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BPEA Article

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

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Abstract

THE ECONOMIC DOMINANCE of the state sector makes its behavior and response crucial to the course of reform in the economies of Central and Eastern Europe. This paper examines the special case of Poland in the three years following the "big bang" of January 1, 1990. The big bang-a program of radical reform to create the legal, institutional, and economic basis for a market economy-was instrumental in changing relative prices, introducing foreign competition, and signaling that tight monetary and fiscal policies would be pursued. However, changes in the ownership and governance of state manufacturing companies have lagged behind.

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