The Implications of Privatization of State-owned Businesses in Poland after 1989
The Implications of Privatization of State-owned Businesses in Poland after 1989
Privatization of state –owned companies became a very common practice in the countries once belonging to the Russian communist regime. The reasons for privatization in those countries were tightly related with the political system that used to be in place. With the communist regime, all “factors of production (land, labor, capital, and entrepreneurial/managerial ability) are owned or tightly controlled by the state.”1 Therefore, as Poland regained its political and economic independence in 1989, the next logical step in the transformation towards democracy and capitalism was privatizing some sectors of the economy. However, with privatization there are many implications that affect the lives of everyday citizens; they oppose private investors from taking over Polish companies. In this paper, I will try to understand the reasoning behind privatization, while at the same time looking at economic and political advantages and disadvantages of privatization in Poland. In order to understand the issues with privatization that Poland encountered, we need to look at the tragic history of the nation. In the 1900’s alone, Poland had been invaded and taken over by four different countries. First, before World War I, Poland was partitioned by the three empires: Germany, Russia, and Austria. The country was not even present on any of the maps at that time; it completely “disappeared.” Then, in 1918, after 123 years of “disappearance”, Poland regained its independence. However, this independence was short lived, as in 1939, Germany broke the non-aggression agreement and invaded Poland, thus starting World War II. It was not long until Russia decided to attack Poland from the east 18 days later. Even though Poland had a military alliance with Great Britain and France, neither country acted against the aggression towards the nation in order to fulfill their pact. Left without any outside
Privatization of state –owned companies became a very common practice in the countries once belonging to the Russian communist regime. The reasons for privatization in those countries were tightly related with the political system that used to be in place. With the communist regime, all “factors of production (land, labor, capital, and entrepreneurial/managerial ability) are owned or tightly controlled by the state.”1 Therefore, as Poland regained its political and economic independence in 1989, the next logical step in the transformation towards democracy and capitalism was privatizing some sectors of the economy. However, with privatization there are many implications that affect the lives of everyday citizens; they oppose private investors from taking over Polish companies. In this paper, I will try to understand the reasoning behind privatization, while at the same time looking at economic and political advantages and disadvantages of privatization in Poland. In order to understand the issues with privatization that Poland encountered, we need to look at the tragic history of the nation. In the 1900’s alone, Poland had been invaded and taken over by four different countries. First, before World War I, Poland was partitioned by the three empires: Germany, Russia, and Austria. The country was not even present on any of the maps at that time; it completely “disappeared.” Then, in 1918, after 123 years of “disappearance”, Poland regained its independence. However, this independence was short lived, as in 1939, Germany broke the non-aggression agreement and invaded Poland, thus starting World War II. It was not long until Russia decided to attack Poland from the east 18 days later. Even though Poland had a military alliance with Great Britain and France, neither country acted against the aggression towards the nation in order to fulfill their pact. Left without any outside
Bibliography: 1 Hunter, Richard J., and Leo V. Ryan. "A Field Report on the Background and Processes of Privatization in Poland." Global Economy Journal 8.1 (2008): n. pag. Print. 2 Kozarzewski Piotr. Center for Social and Economic Research. Case Study. “Privatization in the Context of Post-Communist Transition: The Case of Poland.” Institute of Political Studies, Polish Academy of Science. 3 Roman Frydman & Andrzej Rapaczynski. "Privatization in Eastern Europe: Is the State Withering Away?” 14-15 (1994). 4 "Tuesday Dec 3." Investopedia. N.p., n.d. Web. 03 Dec. 2013. 5Figo, Theresa. Personal interview. 1 Dec. 2013.