Post-Adaptation Growth Recovery in Poland and Russia - Similarities and Differences

CASE Network Studies and Analyses Working Paper No. 280

63 Pages Posted: 8 Dec 2008 Last revised: 9 Jan 2015

See all articles by Marek Dabrowski

Marek Dabrowski

CASE - Center for Social and Economic Research; Bruegel; National Research University Higher School of Economics

Irina Sinitsina

CASE - Center for Social and Economic Research

Oleksandr Rohozynsky

Kyiv School of Economics; EERC

Date Written: June 1, 2004

Abstract

The purpose of this paper is to analyze the sources, economic and social characteristics, of growth recovery, which followed the first period of output decline in two transition countries - Poland and Russia. They represent two different groups of transition countries (new EU member states vs. CIS) in terms of adopted transition strategy and accomplished results. Generally, fast reformers succeeded and slow reformers experienced a lot of troubles. Although eventually all former communist countries entered the path of economic growth, those which moved slowly lost sometimes the whole decade. Social costs of slow reforms were also dramatic: income degradation and rising inequalities, high level of poverty and corruption, various social and institutional distortions and pathologies, violation of human rights and civil and economic liberties, attempts of authoritarian restoration, etc.

The period of 'adaptation' output decline was much more severe and longer in Russia than in Poland, and recovery came later. Unlike in the leading transition countries, the role of new private firms and FDI in Russia has been very limited what can be explained by administrative barriers, widespread corruption, lack of transparency, instability and contradictions in economic legislation, reflecting poor business climate. In the absence of FDI and with limited role of SME Russian economy is dominated by large domestic corporations, many of them having an 'oligarchic' characteristic. This additionally complicates the political economy of market reforms and weakens constituency of favor of open democratic society and liberal economic policies.

The high oil prices helped in economic recovery and fiscal adjustment in Russia in early 2000s. However, Russian economy has become increasingly oil-dependent. While major obstacles to future Russia's growth can origin from its structural monoculture dominated by the oil and energy sector, and poor business climate, the excessive welfare state can be considered as the main development burden in the case of Poland.

In both analyzed countries poverty and inequality increased substantially during 1990s, to much bigger extent in Russia compared to Poland. While part of the income polarization was inevitably connected with departure from communist egalitarianism and part of poverty phenomenon reflected transition adaptation costs, other factors such as continuous structural distortions, incomplete liberalization, high inflation, insufficient competition, barriers to entrepreneurship, institutional weaknesses of the state captured by oligarchs, corruption, etc., played a significant role here.

Keywords: transition, transition strategy, growth, poverty, income inequality, Poland, Russia, Central and Eastern Europe, CIS

JEL Classification: P24, P26, P27, P36

Suggested Citation

Dabrowski, Marek and Sinitsina, Irina and Rohozynsky, Oleksandr, Post-Adaptation Growth Recovery in Poland and Russia - Similarities and Differences (June 1, 2004). CASE Network Studies and Analyses Working Paper No. 280, Available at SSRN: https://ssrn.com/abstract=1312303 or http://dx.doi.org/10.2139/ssrn.1312303

Marek Dabrowski (Contact Author)

CASE - Center for Social and Economic Research ( email )

61 Jana Pawla II Ave, office 212
Warsaw, 01-031
Poland
+48 22 206 29 00 (Phone)

HOME PAGE: http://www.case-research.eu/en/marek-dabrowski

Bruegel ( email )

Rue de la Charité 33
B-1210 Brussels Belgium, 1210
Belgium

HOME PAGE: http://www.bruegel.org/scholars/scholar-detail/scholar/430-marek-dabrowski/

National Research University Higher School of Economics ( email )

Myasnitskaya 20
Moscow, 101000
Russia

HOME PAGE: http://https://www.hse.ru/en/org/persons/112929885

Irina Sinitsina

CASE - Center for Social and Economic Research ( email )

Al. Jana Pawła II 61/212
00-944 Warsaw, 01-031
Poland

Oleksandr Rohozynsky

Kyiv School of Economics ( email )

vul. Yakira 13, office 334
Kyiv, 04119
Ukraine
+380444928012 (Phone)

HOME PAGE: http://www.kse.org.ua

EERC ( email )

vul Yakira 13, office 334
Kyiv, 04119
Ukraine
+1-404-418-6698 (Phone)

HOME PAGE: http://www.eerc.ru

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
86
Abstract Views
962
rank
358,973
PlumX Metrics