Piotr Kozarzewski and Maciej Bałtowski analyse the causes and manifestations of this trend in economic policy in Poland. They use privatization policy as an example. The authors examine the effects of the privatization policy and point to a large unfinished agenda in ownership transformation that has had an adverse impact on the institutional setup of the Polish state, creating grounds for rent seeking and cronyism, which, in turn, impede the pace of privatization. They find out that it is the increasing capture of the state by rent-seeking groups, and not, contrary to popular opinion, the global financial crisis, that most contributes to the growing statist trends of Poland’s economic policy.
The authors of this report look at ownership changes in the companies owned by the Polish National Investment Funds in the 1995–2000 period. They analyze the numbers of companies in the NIFs' portfolios were sold to what types of investors (i.e., domestic corporate, domestic individual, employee, foreign, other NIFs, public trading) in which years. A great deal of attention is also paid to the issue of changes in the ownership of the funds themselves as well as the issues of corporate governance in the funds (management costs, strategies, etc.). Finally, the economic performance of NIF portfolio companies is compared with other groups of companies in Polish economy, and then the group of NIF companies is broken down with respect to type of owner that acquired (or kept) them, and these groups are compared with each other.
Authored by: Barbara Blaszczyk, Michal Gorzynski, Tytus Kaminski, Bartlomiej Paczoski
Published in 2001
Institutional variables are the most important factor explaining real convergence. But what are institutions? This paper examines the relationship between institutions and policies, institutions and organisations, and formal and informal institutions. The concept of propelling and stabilizing institutions is introduced and used to explain differences in real convergence.
Authored by: Leszek Balcerowicz
Published in 2007
The paper aims to investigate secondary ownership changes in enterprises privatized in special privatization schemes in the Czech Republic. This volume contains the output of country research undertaken in 2000–2001.
Authored by: Evzen Kocenda and Juraj Valachy
2001
Belarus was among the few post-communist countries to resign from comprehensive market reforms and attempt to improve the efficiency of the economy through administrative means, leaving market mechanisms only an auxiliary role. Since its inception, the ‘Belarusian economic model’ has undergone several revisions of a de-statisation and de-regulation kind, but still the Belarusian economy remains dominated by the state. This paper analyses the characteristic features of the Belarusian economic system – especially those related to the public sector – as well as its evolution over time during the period following its independence. The paper concludes that during the post-Soviet period, the Belarusian economy evolved from a quasi-Soviet system based on state property, state planning, support to inefficient enterprises and the massive redistribution of funds to a more flexible hybrid model where the public sector still remains the core of the economy. The case of Belarus shows that presently there is no appropriate theoretical perspective which, in an unmodified form, could be applied to study this type of economic system. Therefore, a new perspective based on an already existing but updated approach or a multidisciplinary approach that incorporates the duality of the Belarusian economy is required.
The Orange Revolution in the fall of 2004 built great hopes for a better future for Ukraine. However, three years later those hopes have been replaced by disappointment, frustration and confusion. Although progress in the areas of political freedom, pluralism, civil rights and freedom in the media remains unquestionable the record of economic, institutional and legal reforms is much more problematic. The key macroeconomic indicators are not better than they were few years ago and the business climate has barely improved. The WTO accession process remains incomplete. The perspectives of Euro-Atlantic integration are continually subject to heated domestic political controversies. The political situation remains unstable, mostly due to the hasty constitutional changes that were adopted during the Orange Revolution.
The purpose of this paper is to analyze the state of the Ukrainian economy at the end of 2007 and reflect upon what kind of reform program the Ukrainian government should consider, regardless of its political color. The reforms suggested in this paper involve a broad agenda of macroeconomic, social, structural and institutional measures. This agenda goes beyond the purely economic sphere and also addresses issues of legal, administrative and political reforms. The politics and political economy of any future reform effort will not be easy because the country is deeply divided in political, cultural, regional and ethnic terms. In such an environment, crucial reforms and strategic decisions will require a wider cross-party political consensus.
Authored by: Marek Dąbrowski
Published in 2007
The purpose of the paper is to present the current state of knowledge on both theoretical models and empirical evidence of interrelations between emerging corporate governance mechanisms and ownership structure of privatized enterprises in post- Communist countries.
Authored by: Barbara Blaszczyk, Iraj Hashi, Alexander Radygin, Richard Woodward
Published in 2003
The authors of this report look at ownership changes in the companies owned by the Polish National Investment Funds in the 1995–2000 period. They analyze the numbers of companies in the NIFs' portfolios were sold to what types of investors (i.e., domestic corporate, domestic individual, employee, foreign, other NIFs, public trading) in which years. A great deal of attention is also paid to the issue of changes in the ownership of the funds themselves as well as the issues of corporate governance in the funds (management costs, strategies, etc.). Finally, the economic performance of NIF portfolio companies is compared with other groups of companies in Polish economy, and then the group of NIF companies is broken down with respect to type of owner that acquired (or kept) them, and these groups are compared with each other.
Authored by: Barbara Blaszczyk, Michal Gorzynski, Tytus Kaminski, Bartlomiej Paczoski
Published in 2001
Institutional variables are the most important factor explaining real convergence. But what are institutions? This paper examines the relationship between institutions and policies, institutions and organisations, and formal and informal institutions. The concept of propelling and stabilizing institutions is introduced and used to explain differences in real convergence.
Authored by: Leszek Balcerowicz
Published in 2007
The paper aims to investigate secondary ownership changes in enterprises privatized in special privatization schemes in the Czech Republic. This volume contains the output of country research undertaken in 2000–2001.
Authored by: Evzen Kocenda and Juraj Valachy
2001
Belarus was among the few post-communist countries to resign from comprehensive market reforms and attempt to improve the efficiency of the economy through administrative means, leaving market mechanisms only an auxiliary role. Since its inception, the ‘Belarusian economic model’ has undergone several revisions of a de-statisation and de-regulation kind, but still the Belarusian economy remains dominated by the state. This paper analyses the characteristic features of the Belarusian economic system – especially those related to the public sector – as well as its evolution over time during the period following its independence. The paper concludes that during the post-Soviet period, the Belarusian economy evolved from a quasi-Soviet system based on state property, state planning, support to inefficient enterprises and the massive redistribution of funds to a more flexible hybrid model where the public sector still remains the core of the economy. The case of Belarus shows that presently there is no appropriate theoretical perspective which, in an unmodified form, could be applied to study this type of economic system. Therefore, a new perspective based on an already existing but updated approach or a multidisciplinary approach that incorporates the duality of the Belarusian economy is required.
The Orange Revolution in the fall of 2004 built great hopes for a better future for Ukraine. However, three years later those hopes have been replaced by disappointment, frustration and confusion. Although progress in the areas of political freedom, pluralism, civil rights and freedom in the media remains unquestionable the record of economic, institutional and legal reforms is much more problematic. The key macroeconomic indicators are not better than they were few years ago and the business climate has barely improved. The WTO accession process remains incomplete. The perspectives of Euro-Atlantic integration are continually subject to heated domestic political controversies. The political situation remains unstable, mostly due to the hasty constitutional changes that were adopted during the Orange Revolution.
The purpose of this paper is to analyze the state of the Ukrainian economy at the end of 2007 and reflect upon what kind of reform program the Ukrainian government should consider, regardless of its political color. The reforms suggested in this paper involve a broad agenda of macroeconomic, social, structural and institutional measures. This agenda goes beyond the purely economic sphere and also addresses issues of legal, administrative and political reforms. The politics and political economy of any future reform effort will not be easy because the country is deeply divided in political, cultural, regional and ethnic terms. In such an environment, crucial reforms and strategic decisions will require a wider cross-party political consensus.
Authored by: Marek Dąbrowski
Published in 2007
The purpose of the paper is to present the current state of knowledge on both theoretical models and empirical evidence of interrelations between emerging corporate governance mechanisms and ownership structure of privatized enterprises in post- Communist countries.
Authored by: Barbara Blaszczyk, Iraj Hashi, Alexander Radygin, Richard Woodward
Published in 2003
This paper analyses the public finance performance and the dynamics of government expenditures on education and health in the Kyrgyz Republic in 2007-2010, when the country was hit by the global economic crisis and then by an internal political crisis in 2010. Despite these crisis conditions, public health expenditures have increased substantially. In education, recurrent expenditures have been protected, while capital investments have been cut dramatically. Both sectors suffer from chronic under-financing, which results in an insufficient quality of services. The country's fiscal situation in the medium-term is going to be difficult, so efficiency-oriented reforms need to be implemented in health care and especially in education in order to sustain the development of these critical services in Kyrgyzstan.
Authored by: Roman Mogilevsky
Published in 2011
This paper investigates an impact of the government policies aimed at the enterprise sector on competitiveness of this sector. The analysis was based on an example of the Polish manufacturing sector and the eight-year period from 1996 to 2003.
The general recommendation is that the competitiveness of the Polish manufacturing sector could be increased by relaxing fiscal burden, further privatization and restructuring of state owned companies. The state aid in a form of subsidies seems to harm both internal and external competitiveness rather than to support them.
Authored by: Ewa Balcerowicz, Maciej Sobolewski
Published in 2005
The paper is devoted to formation of the modern corporate governance system in Kyrgyz Republic. The main factors that influence this process have been studied, e.g., legal background and practice of privatization; corporate and antimonopoly law; financial markets; stakeholders activities, etc. The authors conclude that there were significant positive changes in the sphere of corporate governance in Kyrgyzstan. First of all it should be marked that in the country that had no previous experience of private property and market, institutions of corporate governance were formed, there was a process of learning of both owners and managers how to govern the company using the available set of laws and regulations. But this process is far from being complete, since the real corporate relations are still very dysfunctional. In the authors’ opinion, improvement of corporate governance in the country requires a complex approach: upgrading of legislation must be accompanied by active measures aimed at improving the situation in all spheres that influence the quality of corporate governance. The main task in this sphere is creation of favorable legal and institutional climate which would lead to improvement of common norms of corporate governance and to attraction of external investments.
Authored by: Alexey Kisenkov, Piotr Kozarzewski, Irina Lukashova, Maria Lukashova, Julia Mironova
Published in 2006
This publication presents the collection of papers written in 2004 within the project that aimed to broaden the knowledge about sources of inflation in Ukraine and indicate policies that can support low inflation in the future. While working on analyses of monetary policies and inflation, the authors used the experience of other transitional countries, Polish in particular.
The project team hopes that the research gathered in this volume will contribute to the understanding of the sources of inflation in Ukraine and to the influence of monetary policy instruments on other variables. And that the results presented here can be of practical use for the National Bank of Ukraine.
Authored by: Volodymyr Hryvniv, Malgorzata Jakubiak, Mykyta Mykhaylychenko, Oksana Novoseletska, Wojciech Paczynski, Przemyslaw Wozniak
Published in 2005
This paper employs a standard Tobin-Markowitz framework to analyse the determinants of capital flows into the CIS countries. Using data from 1996-2006, we find that the Russian financial crisis of 1998 has had a profound impact on capital flows into the CIS (both directly and indirectly). Firstly, it introduced a structural shift in the investors' behaviour by shifting the focus from the external factors to the internal ones, e.g. domestic interest and GDP growth rates. Secondly, it also drastically changed the impact of a number of explanatory variables on capital flows into the CIS. Political risk was found to be the second most important determinant of capital flows into the CIS. Additionally, we report some strong evidence of co-movement between portfolio flows into the CIS and CEEC, coupled with strong complementarity between global stock market activity and portfolio inflows into the CIS. Interestingly, external factors tend to be of a higher significance than internal factors for the largest members (Russia, Ukraine and Kazakhstan) of the CIS; whereas domestic variables tend to have a greater impact on the capital flows into the smaller CIS countries.
Authored by: Oleksandr Lozovyi
Published in 2007
The current fiscal imbalances and fragilities in the Southern and Eastern Mediterranean countries (SEMC) are the result of decades of instability, but have become more visible since 2008, when a combination of adverse economic and political shocks (the global and European financial crises, Arab Spring) hit the region. In an environment of slower growth and higher public expenditure pressures, fiscal deficits and public debts have increased rapidly. This has led to the deterioration of current accounts, a depletion of official reserves, the depreciation of some currencies and higher inflationary pressure.
To avoid the danger of public debt and a balance-of-payment crisis, comprehensive economic reforms, including fiscal adjustment, are urgently needed. These reforms should involve eliminating energy and food subsidies and replacing them with targeted social assistance, reducing the oversized public administration and privatizing public sector enterprises, improving the business climate, increasing trade and investment openness, and sector diversification. The SEMC may also benefit from a peace dividend if the numerous internal and regional conflicts are resolved.
However, the success of economic reforms will depend on the results of the political transition, i.e., the ability to build stable democratic regimes which can resist populist temptations and rally political support for more rational economic policies.
Authored by: Marek Dąbrowski
Published in 2014
This report presents the methodology for the construction of the Financial Stress Index (FSI) and the Economic Sensitivity Index (ESI) and investigates the economic situation in twelve Central and East European Countries (CEECs) between 2001 and 2012. The objective of this paper was to capture key features of financial and economic vulnerability and examine the co-movement of economic turmoil and financial disturbances that strongly affected the CEECs in the last decade. The main finding is that the FSI can be used as a leading indicator and can be used to recognize changing trends in the index. A shift in the value of the index proves that EU accession has a positive, but minor influence on financial stability in the CEECs. On the other hand, the impact of the introduction of the euro in Estonia, Slovakia and Slovenia is ambiguous.
For most of the countries in our sample, the FSI started to grow rapidly in 2007, reaching its peak around the third quarter of 2008. Consequently, financial stress remained high for a few quarters and started to fall gradually. For a number of countries, we observe higher financial stress in the latest period of our analysis, i.e. 2010-2012. However, the value of the FSI was significantly lower than three years earlier.
The results show that indices might be helpful in predicting future recessions. Consequently, the model will be expanded by adding a forecasting module, the launch of which is planned for April 2014.
Written by Maciej Krzak and Grzegorz Poniatowski. Published in January 2014
PDF available on our website at: http://www.case-research.eu/en/node/58411
The purpose of this paper is to analyze the sources, economic and social characteristics, of growth recovery, which followed the first period of output decline in two transition countries – Poland and Russia. They represent two different groups of transition countries (new EU member states vs. CIS) in terms of adopted transition strategy and accomplished results. Generally, fast reformers succeeded and slow reformers experienced a lot of troubles. Although eventually all former communist countries entered the path of economic growth, those which moved slowly lost sometimes the whole decade. Social costs of slow reforms were also dramatic: income degradation and rising inequalities, high level of poverty and corruption, various social and institutional distortions and pathologies, violation of human rights and civil and economic liberties, attempts of authoritarian restoration, etc.
Authored by: Marek Dabrowski, Oleksandr Rohozynsky, Irina Sinitsina
Published in 2004
This paper confronts the traditional balance-of-payments (BoP) analytical framework (with its dominant focus on the size of a given country’s current account imbalance and its external liabilities) with the contemporary realities of highly integrated international capital markets and cross-country capital mobility. Some key implicit assumptions of the traditional framework like those of a fixed residence of capital owners and home country bias are challenged and an alternative set of assumptions is offered. These reflect the unrestricted character of private capital flows (with no “home country bias” and fixed domicile) determined mostly by the expected rate of return. As a result, the importance of BoP constraints (in their “orthodox” interpretation) diminishes and they disappear completely with respect to individual member states within a highly integrated monetary union. This does not mean, however, immunization from other kinds of macroeconomic risks.
Authored by: Marek Dąbrowski
Published in 2006
he paper examines theoretical literature, recent EMU accession examples, and current CEECs performance in search of the optimal currency regime for meeting the Maastricht criteria. Currency board arrangements seems to provide the fastest convergence. For other regimes, the markets may have theoretical and historical reasons to believe in the government's temptation to devalue on the ERM-2 entry. The government should announce the final date, and, possibly indicate the final exchange rate for the regime switch to avoid excessive currency and yield volatility. It should also underscore the central bank’s and EU authorities importance (even if non-existent) in the parity setting process to avoid excessive domestic debt inflation premium ahead of the accession. Recent experience shows that it will be easy to get rid of the remaining influence of cross rates on CEECs exchange rates.
Authored by: Mateusz Szczurek
Published in 2003
An attempt is made to explore the basic implications of differences in productivity growth rates in countries within a monetary union and tailor them to the case of the EU new member countries running up to the EMU. By using the mathematical model of Harrod-Balassa-Samuelson effect and linking productivity and relative price dynamics with monetary policy, it is shown that: 1) productivity growth in faster-growing countries (FGC) leads to either inflation there, or union-wide exchange rate appreciation, or both in certain proportions, depending on the monetary policy stance taken by the union, but does not cause increase in inflation in slower-growing countries (SGC) by itself, unless the union’s monetary authorities take pro-inflationary policy; 2) because of presence of FGC, the SGC do not become less competitive in the world, and can benefit from increased export of their goods to FGC, provided their labour markets are flexible enough; 3) the real challenge for SGC posed by FGC is not inflation, but rather loss of jobs and export revenues, if their labour markets are not flexible enough to adjust under tight union-wide monetary policy aimed at keeping the union-wide overall price level unchanged, or the labour productivity increase in FGC is not met by adequate improvement in labour productivity in SGC. It should be noted, however, that this ‘adequate improvement’ is enough to constitute only a fraction of the productivity growth in FGC.
Authored by: Nikolai Zoubanov
Published in 2003
The paper aims to assess the impact of selected elements of social harmonization on labor market performance in the European Union among two groups of workers—the total working population and the elderly. The aim is to examine whether upward changes in labor taxes affect employment, unemployment, and inactivity rates in the European Union.
This paper focuses on roots of strain in the European Monetary Union (EMU). It argues that there is need for a thorough reform of the governance structure of the Union in conjunction with radical changes in the regulation and supervision of financial markets. Financial intermediation has gone astray in recent decades and entailed a big bubble in the industrialized world. Waves of financial deregulation have enhanced systemic risks, via speculative behavior and growing inter-connectedness. Moreover, the EMU was sub-optimal from its debut and competitiveness gaps did not diminish against the backdrop of its inadequate policy and institutional design. The euro zone crisis is not related to fiscal negligence only; over-borrowing by the private sector and poor lending by banks, as well as a one-sided monetary policy, also explain this debacle. The EMU needs to complement its common monetary policy with solid fiscal/budget underpinnings. Fiscal rules and sanctions are necessary, but not sufficient. A common treasury (a federal budget) is needed in order to help the EMU absorb shocks and forestall confidence crises. A joint system of regulation and supervision of financial markets should operate. Emergency measures have to be comprehensive and acknowledge the necessity of a lender of last resort; they have to combat vicious circles. Structural reforms and EMU level policies are needed to enhance competitiveness in various countries and foster convergence. The EU has to work closely with the US and other G20 members in order to achieve a less unstable global financial system.
Authored by: Daniel Daianu
Published in 2012
The Eurozone crisis mobilises an appreciable amount of the attention of politicians and the public, with calls for a decisive defence of the euro, because the single currency’s demise is said to be the beginning of the end of the EU and Single European Market. In our view, preserving the euro may result in something completely different than expected: the disintegration of the EU and the Single European Market rather than their further strengthening. The fundamental problem with the common currency is individual countries’ inability to correct their external exchange rates, which normally constitutes a fast and efficient adjustment instrument, especially in crisis times.
Europe consists of nation states that constitute the major axes of national identity and major sources of government’s legitimisation. Staying within the euro zone may sentence some countries – which, for whatever reason, have lost or may lose competitiveness – to economic, social and civilizational degradation, and with no way out of this situation. This may disturb social and political cohesion in member countries, give birth to populist tendencies that endanger the democratic order, and hamper peaceful cooperation in Europe. The situation may get out of control and trigger a chaotic break-up of the euro zone,
threatening the future of the whole EU and Single European Market.
In order to return to the origins of European integration and avoid the chaotic break-up of the euro zone, the euro zone should be dismantled in a controlled manner. If a weak country were to leave the euro zone, it would entail panic and a banking system collapse. Therefore we opt for a different scenario, in which the euro area is slowly dismantled in such a way that the most competitive countries or group of such countries leave the euro zone. Such a step would create a new European currency regime based on national currencies or currencies serving groups of homogenous countries, and save EU institutions along with the Single European Market.
This paper has been also published in "German Economic Review" (Volume 14, Issue 1, pages 31–49, February 2013)
Authored by: Stefan Kawalec and Ernest Pytlarczyk
This paper analyses the public finance performance and the dynamics of government expenditures on education and health in the Kyrgyz Republic in 2007-2010, when the country was hit by the global economic crisis and then by an internal political crisis in 2010. Despite these crisis conditions, public health expenditures have increased substantially. In education, recurrent expenditures have been protected, while capital investments have been cut dramatically. Both sectors suffer from chronic under-financing, which results in an insufficient quality of services. The country's fiscal situation in the medium-term is going to be difficult, so efficiency-oriented reforms need to be implemented in health care and especially in education in order to sustain the development of these critical services in Kyrgyzstan.
Authored by: Roman Mogilevsky
Published in 2011
This paper investigates an impact of the government policies aimed at the enterprise sector on competitiveness of this sector. The analysis was based on an example of the Polish manufacturing sector and the eight-year period from 1996 to 2003.
The general recommendation is that the competitiveness of the Polish manufacturing sector could be increased by relaxing fiscal burden, further privatization and restructuring of state owned companies. The state aid in a form of subsidies seems to harm both internal and external competitiveness rather than to support them.
Authored by: Ewa Balcerowicz, Maciej Sobolewski
Published in 2005
The paper is devoted to formation of the modern corporate governance system in Kyrgyz Republic. The main factors that influence this process have been studied, e.g., legal background and practice of privatization; corporate and antimonopoly law; financial markets; stakeholders activities, etc. The authors conclude that there were significant positive changes in the sphere of corporate governance in Kyrgyzstan. First of all it should be marked that in the country that had no previous experience of private property and market, institutions of corporate governance were formed, there was a process of learning of both owners and managers how to govern the company using the available set of laws and regulations. But this process is far from being complete, since the real corporate relations are still very dysfunctional. In the authors’ opinion, improvement of corporate governance in the country requires a complex approach: upgrading of legislation must be accompanied by active measures aimed at improving the situation in all spheres that influence the quality of corporate governance. The main task in this sphere is creation of favorable legal and institutional climate which would lead to improvement of common norms of corporate governance and to attraction of external investments.
Authored by: Alexey Kisenkov, Piotr Kozarzewski, Irina Lukashova, Maria Lukashova, Julia Mironova
Published in 2006
This publication presents the collection of papers written in 2004 within the project that aimed to broaden the knowledge about sources of inflation in Ukraine and indicate policies that can support low inflation in the future. While working on analyses of monetary policies and inflation, the authors used the experience of other transitional countries, Polish in particular.
The project team hopes that the research gathered in this volume will contribute to the understanding of the sources of inflation in Ukraine and to the influence of monetary policy instruments on other variables. And that the results presented here can be of practical use for the National Bank of Ukraine.
Authored by: Volodymyr Hryvniv, Malgorzata Jakubiak, Mykyta Mykhaylychenko, Oksana Novoseletska, Wojciech Paczynski, Przemyslaw Wozniak
Published in 2005
This paper employs a standard Tobin-Markowitz framework to analyse the determinants of capital flows into the CIS countries. Using data from 1996-2006, we find that the Russian financial crisis of 1998 has had a profound impact on capital flows into the CIS (both directly and indirectly). Firstly, it introduced a structural shift in the investors' behaviour by shifting the focus from the external factors to the internal ones, e.g. domestic interest and GDP growth rates. Secondly, it also drastically changed the impact of a number of explanatory variables on capital flows into the CIS. Political risk was found to be the second most important determinant of capital flows into the CIS. Additionally, we report some strong evidence of co-movement between portfolio flows into the CIS and CEEC, coupled with strong complementarity between global stock market activity and portfolio inflows into the CIS. Interestingly, external factors tend to be of a higher significance than internal factors for the largest members (Russia, Ukraine and Kazakhstan) of the CIS; whereas domestic variables tend to have a greater impact on the capital flows into the smaller CIS countries.
Authored by: Oleksandr Lozovyi
Published in 2007
The current fiscal imbalances and fragilities in the Southern and Eastern Mediterranean countries (SEMC) are the result of decades of instability, but have become more visible since 2008, when a combination of adverse economic and political shocks (the global and European financial crises, Arab Spring) hit the region. In an environment of slower growth and higher public expenditure pressures, fiscal deficits and public debts have increased rapidly. This has led to the deterioration of current accounts, a depletion of official reserves, the depreciation of some currencies and higher inflationary pressure.
To avoid the danger of public debt and a balance-of-payment crisis, comprehensive economic reforms, including fiscal adjustment, are urgently needed. These reforms should involve eliminating energy and food subsidies and replacing them with targeted social assistance, reducing the oversized public administration and privatizing public sector enterprises, improving the business climate, increasing trade and investment openness, and sector diversification. The SEMC may also benefit from a peace dividend if the numerous internal and regional conflicts are resolved.
However, the success of economic reforms will depend on the results of the political transition, i.e., the ability to build stable democratic regimes which can resist populist temptations and rally political support for more rational economic policies.
Authored by: Marek Dąbrowski
Published in 2014
This report presents the methodology for the construction of the Financial Stress Index (FSI) and the Economic Sensitivity Index (ESI) and investigates the economic situation in twelve Central and East European Countries (CEECs) between 2001 and 2012. The objective of this paper was to capture key features of financial and economic vulnerability and examine the co-movement of economic turmoil and financial disturbances that strongly affected the CEECs in the last decade. The main finding is that the FSI can be used as a leading indicator and can be used to recognize changing trends in the index. A shift in the value of the index proves that EU accession has a positive, but minor influence on financial stability in the CEECs. On the other hand, the impact of the introduction of the euro in Estonia, Slovakia and Slovenia is ambiguous.
For most of the countries in our sample, the FSI started to grow rapidly in 2007, reaching its peak around the third quarter of 2008. Consequently, financial stress remained high for a few quarters and started to fall gradually. For a number of countries, we observe higher financial stress in the latest period of our analysis, i.e. 2010-2012. However, the value of the FSI was significantly lower than three years earlier.
The results show that indices might be helpful in predicting future recessions. Consequently, the model will be expanded by adding a forecasting module, the launch of which is planned for April 2014.
Written by Maciej Krzak and Grzegorz Poniatowski. Published in January 2014
PDF available on our website at: http://www.case-research.eu/en/node/58411
The purpose of this paper is to analyze the sources, economic and social characteristics, of growth recovery, which followed the first period of output decline in two transition countries – Poland and Russia. They represent two different groups of transition countries (new EU member states vs. CIS) in terms of adopted transition strategy and accomplished results. Generally, fast reformers succeeded and slow reformers experienced a lot of troubles. Although eventually all former communist countries entered the path of economic growth, those which moved slowly lost sometimes the whole decade. Social costs of slow reforms were also dramatic: income degradation and rising inequalities, high level of poverty and corruption, various social and institutional distortions and pathologies, violation of human rights and civil and economic liberties, attempts of authoritarian restoration, etc.
Authored by: Marek Dabrowski, Oleksandr Rohozynsky, Irina Sinitsina
Published in 2004
This paper confronts the traditional balance-of-payments (BoP) analytical framework (with its dominant focus on the size of a given country’s current account imbalance and its external liabilities) with the contemporary realities of highly integrated international capital markets and cross-country capital mobility. Some key implicit assumptions of the traditional framework like those of a fixed residence of capital owners and home country bias are challenged and an alternative set of assumptions is offered. These reflect the unrestricted character of private capital flows (with no “home country bias” and fixed domicile) determined mostly by the expected rate of return. As a result, the importance of BoP constraints (in their “orthodox” interpretation) diminishes and they disappear completely with respect to individual member states within a highly integrated monetary union. This does not mean, however, immunization from other kinds of macroeconomic risks.
Authored by: Marek Dąbrowski
Published in 2006
he paper examines theoretical literature, recent EMU accession examples, and current CEECs performance in search of the optimal currency regime for meeting the Maastricht criteria. Currency board arrangements seems to provide the fastest convergence. For other regimes, the markets may have theoretical and historical reasons to believe in the government's temptation to devalue on the ERM-2 entry. The government should announce the final date, and, possibly indicate the final exchange rate for the regime switch to avoid excessive currency and yield volatility. It should also underscore the central bank’s and EU authorities importance (even if non-existent) in the parity setting process to avoid excessive domestic debt inflation premium ahead of the accession. Recent experience shows that it will be easy to get rid of the remaining influence of cross rates on CEECs exchange rates.
Authored by: Mateusz Szczurek
Published in 2003
An attempt is made to explore the basic implications of differences in productivity growth rates in countries within a monetary union and tailor them to the case of the EU new member countries running up to the EMU. By using the mathematical model of Harrod-Balassa-Samuelson effect and linking productivity and relative price dynamics with monetary policy, it is shown that: 1) productivity growth in faster-growing countries (FGC) leads to either inflation there, or union-wide exchange rate appreciation, or both in certain proportions, depending on the monetary policy stance taken by the union, but does not cause increase in inflation in slower-growing countries (SGC) by itself, unless the union’s monetary authorities take pro-inflationary policy; 2) because of presence of FGC, the SGC do not become less competitive in the world, and can benefit from increased export of their goods to FGC, provided their labour markets are flexible enough; 3) the real challenge for SGC posed by FGC is not inflation, but rather loss of jobs and export revenues, if their labour markets are not flexible enough to adjust under tight union-wide monetary policy aimed at keeping the union-wide overall price level unchanged, or the labour productivity increase in FGC is not met by adequate improvement in labour productivity in SGC. It should be noted, however, that this ‘adequate improvement’ is enough to constitute only a fraction of the productivity growth in FGC.
Authored by: Nikolai Zoubanov
Published in 2003
The paper aims to assess the impact of selected elements of social harmonization on labor market performance in the European Union among two groups of workers—the total working population and the elderly. The aim is to examine whether upward changes in labor taxes affect employment, unemployment, and inactivity rates in the European Union.
This paper focuses on roots of strain in the European Monetary Union (EMU). It argues that there is need for a thorough reform of the governance structure of the Union in conjunction with radical changes in the regulation and supervision of financial markets. Financial intermediation has gone astray in recent decades and entailed a big bubble in the industrialized world. Waves of financial deregulation have enhanced systemic risks, via speculative behavior and growing inter-connectedness. Moreover, the EMU was sub-optimal from its debut and competitiveness gaps did not diminish against the backdrop of its inadequate policy and institutional design. The euro zone crisis is not related to fiscal negligence only; over-borrowing by the private sector and poor lending by banks, as well as a one-sided monetary policy, also explain this debacle. The EMU needs to complement its common monetary policy with solid fiscal/budget underpinnings. Fiscal rules and sanctions are necessary, but not sufficient. A common treasury (a federal budget) is needed in order to help the EMU absorb shocks and forestall confidence crises. A joint system of regulation and supervision of financial markets should operate. Emergency measures have to be comprehensive and acknowledge the necessity of a lender of last resort; they have to combat vicious circles. Structural reforms and EMU level policies are needed to enhance competitiveness in various countries and foster convergence. The EU has to work closely with the US and other G20 members in order to achieve a less unstable global financial system.
Authored by: Daniel Daianu
Published in 2012
The Eurozone crisis mobilises an appreciable amount of the attention of politicians and the public, with calls for a decisive defence of the euro, because the single currency’s demise is said to be the beginning of the end of the EU and Single European Market. In our view, preserving the euro may result in something completely different than expected: the disintegration of the EU and the Single European Market rather than their further strengthening. The fundamental problem with the common currency is individual countries’ inability to correct their external exchange rates, which normally constitutes a fast and efficient adjustment instrument, especially in crisis times.
Europe consists of nation states that constitute the major axes of national identity and major sources of government’s legitimisation. Staying within the euro zone may sentence some countries – which, for whatever reason, have lost or may lose competitiveness – to economic, social and civilizational degradation, and with no way out of this situation. This may disturb social and political cohesion in member countries, give birth to populist tendencies that endanger the democratic order, and hamper peaceful cooperation in Europe. The situation may get out of control and trigger a chaotic break-up of the euro zone,
threatening the future of the whole EU and Single European Market.
In order to return to the origins of European integration and avoid the chaotic break-up of the euro zone, the euro zone should be dismantled in a controlled manner. If a weak country were to leave the euro zone, it would entail panic and a banking system collapse. Therefore we opt for a different scenario, in which the euro area is slowly dismantled in such a way that the most competitive countries or group of such countries leave the euro zone. Such a step would create a new European currency regime based on national currencies or currencies serving groups of homogenous countries, and save EU institutions along with the Single European Market.
This paper has been also published in "German Economic Review" (Volume 14, Issue 1, pages 31–49, February 2013)
Authored by: Stefan Kawalec and Ernest Pytlarczyk
Palestra proferida no Workshop "Moscas-das-frutas no Brasil: Construção de uma visão de futuro", realizado em Brasília, DF, no período de 8 e 9 de dezembro de 2015.
Emprego da captura massal e iscas tóxicas para o manejo de moscas-das-frutas:...PNMF
Palestra proferida no Workshop "Moscas-das-frutas no Brasil: Construção de uma visão de futuro", realizado em Brasília, DF, no período de 8 e 9 de dezembro de 2015.
The last twenty years have seen a perhaps unprecedented level of economic and political reform on a global scale. It is our hope that with this report we have made some contribution to the understanding of the factors underlying the success of reforms as well as the dangers that face reformers and reforms. We should note that in discussing the success of reforms, and the factors underlying that success, we have defined success not only in terms of the degree to which the reformers’ goals were accomplished by the reforms, but also in terms of the ability of reformers to gain the acceptance among legislators and the general populace necessary for the implementation of reforms. We have been interested not only in what makes a reform “good” in a technical sense, but also in what makes it implementable and sustainable. Thus, we hope that we have not only deepened the understanding of the Polish experience in the years since 1989, but also provided some insights which may be of use for other reform efforts in other countries, perhaps in very different parts of the globe.
Authored by: Jacek Kochanowicz, Piotr Kozarzewski, Richard Woodward
Published i 2005
This authors of this volume investigate the actual evolution of ownership structure in firms privatized through "wholesale schemes" – voucher privatization in the Czech Republic and the National Investment Fund program in Poland – using original databases. They attempt to answer questions concerning the factors influencing this evolution and analyze the interconnections between property rights reallocation, ownership concentration, and the corporate governance of companies.
Authored by: Irena Grosfeld and Iraj Hashi
This study includes an evaluation of the fiscal effects of privatization in both countries in the period since the very beginning of the process, i.e. in the case of Poland since 1990 and in the case of Bulgaria since 1993. The crosscountry comparison of the fiscal dimension of privatization has been contingent on the privatization models, priorities and methods applied in both countries.
Authored by: Michal Gorzynski, Julian Pankow, Krassen Stanchev, Georgi Stoev, Mateusz Walewski, Assenka Yonkova
Published in 2000
The authors begin with a general discussion of MEBOs in Poland and go on to analyze ownership changes in a sample of such companies. First, they present the initial ownership structures created at the time of privatization and the evolution of those structures through 1999, and then go on to analyze the factors behind these changes and the relationships between the evolution of ownership structures on the one hand and economic performance and corporate governance on the other.
Authored by: Piotr Kozarzewski and Richard Woodward
Published in 2001
New financial institutions, pension funds, are being established in Central and Eastern Europe, that are also an important element of the social security system. They provide an additional source of income in old age. This source is all the more important insofar as public, pay-as-you-go pension systems in many countries are having problems with meeting previous pension commitments, which were often excessively generous and did not take into account potential changes in demographic conditions and the labour market.
The subject of our consideration will be the experiences relating to pension fund regulations from the point of view of their safety of operations in five countries of Central and Eastern Europe.
Authored by: Stanislawa Golinowska and Piotr Kurowski
Published in 2000
The fifth enlargement of the EU has now brought together twenty five countries, a massive success. But success has its price: twenty-five countries do not cooperate as six used to. The result is a general impression that the undertaking is being diluted and that national interests prevail over the common good, which means less willingness to take the next integrative step. This paper argues that this perception is largely misguided. The EU-25 group is considerably more integrated than the EU-6 ever was. Dilution is not a necessary consequence of enlargement, rather enlargement is bringing to the fore a number of institutional failures that were present all along.
This paper takes a politico-economic view of the link between enlargement and deepening. After a broad review of the task allocation principles, it concludes that enlargement and deepening are not substitutes but complements. It produces evidence that enlargement is not increasing preference heterogeneities within the union, but that it leads national governments to preserve more forcefully their own powers, often against the wishes of their own citizens. The result is an inability to reform the decisionmaking process that has become unwieldy as the result of enlargement.
The issue, then, is how to restore the EU's ability to run its affairs. The European Constitutional Convention has made little headway. Other solutions that go beyond current debates are examined. "Pioneer clubs" raise many unresolved issues. More promising, maybe, is the idea that the acquis communautaires should be once and for all decisions. By lowering the stakes of both sovereignty transfers and qualified majority voting, allowing changes in both directions between shared and national competencies could encourage governments to accept more daring reforms. Strengthening the legitimacy of union-specific institutions (the European Parliament or the Commission Presidency) would create a counter-power to deal with national governments' natural tendency to defend their own prerogatives.
Authored by: Charles Wyplosz
Published in 2005
Poland’s new Employee Capital Plans (PPK) scheme, which is mandatory for employers, started to be implemented in July 2019. The article looks at the systemic solutions applied in the programme from the perspective of the concept of the simultaneous reconstruction of the retirement pension system. The aim is to present arguments for and against the project from the point of view of various actors, and to assess the chances of success for the new system. The article offers a detailed study of legal solutions, an analysis of the literature on the subject, and reports of institutions that supervise pension funds. The results of this analysis point to the lack of cohesion between certain solutions of the 1999 pension reform and expose a lack of consistency in how the reform was carried out, which led to the eventual removal of the capital part of the pension system. The study shows that additional saving for old age is advisable in the country’s current demographic situation and necessary for both economic and social reasons. However, the systemic solutions offered by the government appear to be chiefly designated to serve short-term state interests and do not create sufficient incentives for pension plan participants to join the programme.
The paper discusses the challenges of the collaborative economy as a system stimulating female social and economic empowerment and assesses the opportunities offered by the collaborative economy in increasing the female labour participation rate amongst Polish women.
The paper discusses the role of regional public goods vs. global goods in influencing postcommunist transition in Central and Eastern Europe and former USSR with special attention given to three particular factors: (i) external anchoring of national reform process; (ii) international trade arrangements and (iii) international financial stability.
Authored by: Marek Dabrowski, Artur Radziwill
Published in 2007
The paper attempts to identify indirectly vertical product differentiation in three industries of Polish manufacturing (manufacture of glass and glass products, manufacture of other general purpose machinery and manufacture of other special purpose machinery) by examining how focus on a given group of customers (segment) is related to company characteristics. Changes in companies' segment orientation between 2002 and 2005 are examined and the factors of these changes are discussed. The analysis is based on a survey of 77 companies.
The data support the hypothesis that there exist segments in the consumer goods market, defined by the income level of customers. In the capital goods market, it is shown that domestic-owned customers are the low-end segment of the market, whereas foreign-owned customers constitute a higher segment. It seems that industries producing capital goods have shifted towards higher market segments between 2002 and 2005 and their principal motive was the pressure exerted by competitors, both domestic and foreign.
Authored by: Iga Magda, Krzysztof Szczygielski
Published in 2006
'Since 2008, the world economy has been facing the consequences of the global financial crisis. As a result, many economic policy paradigms have been revised, and this process is far from complete. The policy area, which needs a fundamental rethinking (especially in advanced economies), relates to the role of public finance and fiscal policy in ensuring economic growth and financial stability. The primary task will be to develop a new analytical approach and detailed indicators, which are necessary to provide a correct diagnosis and effective recommendations.'
What are the “safe” levels of budget deficit and public debt during “normal” or “good” times? Is there a single norm of fiscal safety?
These questions are discussed in the new paper by Marek Dabrowski: "Fiscal Sustainability: Conceptual, Institutional, and Policy Issues".
The publication is a part of CASE Working Papers series.
This paper evaluates achievements and shortcomings of the Lisbon Strategy launched by the European Union in the spring of 2000 aiming to increase the competitiveness of the European economy within ten years. A careful examination of the Strategy’s pros and cons shows that its general rationale was sound and helpful despite an incorrect and naive political call to economically outperform the rest of the world in such period. The main priorities of the Strategy: promoting growth through creating more and better jobs and developing the knowledge base of the economy, remain valid for today and for the future. However, it has to be underlined that implementing desired changes requires time. At the moment, it is crucial to accomplish structural reforms, which have significant impact on job creation, business performance and growth. Among them, it is essential to complete the Single Market, still limited by many administrative barriers.
The paper shows main areas of necessary improvements to be undertaken by the Community and the member states. To strengthen real ownership of the Lisbon process, politicians must change their thinking from short-term and national to long-term and beneficial for the entire Community. Only such committed leadership can persuade the citizens to support the reforms, aiming to build a common European public good. Exploring these ideas would be a desirable return to the basic concept of the European Community, shaped by its founding fathers short after the World War II.
Authored by: Barbara Blaszczyk
Published in 2005
This paper describes the general framework of the EU’s emerging relationship with its new neighbours and investigates the potential economic impact of the European Neighbourhood Policy (ENP), both for the EU itself and for its neighbours. In particular, it seeks to develop an answer to the question of whether the ENP is sufficiently attractive so as to induce the governments in neighbourhood countries to adopt (or accelerate the adoption of) the types of economic and governance reforms that were implemented in the new member states during their accession processes. Although the specifics of the ENP are still being developed, the lack of incentives as regards to unclear accession to the EU is identified as the main weakness of the ENP.
Economically, the ENP seeks to ease trade restrictions through the implementation of legislative approximation and convergence with EU standards, before accessing the EU’s single market can become a reality. Positively though, is that the access to the single market could improve significantly under the ENP. As experienced by the Central European states, FDI is instrumental to transform the economies of the Western CIS and the Caucasus. The ENP can be a supportive framework for improving investor confidence. Likewise, the new European Neighbourhood Instrument can add more coherence in technical assistance, and provide more financial support for creating capacities for trade infrastructures and institutional and private sector development. Finally, measures to promote increased labour migration between the new neighbours and the enlarged EU may be worth to put on the agenda for the future development and impact of the ENP.
Authored by: Susanne Milcher, Ben Slay
Published in 2005
This paper is an overview of the achievements in the area of employee financial participation (EFP) during the last fifty years. It addresses the question of the extent to which EFP is relevant in today’s world. EFP is distinguished from participation in management (industrial democracy), and the various types of EP are discussed. The major arguments for EFP are presented and discussed critically. The evolution of major forms of EFP, the scale of their operation in several advanced economies, and the legal and tax incentives for EFP are described. The efforts of European Union bodies to popularise this idea in all member countries are illustrated. Showing that EFP has become a broadly recognised principle of modern management in thousands of enterprises, we consider opportunities for disseminating these solutions on a wider scale, in particular in Poland. Finally, a number of directions for further research on financial participation are considered.
Authored by: Barbara Blaszczyk
Published in 2014
The task of this paper is to provide information and analysis on the legal framework of privatisation and corporate governance in Poland and on secondary privatisation processes in Polish privatised enterprises, i.e. changes in ownership structure which are taking place after privatisation. The role of regulatory framework in secondary privatisation processes is also shown (besides a number of economic, social, gnoseological, and other factors).
Authored by: Piotr Kozarzewski
Published in 2003
The projection examines impact of demographic changes and changes in health status on future (up to 2050) health expenditures. Next to it, future changes in the labour market participation and their impact on the health care system revenues are examined. Impact of demography on the health care system financial balanced is examined in four different scenarios: baseline scenario, death-related costs scenario, different longevity scenario and diversified employment rates scenario. Results indicate dynamic and systematic increase of the health expenditures in the next 30 years. Afterwards the dynamics of this process is foreseen to slow down. Despite the increase of the revenues of the health care system, the system will face deficit in the close future. This holds for each scenario, however the size of the deficit differs depending on longevity and labour market participation assumptions. Results lead to a discussion on possible reforms of the health care system.
Authored by: Stanislawa Golinowska, Ewa Kocot, Agnieszka Sowa
Published in 2008
The report examines the social and economic drivers and impact of circular migration between Belarus and Poland, Slovakia, and the Czech Republic. The core question the authors sought to address was how managing circular migration could, in the long term, help to optimise labour resources in both the country of origin and the destination countries. In the pages that follow, the authors of the report present the current and forecasted labour market and demographic situation in their respective countries as well as the dynamics and characteristics of short-term labour migration flows between Belarus and Poland, Slovakia, and the Czech Republic, concentrating on the period since 2010. They also outline and discuss related policy responses and evaluate prospects for cooperation on circular migration.
Podręcznik został opracowany w celu przekazania trenerom i nauczycielom podstawowej wiedzy, która może być przydatna w prowadzeniu szkoleń promujących pracę rejestrowaną. Prezentuje on z jednej strony korzyści z pracy rejestrowanej, z drugiej – potencjalne koszty związane z pracą nierejestrowaną. W pierwszej kolejności informacje te przedstawiono w odniesieniu do pracowników najemnych (rozdział 2), podkreślając w sposób szczególny to, że negatywne konsekwencje pracy nierejestrowanej są ponoszone przez całe życie. Ze względu na specyficzną sytuację cudzoziemców pracujących w Polsce konsekwencje ponoszone przez tę grupę opisano oddzielnie (rozdział 3). Ponadto zaprezentowano skutki dotyczące pracodawców z szarej strefy z wyodrębnieniem tych, którzy zatrudniają cudzoziemców (rozdział 4). Uzupełnieniem przedstawionych informacji jest opis działań podejmowanych przez państwo w celu ograniczenia zjawiska pracy nierejestrowanej w Polsce (rozdział 5) oraz prowadzonych w Wielkiej Brytanii, czyli w kraju będącym liderem w walce z szarą strefą (rozdział 6).
European countries face a challenge related to the economic and social consequences of their societies’ aging. Specifically, pension systems must adjust to the coming changes, maintaining both financial stability, connected with equalizing inflows from premiums and spending on pensions, and simultaneously the sufficiency of benefits, protecting retirees against poverty and smoothing consumption over their lives, i.e. ensuring the ability to pay for consumption needs at each stage of life, regardless of income from labor.
One of the key instruments applied toward these goals is the retirement age. Formally it is a legally established boundary: once people have crossed it – on average – they significantly lose their ability to perform work (the so-called old-age risk). But since the 1970s, in many developed countries the retirement age has become an instrument of social and labor-market policy. Specifically, in the 1970s and ‘80s, an early retirement age was perceived as a solution allowing a reduction in the supply of labor, particularly among people with relatively low competencies who were approaching retirement age, which is called the lump of labor fallacy. It was often believed that people taking early retirement freed up jobs for the young. But a range of economic evidence shows that the number of jobs is not fixed, and those who retire don’t in fact free up jobs. On the contrary, because of higher spending by pension systems, labor costs rise, which limits the supply of jobs. In general, a good situation on the labor market supports employment of both the youngest and the oldest labor force participants. Additionally, a lower retirement age for women was maintained, which resulted to a high degree from cultural conditions and norms that are typical for traditional societies.
Until now, the banking sector has been one of the strong points of Poland’s economy. In contrast to banks in the U.S. and leading Western European economies, lenders in Poland came through the 2008 global financial crisis without a scratch, without needing state financial support. But in recent years the industry’s problems have been growing, creating a threat to economic growth and gains in living standards.
For an economy’s productivity to increase, funds can’t go to all companies evenly, and definitely shouldn’t go to those that are most lacking in funds, but to those that will use them most efficiently. This is true of total external financing, and thus funding both from the banking sector and from parabanks, the capital market and funds from public institutions. In Poland, in light of the relatively modest scale of the capital market, banks play a clearly dominant role in external financing of companies. This is why the author of this text focuses on the bank credit allocation efficiency.
The author points out that in the very near future, conditions will emerge in Poland which – as the experience of other countries shows – create a risk of reduced efficiency of credit allocation to business. Additionally, in Poland today, bank lending to companies is to a high degree being replaced by funds from state aid, which reduces the efficiency of allocation of external funds to companies (both loans and subsidies), as allocation of government subsidies is not usually based on efficiency. This decline in external financing allocation efficiency may slow, halt or even reverse the process, that has been uninterrupted for 28 years, of Poland’s convergence, i.e. the narrowing of the gap in living standards between Poland and the West.
The economic characteristics of the COVID-19 crisis differ from those of previous crises. It is a combination of demand- and supply-side constraints which led to the formation of a monetary overhang that will be unfrozen once the pandemic ends. Monetary policy must take this effect into consideration, along with other pro-inflationary factors, in the post-pandemic era. It must also think in advance about how to avoid a policy trap coming from fiscal dominance.
This paper is organized as follows: Chapter 2 deals with the economic characteristics of the COVID-19 pandemic and its impact on the effectiveness of the monetary policy response measures undertaken. In Chapter 3, we analyse the monetary policy decisions of the ECB (and other major CBs for comparison) and their effectiveness in achieving the declared policy goals in the short term. Chapter 4 is devoted to an analysis of the policy challenges which may be faced by the ECB and other major CBs once the pandemic emergency comes to its end. Chapter 5 contains a summary and the conclusions of our analysis.
Purpose: This paper tries to identify the wage gap between informal and formal workers and tests for the two-tier structure of the informal labour market in Poland.
Design/methodology/approach: I employ the propensity score matching (PSM) technique and use data from the Polish Labour Force Survey (LFS) for the period 2009–2017 to estimate the wage gap between informal and formal workers, both at the means and along the wage distribution. I use two definitions of informal employment: a) employment without a written agreement and b) employment while officially registered as unemployed at a labour office. In order to reduce the bias resulting from the non-random selection of
individuals into informal employment, I use a rich set of control variables representing several individual characteristics.
Findings: After controlling for observed heterogeneity, I find that on average informal workers earn less than formal workers, both in terms of monthly earnings and hourly wage. This result is not sensitive to the definition of informal employment used and is
stable over the analysed time period (2009–2017). However, the wage penalty to informal employment is substantially higher for individuals at the bottom of the wage distribution, which supports the hypothesis of the two-tier structure of the informal labour market in Poland.
Originality/value: The main contribution of this study is that it identifies the two-tier structure of the informal labour market in Poland: informal workers in the first quartile of the wage distribution and those above the first quartile appear to be in two partially different segments of the labour market.
The rule of law, by securing civil and economic rights, directly contributes to social prosperity and is one of our societies’ greatest achievements. In the European Union (EU), the rule of law is enshrined in the Treaties of its founding and is recognised not just as a necessary condition of a liberal democratic society, but also as an important requirement for a stable, effective, and sustainable market economy. In fact, it was the stability and equality of opportunity provided by the rule of law that enabled the post-war Wirtschaftswunder in Germany and the post-Communist resuscitation of the economy in Poland.
But the rule of law is a living concept that is constantly evolving – both in its formal, de jure dimension, embodied in legislation, and its de facto dimension, or its reception by society. In Poland, in particular, according to the EU, the rule of law has been heavily challenged by government since 2015 and has evolved amid continued pressure exerted on the institutions which execute laws. More recently, the outbreak of the COVID-19 pandemic transformed the perception of the rule of law and its boundaries throughout the EU and beyond (Marzocchi, 2020).
This Study contains Value Added Tax (VAT) Gap estimates for 2018, fast estimates using a simplified methodology for 2019, the year immediately preceding the analysis, and includes revised estimates for 2014-2017. It also includes the updated and extended results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). As a novelty, the econometric analysis to forecast potential impacts of the coronavirus crisis and resulting recession on the evolution of the VAT Gap in 2020 is reported.
In 2018, most European Union (EU) Member States (MS) saw a slight decrease in the pace of gross domestic product (GDP) growth, but the economic conditions for increasing tax compliance remained favourable. We estimate that the VAT total tax liability (VTTL) in 2018 increased by 3.6 percent whereas VAT revenue increased by 4.2 percent, leading to a decline in the VAT Gap in both relative and nominal terms. In relative terms, the EU-wide Gap dropped to 11 percent and EUR 140 billion. Fast estimates show that the VAT Gap will likely continue to decline in 2019.
Of the EU-28, the smallest Gaps were observed in Sweden (0.7 percent), Croatia (3.5 percent), and Finland (3.6 percent), the largest – in Romania (33.8 percent), Greece (30.1 percent), and Lithuania (25.9 percent). Overall, half of the EU-28 MS recorded a Gap above 9.2 percent. In nominal terms, the largest Gaps were recorded in Italy (EUR 35.4 billion), the United Kingdom (EUR 23.5 billion), and Germany (EUR 22 billion).
The euro is the second most important global currency after the US dollar. However, its international role has not increased since its inception in 1999. The private sector prefers using the US dollar rather than the euro because the financial market for US dollar-denominated assets is larger and deeper; network externalities and inertia also play a role. Increasing the attractiveness of the euro outside the euro area requires, among others, a proactive role for the European Central Bank and completing the Banking Union and Capital Market Union.
Forecasting during a strong shock is burdened with exceptionally high uncertainty. This gives rise to the temptation to formulate alarmist forecasts. Experiences from earlier pandemics, particularly those from the 20th century, for which we have the most data, don’t provide a basis for this. The mildest of them weakened growth by less than 1 percentage point, and the worst, the Spanish Flu, by 6 percentage points. Still, even the Spanish Flu never caused losses on the order of 20% of GDP – not even where it turned out to be a humanitarian disaster, costing the lives of 3-5% of the population. History suggests that if pandemics lead to such deep losses at all, it’s only in particular quarters and not over a whole year, as economic activity rebounds. The strength of that rebound is largely determined by economic policy. The purpose of this work is to describe possible scenarios for a rebound in Polish economic growth after the epidemic.
A separate issue, no less important, is what world will emerge from the current crisis. In the face of the 2008 financial crisis, White House Chief of Staff Rahm Emanuel said: “You never want a serious crisis to go to waste. And what I mean by that is an opportunity to do things that you think you could not do before.” Such changes can make the economy and society function better than before the crisis. Unfortunately, the opportunities created by the global financial crisis were squandered. Today’s task is more difficult; the scale of various problems has expanded even more. Without deep structural and institutional changes, the world will be facing enduring social and economic problems, accompanied by long-term stagnation.
"Many brilliant prophecies have appeared for the future of the EU and our entire planet. I believe that Europe, in its own style, will draw pragmatic conclusions from the crisis, not revolutionary ones; conclusions that will allow us to continue enjoying a Europe without borders. Brussels will demonstrate its usefulness; it will react ably and flexibly. First of all, contrary to the deceitful statements of members of the Polish government, the EU warned of the threats already in 2021. Secondly, already in mid-March EU assistance programs were ready, i.e. earlier than the PiS government’s “shield” program. The conclusion from the crisis will be a strengthening of all the preventive mechanisms that allow us to recognize threats and react in time of need. Research programs will be more strongly directed toward diagnosing and treating infectious diseases. Europe will gain greater self-sufficiency in the area of medical equipment and drugs, and the EU – greater competencies in the area of the health service, thus far entrusted to the member states. The 2021-27 budget must be reconstructed, to supplement the priority of the Green Deal with economic stimulus programs. In this way structural funds, which have the greatest multiplier effect for investment and the labor market, may return to favor. So once again: an addition, as a conclusion from the crisis, and not a reinvention of the EU," writes Dr. Janusz Lewandowski the author of the 162nd mBank-CASE seminar Proceeding.
Dla wielu rodaków europejskość Polski jest oczywista, trudno jest im nawet wyobrazić sobie, jak kształtowałyby się losy naszego kraju bez uczestnictwa w integracji europejskiej. Szczególnie młode pokolenie traktuje osiągnięty przez nas dzięki uczestnictwie w Unii ogromny postęp cywilizacyjny jako coś danego i naturalnego. Jednak świadomość tego, jaki był nasz punkt wyjścia, jaką przeszliśmy drogę i jak przyczyniły się do tego unijne działania oraz jakie wynikały z tego korzyści powinna nam stale towarzyszyć. Bez tej świadomości, starannego weryfikowania faktów i docenienia naszych osiągnięć grozi nam uleganie niesprawdzonym argumentom przeciwników integracji europejskiej i popełnienie nieodwracalnych błędów. Dla tych, którzy chcą poznać te fakty, przygotowany został raport "Nasza Europa. 15 lat Polski w Unii Europejskiej". Podjęto w nim ocenę 15 lat członkostwa Polski z perspektywy doświadczeń procesu integracji, z jego barierami i sukcesami, a także wyzwaniami przyszłości.
Raport jest wynikiem pracy zbiorowej licznych ekspertów z różnych dziedzin, od wielu lat analizujących wielowymiarowe efekty działania instytucji UE oraz współpracy z krajami członkowskimi na podstawie europejskich wartości i mechanizmów. Autorzy podsumowują korzyści członkostwa Polski w Unii Europejskiej na podstawie faktów, nie stroniąc jednakże od własnych ocen i refleksji.
This report is the result of the joint work of a number of experts from various fields who have been - for many years – analysing the multidimensional effects of EU institutions and cooperation with Member States pursuant to European values and mechanisms. The authors summarise the benefits of Poland’s membership in the EU based on facts; however, they do not hide their own views and reflections. They also demonstrate the barriers and challenges to further European integration.
This report was prepared by CASE, one of the oldest independent think tanks in Central and Eastern Europe, utilising its nearly 30 years of experience in providing objective analyses and recommendations with respect to socioeconomic topics. It is both an expression of concern about Poland’s future in the EU, as well as the authors’ contribution to the debate on further European integration.
Belarusian economy has been stagnating in 2011-2015 after 15 years of a high annual average growth rate. In 2015, after four years of stagnation, the Belarusian economy slid into a recession, its first since 1996, and experienced both cyclical and structural recessions. Since 2015, the Belarusian government and the National Bank of Belarus have been giving economic reforms a good chance thanks to gradual but consistent actions aimed at maintaining macroeconomic stability and economic liberalization. It seems that the economic authorities have sustained more transformation efforts during 2015-2018 than in the previous 24 years since 1991.
As the relative welfare level in Belarus is currently 64% compared to the Central and Eastern Europe (CEE) countries average, Belarus needs to build stronger fundaments of sustainable growth by continuing and accelerating the implementation of institutional transformation, primarily by fostering elimination of existing administrative mechanisms of inefficient resource allocation. Based on the experience of the CEE countries’ economic transformation, we highlight five lessons for the purpose of the economic reforms that Belarus still faces today: keeping macroeconomic stability, restructuring and improving the governance of state-owned enterprises, developing the financial market, increasing taxation efficiency, and deepening fiscal decentralization.
Inflation in advanced economies is low by historical standards but there is no threat of deflation. Slower economic growth is caused by supply-side constraints rather than low inflation. Below-the-target inflation does not damage the reputation of central banks. Thus, central banks should not try to bring inflation back to the targeted level of 2%. Rather, they should revise the inflation target downwards and publicly explain the rationale for such a move. Risks to the independence of central banks come from their additional mandates (beyond price stability) and populist politics.
Estonia has Europe’s most transparent tax system (while Poland is second-to-last, in 35th place), and is also known for its pioneering approach to taxation of legal persons’ income. Since 2000, payers of Estonian corporate tax don’t pay tax on their profits as long as they don’t realize them. In principle, this approach should make access to capital easier, spark investment by companies and contribute to faster economic growth. Are these and other positive effects really noticeable in Estonia? Have other countries followed in this country’s footsteps? Would deferment of income tax be possible and beneficial for Poland? How would this affect revenue from tax on corporate profits? Would investors come to see Poland as a tax haven? Does the Estonian system limit tax avoidance and evasion, or actually the opposite? Is such a system fair? Are intermediate solutions possible, which would combine the strengths or limit the weaknesses of the classical and Estonian models of profit tax? These questions are discussed in the mBank-CASE seminar Proceeding no. 163, written by Dmitri Jegorov, deputy general secretary of the Estonian Finance Ministry, who directs the country’s tax and customs policy, Dr. Anna Leszczyłowska of the Poznań University of Economics and Business and Aleksander Łożykowski of the Warsaw School of Economics.
The trade war between the U.S. and China began in March 2018. The American side raised import duties on aluminum and steel from China, which were later extended to other countries, including Canada, Mexico and the EU member states. This drew a negative reaction from those countries and bilateral negotiations with the U.S. In June 2018 America, referring to Section 301 of its 1974 Trade Act, raised tariffs to 25% on 818 groups of products imported from China, arguing that the tariff increase was a response to years of theft of American intellectual property and dishonest trade practices, which has caused the U.S. trade deficit.
Will this trade war mean the collapse of the multilateral trading system and a transition to bilateral relationships? What are the possibilities for increasing tariffs in light of World Trade Organization rules? Can the conflict be resolved using the WTO dispute-resolution mechanism? What are the consequences of the trade war for American consumers and producers, and for suppliers from other countries? How high will tariffs climb as a result of a global trade war? How far can trade volumes and GDP fall if the worst-case scenario comes to pass? Professor Jan J. Michałek and Dr. Przemysław Woźniak give answers to these questions in the mBank-CASE Seminar Proceeding No. 161.
This Report has been prepared for the European Commission, DG TAXUD under contract TAXUD/2017/DE/329, “Study and Reports on the VAT Gap in the EU-28 Member States” and serves as a follow-up to the six reports published between 2013 and 2018.
This Study contains new estimates of the Value Added Tax (VAT) Gap for 2017, as well as updated estimates for 2013-2016. As a novelty in this series of reports, so called “fast VAT Gap estimates” are also presented the year immediately preceding the analysis, namely for 2018. In addition, the study reports the results of the econometric analysis of VAT Gap determinants initiated and initially reported in the 2018 Report (Poniatowski et al., 2018). It also scrutinises the Policy Gap in 2017 as well as the contribution that reduced rates and exemptions made to the theoretical VAT revenue losses.
The paper discusses the role of the state in shaping an economic system which is, in line with the welfare economics approach, capable of performing socially important functions and achieving socially desirable results. We describe this system through a set of indexes: the IHDI, the World Happiness Index, and the Satisfaction of Life index. The characteris-tics of the state are analyzed using a set of variables which describe both the quantitative (government size, various types of governmental expenditures, and regulatory burden) and qualitative (institutional setup and property rights protection) aspects of its functioning. The study examines the “old” and “new” member states of the European Union, the post-communist countries of Eastern Europe and Asia, and the economies of Latin America. The main conclusion of the research is that the institutional quality of the state seems to be the most important for creation of a socially effective economic system, while the level of state interventionism plays, at most, a secondary and often negligible role. Geographical differentiation is also discovered, as well as the lack of a direct correlation between the characteristics of an economic system and the subjective feeling of well-being. These re-sults may corroborate the neo-institutionalist hypothesis that noneconomic factors, such as historical, institutional, cultural, and even genetic factors, may play an important role in making the economic system capable to perform its tasks; this remains an area for future research.
EuroPACE is an innovative financial mechanism inspired by an American building improvement initiative called Property Assessed Clean Energy (PACE). The innovative character of the EuroPACE mechanism is that financing through EuroPACE is linked to the taxes paid on a property. In other words, the financing lent by a private investor is repaid through property taxes and other charges related to the buildings. EuroPACE is therefore in line with the EC’s objectives of (1) putting EE first, (2) contributing to the EU’s global leadership, and (3) empowering consumers to enable MS to reach their energy and climate targets for 2030. Last but not least, EuroPACE could contribute to the democratisation of the energy supply by offering cash-flow positive, decentralised EE solutions.
The EuroPACE mechanism engages several stakeholders in the process: local government, investors, equipment installers, and homeowners. To establish the EuroPACE programme, several conditions must be satisfied, each of which are relevant for different stakeholder at different stages of the implementation. For the purpose of this report, we divided these criteria into two categories: key criteria, which make the implementation possible, and complementary criteria, which make the implementation easier. For the time being, it is a pure hypothesis to be tested with potential EuroPACE implementation.
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4
List of figures
Figure 1. Revenues from privatization and dividend payments
(in bln PLN, current prices) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Figure 2. Planned and received revenues from privatization
and dividend payments (in bln PLN, current prices). . . . . . . . . . . . 19
Figure 3. Revenues from privatization in Poland (in bln PLN)
and European Union (in bln USD) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5. CASE Working Papers | No 3 (127) | Change in economic…
5
Abbreviations
CEE – Central and East European countries
EU – European Union
GDP – gross domestic product
MEBO – managementemployee buyout
PiS – Prawo i Sprawiedlowość (Law and Justice) – a Polish political party
PLN – Polish złoty
PO – Platforma Obywatelska (Civic Platform) – a Polish political party
PPP – publicprivate partnership
PSL – Polskie Stronnictwo Ludowe (Polish People’s Party) – a Polish political party
SOE – stateowned enterprise
USA – United States of America
USD – US dollar
6. CASE Working Paper | No 1 (2015)
6
Piotr Kozarzewski — political scientist and sociologist, is a member of the CASE Supervisory
Council and a professor at the University of Computer Sciences and Economics in Olsztyn.
He has participated in numerous research and advisory projects in Poland and abroad
devoted to post-communist transition, especially privatization. His research interests
concentrate, among others, on the political economy of transition, institutional economy,
corporate governance, and private sector development. He is an author or co-author of
about 150 publications and reports, including:
“Formal and Real Ownership Structure of the Polish Economy. State-Owned versus
State-Controlled Enterprises”, Post-Communist Economies, 2016 (forthcoming; together
with Maciej Bałtowski).
Zmiana własnościowa polskiej gospodarki 1989-2013 [Ownership change of the Polish
economy 1989-2013], Warsaw: PWE, 2014 (together with Maciej Bałtowski).
“The Reform Process in Post-Communist Transition: Understanding Reform in Eastern
and Central Europe and the Commonwealth of Independent States”, in: J. M. Fanelli,
G. McMahon (eds.), Understanding Market Reforms, Vol. II, Houndmills and New York:
Palgrave Macmillan, 2006 (together with Richard Woodward).
“International Transfer of Knowledge: An Opportunity to Even Out Disparities in
Development”, in: M. Jarosz (ed.), Poland and Its People in United Europe. Economic and
Social Imbalances, Warsaw: ISP PAN, 2011.
Maciej Bałtowski — professor of economy, is Head of the Theory and History of Economics
Department of the Faculty of Economics at the Maria Curie-Skłodowska University in Lublin.
He is also a member of the Council of the Supreme Audit Office in Poland. He is an author
and co-author of six books and numerous scientific and press articles devoted to economic
transition and ownership changes in Poland. His research interests also cover problems
of economic policy as well as the role of the state and state ownership in contemporary
economies. Apart from the two publications written together with Piotr Kozarzewski,
his publications include, among others:
„Własność państwowa jako instrument współczesnej polityki gospodarczej” [„State
ownership as an instrument of the modern economic policy”], w: E. Mączyńska (ed.),
Modele ustroju społeczno-gospodarczego. Kontrowersje i dylematy [Models of socioeconomic
systems. Controversies and dilemmas], red. E. Mączyńska, PWE, 2015.
Transformacja gospodarcza w Polsce [Economic transformation in Poland], Warsaw: PWN,
2006 (together with Maciej Miszewski).
“Politicians or Administrators? State Corporate Governance in Poland”, in: T. Mickiewicz
(ed.), Corporate Governance and Finance in Poland & Russia, Amsterdam-London and
Houndmills: Palgrave Macmillan, 2006 (together with Tomasz Mickiewicz).
The authors
7. CASE Working Paper | No 1 (2015)
7
This paper presents an analysis of the causes and manifestations of Poland’s recent shift in
economic policy towards a more active role of the state, and uses privatization policy as an
example. This change coincided with a shift in “fashion” in economic policy, away from the
idea of “state failure” and more towards the idea of “market failure.” Our paper begins with
a brief presentation of the recent changes in the theoretical approach towards the role of
the state in the market economy and of studies devoted to privatization policies in post-
-communist countries, the latter having, in our view, critical gaps, which we attempt to fill
in this paper. To meet this goal, we first discuss the Poland’s privatization policy and its place
in economic policy during the transition period, as well as its evolution from promoting
systemic change towards focusing on predominantly fiscal goals. Analyzing the effects of
this privatization policy, we point to a large unfinished agenda in ownership transformation
that has had an adverse impact on the institutional setup of the Polish state, creating grounds
for rent seeking and cronyism, which, in turn, impede the pace of privatization. We conclude
that it is the increasing capture of the state by rent-seeking groups, and not, contrary to
popular opinion, the global financial crisis, that most contributes to the growing statist trends
of Poland’s economic policy.
Abstract
8. CASE Working Paper | No 1 (2015)
8
Since the beginning of the global financial crisis, we have witnessed a shift in national
economic policies towards a more active role of the state, far beyond its previous role as
a regulator, acquiring more active and interventionist functions. This shift seems to be of
a dominant nature and involves countries with different patterns of economic policy: from
“neoliberal” USA, through to “pragmatic” Germany, to “statist” (toutes proportions gardées)
France. This shift enjoys support from many of the most renowned economists, including
Nobel Prize winners Joseph Stiglitz (2009) and Paul Krugman (2009), and is contributing
to the “resurrection” of Keynesian ideas.
A wide discussion began that was devoted to searching for an efficient model of state
corporate governance that would ensure an effective impact of the state of the economy,
on the one hand, and would avoid the dysfunctions of an economically active state, on
the other (Musacchio & Lazzarini, 2012). Post-communist economies did not remain on the
sidelines, and Poland can certainly be found among those that are looking for remedies
for their current problems related to a more active role of the state. Thus far, Poland has
avoided the implementation of wide-scale direct anti-crisis interventionist measures, such
as direct support to failing industries and companies or financial institutions. However,
it has not avoided a substantial paradigm shift away from the idea of “state failure” and more
towards the idea of “market failure.”
In examining this paradigm shift, we focus our analysis on privatization policy because of its
special role in transition economies. Compared to the most developed market economies,
in post-communist countries, questions of ownership and the role of the state in economic
processes were – and still are – much more important issues. This stems from the specific
set of economic policy tasks in this group of countries that not only must meet the challeng-
es of changing economic and social conditions, but also must ensure the implementation of
the transition from a planned to a market economy. Among others, such a policy must lead
to the appropriate change of the role of the state in the economy as well as to structural
change in the distribution of property rights.
In this context, it is important to analyze the initial assumptions and goals of a privatization
policy, as well as its place in the overall economic policy of a government, and then to fol-
Introduction
9. CASE Working Papers | No 3 (127) | Change in economic…
9
low the changes in the privatization policy, attempting to understand the reasons for these
changes.
The existing literature seems to have significant gaps in this respect. The vast majority of
publications devoted to privatization concentrate on best policy issues (in the framework of
the various aspects of the state failure versus market failure dispute, deliberations on the
best type of owner, and assumptions that the government should act in good faith) or on
the practical outcomes of the privatization of state property (in terms of revenues and its
impactonrestructuringandmicroeconomicefficiency,amongothers).Therearemanyvaluable
publications in both areas. It is also important to mention the “classical” articles by Frydman
and Rapaczynski (1994) and Boycko, Shleifer, and Vishny (1996) in the former area. Literature
in the latter area is especially broad and varied in conclusions; however, it is important to
note a recent publication that summarizes the efficiency of privatization processes (Estrin
et al., 2009). At the same time, deep analyses of the real mechanisms that yield a specific
privatization policy or comprehensive examinations of the true goals of privatization,
why these goals were set and subsequently changed, and the degree to which these goals
were realized are often overlooked or marginalized by researchers.
Since the early 2000s, researchers have shown a lessening interest in privatization
in Central and Eastern European (CEE) countries, and especially after the European Union
(EU) accession of these countries. Perhaps researchers consider this issue outdated now
that these states are part of the club of the most developed European economies, and
their economies are now predominantly private sector driven. Regarding Poland, there is
also limited research on this topic. This explains the steep drop in privatization dynamics in
regards to political and ideological factors (Błaszczyk, 2004).
There are only a few articles devoted to recent privatization trends in post-communist
countries. Two articles deserve attention: the first is a study of the Russian economy,
where changes in government policy are analyzed using the evolution of contemporary
theoretic approaches to the choice of an optimal form of ownership (Radygin & Entov, 2013);
the second is a study of the changing role of the state and ownership and privatization
in Hungary and Poland as a contribution to the development of the theory of Central
and Eastern European capitalism models (Szanyi, 2014).
The aim of our article is to contribute to the discussion on the factors that impact
privatization policy as a part of economic policy design and implementation in post-
-communist countries. Taking Poland as an example, this article presents the findings
of the most recent stage of research on ownership changes in transition economies –
a process we have studied since the early 1990s. We have summarized the previous stages
of our research in two books: the first examines privatization in post-communist countries
10. CASE Working Papers | No 3 (127) | Change in economic…
10
(Kozarzewski, 2006) and the second examines ownership changes in Poland during the
transition (Bałtowski & Kozarzewski, 2014).
In this paper, using privatization policy as an example, we attempt to show that the
economic downturn is only partially responsible for this shift in Polish economic policy.
Contrary to popular opinion, we believe that it is the increasing capture of the state by
rent-seeking groups, and not the financial crisis, that is the main cause of these statistical
trends. In fact, the growing imbalance in public finances may even stimulate cautious
privatization as a source of revenue for the state budget.
11. CASE Working Paper | No 1 (2015)
11
To understand the specificities and mechanisms of the recent pro-statist shift in Poland,
we must look at the history of ownership policy in Poland throughout its transition period,
and not simply focus on the global crisis period, because the roots of this policy shift took
hold much earlier.
As in all other Central European transition countries, the privatization of the Poland’s econ-
omy was regarded as a pillar of its market reforms. At the end of the communist era, the
Polish economy was primarily state property-based, with over 70% of the country’s GDP
produced by the state sector (with the private sector contributing mostly via agriculture
and small businesses). However, from the very beginning of the transition, there was
a general understanding among the authors of the economic reform that a market economy
must be based on the inviolability of private property.
The economic program of the first post-communist government (the Balcerowicz Plan) ad-
dressed privatization issues in the context of the creation of market institutions that had
stood the test of time in Western economies. Following that simple course of thought,
the main privatization goal was of a systemic character: to contribute to the change of the
economic system through the creation of private entities. Within the framework of this
goal, a number of sub-goals existed, of which the most important was the creation of well-
-functioning markets, including a securities market, and a change in the role of the state,
which would not have to perform ownership functions for the majority of enterprises.
Apart from this purely systemic role, privatization would solve the problem of the micro-
economic inefficiency of state-owned enterprises; this would, in turn, contribute to the in-
crease in productivity of the whole enterprise sector.
Other privatization goals also existed-political (the creation of a powerful pro-reform
lobby that would be involved in the privatization process and utilize its results), social (in
terms of social justice, as well as in terms of resolving social problems at an enterprise level),
and fiscal. On the one hand, the value of the state-owned stock designated for privatization
was large; therefore, the potential privatization revenues for the budget were also signifi-
cant and able to contribute, for example, to reducing the budget deficit. On the other hand,
1. Privatization and the Changing
Role of the State: Initial Conditions
and Assumptions
12. CASE Working Papers | No 3 (127) | Change in economic…
12
privatization would eliminate the need for the state to support enterprises in distress;
thus saving budgetary expenditures.
It should be noted, however, that detailed descriptions of the main goals of the
privatization were not developed. Only a few goals were officially announced, and most
had to be deduced from decisions made by the parliament or other governmental agencies.
There was general understanding among decision makers that a large-scale, deep, and com-
prehensive privatization was needed, but the set of goals and their hierarchy remained,
to a large extent, ill-defined. In general, during the first years of transition, systemic and
microeconomic goals seemed to be the most important, while fiscal goals were given
a much lesser importance.
Another important feature of the Polish privatization was its gradualist and highly con-
sensual character. Its authors were aware of the trade-off between the speed and quality
of the transformation processes. They believed that a slower transition speed as a result
of the careful preparation of privatization deals (both in technical and social dimensions)
was much more important than a massive and rapid formal change of owners because the
reformed market environment would exert strong pressure on state-owned enterprises,
forcing them to adapt and restructure, thus making their privatization less urgent, albeit still
necessary. The gradual nature of the Polish privatization also reflected Poland’s decision
on what should occur first: privatization (which would create demand for further reforms)
(Frydman & Rapaczynski, 1994; Boycko, Shleifer, & Vishny, 1995) or regulation and institu-
tional constraints (in order to create a framework for actors’ behavior and prevent tunneling)
(Murrell & Wang, 1993). This gradualism reflected a choice in favor of the latter solution.
The main features of the Polish privatization (multiplicity of goals, slow pace, and con-
sensual character) were reflected in the privatization law, which envisaged a wide range
of paths to ownership transformation: sales to both strategic investors and via the stock
market, management-employee buyouts, and even a unique kind of mass privatization,
which was designed not only to transfer a significant (albeit limited in comparison with other
post-communist countries) part of the state sector’s assets to Polish citizens, but also to
create a mechanism for actively restructuring the companies participating in the mass
privatization. All paths to privatization were essentially equivalent (buyers paid market
price or a price based on valuation), except in the case of the National Investment Fund
(NIF) program, where certificates of ownership were distributed among the population for
a nominal fee.
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2.1. Shift in Goals
The goals and scope of the privatization (and the corresponding concept of the role of the
state in the enterprise sector) changed over time.
In mid-1990s, the government began explicitly setting privatization goals, although
the goals were primarily of a limited and short- to medium-term nature (such as support
for the creation of financial markets or financing social sector reforms). At the same time,
the systemic goal was never explicitly set, such as what the ultimate ownership structure
of the Polish economy should look like, or what were the criteria for retaining some sectors
or companies under the state control. Furthermore, rather quickly and primarily due to
pressure from interest groups that were afraid of losing the privileges and rents derived
from state-owned companies (directors, trade-unions, among others), the government
began excluding enterprises regarded as being of special importance for national interests,
thus limiting the scope of the destatization of the Polish economy.
Another important change in goal setting was the growing fiscalization of the process: in-
creasing budget revenues gradually became more important than other expected effects.
Eventually, the revenues from privatization became the primary motivation to overcome the
growing barriers to selling state property. Increasing resistance came from industrial lobbies
not interested in losing support from the state. Political elites also became more skeptical
of privatization; through most of the 2000s, the ruling coalition was explicitly opposed
to the continuation of the privatization of that which was still controlled by the state.
After more liberal-minded political forces re-gained power in 2007, privatization dynamics
improved; however, meeting fiscal goals were still the most important issue. Privatization
dynamics have again begun to lose momentum since the beginning of 2010s (see below).
It is also important to note the opportunistic behavior of the Ministry of the Treasury,
which proved to be, to a large extent, incapable of staying within the boundaries of a task-
-oriented organization set up to organize the process of transition. It suffered a growing
conflict between its owner and seller functions: the fewer assets under control of the
ministry, the less its political weight. This attitude was strengthened by the winning political
2. Change over Time
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parties, which began treating state assets as spoils that belonged to the victors. One such
example of this behavior was the appointments to the supervisory boards of companies
that were controlled by the Ministry of Treasury. Thus, the Ministry contributed to
strengthening the elements of crony capitalism.
Other goals, especially long-term goals, lost their importance. First, regarding the systemic goals:
in the new century, regardless of whether the ruling coalition was more pro-statist or more liber-
al-minded, many of the largest privatization deals left control of the company in the state’s hands.
In other words, the state budget saw revenues from privatization without passing control of the
company to private hands, in line with the Polish proverb: To eat a cake and to have a cake.
The first method for the state to retain company control was by selling only minority blocks
of shares or the “leftovers”: small blocks of unsold shares that did not allow for control of
the property. According to estimations, in recent years, selling blocks of shares that do not
affect ownership control comprise about three-quarters of all privatization revenues (Minis-
try of Treasury, 2011). The second method for the state to retain company control-non-own-
ership control-began even earlier, in the late 1990s. This method can be called “reluctant
privatization,” which refers to the transfer of ownership rights without the appropriate
transfer of control rights (Bortolotti & Faccio, 2004). In these cases, the state holds special
control rights through “golden shares” (which were withdrawn in 2006 after protests from
the European Commission, but “resurrected” in a modified form in 2010) or through special
provisions in company charters. Companies that are subject to these special rights of the
governments are not numerous, but they are among the largest and most important Polish
companies, and are in industries of strategic importance.
The same can be said of the microeconomic goals of finding efficient owners who would
bring valuable financial and other resources to privatized enterprises. Passing state property
into private hands, especially those of foreign investors, is often regarded as a negative
process and is seen as a threat to certain vital Polish national interests. Instead, a campaign
devoted to the development of “citizens’ shareholdings” has been launched-where large
blocks of shares are being sold to a large number of small individual investors, with the
Treasury retaining ownership control over the privatized companies.
Now, it seems that almost no one remembers that the government had to create support
for privatization and its market reforms. Both the ruling coalition and its political rivals are look-
ing for allies among forces not necessarily interested in a healthy, rent-free market economy
where the rules of the game apply equally to everyone. Perhaps this has a practical basis: the
pro-reform political base is still too narrow to ensure victory in the next elections or in passing
a bill, so the government seeks political support among actors who have real political weight-
-lobbies, special interest groups, and, last but not least, voters, who, en masse, are against
privatization and in favor of state paternalism.
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2.2. Change of Paradigm
Shifts in the hierarchy of goals seem to reflect broader changes in economic policy-
-specifically, changes in the paradigm of the role of the state in the economy. The state is
no longer withdrawing from direct control and intervention in the market, and is instead
remaining a powerful player in business and policy–and even has expanded its role, mean-
ing that privatization is falling by the wayside in favor of a new statist ideology. Privatization
has ceased to be a pillar of reformist economic policy; rather, its role has become residual.
Nowadays, the government will privatize when it has no better solution resolve its problems,
namely financial.
This paradigm change manifests itself in many different ways. First, we note the
above-mentioned resignation from the complete privatization of companies, especially
when these companies can generate financial gains for the state budget. Even economists
and decision makers who were regarded as liberal-minded, such as Jacek Rostowski, the
former Minister of Finance in Donald Tusk’s government, and Jacek Socha, the former
Minister of the Treasury and Head of the Securities and Stock Exchanges Commission,
at the beginning of the current decade, declared that profitable companies should not be
privatized, at least in the short term, in order to ensure budget revenues from their
operations and to possibly sell them at a higher price in the future (Głombicki, 2012; Prusek
& Bielecki, 2012). In line with these declarations, the dynamics of privatization (even selling
minority blocks of shares) have declined primarily because of the withdrawal of companies
from approved privatization plans and the preparation of less ambitious privatization plans
for subsequent years. By 2014, privatization had nearly halted (see more below).
Second, despite not declaring any nationalization goals, the state has been gradually
increasing its ownership control through the acquisition of previously privatized enterprises
by companies controlled by the Treasury (e.g. in the energy sector, among others). Official-
ly, however, the state has not declared this to be a part of its economic policy, but simply
“business decisions.”
Third, the state has declared increased investment activity, among others, through
the “Polish Investments” program that was launched in 2012. In this program, which is still
unwinding rather slowly, the state is expected to invest (e.g. revenues from privatization)
in large-scale public-private partnership (PPP) investment projects. However, this program
has several pitfalls. There are doubts regarding whether investment projects would be
chosen wisely and whether they would create additional investment impulses instead of
wasting money on support for impractical but politically attractive projects. There are also
doubts regarding the government’s ability to run complicated projects – the state has earned
a reputation for being a rather mediocre entrepreneur.
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Additionally, a kind of economic xenophobia is developing, and not only among
populist politicians and pro-static economists. Thus far, unlike, for example, in Hungary,
this xenophobia is still mostly used as a slogan rather than as a concrete course of action.
No specific actions have been made, and this refers only to the situation of the banking
sector, which is 80% private and where 70% of capital is now controlled by foreign
investors. In recent years, however, and in view of the second wave of the global financial
crisis, ideas regarding the restructuring of the banking sector as it relates to ownership
structure have emerged and have become popular even among some pro-market reform
economists and politicians, not speaking about populist-minded opposition. These ideas
are referred to as the “domification” or the “re-polonization” of banks: domestic investors
should purchase foreign-owned banks to protect the Polish banking sector from the effects
of financial turmoil abroad (Kawalec, 2011). It should be noted, however, that previously,
there were no signs of such threats: the Polish banking sector has proved itself to be very
sound, politically independent, and well functioning, with its only threats coming from
a shifting external environment. Poland was the only post-communist country that avoided
a financial crisis during the entire 25 years of transition. Furthermore, there were no signs
of dysfunctional behavior in the Polish banking sector during the first wave of the global
financial crisis. Besides, mechanisms of such a transfer remain unclear: there is neither
the appropriate legislation, nor the domestic capital willing to take part in this project.
Opponents of this idea also note political risks – domestic investors are less immune to
political pressure from the government (Piotrowski, 2012). Quite possibly, at least some
proponents of the “domification” count exactly on this: the possibility to exert influence
on domestically-owned banks in order to force them to support the governmental policy
of providing assistance to Polish companies (i.e. relaxed conditions), or even to become
another source of rent for special interest groups.
There are other signs of increasing support for domestic entities, such as the acquisition
of shares of a company that was “too important to fail” and the de facto protectionist
measures in favor of Polish coal mines that limit competition from Russian coal.
Recently, the government has begun to force changes in legislation that would give
the Treasury special rights and privileges in the market, as compared to other owners.
In July 2015, the parliament adopted a law that allows the government to block the
acquisition of shares by a new controlling investor for a number of companies that have
a “strategic importance,” even if the company is fully private. Currently, the government
is adopting a law that would remove from the treasury its disclosure requirements related
to operations in the securities market, including removing the obligation to make an offer
to buy out shareholders when acquiring shares in a company above a certain threshold.
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2.3. Paradigm Shift versus Income Dilemma
This very cautious attitude towards privatization, which became part of the government’s
policy at the beginning of the new century, has prevented it from meeting many of its
fiscal goals. During 2001–2006, revenues from privatization fell steeply, with even modest
revenue plans not being fulfilled (except in 2004, which can be explained by the personality
of then-Minister of the Treasury, the aforementioned liberal Jacek Socha, who occupied this
position from May 2004-October 2005). A grim “record” was set in 2006, when the lowest
privatization revenues in the whole of Poland’s transition history were recorded: instead of
the planned 5.5 billion PLN, the real revenues were only 600 million PLN (just 11% of the
planned amount). Low privatization revenues jeopardized the implementation of policies
that were to be financed using these revenues. This situation also contributed to the financial
failure of the pension system reform.
However, a partial solution was found: to use the right of the Treasury to receive
dividend payments from its shareholdings and direct payments from non-commercialized
state-owned enterprises. Since 2005, dividends have become more substantial and,
in 2006–2009 and 2013–2014, this source of income provided the state with higher revenues
than from privatization. Since 2006, the government began to plan dividend revenues.
After the anti-reform coalition led by Kaczyński’s PiS party lost the elections in 2007,
and the moderately liberal PO-PSL coalition formed the new government, the Treasury
re-started a quite ambitious privatization program. However, it did not resign from receiving
dividend payments. In Figure 1, we see how, at the turn of the last decade, the “dividend
instead of privatization” policy thus changed into a “dividend and privatization” policy.
It should be also noted that two consecutive ruling PO-PSL coalitions, which are considered
rather liberal (especially when compared to the previous PiS-led coalitions), implement-
ed an even more active policy of draining companies’ financial resources through dividend
payments. Such a policy raises concerns about the threats to the development prospects
of these companies.
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Figure 1. Revenues from privatization and dividend payments (in bln PLN, current prices).
Source: Ministry of Treasury.
If we look at the level of fulfillment of the planned privatization revenues and dividends
in Figure 2, we notice that the latter is rather easier to use, being more politically accept-
able in the course of solving the above-mentioned cake dilemma: dividend plans were
usually over-fulfilled, unlike the privatization revenue plans, which, in the new century, often
remained unfulfilled.
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Figure 2. Planned and received revenues from privatization and dividend payments
(in bln PLN, current prices).
Source: Ministry of Treasury.
If we compare the dynamics of privatization in Poland (measured by revenues from
privatization) with the EU, we will see similar trends until the early 2000s (Figure 3). There
was steady growth until the turn of the new century and a steep decline afterwards.
Notwithstanding the different place of privatization in the economic policies of CEE post-
-communist countries and the many developed economies of “Old Europe,” there was some
mutual ground in appreciating the role of privatization in the economy – both as a means
for improving the functioning of enterprises and as a source of income for state budgets.
The beginning of these declining dynamics also had some common ground: the global
economic recession. However, after the world economy began to recover, privatization
accelerated in the EU, but continued to decline and stagnate in Poland. A few years later,
we see how the global financial crisis contributed to the declining dynamics of privatiza-
tion proceeds in the EU; however, Poland again followed its own path, which was mostly
opposite from the rest of the region. The first year of the crisis, 2009, was marked by growing
proceeds from privatization in Poland; however, when EU economy began its recovery and
privatization proceeds started to increase, a decreasing trend began in Poland.
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Figure 3. Revenues from privatization in Poland (in bln PLN) and European Union
(in bln USD).
Source: Ministry of Treasury; The PB Report (2015, p. 8).
In attempting to explain this discrepancy in recent dynamics, we may consider the purely
fiscal goals of the Polish privatization. The period with the highest proceeds from
privatization in recent years coincides with the highest general government deficit (up to 7.6%
of the country’s GDP in 2010) and desperate attempts by the Polish government to improve
the state of public finances and, among others, to have the excessive deficit procedure lifted
(which was imposed on Poland by the Council of the EU in 2009). The gradual improvement
of the budgetary situation (which, indeed, is taking place since 2011) may mean decreasing
incentives to use privatization as a source of revenues.
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As we have shown above, the winding road of the Polish privatization policy contribut-
ed to changes in privatization dynamics and outcomes. Thus far, five stages of Poland’s
privatization process have been identified (Bałtowski & Kozarzewski 2014):
Creating privatization foundations (September 1989–December 1990): developing the con-
cept and adopting the law.
“Heroic” privatization (January 1991–December 1996): detailed solutions were developed
and the government learned how to privatize. At the same time, there was strong grassroots
privatization activity using the management and employee buyout (MEBO) technique.
“Mature” privatization (January 1997–August 2000): this was the period of the most
intense privatization, where the highest privatization revenues were recorded.
Regress in privatization (September 2000–November 2007): political elites with a
negative attitude towards privatization came to power, prompting a policy of support for
the state-controlled sector. Privatization essentially stopped, causing severe problems
for the state budget.
Privatization in the shadow of statism (December 2007–present): the change in the ruling
elites and the more liberal Donald Tusk governments resumed privatization, but usually only
for fiscal reasons and without losing state control. This period is also marked by growing sup-
port for the public sector and domestic investors.
Weak privatization outcomes in 2014 were followed with even weaker ones in 2015, when a
new grim “record” was set with privatization revenues amounting to mere 43.6 million PLN
(about 10 million Euro, 3.7% of the planned amount). The new government which was formed
after the populist PiS won the parliamentary elections at the end of October 2015, conducts
openly statist policy and at the beginning of 2016 declared that it was going to slow down
privatization even more, selling only small blocks of shares and “leftovers.” It means that
Polish privatization policy has entered the next, and probably the least favorable phase
in the whole history of ownership change in this country.
Notwithstanding these obstacles, after 25 years of privatization, the state-controlled
sector shrunk significantly. While in 1989, the public sector accounted for 70% of sales,
66% of employment, and about 70% of the country’s GDP, by the end of 2013, according to
3. Privatization Policy Outcomes
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estimations based on official statistical data (Central Statistical Office, 2014a, 2014b, 2014c),
it fell in the non-financial enterprise sector to 9.8% of sales, 12.5% of employment, and,
according to our estimations, to about 10% of GDP. This is still somewhat more than in
most developed economies; however, it makes the public sector appear marginal, and may
mean that Polish economy has become almost fully private sector-driven.
Nevertheless, a quarter century of privatization has left some important items on the agenda
unfinished.
The first item is that of the companies that remain under state control. These companies
are more numerous than as presented by official statistics. According to our estimations,
which will be published in a separate paper and considers all companies that were under
effective state control (ownership control plus non-ownership control as a result of
“reluctant privatization”), the real public sector share in the non-financial enterprise sector
was significantly larger and amounted to 16.1% in sales and 15.1% in employment by
end-2013. In our earlier research, we estimated the real share of the public sector’s GDP
at about 15-20% for end-2012 (Bałtowski & Kozarzewski, 2014). State control has differ-
ent forms, such as simply keeping the majority of shares in the hand of the Treasury, or as
indirect control by means of holding structures, special provisions in company charters,
or special rights of the government towards selected companies. Some of these forms have
been discussed earlier.
The second item is that of uneven privatization results across companies of different
size. An analysis of the list of the 1,500 largest Polish non-financial enterprises, compiled
by the authors of this paper on the basis of the list of the 2,000 largest Polish companies
by Rzeczpospolita (“Lista 2000,” 2014), verified and supplemented with data from other
sources, shows that the bigger the enterprises are, the more likely they are to be controlled
by the state (in an ownership or non-ownership way). Among the 100 largest companies
in Poland, only 20 are state-controlled; however, their share in sales in this group is 42.5%,
and in employment – 50.5%. Among the 25 largest companies, nearly half (12) are under
state control, and their share in sales and employment in the group are 64.4% and 62.3%,
respectively. Of the 10 largest enterprises, six are controlled by the state.
The third item is that of uneven results across the various sectors of the economy:
while in manufacturing industries, the state sector share in sales by the end of 2012 was
5.6%, but in extractive industries and infrastructure, it was almost half: 46.2% and 45.8%,
respectively (Bałtowski & Kozarzewski, 2014).
A question arises: Why may an unfinished privatization agenda be a problem for Poland
and, generally, transition economies? In the most developed economies, state-controlled
companies are generally not less efficient than private companies – both in economic and
financial terms, as well as in terms of meeting their purpose: exercising some very important social
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and/or economic public functions. Therefore, it can be expected that state-controlled enterprises
may play the same role in transition economies. Unfortunately, this is very hard to achieve.
First, the role of the state-owned sector in communist economies differed radically from
that of market economies. State-owned enterprises in communist countries were the
foundation of the planned economy system, whereas in market economies, they occupy
specific niches: public utilities which cannot be provided by the private sector at a desired
scale, quality, or price, and the realization of the developmental functions of the state (Szanyi,
2014). The structure of the state-owned sector in Poland (and many other post-communist
economies) is still far from that of the most developed economies, and many state-owned
enterprises operate in industries where there is no reason (from the point of view of efficient
economic and social policy) for the state to be involved.
Second, in developed economies, a state-controlled enterprise sector functions in a much
more developed and sound institutional environment: it is efficiently controlled by the
market and legal system. However, mechanisms of external corporate control are still weak
in post-communist countries, the quality of the law is not always at the highest level,
and there are widespread enforcement problems. In this situation, the internal control of
private owners gains importance.
This leads to the inferior performance of the vast majority of state-controlled companies,
and generally shows that, in given institutional conditions, the state is a less effective owner
than a private one, especially in regards to strategic industrial investors. Research conducted
by the authors (Bałtowski & Kozarzewski, 2014) shows that, in Poland, from performance
point of view, state-owned companies, to a much higher degree than enterprises with non-
state owners, were vulnerable to the conditions of the market, showing enormous ups and
downs when conditions changed. The relatively favorable financial results of the state-con-
trolled sector hide the high degree of differentiation between a few very profitable compa-
nies and the majority of the companies that were unprofitable. From an institutional point
of view, these companies were one of the most important sources of rent in the economy.
Corporate governance in these companies was often dysfunctional; specifically, the dis-
proportionate authority of executives and trade unions, excessive employment, and a high
degree of politically motivated decisions – both in regards to production and their high-rank
personnel policies, which are directed by the both companies themselves and by the super-
vising state body. Thus, the state-controlled sector contributes to the dysfunction of the
state, creating grounds for the politicization of economic policy, cronyism, and even outright
corruption. Institutions that could help to overcome these dysfunctions are still too weak,
and we have yet to see any political will to strengthen them. On the contrary, one may be
under the impression that the political elites are trying to widen the scope for arbitrary
decision making in the economy.
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It can be argued that there are both endogenous and exogenous factors that have
contributed to the increasing role of the state in Poland in recent years.
The first endogenous factor is inadequate institutions: the Polish state is still institution-
ally weak and is often not capable of performing its functions in an optimal way. These
institutions are not inclusive enough, to use the terms coined by Daron Acemoglu and
James A. Robinson (2012), in the sense of securing a level ground for all economic players
with their rights efficiently protected. Still strong (and even showing some growth tenden-
cies) are extractive institutions that “are designed to extract incomes and wealth from one
subset of society to benefit a different subset” (Acemoglu & Robinson, 2012, p. 76). It should
be stressed, however, that in Poland, privatization processes themselves were infrequently
used as sources of rent. The main source of rent lays in the state-controlled sector. It is
still characterized by very influential special interest groups that created a kind of political
capitalism á rebours. While in a “straight” political capitalism, rent seekers abuse the
public sector, in a political capitalism á rebours, the state sector is, itself, a rent seeker
who abuses other sectors and populations not connected with public sector (Bałtowski&
Mickiewicz, 2009). Polish extractive institutions originate both from the communist past
(e.g. the predominance of state ownership) and the period of systemic reforms. Influential
special interests groups of the so-called early winners have emerged who received rent from
the transition process itself (Hellman, 1998; Kozarzewski & Woodward, 2006). For example,
one group uses the dual role of the Ministry of the Treasury (seller and owner of public
property) and extracts a rent from its political weight and possibility to distribute rents for
political winners.
The second endogenous factor is the financial challenges of economic policy. The
financial problems of the government, such as a high public debt and a budget deficit,
should be mentioned. These financial problems force the government to look for additional
sources of revenues. This is one of the causes of the fiscalization of the government’s own-
ership policy as well as the budding hope that support for the state sector and new public
investments will help to overcome these financial problems. However, this cause seems to be
of secondary importance, which may be indirectly corroborated by recent studies on state
4. Concluding Remarks and Discussion
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capture in Poland that has shown that periods of slower economic growth (which may mean
an aggravation of fiscal problems) did not lead to an increase in state capture. On the con-
trary, the likelihood of state capture was positively correlated with periods of higher
economic growth, while the start of the global financial crisis had a “wake-up effect,”
significantly decreasing the likelihood of state capture in that period (Alwasiak et al.,
2013). Besides, the fiscal needs of the government may have an adverse effect on privati-
zation trends, stimulating the cautious selling of the elements of state property; however,
preferably, without losing control of it.
The state-controlled sector is also used to solve social problems, for example, through
the creation of jobs and the protection of certain enterprises and industries that are
politically “too important to fail.”
Exogenous factors seem to be relatively less important in Poland: the impact of the global
financial crisis, which was followed by a worldwide change in policy paradigm concerning
the role of the state (i.e. a shift from “state failure” to “market failure” approaches). From
what is seen in current economic policy trends, the state should play a more active role not
only in regulation and enforcement, but should also be more interventionist as an active
supporter of market players and increase its role as a business player itself. It should be
noted that during the first wave of the crisis, during 2008–2009, the Polish government,
unlike many other governments in more developed economies, did not conduct a broad
interventionist policy. Rather, it focused on protecting the liquidity of financial markets and
the stability of the country’s financial system. This was a much less expensive policy that
brought about positive results and contributed to the situation where, in 2009, Poland was
the only European country that achieved economic growth, albeit very modest. The recent
pro-interventionist shift in the role of the state in Poland occurred mainly after the first wave
of the global crisis had peaked. Therefore, both the change in the style of economic policy
and the direct impact of the global crisis seem to be of secondary importance. In addition,
the lack of a correlation between privatization trends in the EU and Poland may
corroborate the thesis that the economic policy of the Polish government, at least in its owner
ship segment, has predominantly endogenous roots.
We treat these conclusions and remarks as small steps towards understanding the subject
in question. Further study is needed, such as, among others, a deep analysis of the factors
identified in this paper from the perspective of their relative strengths, mutual dependencies,
and the specific mechanisms exerting an impact on privatization policy (and, more broadly,
on the level of statism in the economic policy of the Polish government).
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Acemoglu, D., & Robinson J. A. (2012). Why nations fail: The origins of power, prosperity, and
poverty. New York: Crown Publishers.
Alwasiak, S., Lewandowska-Kalina, M., Kalina L., Kowalewski, O., Możdżeń, M., & Rybiński,
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Warsaw: PWE.
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