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

Brian Pinto,

BP

Brian Pinto Former Senior Advisor - World Bank

Marek Belka, and

MB

Marek Belka Lodz University

Stefan Krajewski

SK

Stefan Krajewski Lodz University

Discussants: Andrei Shleifer

AS

Andrei Shleifer

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.