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Contents of issue 9/2007

Tomasz Tokarski - Optimal Investment Rates in an N-Capital Growth Model, summary, article

Zofia Barbara Liberda - Income Preferences and Household Savings, summary, article

Wanda Karpińska-Mizielińska, Tadeusz Smuga - The Determinants of Polish Companies’ Direct Investment Abroad, summary, article

Magdalena A. Sobańska - Foreign Direct Investment in Estonia, summary, article

Edward Maleszyk - The Internationalization of Poland’s Retail Companies, summary, article


Book Review: Władysław Szymański, Czy globalizacja musi być irracjonalna? (Does Globalization Have to Be Irrational?), Szkoła Główna Handlowa w Warszawie, Warsaw 2007, 250 pp. - reviewed by Jacek Brdulak

Book Review: Ryszard Piasecki (ed.), Ekonomia rozwoju (Growth Economics), Polskie Wydawnictwo Ekonomiczne, Warsaw 2007, 272 pp. - reviewed by Grzegorz Konat

Tomasz Tokarski - Optimal Investment Rates in an N-Capital Growth Model

The paper aims to determine an optimal structure of investment rates under an N-capital growth model. This model is a combination and expansion of models developed by Solow [1956]; Mankiw, Romer, Weil [1992]; Nonneman, Vanhoudt [1996]; and Tokarski [1996; 2000; 2003; 2005], with elements of optimal control models by Ramsey [1928], Lucas [1988] and Romer [1986, 1990].
The economic growth model described in the paper is based on the following assumptions:
- The stream of products generated in the economy is influenced by a finite N amount of capital, labor and technology resources; it is also assumed that labor and technology resources grow according to certain exogenous growth rates;
- The increase of each of the analyzed capital stocks is the difference between investment in this capital and its depreciation; these assumptions refer to the neoclassical growth models developed by Solow, Mankiw-Romer-Weil, and Nonneman-Vanhoudt;
- A typical rationally behaving consumer (much as in the case of endogenous growth models developed by Lucas and Romer) seeks a long-term investment rate structure that will maximize the usefulness of consumption in an infinite period of time;
- Additionally, an assumption is made that the macroeconomic production function in the described growth model does not have to be characterized by a constant scale effect (as earlier noted by Tokarski [1996, 2003 or 2005]).
The model described by the author is solved using Pontryagin’s maximum principle.

Keywords: investment rates, growth model, Pontryagin’s maximum principle
Article: PDF

Zofia Barbara Liberda - Income Preferences and Household Savings

In this paper, the author deals with the saving profiles of households in relation to the perception of their subjectively preferred incomes. The author shows that household savings are influenced by a behavioral attitude concerning the evaluation of one’s household income.
The variable used in the analysis of household behavior is an income preference ratio constructed by the author. This variable is computed as a ratio of the subjectively preferred income as declared by the household head to the current disposable income of the household.
An analysis of the income preference ratio has been conducted with respect to the age and gender of the household head. It shows that women as heads of households generally have lower expectations regarding preferred income and that income preferences vary according to the age of the household head, being the highest at a young age.
Household savings are correlated with the level of current disposable income and income preferences. Positive household savings can even be observed among households with very low incomes. Savings rise significantly in households with income higher than “sufficient” and are very high in households with “good” and “very good” income.
The results of the analysis show that the income preferences of Polish households tend toward higher income levels than the actual level of disposable income. The propensity to save suggests that the financial condition of Polish households may be better than subjectively perceived and declared by the household head. The subjectively preferred incomes of households positively influence household saving profiles, with the exception of households with “insufficient” incomes.
The research is based on 2004 data for 32,000 households from Household Budget Surveys for Poland.

Keywords: income preferences, disposable income, household savings, saving profiles
Article: PDF

Wanda Karpińska-Mizielińska, Tadeusz Smuga - The Determinants of Polish Companies’ Direct Investment Abroad

The paper offers a comprehensive analysis of direct investments made by Polish companies abroad. Such investments have intensified in recent years, especially since Poland joined the European Union on May 1, 2004. Foreign expansion is an important part of the development strategies of many Polish companies today. The empirical research described in the paper identifies the factors that determine direct investment by Polish companies abroad, with a special focus on barriers to such projects. The studies in question were carried out at the Foreign Trade Research Institute (IKiCHZ) in 2006 and involved two groups of businesses: those that have already invested abroad in recent years, and those that may carry out such projects in the future. The latter group comprises potential investors who stand out in the corporate sector because of their market position, financial condition and the fact that exports account for a large part of their sales.
The analysis involved the following aspects of direct investment abroad: an evaluation of the financial condition of investors and their prospects for the coming years; the possible determinants and barriers to investment on foreign markets; investment plans; the financial, organizational and legal conditions involved; feasibility studies; and the expected benefits and forms of public assistance to Polish companies investing abroad.
The empirical studies discussed by the authors reveal that Polish entrepreneurs are interested in direct investment abroad and see it as an opportunity for the further development of their companies. The research shows that Polish investors on foreign markets primarily include large companies that export their products and are doing well financially. Poland’s EU accession has had a positive influence on Polish companies’ direct investment abroad. Still, the authors conclude that direct investment by Polish companies on foreign markets is still in its infancy. This is confirmed by the scope and forms of these projects as well as by the considerable caution displayed by the analyzed businesses in undertaking such operations.

Keywords: direct investment abroad, potential investors, investment plans, foreign expansion, barriers, benefits
Article: PDF

Magdalena A. Sobańska - Foreign Direct Investment in Estonia

The author looks at foreign direct investment in Estonia and discusses its implications for the country’s economy. The analysis covers the 1994-2004 period and is based on a combination of analytical and descriptive methods. To obtain a more complete picture of foreign capital involvement in Estonia, which was once part of the Soviet Union, the author discusses factors that influence the country’s investment attractiveness. She concludes that Estonia’s market transformation has contributed to a major acceleration in the inflow of FDI to this country. FDI in Estonia has been characterized by a strong concentration, both in terms of the investors’ country of origin and the sectors in which they become involved, Sobańska notes. Scandinavian companies, primarily those from Sweden as well as Finland, have dominated among foreign direct investors in Estonia, while the role of investors from Central and Eastern Europe in Estonia’s overall FDI performance has been marginal. Since 1998 the financial sector has been the main focus of foreign direct investment in Estonia. Foreign investors have also contributed to the restructuring of the country’s corporate sector. The inflow of foreign capital has enabled Estonia to join the international trade system. However, despite the generally positive role of FDI in the country’s development, the strong concentration of foreign capital leads to worries about the permanence of Estonia’s economic achievements. A potential economic crisis in Scandinavia could easily lead to a situation in which FDI would bring negative market trends to Estonia’s fledgling economy.

Keywords: foreign direct investment, investment attractiveness, restructuring, foreign trade, Estonia
Article: PDF

Edward Maleszyk - The Internationalization of Poland’s Retail Companies

The paper examines the conditions that determine the internationalization of Poland’s retail companies and other businesses, and it also evaluates the scope and forms of this process. The author analyzes these issues on the basis of desk research, or studies that collate the findings of previously published data and evaluate them in new ways. Another method used by the author is direct research involving a selected group of major enterprises that either already operate on foreign markets or plan to expand abroad. The analysis made it possible to identify the most important motives behind the internationalization of business operations as well as the directions of expansion in terms of both geographical regions and individual business sectors. Maleszyk also describes the organizational forms of internationalization (such as foreign direct investment and various forms of cooperation and integration) as well as barriers to decision-making on business expansion and development. The analysis reveals that the process of internationalization applies to a limited group of companies and is at an early stage of development. To accelerate internationalization, it is necessary to strengthen the market position of Polish enterprises and more intensely promote Polish brand-name products abroad. Other priorities include expanding the system for providing investment advice and supporting institutions that promote entrepreneurship, as well as facilitate lending from banks.

Keywords: internationalization, competitiveness, desk research, direct research, foreign direct investment, expansion, cooperation, integration
Article: PDF

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