Contents of issue 3/2014
Katarzyna Mroczek, Tomasz Tokarski, Mariusz Trojak - Gravity Model of the Economic Diversity of Polish Regions, abstract
Ryta I. Dziemianowicz, Adam Wyszkowski, Renata Budlewska - Tax Expenditures as a Hidden Form of Government Spending, abstract
Jacek Białek - Consumer Price Index Measurement Bias, abstract
Joanna Wiśniewska - The Competitiveness of Rural-Based Enterprises in Poland’s Wielkopolska Region, abstract
Agnieszka Sapa, Agnieszka Baer-Nawrocka - Convergence in Agricultural Labor Productivity and the Intensity of Agri-Food Trade in North, South and Central America, abstract
Joanna Karpowicz - The System of Preferential Lending to Small and Medium-Sized Enterprises in Germany, abstract
, articleIN MEMORIAM
Jacek Jastrzębski, Katarzyna Mroczek - Ronald Harry Coase, 1910–2013, abstract
Book Review: Bogdan Mróz, Konsument w globalnej gospodarce. Trzy perspektywy
(The Consumer in the Global Economy: Three Perspectives), Oficyna Wydawnicza, Szkoła Główna Handlowa w Warszawie, Warsaw 2013, 300 pp. - reviewed by Cezary Suszyński
Book Review: Elżbieta Czarny, Regionalne ugrupowania integracyjne w gospodarce światowej
(Regional Collectives in the Global Economy), Polskie Wydawnictwo Ekonomiczne, Warsaw 2013, 200 pp. - reviewed by Łukasz Ambroziak
Katarzyna Mroczek, Tomasz Tokarski, Mariusz Trojak - Gravity Model of the Economic Diversity of Polish Regions
The paper seeks to explain the influence of the so-called gravity effect on the regional diversity of economic growth in Poland.
The gravity effect, which is a reference to Newton’s gravity law, is based on the assumption that regions have some economic influence on one another. The strength of these relationships is proportional to the size of the regional economies and inversely proportional to the distance between them. The applied model of economic growth refers to the neoclassical models of Solow; Mankiw, Romer and Weil; and Nonneman and Vanhoud. The presented model takes into account the gravity effect. The model has one non-trivial stationary point that is asymptotically stable, the authors say, which means that this point is a long-run economic equilibrium point.
The paper examines the regional diversity of various macroeconomic indicators in the period from 1999 to 2011. Additionally, parameters of the labor productivity function are estimated at the regional level.
The research yielded numerical simulations of two possible scenarios of the economic diversity of Polish regions. In the first scenario, it is assumed that investment rates are different in different regions (mean rates for each region from past periods). In the second scenario, the investment rates are the same for all regions. Both scenarios seem to indicate that the regional diversification of economic growth in Polish regions may decrease significantly, but the process of divergence was stronger under the regime imposed in the first scenario, the authors say.
The strongest gravity effects were observed in an area bounded by the cities of Warsaw, Poznań and Wrocław as well as the southern Silesia region, with the possible inclusion of the city of Cracow. Peripheral regions in terms of the gravity effect, according to the authors, are provinces in eastern Poland as well as Świętokrzyskie in the center of the country, Pomorskie and Zachodniopomorskie in the north, and Lubuskie in the west.Keywords
: economic growth, gravity effect, regional diversityJEL classification codes
: R11, E23, O47Article
Ryta I. Dziemianowicz, Adam Wyszkowski, Renata Budlewska - Tax Expenditures as a Hidden Form of Government Spending
The article looks at tax expenditures as a type of government spending classified as off-budget expenditures. The authors examine the influence of this form of government spending on the Polish budget.
Tax expenditure is the revenue that a government foregoes through special tax credits, deductions, exclusions, exemptions, deferrals, and preferential tax rates. Tax expenditures reduce the tax burden in order to achieve specific tax policy goals. The focus on preferential tax structures is especially important now that many countries are struggling with imbalances in their public finance sectors and are grappling with growing public debts, the authors say.
The overall estimated value of tax expenditures in Poland in 2011 amounted to $24.5 billion, according to the authors, while the general government deficit that year was $19 billion. This illustrates the scale of off-budget public spending, the authors say. In 2009–2011, tax expenditures accounted for 16.65% to 19.23% of total public spending, according to the authors, and the loss of government revenue was estimated at between 27.7% and 29.6% of state tax revenue. However, this part of public spending is not always transparent, the authors say. It evades public control and effectively limits the possibility of pursuing a responsible fiscal policy.Keywords
: tax preferences, tax expenditures, tax allowances, tax exemptionsJEL classification codes
: E6, H2, H3, H5, H6Article
Jacek Białek - Consumer Price Index Measurement Bias
The article takes an in-depth look at the Consumer Price Index (CPI), which is widely used as a basic measure of inflation.
In practice, the author says, when measuring the CPI economists usually use the so-called Laspeyres price index, which does not take into account changes in the structure of consumption resulting from price changes in a given time interval. The problem is that the Laspeyres index can be biased due to commodity substitution, the author says.
The article discusses potential sources of the CPI bias and the application of two approaches for calculating the index. The first approach is connected with superlative indices, while the second uses the so-called generalized Fisher price index.
The article presents the results of empirical and simulation studies conducted by the author. An empirical analysis for the 2010–2013 period points to the existence of a small and unstable CPI substitution bias, according to the author. The simulation study, in turn, makes it possible to conclude that imputations of prices of new and disappearing goods are crucial for CPI bias calculations, Białek says. Moreover, the sign and value of the correlation between prices and quantities do not generally influence the CPI substitution bias in the broad sense, the author notes.Keywords
: Consumer Price Index (CPI), superlative index, Laspeyres index, Fisher indexJEL classification codes
: E17, E21, E30Article
Joanna Wiśniewska - The Competitiveness of Rural-Based Enterprises in Poland’s Wielkopolska Region
The paper studies the competitiveness of non-agricultural enterprises doing business in rural areas. It examines the conditions in which these enterprises operate and the role they play in the sustainable economic development of rural areas and the economy as a whole. The author uses a model of enterprise competitiveness reflected in the competitive potential, competitive position and competitive strategy of the studied businesses.
Wiśniewska collected her research material through questionnaires. She surveyed random businesses based in rural areas in Poland’s western Wielkopolska region. The author found that entrepreneurship in rural areas is largely based on traditional instruments of competitiveness that enable rural-based businesses to secure a competitive advantage. The enterprises surveyed shape their competitiveness on the basis of product quality, price and close relations with buyers, the author says.
The article examines existing threats to the competitiveness of the studied enterprises. The most important threats are risk avoidance and a lack of financial means to undertake new economic and market solutions, the author notes.
The businesses surveyed are inflexible and poorly adapted to new market conditions, according to Wiśniewska. At a time of growing domestic and international competition on local markets, rural-based firms will enjoy a lasting competitive advantage only if they decide to work together and embrace product, process and market innovation, the author concludes.Keywords
: competitiveness, entrepreneurship, rural areas, competitiveness strategiesJEL classification codes
: R11, D22Article
Agnieszka Sapa, Agnieszka Baer-Nawrocka - Convergence in Agricultural Labor Productivity and the Intensity of Agri-Food Trade in North, South and Central America
The paper examines the process of convergence in labor productivity in agriculture among countries that are members of regional trade agreements in North, Central and South America–the North American Free Trade Agreement (NAFTA), the Central American Common Market (CACM), and the Southern Common Market (MERCOSUR) respectively. The authors analyze the intensity of intraregional agri-food trade within these organizations. They use the σ-convergence coefficient to estimate interregional disparities in agricultural labor productivity. Changes in agri-food flows are measured with trade interdependence indices such as the share of intra-regional trade, the intra-regional trade intensity index, and the symmetrical introversion trade indicator. The analysis covers the 1980–2010 period.
The study shows that a process of convergence in agricultural labor productivity occurred only in the case of MERCOSUR. Moreover, the authors found that the intensity of intra-regional agri-food trade grew at a slower rate than the intensity of extra-regional trade. This trend was accompanied by the growing role of MERCOSUR in world agri-food trade, according to the authors. In other analyzed groupings, the steady increase in the intensity of intra-regional agri-food trade was not accompanied by changes in the σ-coefficient or there was a process of divergence in agricultural labor productivity, the authors conclude.Keywords
: labor productivity, agri-food trade, regional trade groupingsJEL classification codes
: F15, J21, Q12, R10, R11Article
Joanna Karpowicz - The System of Preferential Lending to Small and Medium-Sized Enterprises in Germany
The article looks at how preferential loans are used to support small and medium-sized enterprises (SME) in Germany. The author highlights the positive role of the German model for the Polish system of preferential lending to SMEs.
The author investigates the effectiveness of available support programs in terms of how they meet the expectations of small and medium-sized enterprises and the economy as a whole.
In her analysis, the author uses selected recent statistics and sources of long-term data. These include government reports and studies commissioned by the German economy ministry.
Small and medium-sized enterprises in Germany benefit from public support in the form of preferential loans granted by government-owned development bank KfW, Karpowicz notes. The bank offers loans to those wanting to establish their own business, in addition to loans to finance specific projects and support for self-employment.
Studies show that the German government’s policy of supporting the SME sector through KfW is well thought out and long-term in nature, the author says. KfW conducts in-depth studies of the German economy and the country’s business environment. However, the bank’s support is not distributed evenly between western and eastern Germany, according to Karpowicz, with western regions claiming the bulk of the funds. The author’s research shows that KfW loans are a key form of public support for Germany’s SME sector.
Meanwhile, Poland lacks a comprehensive government-financed system of preferential loans to SMEs, according to the author. Most of the available loan and guarantee programs are financed from European Union coffers and are subject to short-term budgeting, which makes long-term planning difficult. Polish economic policy makers need to develop new tools to increase the efficiency and effectiveness of preferential lending to SMEs, the author argues. One promising initiative is the Polish government’s de minimis guarantee program for the SME sector launched in mid-March 2013 and modeled after German preferential loan programs.Keywords
: preferential loans, small and medium-sized enterprises, public supportJEL classification codes
: H25, L22, L26, M11Article
Jacek Jastrzębski, Katarzyna Mroczek - Ronald Harry Coase, 1910–2013
British Nobel Prize-winning economist Ronald Harry Coase, the founder of the transaction cost theory, died on Sept. 2, 2013.
Born in 1910 near London, Coase grew up, studied and then taught at a number of prestigious universities in Britain before moving to the United States in the 1950s. He is recognized to be the father of the transaction cost theory and an economist who managed to combine economics and law – two co-existing but not necessarily overlapping areas. His most famous publications included The Nature of the Firm from 1937 and The Problem of Social Cost from 1960. They raise two fundamental questions: “Why do companies exist? and “How to resolve the problem of externalities?” Coase will be remembered by economic history as a man who was not afraid to ask difficult questions, challenge traditional solutions and look for new answers. At the same time, he was well aware of his own imperfections.
The article summarizes Coase’s achievements and outlines his most well known and influential work and concepts. The authors based their research on a literature review focusing on the influence Coase’s work had on different research areas – from the transaction cost theory and its impact on sector and company analysis to the issue of social cost and the discussion of its economic and ethical impact, to monopoly theory.
Coase won the Nobel Prize for his work in economics in 1991.Keywords
: Ronald Coase, transaction costs, new institutional economics, The Nature of the Firm, The Problem of Social CostJEL classification codes
: D21, D22, D23Article