The Polish transition programme at mid-1991: Stabilisation under threat

Monetary restraint in Poland does not operate in the expected manner under the conditions of predominant state ownership of both banks and industrial enterprises. With effective owners' control being prohibitively costly in the state-owned firms, "nobody's" banks continue their old lending pattern to large state-owned enterprises regardless of the latters' creditworthiness and profitability. "Nobody's" enterprises accustomed to soft budget constraint are not deterred by high interest rate levels. Under these circumstances macroeconomic restraint does not select the best enterprises but in fact does the reverse: Least efficient large enterprises survive, while smaller but more efficient ones starved of credits are threatened with bankruptcy. Inability to cope effectively with the legacy of the Soviet-type economy is compounded by autonomous policy errors. Apart from too nervous reactions to monthly changes in the inflation rate, the major mistake has been the timing and scale of tightening monetary policy. The sharp increases in the interest rate were effected almost weeks before the major demand reduction for Polish products resulting from the expected changes in trade with the Soviet Union. As a result the economy received a strong recessionary blow from monetary policy that preceded another major blow from the fall in foreign demand. Inevitably the economy went into a recession that did not end by June 1991 while inflation continued. --

Political economy of privatisation: Poland in comparative perspective

Regardless of one's stand on the privatisation issue, there is certainly one point on which all protagonists and antagonists of privatisation agree. This is the political importance of the issue in question. Privatisation part of the transition to the market system is a major political, nor only economic change. Therefore, it should be analysed not only in economic but also in political terms. Politics, or, more precisely, political economy of privatisation is, then, a legitimate - and highly relevant - topic of analysis. Preferences and interests of various actors (public and private ones), ways of articulating these preferences and interests, actors' interaction with the political system, etc., all impinge upon privatisation process and outcomes. Also, the political environment within which the transition has been taking place is of great significance to privatisation. Finally, since transition away from the centrally planned, Soviet-type economy is without precedent, any expectations with respect to both process and outcomes have to be based upon privatisation experience elsewhere. It is this experience that the present writer will look into, first in order to form preliminary expectations about the political economy of privatisation in Poland. First section deals, then, with political economy of privatisation in post-Soviet-type economies (post-STEs for short) in comparison with that in developing countries (LDCs for short).

Privatisation debates in Poland before and after communist demise: A comparative perspective

Poland and Hungary, the most persistent tinkerers with the Soviet economic system, became also the first communist countries to have allowed debates on the need to rearrange the structure of property rights in the economy as a way to improve its performance. Elsewhere, until the end of the 1980s, these debates were either explicitely rejected (as in Czechoslovakia or former G.D.R.) or much more limited (as in the USSR under Gorbachev). In what follows, the present writer will explain the politico-economic context, within which these debates were taking place, and will outline major options proposed there. Moving from minor to major changes formulated in the debate, I begin by presenting some proposals that kept the status of state ownership unchanged, and later evaluate further reaching ones. Also, these options, or most of them, had their predecessors in earlier debates in the West. Therefore, wherever important, linkages to these debates have been made as well.

The role of the new, entrepreneurial private sector in transition and economic performance in light of the successes in Poland, the Czech Republic and Hungary

The central theme of this paper is the role of the new, entrepreneurial private sector, established after the fall of communism, in output recovery, and, more generally, in economic expansion of post-communist economies. This role is considered specifically in the context of the successes in Poland, the Czech Republic, and Hungary. The author notes a substantial difference between the performance of the new private sector and the privatized sector in the short to medium run (3-7 years) from the start of privatization. New private firms typically enter the economic game with well-established de jure and de facto property rights and with industrial relations based on market economy rules. Unlike the public sector or privatized firms, the labor force of these firms is not demoralized by the change to market-economy rules. As a result, they often perform better and are quick to increasing their share of aggregate output. This also helps the economy as a whole emerge earlier from transitional recession. The author discusses two hypothetical paths of recovery and expansion; one with and one without a dynamic new private sector. The determinants for establishing and growth of new private firms are considered. In addition to the specific rules and general framework of transition, the study concludes that broad institutional fundamentals of political liberty, law and order, and trust contribute to the successful emergence of this new entrepreneurial sector.new private sector; transition; growth; Poland

KRYZYS STREFY EURO I JEGO ŹRÓDŁA W FUNKCJONOWANIU PAŃSTWA OPIEKUŃCZEGO

The author identifies the less often discussed institutional and policy issues of the Eurozone. He points out the theory-inconsistent creation of the monetary union performed ahead of the economic and fiscal union, the implementation of surrogate solutions such as the Growth and Stability Pact and the weak discipline in its observance, as well as the surprising lack of exit rules and the real problem of the crisis that is not financial, but that of waning confidence. He further warns that the Eurozone crisis, serious as it is, is an outgrowth of a much more serious and lasting problem of the crumbling Western welfare state and its ever growing size of indebtedness. The financial crisis has simply accelerated the day of reckoning by a few years, but without major changes the collapse is inevitable. The kind of changes needed is politically costly and, therefore, will be introduced only when all other non-solutions have failed. For that reason the author expects that the crisis of the West will last for at least another 5-10 years.W tekście autor wskazuje na rzadziej dyskutowane problemy instytucjonalne i politykę prowadzoną w ramach strefy euro. Zwraca uwagę na, niezgodne z teorią integracji, wcześniejsze stworzenie unii monetarnej niż unii gospodarczej (wspólnej polityki budżetowej, podatkowej itd.) na stworzone surogaty w postaci kryteriów z Maastricht oraz Paktu stabilizacji i rozwoju. Podkreśla też zmiękczanie tych reguł w praktyce w stosunku do członków założycieli. Wreszcie, wskazuje na zdumiewający brak „reguł wyjścia” z takiej strefy. Autor ostrzega jednak, że problemy eurostrefy są – mimo ich znaczenia – jedynie przejawem głębszego i bardziej długotrwałego kryzysu Europy Zachodniej, a właściwie Zachodu w całości. Źródłem problemów strefy euro jest głęboki kryzys państwa opiekuńczego, którego coraz bardziej pogarszające się finanse spowodowały ów proces przyspieszonego zadłużania się państw. Od kryzysu tego nie ucieknie się poprzez szybszy wzrost gospodarczy, gdyż to właśnie wysoki poziom wydatków publicznych w relacji do PKB jest głównym czynnikiem coraz silniejszego spowolnienia gospodarczego na Zachodzie. Dlatego kryzys Zachodu będzie trwać jeszcze wiele lat

Structural transformations in economic development: interpretations and extensions

Gospodarki nie tylko rosną, ale zmieniają swoją strukturę w procesie wzrostu. Ponadto, chociaż zmiany strukturalne następują w całym procesie rozwoju gospodarczego, istnieją – zdaniem autora – dwie fazy procesu zmian strukturalnych, które z racji ich znaczenia zasługują na specjalną uwagę badaczy. Są to industrializacja (przesunięcie roli silnika wzrostu z sektora rolnictwa do sektora przemysłu) oraz współcześnie przesuwanie się tejże roli z przemysłu przetwórczego do usług o wysokim udziale kapitału ludzkiego.Pierwsza faza jest znacznie lepiej rozpoznana intelektualnie. Rozliczne  badania ukazują ogólne prawidłowości strukturalnych transformacji i ich zróżnicowanie. Autor wskazuje w swoich komentarzach jedynie na potrzeby pewnych, niewielkich korekt. Na przykład nieco niższego pułapu udziału przemysłu przetwórczego w PKB, po osiągnięciu którego następuje zmniejszanie się tego udziału, niż sugeruje to literatura przedmiotu. Zwraca on też uwagę, że nowsze badania wskazują na znacznie wcześniejszy moment rozpoczęcia intensywnego wzrostu gospodarczego i wzrostu udziału przemysłu przetwórczego, niż wynika to z uznanej za standard literatury przedmiotu.Druga faza transformacji strukturalnych znajduje się z punktu widzenia badawczego jeszcze w powijakach. Właściwie brak teoretycznych pewników, nie mówiąc już o solidnej bazie empirycznej. Jedyny pewnik to pozytywna korelacja udziału (różnie mierzonych) udziałów subsektora usług o wysokim nasyceniu kapitałem ludzkim z poziomem PKB per capita. Przedmiotem dyskusji jest nawet to, czy przesuwanie się produkcji i zatrudnienia do sektora usług jest szkodliwą deindustrializacją czy pozytywnym przesunięciem popytu i podaży w kierunku wykorzystującym wysoki poziom kwalifikacji mieszkańców bogatego Zachodu.Autor artykułu prezentuje swój wkład w debatę w kwestii determinant owych przesunięć roli silnika wzrostu. Zwraca on uwagę, w ślad za Fukuyamą, że w procesie industrializacji wolności ekonomiczne i obywatelskie odgrywają mniejszą rolę wzmacniającą ten proces. Wskazuje jednak, że ich siła oddziaływania rośnie wraz ze wzrostem PKB per capita i rosnącym udziałem usług o wysokim nasyceniu kapitałem ludzkim. Teza autora znajduje potwierdzenie empiryczne.Economies not only grow, but also change their output structure in the process. Although structural changes take place throughout the whole process of economic development, the author identifies certain phases of that process, which in his opinion are of particular significance. They are: industrialisation (a shift in the development engine role from agriculture to industry) and an emerging engine role of human capital-intensive services (a shift of dominance from industry to services).The first of these phases has been intellectually much better researched than the second. There are numerous researches that prove general standardised patterns of structural transformation as well as differences between them. The author notes that the inflection point, when the share of the manufacturing sector reaches its maximum level (between 30% and 40% GDP), is probably somewhat overstated, given various distortions generated by activist developmental strategies. Also, he points out to the studies that place the beginning of intensive growth (growth on per capita basis) in poor countries at a much earlier date than it would arise from the established literature sources.The second phase is less well recognised both theoretically and empirically. There are no ‘fixed’ issues and the theoretical part, as well as the empirical, are at the very early stage of development. The only certain fact, or constant, is the positive correlation between the level of development (in terms of GNP p.c.) and the share of human capital-intensive services  calculated in different ways.The author’s contribution to the study of the second phase of transformations concerns the link between the level of GNP p.c. and the level of economic and civic freedoms. It is stressed that while in the industrialisation process the correlation between the two variables is weak, it is much stronger in the second major phase of emerging dominance of human capital-intensive services.