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WASHINGTON, D.C., July 14 -- Poland, which has been in the vanguard of economic liberalization sweeping eastern Europe, is the subject of a new discussion paper by the International Finance Corporation (IFC). Titled "Coping with Capitalism: the new Polish Entrepreneurs," it is written by Bohdan Wyznikiewicz, Brian Pinto and Maciej Grabowski and discusses the experiences of Polish entrepreneurs during the country's transition from a rigidly-structured centrally-planned socialist state to a free-market capitalist economy. The paper examines how business decisions were affected by Poland's Economic Transformation Program (ETP), launched on January 1, 1990, which substantially eased regulations, removed restrictions, freed prices and lowered entry barriers for private business. When that happened, writes Guy Pfeffermann, Director of IFC's Economics Department, in the study's foreword: "The response was swift and huge, with the share of the private sector growing rapidly." Poland's Law on Economic Activity of Dece
mber 1988 is also considered significant in demonopolizing state controls and fostering what the study refers to as "a veritable burst of entrepreneurship." Seventy-five Polish entrepreneurs, who experienced these critical economic changes, participated in the study. In documenting their stories, the paper is divided into three sections: a review of private sector developments, a summary of the main patterns emerging from the survey of entrepreneurs, and detailed profiles of 17 of them. The study points out that the private sector has grown strongly in manufacturing, trading, transportation, construction, and services. Many traders are now thinking of switching to manufacturing because cost-price distortions and arbitrage opportunities created by wedges between domestic and international prices are disappearing. There are, however, many constraints to private sector growth including the lack of access to credit, a risky investment climate, high interest rates, inadequate market information, insufficient commu
nications facilities and legal and financial impediments. The main complaint is the reluctance of banks to lend to untried clients, but this too has had a positive result -- with the creation of private equity and the reinvestment of earnings.
One of the entrepreneurs profiled, Mr. Jerzy Mielcarz of Dobrzyca, a food and pharmaceutical producer, feels that his biggest problems are "financial constraints, including limited access to bank credit, high interest rate and problems with financial liquidity." Another entrepreneur, Mrs. Anna Pieniek-Tobiasz of Radom, whose company provides construction services to housing cooperatives, views the "persistent downward trend in demand," "payment arrears affecting cash flow," and rapidly increasing numbers of "unregistered contractors" as the main barriers to growth. IFC is a member of the World Bank Group and is the largest source of equity and loan financing for private sector projects in developing countries.
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