The Effects of Privatization of State-Owned Enterprises in Poland and East Germany

The main goal of this project was to propose appropriate methods of analysing the effects of the privatisation of state-owned enterprises, methods which were then tested on a limited sample of 16 Polish and 8 German enterprises privatised in 1992. A considerable amount of information was collected relating to the six-year period 1989-1994 relating to most aspects of the companies' activities. The effects of privatisation were taken to be those changes within the enterprises which were the result of privatisation, in such areas as production, the productivity of labour and fixed assets, investments and innovations, employment and wages, economic incentives (especially for top managers), financing (internal and external sources), bad debts and economic effects (financial analysis). A second important goal was to identify the main factors which represent methodological obstacles in surveys of the effects of privatisation during a period of fundamental transformation of the entire economic system. The list of enterprises for the research was compiled in such a way as to allow for the differentiation of ownership structures of privatised firms and to permit (at least to a certain extent) the empirical verification of some hypotheses regarding the privatisation process. The enterprises selected were divided into the following three groups representing (as far as possible) various types of ownership structures or types of control: (1) enterprises control by strategic investors (domestic or foreign), (2) enterprises controlled by employees (employee-owned companies), (3) enterprises controlled by managers. Formal methods such as econometric models with varying parameters were used to separate pure privatisation effects from other factors which influence various aspects of an enterprise's working, including policies on the productivity of labour and capital, average wages, the remuneration of top managers, etc. While the group admits that their findings and conclusions cannot be treated as representative of all privatised enterprises in Poland and Germany, they found considerable convergence with their findings and those of other surveys conducted on a wider scale. The main hypotheses that were confirmed included that privatisation (especially in companies controlled by large investors and managers) leads to a significant increase in the effectiveness of these production process, growing pay differentials between different employee groups (e.g. between executives and rank-and-file employees) and between different jobs and positions within particular professional groups. They also confirmed the growing importance in incentives to top executives of incentives linked with the company's economic effects (particularly profit-related incentives), long-term incentives and the capital market.

Comparative Analysis of Educational Attainment in Transition Economies

The project compared several indicators of educational attainment across various groups of transition economies, and between transition economies and others. The indicators of education reflected both the quantity of schooling (e.g. average years of schooling, percentage not attending school at all, and adult literacy rates) and schooling quality (e.g. public expenditure on education, pupil-teacher ratios, repetition rates, dropout rates, and international test scores). The basic test used in the project was a t-test on differences in sample means. Among the transition economies, the indicators examined were most favourable for central European, high-income and advanced transition countries, although the differences between these countries and the remaining transition countries were not usually statistically significant. When compared with other world economies, the transition countries typically showed significantly better indicators than developing countries, but differences between transition and developed countries were not statistically significant. The project also examined the behaviour of the correlation coefficient between indicators of education and income, which, as expected, were usually positive.