Marcin Piatkowski | Harvard University (original) (raw)

Papers by Marcin Piatkowski

Does EU Membership Facilitate Convergence? The Experience of the EU's Eastern Enlargement - Volume I, 2021

Die Finanzkrise hat Volkswirtschaften weltweit in die Krise gesturzt. In Europa haben Regierungen... more Die Finanzkrise hat Volkswirtschaften weltweit in die Krise gesturzt. In Europa haben Regierungen auf die daraus resultierende Staatsschuldenkrise mit harter Spar- und Austeritatspolitik reagiert. Kritiker werfen den Regierungen vor, mit diesem Kurs die Krise zu verscharfen. Die FES hat progressive Okonomen in verschiedenen OECD-Staaten gefragt, welche Wachstumsstrategien sie fur ihre Lander empfehlen. Die Studien beschreiben eine Landkarte wirtschaftspolitischer Moglichkeiten jenseits der Orthodoxie von Austeritat und Sparpolitik. Allerdings zeigen sie auch die Besonderheit der jeweiligen Ausgangslagen. Europaische oder gar globale Antworten erscheinen nur begrenzt vorstellbar: One-size-fits-all-Losungen sind nicht erkennbar.

Innovation policy is increasingly conceived as the shared responsibility of national and subnatio... more Innovation policy is increasingly conceived as the shared responsibility of national and subnational governments, yet most countries are struggling with multilevel governance. This paper provides an overview of how different countries are dealing with regional innovation policy and of the institutions and tools used for national-regional coordination. The focus is on discussing the policy implications for developing countries, which have decentralized their innovation policies more recently than developed countries, but face more acute challenges with respect to critical mass and institutional capacity. These challenges call for a sequential and cautious approach to decentralizing innovation policy, seeking economies of scale and avoiding wasteful duplication across regions, while introducing methods to ensure that devolution of power is accompanied by capacity building in regional governments. Governments of developing countries are also advised to be cautious when using a regional innovation policy approach as a tool to reduce cross-regional income gaps. This is because policy efforts to counterbalance the natural trend toward agglomeration of innovative activities in core regions might lead to inefficient allocation of public funds.

The contribution of the 'new economy' to economic growth in developing countries has so f... more The contribution of the 'new economy' to economic growth in developing countries has so far been minimal. Despite the recent hype, the 'old economy' will for long be the fundamental force behind economic growth in transition economies. Nonetheless, in the longer run the 'new economy' offers great potential for faster economic growth in postsocialist economies. Realizing this potential is however not automatic. It can be left unharnessed if there is no suitable institutional infrastructure, which would allow for adoption, diffusion, and productive use of information and communication technologies (ICT). The paper constructs a New Economy Indicator (NEI) measuring the level of preparedness of transition economies for harnessing the potential of ICT to accelerate the long-term economic growth and catching-up with developed countries. In the NEI ranking Slovenia scored the highest, followed by the Czech Republic and Hungary. Albania, Bosnia and Herzegovina, and F...

Policy Research Working Papers, 2013

The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Information Technologies and International Development, 2006

This article investigates the potential of information and communication technologies (ICT) for f... more This article investigates the potential of information and communication technologies (ICT) for faster convergence of seven transition economies from Central and Eastern Europe (CEE) and Russia (CEER) with the EU-15 and the U.S. income level. First, the article argues that ICT accelerated the convergence of the four new EU member states with the EU-15 (the case of technological leapfrogging) but decelerated convergence of Romania, Russia, and, to a lesser extent, Bulgaria and Slovakia (the case of a growing digital divide). This divergence was mainly because of the lower quality of the economic and institutional environment, which inhibited the diffusion of ICT. Second, the article shows that ICT has a large potential to increase long-term growth in transition countries. Third, it argues that the use of ICT has an important role in stimulating productivity growth at the industry level and that it offers considerable potential for faster productivity growth in non-ICT-using, “old economy” industries. Realizing this potential, however, will crucially depend on far-reaching structural reforms, business reorganization, investment in human capital, and well-designed public “push strategy.” These lessons are pertinent not only to transition economies, but also to most advanced developing countries.

IMF Working Papers, 2008

This Working Paper should not be reported as representing the views of the IMF. The views express... more This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Global economic integration intensified tax competition and raised concerns about the resulting "race to the bottom", which could undermine public investment and social spending. The aim of this paper is to test predictions that (i) there is interdependence in CIT rate setting in Eastern Europe and that (ii) the recent CIT cut in Moldova may intensify tax competition in the region. It finds that there is indeed evidence that during 1995-2006 countries in Eastern Europe strategically responded to changes in CIT rates in the region and that Moldovan zero CIT is likely to encourage further cuts in CIT. The paper also discusses implications of tax competition for Eastern Europe and finds that FDI flows will not be much affected, tax revenues are likely to decline, the shift in the composition in tax revenue may increase economic efficiency, but decrease equity. Tax coordination, while difficult politically, could help stem further decline in corporate taxation, but any gains might be modest and not certain to exceed the costs of tax coordination. Without tax coordination, however, it is unclear what exactly could stop corporate taxes from falling further.

bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su r... more bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed

The aim of this report is to provide the Ministry of Justice of Poland with an analysis of the co... more The aim of this report is to provide the Ministry of Justice of Poland with an analysis of the country’s corporate insolvency framework and to provide a set of specific recommendations to improve the business environment in this regard. The report deals only with insolvency of companies. Issues related to consumer insolvency and insolvency of banks and financial institutions are not part of the analysis.

Oxford Scholarship Online

In this chapter I discuss Poland’s growth prospects and analyze long-term projections produced by... more In this chapter I discuss Poland’s growth prospects and analyze long-term projections produced by international institutions. I argue that Poland should continue to grow and converge with the West at least until 2030 and achieve around 80 per cent of its level of income. This would be the highest relative level of income and quality of life in Poland’s history. The country’s true Golden Age would flourish. After 2030, however, convergence is likely to slow and might even reverse unless further reforms are implemented. I then discuss how much economists understand about what makes countries grow. I assert that we know much less than we think we know. I briefly review various challenges of moving from economic theory to economic practice. I also look at the pros and cons of international economic rankings, arguing that they play an important role by ‘naming and shaming’ countries into reforms, but their power is often overappreciated.

Oxford Scholarship Online

In this chapter I provide a methodological framework for the rest of the book to help explain Pol... more In this chapter I provide a methodological framework for the rest of the book to help explain Poland’s long-term economic backwardness, its unprecedented economic success since 1989, and its development prospects. I argue that the existing economic literature largely focuses on the proximate causes of economic growth, but underestimates the fundamental causes of growth—institutions, culture, ideologies, leaders, and luck—which drive economic policies and are ultimately the reasons why some countries are rich while others are poor. I then focus on the role of institutions and culture in explaining economic development. Following Acemoglu, Johnson and Robinson (ARJ), I distinguish between ‘extractive societies’ and ‘inclusive societies’, and argue that it is rare to move from one type of society equilibrium to another. I extend the ARJ institutional framework and show the conditions necessary for the shift from extractive to inclusive societies and vice versa.

Oxford Scholarship Online

In this chapter I focus on the fundamental causes of the Polish growth miracle, namely the adopti... more In this chapter I focus on the fundamental causes of the Polish growth miracle, namely the adoption of Western institutions. I start by documenting how the prospect of the EU accession drove the institution building. I show what institutions Poland adopted and how they were key to the country’s economic performance. I argue that Poland was among the fastest adopters of Western institutions, which helped it grow more rapidly than other transition economies. I then focus on the fundamental question of why Poland wanted to adopt good institutions from the West. I argue that Poland built good institutions because of the positive legacy of communism, a historically unprecedented social consensus to ‘return to Europe’, Westernized and growth-oriented elites, and emergence of a strong middle class. Western European readiness to embrace Eastern Europe was also critical. I conclude by offering insights and policy recommendations for other countries.

Oxford Scholarship Online

I argue in this chapter that despite its ultimate social, economic, and moral bankruptcy, communi... more I argue in this chapter that despite its ultimate social, economic, and moral bankruptcy, communism imposed on Poland after 1945 sowed the seeds of the country’s economic success after 1989. The old, feudal social structures were bulldozed to snap Poland out of growth-inhibiting extractive society equilibrium, creating a classless society, boosting social mobility, and securing good quality of education for all. Forced industrialization and unprecedented labour movements supported solid GDP growth rates in Poland until the 1960s, but low returns on investment, lack of technological progress, and external shocks caused declining growth rates in the 1970s, and economic stagnation in the 1980s. I conclude that the assumption that if Poland had returned to capitalism after 1945, it would have developed as quickly as the West, is simplistic. I show that a capitalist Poland would have faced significant challenges to growth, and convergence with the West would not have been guaranteed.

Oxford Scholarship Online

In this chapter, I argue that although the existing growth model has worked well so far, Poland a... more In this chapter, I argue that although the existing growth model has worked well so far, Poland and the rest of the region needs to re-adjust it to sustain a high growth rate. I then introduce the concept of the ‘Warsaw Consensus’, a set of ten policy prescriptions that should guide further convergence of Poland and CEE with the West. The ‘Warsaw Consensus’ upgrades, corrects, and enhances the ‘Washington Consensus’ and embeds it in the specific context of CEE. It deals with the key challenges to the region’s growth and offers policy solutions. I argue that implementation of the ‘Warsaw Consensus’ should be based on a new policy approach of experimenting, evaluating, and pragmaticizing (being pragmatic), and be assessed against its impact on economic growth, well-being, and happiness. Countries should also ensure that they minimize the risks of crises and become anti-fragile.

Oxford Scholarship Online

In this chapter I highlight the critical role of culture in the functioning of political and econ... more In this chapter I highlight the critical role of culture in the functioning of political and economic institutions in transition economies. People’s beliefs, stereotypes, mindsets, and unwritten ways of doing things ultimately decide whether institutions are efficient or not. I then focus on the interaction of culture, institutions, and growth in Poland and try to explain why the country’s seemingly conservative culture, which in many respects seems to be at odds with Western European culture, especially as regards religion, has not prevented it from becoming Europe’s growth champion. I argue that it was because of strong elites that internalized Western values, an implicit quid pro quo between the new elites and the more conservative parts of the society to install European institutions and promote Western values in exchange for the promise of economic prosperity, and the generally non-fundamentalist nature of religion in Poland. I also discuss the key roles of individuals, ideas, ...

Oxford Scholarship Online

In this chapter I explain the proximate drivers of Poland’s economic success since 1989. I divide... more In this chapter I explain the proximate drivers of Poland’s economic success since 1989. I divide the transition into the initial period of ‘shock therapy’ during 1989 1991 and then the second period of economic recovery after 1992. I discuss the ongoing debate on the pros and cons of ‘shock therapy’ versus a ‘gradual’ approach to post-communist transition. I use the example of Poland’s ‘shock therapy’ to analyze both approaches. I conclude that that the differences in actual policies were smaller than implied by the rhetoric of both sides of the debate. I then explain why Poland was more successful than other transition economies, and discuss whether Poland could have grown even faster. I argue that on the whole the Polish transition was almost ‘as good as it gets’. I draw the lessons learned and policy insights from Poland’s transition for other countries.

Oxford Scholarship Online

In this chapter I explain why Poland and most countries in Eastern Europe have always lagged behi... more In this chapter I explain why Poland and most countries in Eastern Europe have always lagged behind Western Europe in economic development. I discuss why in the past the European continent split into two parts and how Western and Eastern Europe followed starkly different developmental paths. I then demonstrate how Polish oligarchic elites built extractive institutions and how they adopted ideologies, cultures, and values, which undermined development from the late sixteenth century to 1939. I also describe how the elites created a libertarian country without taxes, state capacity, and rule of law, and how this ‘golden freedom’ led to Poland’s collapse and disappearance from the map of Europe in 1795. I argue that Polish extractive society was so well established that it could not reform itself from the inside. It was like a black hole, where the force of gravity is so strong that the light could not come out.

Does EU Membership Facilitate Convergence? The Experience of the EU's Eastern Enlargement - Volume I, 2021

Die Finanzkrise hat Volkswirtschaften weltweit in die Krise gesturzt. In Europa haben Regierungen... more Die Finanzkrise hat Volkswirtschaften weltweit in die Krise gesturzt. In Europa haben Regierungen auf die daraus resultierende Staatsschuldenkrise mit harter Spar- und Austeritatspolitik reagiert. Kritiker werfen den Regierungen vor, mit diesem Kurs die Krise zu verscharfen. Die FES hat progressive Okonomen in verschiedenen OECD-Staaten gefragt, welche Wachstumsstrategien sie fur ihre Lander empfehlen. Die Studien beschreiben eine Landkarte wirtschaftspolitischer Moglichkeiten jenseits der Orthodoxie von Austeritat und Sparpolitik. Allerdings zeigen sie auch die Besonderheit der jeweiligen Ausgangslagen. Europaische oder gar globale Antworten erscheinen nur begrenzt vorstellbar: One-size-fits-all-Losungen sind nicht erkennbar.

Innovation policy is increasingly conceived as the shared responsibility of national and subnatio... more Innovation policy is increasingly conceived as the shared responsibility of national and subnational governments, yet most countries are struggling with multilevel governance. This paper provides an overview of how different countries are dealing with regional innovation policy and of the institutions and tools used for national-regional coordination. The focus is on discussing the policy implications for developing countries, which have decentralized their innovation policies more recently than developed countries, but face more acute challenges with respect to critical mass and institutional capacity. These challenges call for a sequential and cautious approach to decentralizing innovation policy, seeking economies of scale and avoiding wasteful duplication across regions, while introducing methods to ensure that devolution of power is accompanied by capacity building in regional governments. Governments of developing countries are also advised to be cautious when using a regional innovation policy approach as a tool to reduce cross-regional income gaps. This is because policy efforts to counterbalance the natural trend toward agglomeration of innovative activities in core regions might lead to inefficient allocation of public funds.

The contribution of the 'new economy' to economic growth in developing countries has so f... more The contribution of the 'new economy' to economic growth in developing countries has so far been minimal. Despite the recent hype, the 'old economy' will for long be the fundamental force behind economic growth in transition economies. Nonetheless, in the longer run the 'new economy' offers great potential for faster economic growth in postsocialist economies. Realizing this potential is however not automatic. It can be left unharnessed if there is no suitable institutional infrastructure, which would allow for adoption, diffusion, and productive use of information and communication technologies (ICT). The paper constructs a New Economy Indicator (NEI) measuring the level of preparedness of transition economies for harnessing the potential of ICT to accelerate the long-term economic growth and catching-up with developed countries. In the NEI ranking Slovenia scored the highest, followed by the Czech Republic and Hungary. Albania, Bosnia and Herzegovina, and F...

Policy Research Working Papers, 2013

The Policy Research Working Paper Series disseminates the findings of work in progress to encoura... more The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Information Technologies and International Development, 2006

This article investigates the potential of information and communication technologies (ICT) for f... more This article investigates the potential of information and communication technologies (ICT) for faster convergence of seven transition economies from Central and Eastern Europe (CEE) and Russia (CEER) with the EU-15 and the U.S. income level. First, the article argues that ICT accelerated the convergence of the four new EU member states with the EU-15 (the case of technological leapfrogging) but decelerated convergence of Romania, Russia, and, to a lesser extent, Bulgaria and Slovakia (the case of a growing digital divide). This divergence was mainly because of the lower quality of the economic and institutional environment, which inhibited the diffusion of ICT. Second, the article shows that ICT has a large potential to increase long-term growth in transition countries. Third, it argues that the use of ICT has an important role in stimulating productivity growth at the industry level and that it offers considerable potential for faster productivity growth in non-ICT-using, “old economy” industries. Realizing this potential, however, will crucially depend on far-reaching structural reforms, business reorganization, investment in human capital, and well-designed public “push strategy.” These lessons are pertinent not only to transition economies, but also to most advanced developing countries.

IMF Working Papers, 2008

This Working Paper should not be reported as representing the views of the IMF. The views express... more This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate. Global economic integration intensified tax competition and raised concerns about the resulting "race to the bottom", which could undermine public investment and social spending. The aim of this paper is to test predictions that (i) there is interdependence in CIT rate setting in Eastern Europe and that (ii) the recent CIT cut in Moldova may intensify tax competition in the region. It finds that there is indeed evidence that during 1995-2006 countries in Eastern Europe strategically responded to changes in CIT rates in the region and that Moldovan zero CIT is likely to encourage further cuts in CIT. The paper also discusses implications of tax competition for Eastern Europe and finds that FDI flows will not be much affected, tax revenues are likely to decline, the shift in the composition in tax revenue may increase economic efficiency, but decrease equity. Tax coordination, while difficult politically, could help stem further decline in corporate taxation, but any gains might be modest and not certain to exceed the costs of tax coordination. Without tax coordination, however, it is unclear what exactly could stop corporate taxes from falling further.

bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su r... more bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed Pu bl ic Di sc lo su re A ut ho riz ed

The aim of this report is to provide the Ministry of Justice of Poland with an analysis of the co... more The aim of this report is to provide the Ministry of Justice of Poland with an analysis of the country’s corporate insolvency framework and to provide a set of specific recommendations to improve the business environment in this regard. The report deals only with insolvency of companies. Issues related to consumer insolvency and insolvency of banks and financial institutions are not part of the analysis.

Oxford Scholarship Online

In this chapter I discuss Poland’s growth prospects and analyze long-term projections produced by... more In this chapter I discuss Poland’s growth prospects and analyze long-term projections produced by international institutions. I argue that Poland should continue to grow and converge with the West at least until 2030 and achieve around 80 per cent of its level of income. This would be the highest relative level of income and quality of life in Poland’s history. The country’s true Golden Age would flourish. After 2030, however, convergence is likely to slow and might even reverse unless further reforms are implemented. I then discuss how much economists understand about what makes countries grow. I assert that we know much less than we think we know. I briefly review various challenges of moving from economic theory to economic practice. I also look at the pros and cons of international economic rankings, arguing that they play an important role by ‘naming and shaming’ countries into reforms, but their power is often overappreciated.

Oxford Scholarship Online

In this chapter I provide a methodological framework for the rest of the book to help explain Pol... more In this chapter I provide a methodological framework for the rest of the book to help explain Poland’s long-term economic backwardness, its unprecedented economic success since 1989, and its development prospects. I argue that the existing economic literature largely focuses on the proximate causes of economic growth, but underestimates the fundamental causes of growth—institutions, culture, ideologies, leaders, and luck—which drive economic policies and are ultimately the reasons why some countries are rich while others are poor. I then focus on the role of institutions and culture in explaining economic development. Following Acemoglu, Johnson and Robinson (ARJ), I distinguish between ‘extractive societies’ and ‘inclusive societies’, and argue that it is rare to move from one type of society equilibrium to another. I extend the ARJ institutional framework and show the conditions necessary for the shift from extractive to inclusive societies and vice versa.

Oxford Scholarship Online

In this chapter I focus on the fundamental causes of the Polish growth miracle, namely the adopti... more In this chapter I focus on the fundamental causes of the Polish growth miracle, namely the adoption of Western institutions. I start by documenting how the prospect of the EU accession drove the institution building. I show what institutions Poland adopted and how they were key to the country’s economic performance. I argue that Poland was among the fastest adopters of Western institutions, which helped it grow more rapidly than other transition economies. I then focus on the fundamental question of why Poland wanted to adopt good institutions from the West. I argue that Poland built good institutions because of the positive legacy of communism, a historically unprecedented social consensus to ‘return to Europe’, Westernized and growth-oriented elites, and emergence of a strong middle class. Western European readiness to embrace Eastern Europe was also critical. I conclude by offering insights and policy recommendations for other countries.

Oxford Scholarship Online

I argue in this chapter that despite its ultimate social, economic, and moral bankruptcy, communi... more I argue in this chapter that despite its ultimate social, economic, and moral bankruptcy, communism imposed on Poland after 1945 sowed the seeds of the country’s economic success after 1989. The old, feudal social structures were bulldozed to snap Poland out of growth-inhibiting extractive society equilibrium, creating a classless society, boosting social mobility, and securing good quality of education for all. Forced industrialization and unprecedented labour movements supported solid GDP growth rates in Poland until the 1960s, but low returns on investment, lack of technological progress, and external shocks caused declining growth rates in the 1970s, and economic stagnation in the 1980s. I conclude that the assumption that if Poland had returned to capitalism after 1945, it would have developed as quickly as the West, is simplistic. I show that a capitalist Poland would have faced significant challenges to growth, and convergence with the West would not have been guaranteed.

Oxford Scholarship Online

In this chapter, I argue that although the existing growth model has worked well so far, Poland a... more In this chapter, I argue that although the existing growth model has worked well so far, Poland and the rest of the region needs to re-adjust it to sustain a high growth rate. I then introduce the concept of the ‘Warsaw Consensus’, a set of ten policy prescriptions that should guide further convergence of Poland and CEE with the West. The ‘Warsaw Consensus’ upgrades, corrects, and enhances the ‘Washington Consensus’ and embeds it in the specific context of CEE. It deals with the key challenges to the region’s growth and offers policy solutions. I argue that implementation of the ‘Warsaw Consensus’ should be based on a new policy approach of experimenting, evaluating, and pragmaticizing (being pragmatic), and be assessed against its impact on economic growth, well-being, and happiness. Countries should also ensure that they minimize the risks of crises and become anti-fragile.

Oxford Scholarship Online

In this chapter I highlight the critical role of culture in the functioning of political and econ... more In this chapter I highlight the critical role of culture in the functioning of political and economic institutions in transition economies. People’s beliefs, stereotypes, mindsets, and unwritten ways of doing things ultimately decide whether institutions are efficient or not. I then focus on the interaction of culture, institutions, and growth in Poland and try to explain why the country’s seemingly conservative culture, which in many respects seems to be at odds with Western European culture, especially as regards religion, has not prevented it from becoming Europe’s growth champion. I argue that it was because of strong elites that internalized Western values, an implicit quid pro quo between the new elites and the more conservative parts of the society to install European institutions and promote Western values in exchange for the promise of economic prosperity, and the generally non-fundamentalist nature of religion in Poland. I also discuss the key roles of individuals, ideas, ...

Oxford Scholarship Online

In this chapter I explain the proximate drivers of Poland’s economic success since 1989. I divide... more In this chapter I explain the proximate drivers of Poland’s economic success since 1989. I divide the transition into the initial period of ‘shock therapy’ during 1989 1991 and then the second period of economic recovery after 1992. I discuss the ongoing debate on the pros and cons of ‘shock therapy’ versus a ‘gradual’ approach to post-communist transition. I use the example of Poland’s ‘shock therapy’ to analyze both approaches. I conclude that that the differences in actual policies were smaller than implied by the rhetoric of both sides of the debate. I then explain why Poland was more successful than other transition economies, and discuss whether Poland could have grown even faster. I argue that on the whole the Polish transition was almost ‘as good as it gets’. I draw the lessons learned and policy insights from Poland’s transition for other countries.

Oxford Scholarship Online

In this chapter I explain why Poland and most countries in Eastern Europe have always lagged behi... more In this chapter I explain why Poland and most countries in Eastern Europe have always lagged behind Western Europe in economic development. I discuss why in the past the European continent split into two parts and how Western and Eastern Europe followed starkly different developmental paths. I then demonstrate how Polish oligarchic elites built extractive institutions and how they adopted ideologies, cultures, and values, which undermined development from the late sixteenth century to 1939. I also describe how the elites created a libertarian country without taxes, state capacity, and rule of law, and how this ‘golden freedom’ led to Poland’s collapse and disappearance from the map of Europe in 1795. I argue that Polish extractive society was so well established that it could not reform itself from the inside. It was like a black hole, where the force of gravity is so strong that the light could not come out.