Privatisation in Poland: Ten Years After

Abstract

The purpose of this article is to compare economic discussion on privatisation, expected privatisation outcomes and actual results in Poland. First it discusses the privatisation of state enterprises in the broader context of the economic transformation programme designed and introduced at the end of 1989 and the beginning of 1990. It examines the choice of privatisation methods, the political economy of privatisation and the three major policy issues: pace of privatisation, sequence of privatisation and the authority to initiate and carry out privatisation. The final section compares privatisation blueprints and actual results. The appendix presents a detailed technical guide to the privatisation methods in Poland and a basic set of figures illustrating the outcome.

Czech privatisation 25 years later

“…Decisions concerning changes in formal institutions such as the privatisation of state-owned enterprises are made at both the legislative and executive level, where the main role is played by politicians and bureaucrats. The approach of public choice theory shows that privatisation, which frees the enterprise of the burden of political interference, limits the ability of politicians to influence the activity of businesses in ways that serve their own ends (Baltowski & Mickiewicz, 2000).…”

“…Three methods were chosen for the privatisation of state enterprises: (i) public (mass, voucher) privatisation; (ii) employee privatisation consisting of distributing shares to employees; and (iii) sale of businesses to domestic and foreign investors. While the first two methods were non-equivalent (they received stakes in the enterprises for free), the last method was equivalent (they had to pay a price that was not zero) (Baltowski & Mickiewicz, 2000).…”

Ownership Concentration, 'Private Benefits of Control' and Debt Financing

“…far from equilibrium and distribution of share ownership may be a result of 'non-equivalent' transfers of ownership titles through various privatisation schemes (Baltowski and Mickiewicz, 2000).…”

Hierarchy of governance institutions and the pecking order of privatisation: Central–Eastern Europe and Central Asia reconsidered

“…In addition, the Czech mass privatisation programme was complemented in the second half of the 1990s by an extensive wave of direct privatisations to outside investors, including foreign ones. In contrast, in Poland, while many enterprises were indeed privatised via direct sales to outside investors (as asserted by Spicer et al, 2000), the extensive role was also played by employee buy-outs based on an underpriced transfer of assets (Bałtowski and Mickiewicz, 2000;Andreff, 2006). This explains a relatively lower level of privatisation revenues in Poland.…”