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Contents of issue 11-12/2010


Paul Krugman - The Increasing Returns Revolution in Trade and Geography, article

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Zbigniew Kuchta, Katarzyna Piłat - The Hansen Real Business Cycle Model and Its Application in the Polish Economy, summary, article

Adam Adamczyk - Proposals for Changes in Tax Incentives to Support R&D in Poland’s Business Sector, summary, article

Edyta Dworak - Advancement of Knowledge-Based Economies in European Union Countries, summary, article

Urszula Markowska-Przybyła - Regional Convergence in Poland from 1999 to 2007, summary, article

Wirginia Doryń - Social Capital and the Internationalization of the Firm, summary, article


Book Review: Katarzyna Metelska-Szaniawska, Konstytucyjne czynniki reform gospodarczych w krajach postsocjalistycznych. Studium empiryczne (Economic Reforms in Postcommunist Countries: An Empirical Study), Wydawnictwo Uniwersytetu Warszawskiego, Warsaw 2008, 354 pp. - reviewed by Marian Zalesko

Book Review: Jan L. Bednarczyk, Sławomir I. Bukowski, Józef Misala (eds.), Współczesny kryzys gospodarczy. Przyczyny - Przebieg - Skutki (The Contemporary Economic Crisis: Causes, Course, Implications), CeDeWu Wydawnictwa Fachowe, Warsaw 2009, 259 pp. - reviewed by Marek Lubiński

Book Review: Anna Marszałek, Rola uczelni w regionie (The Role of University-Level Schools in Regions), Difin, Warsaw 2010, 272 pp. - reviewed by Stanisław Macioł

Book Review: Maria Johann, Strategie marketingowe w turystyce (Marketing Strategies in Tourism), Difin, Warsaw 2009, 150 pp. - reviewed by Maciej Dębski

Index of Publications in 2010

Zbigniew Kuchta, Katarzyna Piłat - The Hansen Real Business Cycle Model and Its Application in the Polish Economy

The paper analyzes the so-called real business cycle model developed by American economist Gary D. Hansen. The model is expanded to include an indivisible labor mechanism. The aim is to check the model in terms of its accuracy in explaining business cycle fluctuations in Poland.
The first part of the article discusses the assumptions and structure of the model. The authors define a state of stationary equilibrium and the final form of the model—a system of log-linearized equations. In the second part of the paper, the authors calibrate the structural parameters and conduct an empirical analysis of the Hansen model, beginning with the characteristics of the variables used in the study and the value of the model’s parameters. The model is solved and the reactions of individual variables to a technological shock are analyzed.
The coefficients of correlation and the deviations of standard simulated and real variables show that the model correctly reflects the direction and strength of the relationships between the variables, the authors say. Positive correlations were obtained between all the simulated variables, in the same way as in the case of actual data. At the same time, in the case of simulated data, much higher correlations were obtained between capital and consumption and between technological changes and labor than in the case of actual data.
As part of the study, an analysis was also conducted of the reactions of variables to a technological shock introduced to the model on an impulse basis. The strongest reaction to the shock was recorded in the case of labor supply and production. Moreover, in the same way as for actual data, the authors found that the fluctuations of consumption are much weaker than the fluctuations of production. This stems from the fact that households tend to smooth out consumption over time, Kuchta and Piłat say.
The obtained results confirm that the dynamism of the Hansen real business cycle model, despite its simplicity, relatively accurately reflects the changes in Poland’s key macroeconomic variables.

Keywords: real business cycle model, business cycle fluctuations, indivisible labor, log-linearized equation, calibration
Article: PDF

Adam Adamczyk - Proposals for Changes in Tax Incentives to Support R&D in Poland’s Business Sector

Sustainable economic growth in Poland requires a high level of innovation. At the moment, innovation in the Polish economy is low due to factors such as insufficient research and development (R&D) expenditure in the corporate sector. In 2006, tax incentives were introduced to stimulate R&D in enterprises. However, they failed to produce the expected results. The incentives enjoyed little interest among businesspeople, and in consequence failed to contribute to increased spending on R&D in the corporate sector.
The paper aims to evaluate these tax incentives by using international comparisons and putting forward proposals for changes in the tax break system.
The existing system was examined with the use of the B-index (“before-tax income needed to break even on one dollar of R&D spending”), a popular measure of the tax system’s influence on investment in R&D applied by the Organization for Economic Cooperation and Development (OECD). The B-index is based on the idea of a marginal effective tax rate. It measures the relative profitability of R&D expenditure in a given tax system.
The analyses made by the author show that the Polish tax system has a negative impact on R&D in the corporate sector—more detrimental than suggested by the B-indexes calculated by the OECD. The results obtained lead the author to conclude that the tax regulations currently in force in Poland are among the least favorable among OECD countries in terms of their influence on R&D in the corporate sector.
According to Adamczyk, the main reason behind the unfavorable influence of the Polish tax system on the profitability of R&D in the corporate sector is that the existing tax breaks apply to a limited number of taxpayers. Other causes include inadequate income tax rates and tax amortization regulations used in the country. Poland’s current tax instruments designed to support R&D, due to their highly selective nature, contradict the idea of direct fiscal incentives, Adamczyk says. He adds that the effectiveness of tax breaks may also depend on factors not covered by the B-index, such as the transparency and stability of tax regulations.

Keywords: tax system, tax incentives, research and development (R&D), investment, OECD B-index
Article: PDF

Edyta Dworak - Advancement of Knowledge-Based Economies in European Union Countries

Knowledge is an essential source of technological, economic and social progress. In innovation processes, knowledge is treated as a basic input used to create innovation and also as an output of these processes. Then knowledge, understood as skills and competence in the innovation process, leads to the creation of innovation. It seems obvious that the notion of a “knowledge-based economy” popular in recent years can be identified with the term “innovative economy,” so an assessment of the development of a knowledge-based economy corresponds with an analysis of the innovativeness of an economy.
The measurement of knowledge-based economies and an analysis of the innovativeness of individual economies pose a challenge for economists. In most measurement methods used in the case of such economies, a summary index built on the basis of many variables, is used.
The aim of the article is to assess the advancement of knowledge-based economies in European Union countries from 2000 to 2007. To estimate the development of knowledge-based economies, a summary knowledge-based economy index was built on the basis of factor analysis. An extensive range of data from the EU statistics office, the Eurostat, was used to build the index. In the research, special attention was paid to Poland’s place on the ranking list. Cyprus, Malta and Luxembourg were excluded from the analysis for lack of complete data.

Keywords: innovation, innovativeness, Knowledge Assessment Methodology, European Innovation Scoreboard, knowledge-based economy, knowledge-based economy index
Article: PDF

Urszula Markowska-Przybyła - Regional Convergence in Poland from 1999 to 2007

The paper analyzes inter- and intraregional differences in Poland in 2007 and examines the changes that have taken place within individual regions and between them since Poland’s current administrative system was introduced in 1999. The author also analyzes real regional convergence in Poland in the studied period.
The author used descriptive statistics and econometric methods, along with the GDP per capita indicator. She analyzed the differences between subregions to offer a more detailed picture of development inequalities in Poland. The analysis of intraregional differences was made with the use of the Theil inequality measure for the country as a whole and by analyzing changes in the center-region relationship in selected provinces. It would be especially interesting to analyze this relationship in the context of the theory of the regional diversification of development processes, Markowska-Przybyła says, but such an analysis could not be made due to the unavailability of statistical data for half of Poland’s regions.
Overall, the research carried out by Markowska-Przybyła points to increased interregional differences in Poland in 1999-2007. A β-convergence test—an estimated regression function—confirmed the existence of a regional divergence in 1999-2007, even though its statistical properties left much to be desired. Two σ-convergence tests also showed the existence of this divergence.
The author concludes that processes of real regional divergence in terms of GDP per capita occurred in Poland in 1999-2007. In the studied period, in addition to growing disparities between regions, a growing diversification between subregions—Level-3 units of the Nomenclature of Units for Territorial Statistics (NUTS) routinely used by the European Union to reference the subdivisions of countries for statistical purposes—was also observed. The disparities between subregions proved to be greater than interregional differences.
Intraregional inequalities revealed by the Theil inequality measure increased in 1999-2007. Development disproportions between the center and the rest of the region vary in the eight provinces analyzed. The greatest disproportions exist in Mazovia and Wielkopolska provinces, the author says, while the smallest ones are in Silesia and Łódź provinces. Lower Silesia, Łódź, Western Pomerania and Mazovia provinces showed decreased disproportions, while Silesia and Wielkopolska saw the reverse trend. In Pomerania province, center-region disproportions decreased, while disproportions between the center and the surrounding subregion increased slightly; in Małopolska province, the reverse trend was observed. The polarization of development was observed in only some provinces. No data is available on center-periphery relations in the remaining provinces, and the same goes for the position of the largest cities in these regions.

Keywords: economic growth, development inequalities, regional convergence, Theil inequality measure, Nomenclature of Units for Territorial Statistics (NUTS)
Article: PDF

Wirginia Doryń - Social Capital and the Internationalization of the Firm

The paper aims to determine the role of social capital in a process known as the internationalization of the firm.
The first part of the article focuses on the concept of corporate social capital as developed by economists Roger Leenders and Shaul Gabbay. The author discusses the features of ties between individual businesses and the structure of these ties as factors shaping the quality of social capital gathered inside a network. The author identifies social capital with a network of business ties, describing social capital as a term with a neutral connotation. Then the network model of the internationalization of the firm is invoked to build a theoretical bridge between social capital and the internationalization of the firm. Under this approach, the main factor behind the internationalization of the firm is membership in an appropriate network of ties. Finally, the author reviews research reports in terms of both gains and potential burdens linked with participation in the network from the perspective of the internationalization process.
The coexistence of the positive and negative aspects of corporate social capital may suggest that social capital both stimulates and impedes the internationalization of the firm, Doryń says; however, the current state of empirical research in the analyzed area does not make it possible to put forward any normative recommendations to businesses, she adds. Overall, Doryń concludes that the issue of social capital and its influence on the internationalization of enterprises should be examined in combination with the specific goals of the firm.

Keywords: social capital, internationalization of the firm, network model, enterprise
Article: PDF

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