ABSTRACT
In this chapter we turn to the behaviour of the firm in the Polish economy. The analysis of this sector poses some serious problems. This is because the Polish economy is characterized by a sizeable state enterprise sector so that we really have two types of firms-private and state enterprises or public firms. Ideally, therefore, the correct way to proceed would be to specify a two-sub-sector model where these two types of firms are distinguished separately. Unfortunately this approach is not feasible due to lack of data. For example, starting with the basic variable, which is the main objective of this chapter, namely, investment expenditure, while the data are available for a short period of time, the actual meaning of the breakdown is suspect. This is due to the process of privatization. The process itself sometimes ends up classifying certain investments as belonging to the private sector rather than as actually having taken place there. Therefore, it is questionable whether for purposes of analysis this kind of distinction can be taken seriously. Apart from this, there are also problems with other data. Here are just a few examples. The data on bank loans refer to all loans to this sector rather than to the public and the private sector. Similarly, the data on the holdings of various financial assetszloty demand and time deposits and foreign currency demand and time deposits-are given as holdings by the two types of firms together. The same also holds true of the various rates of return as well as loan rates and the rate of profitability. These data shortcomings and the problems in definition compel us to treat the two types of firms as if they were identical in their behaviour. This is clearly unsatisfactory because of its behavioural implications. At this point obviously nothing can be done. Hopefully, when appropriate data become available, it would be useful to proceed by disaggregating this sector. In the meantime, in the next section we will discuss the relative importance of these two types of firms.
