Business Demography, Job Flows and Productivity in Poland’s Enterprise Sector

The article deals with Poland’s transition to a market economy in the 1990s and compares the changes that took place in the Polish economy at the time with developments in mature economies. Using three indexes—the enterprise turnover rate, job flow rates, and productivity growth decomposition—the authors attempt to show that transition processes in Poland have had a positive effect on the country’s enterprise sector, though there is still a lot of work to be done. These three indexes help understand the structural changes that occurred during the transition from central planning to an open market economy in Poland. Using a unique set of data from Polish companies, the authors calculated several measures of resource reallocation, along with enterprise entry and exit rates, and job flow rates. Moreover, they computed the labor productivity growth rate. The high rates of resource reallocation suggest that the Schumpeterian processes of creative destruction have played a major role in productivity enhancement. Surprisingly, labor productivity decomposition shows that the “within effect” influenced productivity the most, while the net entry effect was significant and positive. The poor availability of data explains why the authors were unable to calculate more sophisticated measures of productivity growth. The quality of the data may be also responsible for the substantial sensitivity of the results to the productivity decomposition method.