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Sector Differences in Data Collecting

Sector Differences in Data Collecting

Identifying the fate of Polish industrial plants after 1989 varied significantly based on sector. Those sectors more detrimental to the privatization process, due to their high concentration of capital or labor, have had more transparent histories. Sectors with bigger plants were also easier to trace back through the process. A sector with naturally smaller-sized plants was less likely to be identified in our data collecting. Lastly, the level of investment and care provided to the sector under the communist regime played a role in whether plants within that given sector could be identified.

The data collected about the fate of plants of former SOEs in Poland varied significantly by sector. Clearly, characteristics and trends that distinguished one from another played a role in this discrepancy. Many implications can be made from the graph above. Distinctively, one can notice the high-level of transparency (of at least basic structural information) of plants related to mining. This results particularly from the importance of the sector in Poland’s transition. Not only is the mining industry in Poland large, its restructuring has also been one of the foremost symbols of the difficulties in economic transformation of former state-owned industries. Large scale production and geographical agglomeration have brought troubles in the mining industry to the forefront of national news. Therefore, locating information about particular mining sites (plants) was not difficult.

As shown above, Mining & Quarrying had the highest percentage of plants identified, and was the only sector with an identification rate above 75%. Still, giving the mining sector a label of “high-level transparency” is based on nothing more than the amount of plants there was complete information on in that sector relative to others. There was 112 plants in the mining and quarrying sectors in Poland during the fall of communism in 1989. Of those 112, we identified 74. Considering the size, in terms of employment and capital, of such plants, it can be assumed that the original 112 captured all of the mines and quarries in Poland. In terms of capital, the 74 plants identified had capital worth 1,322,783,000 in 1988 Polish Zloty. Employment before transition in those plants was 216,746. To compare, the whole capital worth of the sector was 1467,901,000 (1988 Polish Zloty). It employed 250,847 people. This means that despite our relative success in identifying the concrete transition paths for around 66% of the plants, 10% of the capital and 13.4% of the jobs remain unaccounted for.

Sectors that proved relatively more problematic to find plant-level data for include: food production, machinery, automotive and furniture production. The food production sector had 294 state-owned production plants at the beginning of transition. Yet, only definitive information of 109 of those was retrieved during our search. The nearly 300 plants in the sector were the most of any of the Polish industrial sectors. This stems particularly from the smaller nature of the food production plants. While our data includes only plants that employed 50 or more workers, the food production plants were still relatively smaller than, say, their mining counterparts. With that, despite having the highest number of plants, the food production sector was not the most important industry in communist Poland.

The relatively high number of unidentified plants in the food production sector does not only stem from the small size of the plants, but also because of the nature of the sector structure. According to a World Bank report, the food production sector during communism in Poland was in “relatively poor condition, with buildings in need of repair and with outdated and obsolete equipment requiring repair”. Additionally, according to the report from May 1991, quick privatization was required in order to inject vital investment into the sector. Such investment was required to salvage any of the capital in the sector and ensure the plants could transition into a free market. Therefore, not only the small nature of the plants, but also the need to privatize them as soon as possible, led to them being relatively harder to identify than the plants in other sectors. One may also be surprised by the lack of information about high-tech industries, such as electrical and information technology. In both of these sectors, concrete information was only available for slightly less than half of the plants existing in 1989. This may stem mainly from the fact that high technology is easily replaceable, basing itself on up-to-date capital and the newest technologies rather than sheer labor.

Since the high-tech production in the plants of the Soviet Bloc was of considerably worse quality than in its western counterparts, as soon as a free market was established, western technologies took over majority of the market. The Polish SOE’s in the high-tech sectors were either liquidated, asset stripped, or taken over by western conglomerates in the early part of transition. The quick nature of the process proved problematic for our data collecting, as events which occurred in the early 1990s were the hardest to find (for many SOEs that were liquidated without any attempt at privatization one can only find the information about the end of being registered in the national registry). In general, the variations between sectors will have to be considered when making final conclusions about the successes and failures of privatization. Still, the variations themselves can be taken as indicators into some potential trends. Simply looking at the chart above can make us hypothesize, that for example, keeping mining & quarrying plants running was were more detrimental to the Polish economy than say, plants producing textiles. While it may appear obvious, such implications are vital in considering how they continue to influence certain economic and political trends in Poland.