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Poland The Privatization Process
Transformation of more fundamental aspects of the
economy
have proceeded much more slowly than did the reforms
undertaken
in 1990 and 1991. The most important feature of the
longer-term
transformation is the privatization of the means of
production.
The end of the communist system brought an immediate and
dynamic
growth in new privately owned businesses, most of which
were
small retailing, trade, and construction enterprises. In
1990
about 516,000 new businesses were established, while
154,000 were
liquidated, a net increase of 362,000. Another 100,000
small
businesses formerly owned by local government agencies
were sold
to private investors in the initial rush to privatization.
By
September 1991, an additional 1.4 million one-person
businesses
and 41,450 new companies had been registered since the
beginning
of the year. Overall, in 1990 and 1991 about 80 percent of
Polish
shops went into private hands, and over 40 percent of
imports
went through private traders.
Legal and administrative preparations for privatization
of
state-owned enterprises took much longer than expected.
The
"small privatization" of shops, restaurants and other
service
establishments was a relatively simple process, but
privatization
of large enterprises proved much more difficult. By
October 1991,
some 227 larger enterprises had been converted into stock
exchange-listed companies, and twenty of them had been
privatized
by offering them for public or private sale. Some of these
transactions involved foreign capital. To speed the
process, the
government of Prime Minister Jan Bielecki, which came to
power in
early 1990, had made capital vouchers available without
charge to
all adult citizens. The vouchers were to be exchangeable
for
shares in mutual investment funds. At first these funds
were to
be managed under contract with foreign and domestic
management
firms. Voucher holders would be allocated 27 percent of
shares of
the enterprises selected for "mass privatization" and
would be
able to purchase any 33 percent share of the privatized
enterprises sold by auction. Because of their
configuration, the
vouchers were expected to give their holders effective
control of
these enterprises. Various technical problems delayed
implementation of this program, as did the change of
government
at the beginning of 1992. At that point, vouchers for
fewer than
ten major enterprises were being traded.
Already in 1990, the private sector had emerged as the
most
dynamic part of the economy. The economy's overall GDP
declined
in 1990 by 12 percent, but it increased by 17 percent in
the
private sector. Total industrial production dropped by 23
percent, but the private sector production increased by 8
percent. At the end of 1991, the private sector provided
about 38
percent of employment; it was responsible for 22.1 percent
of
total industrial production, 43.9 percent of construction
output,
70 percent of retail sales, and 16.3 percent of
transportation
services. Surprising growth occurred in private foreign
trade
activity, which accounted for 28 percent of foreign
transactions
in the first three quarters of 1991.
By early 1992, some form of privatization had occurred
in
17.4 percent of state enterprises. At that point, plans
called
for conversion of half of Poland's state enterprises to
private
ownership by 1995. The rate of privatization had already
slowed
in 1992, however, partly because of reduced government
outlays
and continual alteration of program goals. Enterprises
were
restructured in several ways: medium-sized firms typically
were
liquidated, and large enterprises were transformed into
stock
companies and limited liability companies.
Data as of October 1992
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