide statistics can be regarded as a sustainable trend borne of genuine microeconomic adjustment.Small Scale Enterprise,Banks&Banking Reform,Environmental Economics&Policies,Economic Theory&Research,Municipal Financial Management

Transforming State Enterprises in Poland: Evidence on Adjustment by Manufacturing Firms

macroeconomics, state enterprises, Poland, manufacturing firms

Payment intermediation and the origins of banking

The medieval banks of continental Europe facilitated trade by serving as payment intermediaries. Depositors commonly would pay one another by transferring bank balances with the aid of overdraft credit. We model this process in an environment of intermediate good exchange with incomplete contract enforcement. Our model suggests that the early banks were capable of accessing the "netting credit" that exists by virtue of there being a high proportion of offsetting transactions in an economy. Individual traders are unable to net their individual positions because of difficulty in enforcing contracts for future performance with the other traders. Banks, by standing between buyer and seller on a centralized basis, can internalize the offsetting nature of the whole set of trades. This original role of banks is still a vital one.

The urban informal credit markets : an integrative report

This paper pulls together the major results of the various Studies on urban informal credit markets (ICMs). The major topics are organized according to the terms of reference (TOR) for the country study drawn up by Ghate (1986) which were favorably considered by researchers of participating countries during a workshop helm in Manila on 28 - 30 May 1986. The TOR cover.s a wide range of topics which ought to be considered in the country study. However, the peculiar characterlstics of the Philippine financial system (both formal and informal) and the limited budget for the study preclude us from including all the suggested topics

Banks as Social Accountants and Screening Devices for the Allocation of Credit

This paper presents and alternative perspective on the role of banks. We emphasize the ways in which banks act as social accountants and screening devices. In this view monetary disturbances have their effects through the disturbances which they induce in society's accounting system and in the mechanisms by which it is ascertained who is credit worthy. Because of asymmetric information, giving rise to credit rationing, interest rates do not play the simple allocative role ascribed by the conventional paradigm, and as a result the equilibrating forces provided by market mechanisms may be weak or virtually absent. The paper provides a critique of the transactions based approach to monetary theory, and sketches a general equilibrium formulation of the theory. The paper traces out some of the policy implications of the theory. We show that certain financial innovations, such as allowing for the more rapid recording of transactions, may actually be welfare reducing.

Trade finance in crisis : market adjustment or market failure ?

As world leaders have agreed to massively support trade finance, this paper discusses the singularity of the issues related to trade finance in the context of the global economic crisis. Why should international trade finance be a particular issue of concern in the current circumstances? Are there specific market or government failures associated with trade finance that justify a special and differential treatment of the issue by policymakers? If so, what would then be the most appropriate policy instruments to address those concerns? The paper cautions against the notion of a large trade finance"gap,"yet highlights the possible rationales and conditions for an effective intervention in support of trade finance.Debt Markets,Banks&Banking Reform,Access to Finance,Emerging Markets,

Financial Structure and Economic Welfare: Applied General Equilibrium Development Economics

This review provides a common framework for researchers thinking about the next generation of micro-founded macro models of growth, inequality, and financial deepening, as well as direction for policy makers targeting microfinance programs to alleviate poverty. Topics include treatment of financial structure general equilibrium models: testing for as-if-complete markets or other financial underpinnings; examining dual-sector models with both a perfectly intermediated sector and a sector in financial autarky, as well as a second generation of these models that embeds information problems and other obstacles to trade; designing surveys to capture measures of income, investment/savings, and flow of funds; and aggregating individuals and households to the level of network, village, or national economy. The review concludes with new directions that overcome conceptual and computational limitations.National Science Foundation (U.S.)National Institutes of Health (U.S.)Templeton FoundationBill & Melinda Gates Foundatio

A little engine that could: domestic private companies and Vietnam?s pressing need for wage employment

Vietnam's young private sector is growing fast. Crucial to this growth has been a policy environment that increasingly recognizes the importance of private entrepreneurship-particularly its potential to help address the country¹s pressing need for significantly increased wage employment creation. Expanding the benefits of private sector growth beyond urban centers out into the rural areas where most Vietnamese live-and where poverty and underemployment are heaviest-will require significantly increased information flows on what is working and what is not. This paper presents an objective picture of Vietnam's emerging private sector, two years after initial implementation of the country's much praised Enterprise Law. The country's private companies are significantly better off than they were just a couple years earlier, when regional economic recession and stagnation on domestic policy reforms had brought development of the formal private sector to a near standstill. At the same time, the sector's small base means that its impressive rates of job creation still fall far short of matching the booming growth of the overall work force. Information for this paper is based on data collected from Vietnam's General Office of Statistics, a small number of individual company case studies, and a national firm-level survey designed and implemented by the authors. Research for the paper revealed significant gaps in available private sector data and flaws in current data gathering methodologies-calling into question the ability of policy makers and advisors to understand rapid, ongoing economic developments and make appropriate and timely policy decisions. The authors hope that this paper can serve as a starting point and an impetus for more targeted research aimed at identifying and addressing specific obstacles to sustainable and broad based job and wealth creation.Health Monitoring&Evaluation,Small Scale Enterprise,Microfinance,Small and Medium Size Enterprises,Public Health Promotion,Private Participation in Infrastructure,Microfinance,Small Scale Enterprise,Health Monitoring&Evaluation,Small and Medium Size Enterprises

Rethinking Marketing Programs for Emerging Markets

We point to a fundamental inconsistency in the emerging market strategies of multinational firms. On the one hand, they seek billions of new consumers in the emerging markets of China, India, Indonesia, and Latin America; on the other, their marketing programs are scarcely adapted for these markets. The result is low market penetration, low market shares, and poor profitability. These multinationals are trapped by their own devices in gilded cages, serving the affluent few and ignoring the potential of billions of new consumers that attracted them in the first place. In this paper, we propose that, in order to attract billions of new consumers, the marketing programs of multinationals need to be rethought from the ground up. We identify three key factors that characterize emerging markets: (1) low incomes, (2) variability in consumers and infrastructure, and (3) the relative cheapness of labor, which is often substituted for capital. We draw on numerous case studies from around the world to illustrate how to incorporate these realities into marketing programs. We conclude with a discussion of the implications of such an approach for the multinational's core strategic assumptions.http://deepblue.lib.umich.edu/bitstream/2027.42/39704/3/wp320.pd