The measurement of transaction costs in Poland, 1996-2014

The empirical validation of the transaction cost concept proved to be a major intellectual endeavour that has yielded only partial success. Particular difficulties have been encountered in the measurement of such costs at the micro or macro level. The paper of Wallis and North (1986) is one attempt to provide a measure of transaction costs in the national economy. Their attempt is to define “transaction sectors” and relate the levels of output (i.e. costs incurred) in such sectors to the level of gross national / domestic product. Among these costs one finds: a) costs of management, sales, administration and control, b) costs of financing, insurance, distribution, c) (some of the costs) of the public sector / the State. Apart from the original research concerning the US, there have been relatively few studies describing other economies (e.g. Australia, Argentina, Bulgaria). The paper joins the discussion on the macroeconomic interpretation of transaction costs started by Wallis and North. While we had hoped to trace the evolution of the transaction sectors as well as the pattern of transaction activities in non-transaction sectors as defined above, the availability of data prevented us from accomplishing ambitious research tasks. This paper is basically a replication of the study Wallis and North (1986) did for the US albeit for a much shorter time span (nineteen years). It contains a short description of the methodology used by these authors, the application of the method to the data on the Polish economy from the mid-1990s to 2014. We compare the findings with Wallis and North and other authors of studies on macroeconomic transaction costs and provide some interpretations of the results. Basically, our findings are remarkably close to the estimates of other teams. However, serious ambiguities in Wallis-North conceptualization make us sceptical as to the merits of this research subprogramme within neo-institutional economics. The implications for the understanding of economic growth and development remain unclear.