European spirit, adaption to market economy and national identity in Poland and Ukraine

National culture and its influence on the European Integration, advertising and entrepreneurship

Masterarbeit, 2008, 284 Seiten

BWL - Handel und Distribution

Leseprobe

Matthias Reichhard

European spirit, adaption to market economy and national identity in Poland and

Ukraine

National culture and its influence on the European Integration, advertising and

entrepreneurship

ISBN: 978-3-8366-1283-8

Druck Diplomica® Verlag GmbH, Hamburg, 2008

Zugl. Technische Universität Bergakademie Freiberg, Freiberg, Deutschland, MA-Thesis /

Master, 2008

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Acknowledgement:

Now that the preparation period for he master thesis at hand draws to a close, the instant has come

to utter thanks above all to my promoter Mgr. Malgorzata Bartosik-Purgat, who has accompanied

this work during one year, was always was ready to give a helpful hand when it came to thematic

questions, quest of papers and solution of technical problems.

Acknowledgement is as well due to Professor Horst Brezinski who managed the legal coordination

of the master thesis in the scope of the double diploma agreement stipulated between the Akademia

Ekonomiczna w Poznaniu and the Technische Universität Bergakademie Freiberg.

Furthermore, I wish to express my gratitude towards Monika Wójcik for linguistic aid in connection

to Polish language, Fabian Flämmer, Martin Maurer and Gerald Schulz for communicating me a

plethora of technical and formal tricks and knacks as well as to my family for the profusion of

mental and emotional support and the advise to find appropriate counterbalance after working

sessions, family Laudage for following this work's advancement, Eva Stricker for granting me

valuable insights in the universe of scientific work and encouraging me to carry on in times of

exhaustion, Professor Michael B. Hinner for guaranteeing that the scope of intended meaning

almost equalled the quantity of shared meaning in his course "scholarly rhetoric" and thus giving

me useful tips and ruses for preparing a paper, furthermore for inspiring me to chose such a topic

thanks to his lectures in intercultural and communication studies. Moreover, I would like to thank

Paulina Pantkowski for permitting me to exchange current opinions and state of mind about

scientific work, M

. G. for giving me strength in a phase of exhaustion due to overwork and

for being shocked of the amplitude of my composition and finally the community of so far

unmentioned friends and comrades within and outside "Feniks" for doggedly, but very gently trying

to keep me from work, proposing me all kinds of divertisement and thus each time reloading my

batteries if te voltage had attained zero; above all Mateusz "Schlawiner" Potaczek, Paula

Skrobaska, Magda Skarzyska, "Anioek" Ania, Arkadius Gemlik, Tobiasz Hoholtyn, Grzegorz

Doberny, Carine Aka, Justin Schlottmann, Thomas Däubler, Michael Schulz, Mathias Köster,

François Nalbert, Christophe Reymen, Paul-Louis Dessery, "panie" Damiano, Robert Simon and

Olivia Bridger.

Danksagung

Jetzt, da sich die Bearbeitungszeit dem Ende entgegengeht, ist es an der Zeit den Personen zu

danken, die in verschiedener Weise mitgeholfen haben, diese Abschlussarbeit entstehen zu lassen.

Besonderer Dank gilt meiner Betreuerin Mgr. Malgorzata Bartosik-Purgat, die mir ein Jahr lang mit

Rat und Tat zur Seite stand, ob es nun um formelle und inhaltliche Fragen oder um Literatursuche

ging.

Gedankt sei außerdem Professor Horst Brezinski, daß er als Vertreter der Freiberger Seite die

Arbeit korrigierte und sich außerdem um die Abstimmung mit den Vorgaben des

Doppeldiplomabkommens zwischen der Akademia Ekonomiczna w Poznaniu und der Technischen

Universität Bergakademie Freiberg kümmerte.

Dank gebührt außerdem Monika Wójcik für sprachliche Unterstützung mit polnischen Texten,

Fabian Flämmer, Martin Maurer and Gerald Schulz, dass sie mir so manchen technisch-formellen

Kniff verraten haben, meinen Eltern und meinem Bruder für geistigen und seelischen Beistand,

Familie Laudage, dass die den Fortschritt meines Werks mit regem Interesse verfolgt hat, Eva

Stricker dass sie mir mit ihrer Magisterarbeit vermittelt hat, wie man ein solches Werk aufbaut und

daß sie mich in Flauten immer wieder angespornt hat, Professor Michael B, Hinner für seine

hilfreiche Einführung in wissenschaftliches Arbeiten dank seines Kurses scholarly rhetoric" und für

seine Inspiration zum Thema dieser Arbeit dank seiner hochinteressanten Vertiefungsvorlesungen

Paulina Pantkowski für einträchtige Gespräche über wissenschaftliches Arbeiten, M

. G.,

dass sie mich in einer Phase mentaler Erschöpfung aufgebaut und mit ihrer Meinung zum Umfang

dieser Arbeit nicht hinterm Berg gehalten hat; Nicht vergessen möchte ich in meiner Danksagung

all die Freunde und Bekannten inner- und außerhalb des Wohnheims "Feniks", die mich bald

bestimmt und mahnend, bald freundlich und charmant versuchten, von der Arbeit abzuhalten,

indem sie mich mit allerlei Verlockungen und Zerstreuungen zu versuchen suchten und mir so

halfen, neue Kraft zu schöpfen. Im einzelnen sind das:

Mateusz "Schlawiner" Potaczek, Paula Skrobaska, Magda Skarzyska, Ania..., Arkadius Gemlik,

Tobiasz Hoholtyn, Grzegorz Doberny, Carine Aka, Justin Schlottmann, Thomas Däubler, Michael

Schulz, Mathias Köster, François Nalbert, Christophe Reymen, Paul-Louis Dessery, "pan"

Damiano. Robert Simon und Olivia Bridger.

Abstract

Since the fall of the Iron Curtain in 1991, the purely economic aspects of

transformation of central and eastern European countries has been studied by many a

researcher. However, the attempt to leave the "that" apart and to shed light on the

"why" of economic features has rather seldomly and methodologically uninspiredly

been made. The aspiration of this work is to cross the field of CEE transformation

and cross-cultural studies and to focus the view on the development in Poland and

Ukraine. Doing so, the hypothesis is posed that national culture influences social,

cultural and economic facets of CEE convergence.

In the first part, an introduction of the transformation matter is provided and

respective cultural theory around and beyond the Hofstede approach reviewed to melt

suggested model dimensions to a customized toolset for part two where transition

perspectives are observed under the light of national identity and masses` disposition

towards Europe as well as human needs in form of advertising and motivations to

entrepreneurship. Results are such that scholars may feel invited to initiate further

subject-related research by gathering respective primary data.

Résumé

Depuis que le Rideau de Fer était tombé en 1991, maints économistes se sont penchés

sur des recherches du procès de transformation dans les pays post-socialistes de l`

Éurope Centrale et Orientale. Cependant, peu de chercheurs ont jusqu`ici tâché

d`éclaircir les couches psycho-sociales de faits-clé macroéconomiques et du

comportement commercial des individus habitant la zone ECO.

C`est précisément la lacune thématique que cette mémoire-ci souhaite d`emplir, en

croisant recherches de transformation et études interculturelles, en se concentrant sur

la Pologne comme de-fait adhérent de l´UE et l` Ukraine, candidat éternel

d´admission.

En conséquent, l`hypothèse de travail est que le concepte de culture nationale se

répercute sur l` harmonisation socio-culturelle et économique des PECO avec la EU-

15.

La première partie de la rédaction introduit le lecteur á la théorie de politique de

transformation resp. au contré des définitons et models de la notion de culture

nationale. e Consécutivement, le corps de la thèse raffine le discours sur la culture

nationale en considérant d`abord sa face visible, soit l`identité nationale polonaise et

ukrainienne en vue de l`approche à l´Europe des Quinze. Ensuite, l` angle de vue

change pour révéler des liens entre le concepte de besoins humains et leur excitaion

par les messages publicitaires avant et après ladisparition du Bloc de l`Est.

Finalement , personnalité d`entrepreneur et propriétés de PME en Pologne et Ukraine

sont illuminées dans la lumière de valeurs nationales.

Le résultat global de la mémoire est tel qu`il devrait inviter d`aucuns

scientifiques de filières correspondantes de prendre la relaie et étayer le fondement

effectué ici de collecte de données primaires bien taillée aux besoins de ce sujet

multidisciplinaire.

Kurzzusammenfassung

Seitdem 1991 der Eisernen Vorhangs fiel, haben etliche Wissenschaftler den

Transformationsprozess postsozialistischer Staaten Mittel- und Osteuropas unter

mancherlei ökonomischen Gesichtspunkten beleuchtet. Hingegen haben bisher recht

wenige Autoren versucht, die Ursache bestimmter volkswirtschaftlicher

Gegebenheiten und ökonomischen Handelns zu ergründen, und wenn, dann meist

mit wenig gehaltvoller Methodik.

An der Schnittstelle zwischen Transformationsforschung und interkulturellen Studien

setzt diese Arbeit an, sich dabei an EU-Mitglied Polen und Beitrittskandidat Ukraine

haltend.

Die Generalhypothese lautet dabei, dass Nationalkultur Aspekte sozialer, kultureller

und wirtschaftlicher Integration spürbar beeinflusst.

Der erste Teil dient der Einführung in die Theorie der Transformationsstudien und

diskutiert Beiträge, die den Komplex Nationalkultur erhellen sollen. Die Darstellng

eines maßgeschneiderten Modells rundet das theoretische Fundament beider

Themenfelder ab.

Im Hauptteil wird neben der Darstellung von nationaler Identität der Einfluß

nationaler Wertsysteme auf Motivation zu Entrepreneurship sowie Merkmale von

KMU geprüft. Des weiteren geht der Autor der Frage nach, welche menschlichen

Bedürfnisse Unternehmen in der ersten Transformationsphase mit ihren

Werbebotschaften in der Masse der Verbraucher zu wecken gedachten - mit Blick auf

die sozialistische Vergangenheit und ob 16 Jahre nach der Wende Anzeichen von

Grundbedürfnisbefriedigung erkennbar sind.

Fazit der Betrachtungen ist, dass Nationalkultur in all seinen Facetten die

Transformation Mittel- und Osteuropas derart prägt, dass das Thema verdient, mit

komplexeren, aussaggekräftigeren Modellen als dem Hofstedeschen aufgegriffen und

mit entsprechenden Sekundärdaten unterlegt zu werden.

Streszczenie

Od upadku elaznej kurtyny w 1991 roku czysto ekonomiczne aspekty transformacji

w pastwach Europy rodkowej i Wschodniej byly studiowane przez wielu badaczy.

Rzadko jednak (lub metodologicznie nieciekawie) próbowano pozostawi sedno

sprawy i rzuci wicej wiatla na przyczyny ekonomicznych cech transformacji.

Celem tej pracy jest przekrojowe przedstawienie bada nad procesem transformacji i

zmian kulturowych w krajach Europy rodkowej i Wschodniej (CEE), a w

szczególnoci skupienie si na rozwoju Polski i Ukrainy. Dlatego te postawiona

zostala hipoteza o wplywie kultury narodowej na spoleczne, kulturalne i

ekonomiczne aspekty konwergencji pastw CEE.

W czci pierwszej znajduje si wprowadzenie do pojcia transformacji oraz jej

kulturowej teorii opartej na podejciu Hofstede'a. Poddane zostalo ono ponownej

analizie w celu zlagodzenia sugerowanych wymiarów modelu do odpowiadajcego

indywidualnym potrzebom zestawu narzdzi potrzebnego w czci drugiej. W teje

czci pokazane s perspektywy procesu przejciowego w wietle tosamoci

narodowej oraz rozmieszczenia mas ludnoci wobec Europy, a take potrzeby ludzkie

w formie reklamowania i zachcania do rozwoju przedsibiorczoci. W rezultacie

naukowcy mog czu si zachceni do prowadzenia dalszych bada zwizanych z

tym tematem poprzez gromadzenie zasadniczych danych.

Table of content

Registry of tables ... XIX

Index of figures ...XX

List of abbreviations... XXIII

Introduction ... 1

Chapter 1: The role of Poland and Ukraine in the CMEA and their position during its

breakdown ... 5

1.1 Introduction to diverse transition CEEC matters : definitions, initial conditions

stage models, endpoint of transition ... 5

1.1.1 Overview on definitions of the transformation issue ... 6

1.1.2 Epitome of the scholars` dispute on the significance of disparate

initial conditions ... 6

1.1.3 Revising literature in quest of accounts of transformation models ... 7

1.1.3.1 Approaches based on GDP growth ... 7

1.1.3.2 A stepwise model of the transformation process presented

by EBRD ... 8

1.1.3.3 Van de Mortel`s three-stage depiction of transition course ... 9

1.1.4 A stub of controverse on the possible endpoint of CEEC transition ... 11

1.2 Economic and general conditions in late communist Poland and Ukraine,

activity of protest movements in the pre-transition period ... 11

1.3 The rapid breakdown of a decade-long morbid economic system Soviet trade

shock of 1989 91... 14

1.4 Link between economic growth and uneven initial conditions among CEEC ... 15

1.5 Gradualism versus Big Bang ... 17

1.6 General socio-economic facts of Pl and Uk today compared to 1990/91 ... 19

1.6.1 Balance sheet line of Poland´s evolution in economy and politics since

the previous mid-generational timespan passed... 19

1.6.2 Frame data sketching Ukraine´s econo-political transition ... 23

XII

Chapter 2: Theoretical contemplations of national culture: literature review, discussion ... 29

2.1 Cultural definitions as embrace of national culture and identity ... 29

2.2 The notion of nation as theoretical agars for the subsequent discussion on national

identity ... 30

2.3 Immersion in the realm of NI by theoretical ancillary constructions ... 31

2.3.1 Presentation of definitions ... 31

2.3.2 Description of models ... 33

2.4 Comments on selected definitions and models of national culture definitions ... 36

2.4.1 Analysis of the regarded NI definitions in respect of utility for transfor-

mation studies ... 36

2.4.2 Exploitation of stated NC models as preparation of following dimension

processing ... 40

2.4.2.1 bipolar modelsgain and flaws: useful parts of approaches à la

Hofstede, critique by McSweeney and Nardon... 40

2.4.2.2 Throsby`s approach of cultural capital ... 44

2.4.2.3 Weaver`s model of the cultural iceberg ... 45

2.4.2.4 Merk`s onion diagram of national culture ... 45

2.4.2.5 Harris and Morgan`s enumeration of partially concrete in- and

outward NC elements ... 45

Chapter 3: Integration of NC traits extracted from selected models ...

3.1 Gathering and listing of suitable model elements ... ...................................... 47

3.2 Intermediate grouping in the attempt to establish model frame and content ... 47

3.3 Extraction of a generic term for the distinct NC model layers ... 48

Chapter 4: Main features of Polish and Ukrainian national identity, its occurrence nowadays,

bi-national comparison and role in the countries` process of European

harmonisation ... 49

4.1 Principal human questions vested in the notion of national identity, cohesion to the

domain of national culture ... 49

4.2 Generation and evolution of Polish national identity through its milleniarian history .. 50

4.3 Facets of disturbances overcome by Polish collective consciousness under

communism ... 53

XIII

4.3.1 Was Polish Catholicism as gueradian of national identity affected during the

socialist era? ... 53

4.3.2 Absorption of Polish national consciousness to Soviet

influence on Poland between 1945 and 1991 ... 54

4.4 Material and mental novelties flooding the pool of Polish self- and foreign concept

and public`s general and microculture-dependent reply thereon ... 54

4.5 Poles` self-comprehension as EU member state and harsh realities ordinary

citizens and their representatives during accession negotiations ... 55

4.6 Repercussions of western winds of adversity on the 2003 adhesion referendum,

satisfaction with the events of May 1

, 2004, overall spitir of euro-enthusiasm/-

scepticism ... 57

4.7 Conclusive remarks on Poland`s NI-dyed convergence process embraced by popular

patrimony, party initiatives, religion, social clivages and foreign influences ... 58

4.8 Sketch of generation and formation of Ukraine`s national identity with focus on the

turbulence spilling over in the 19

and 20 century ... 60

4.9 Disorientations, uncertainties and new alignment in public debate after the

marginalisation of Marxist doctrines in 1991 ... 62

4.10 A threefold set of examples provided to outline Ukrainians´ deal with the subject of EU

engagement ... 63

4.11 Negotiations of candidacy between Kiev and Brussels a long decade of unilateral

advancements ... 64

4.12 Comparison of nature and effect of NI in Poland and Ukraine ... 65

Chapter 5: Theoretical precis of the Basic Human Need subject, draft of respective

consumers` need topology based upon of suitable advertising cases ... 67

5.1 Elusive touch of the cause-effect problem between BHN and national culture ... 67

5.2 Definitions of human needs ... 68

5.3 Human needs models composed by basic and progressive aspirative level... 68

5.3.1 Maslow`s pyramid of human needs, extensions and criticism ... 69

5.3.2 Sites´ suggestion of primary and derivative needs in relation to the

Maslow model ... .. 71

XIV

5.3.3 Hertnon`s (2/2) BHN matrix and multi-sector spiral depiction ... 72

5.4 Additional contributions, behavioural extension of the BHN concept ... 73

5.4.1 Nussbaum`s ten-point compilaton of human aspirations ... 73

5.4.2 Discussion of Knemeyer`s model of human state and behaviour ... 74

5.4.3 General conjunction between BHN, values and customer behaviour... 75

5.5 Criticism of ordinal and enumerative BHN approaches, question of universality

resp. cultural embracement à la Marker ... 76

5.6 Interpretation of style and message in advertising and the mass clientèle`s reaction

thereon for selected durable and non-durable consumer goods in respect of basic human

needs ... 77

5.6.1 Weaving a connection between the BHN concept and marketing, esp.

promotion ...77

5.6.2 The situation in Poland ... 79

5.6.2.1 Amplour and quality of marketing, esp. advertising, in the

socialist period ... 79

5.6.2.2 Extract of publicitarian productions diffused within the first 15

years of capitalism ... 82

5.6.2.2.1 Compilation of promotional creations for consumer

goods (Hygienic products, beer, tobacco and chocolate) ... 82

5.6.2.2.2 Overview of Polish households` equipment by consumer

durables, treatment of the Heyah advertisement campaigns

since 2004 ... 90

5.6.3 The situation in Ukraine ... 94

5.6.3.1 Reality of reklama, propaganda and sneaking glimpse on

western brands and effect on advertising perception in the

early 1990s ... 94

5.6.3.2 Sangwan`s and Golovkina`s survey on the consciousness of

brand`s mental anchorage within customers and dangers for

CEEC inhabitants ... 96

5.6.3.3 Selection of advertising creations meant to influence purchase

behaviour in today`s Ukraine ... 98

5.6.3.3.1 Examination of a set of consumer goods being

concordant the Polish review ... 98

5.6.3.3.2 Illumination of the BHN apealed to by the durable

mobile phones (Nokia) ... 105

5.7 Quintessence of dominating BHN in Polish and Ukrainian advertising paysage after the

turnaround of 1991 ... 107

Chapter 6: Polish and Ukrainian national values and their tracability in customs of business

ownership and the complexion of small private business ... 108

6.1 Elucidation of motives to tie the BV/NV domain to the field of entrepreneurship ... 108

6.2 Definitions and classifications of SMEs and enterpreneurship, semantic connection and

functions for economy ... 108

6.2.1 Semantic enlargement of the entrepreneurship notion since the 18th century a

glance at younger history and the focus of diverse social sciences ... 110

6.2.2 Contemporary visages of entrepreneurship in the tradition of the "X as

Y" scheme ... 112

6.3 Empirical analyses and theoretical reasonings concerning motivations to open

up a business ... 113

6.3.1 Enumeration of approaches for corporate founding research ... 114

6.3.1.1 Extraction of socio-economic sources of entrepreneural

incitation retrieved by the Global Entrepreneurship Monitor

Poland

...

114

6.3.1.2 Ocumenical contemplation of triggers for starting up,

following Grilo`s and Thurik`s supply and demand side

suggestion ... 117

6.4 Sketch of private businessmen`s situation and their competitive mentality under

communist centralized economy, repercussions to business venture in CEE along the

transition phases ... 125

6.5 Establishing the theoretical linkage between the notion of entrepreneurship

and human values ... 130

6.5.1 Bouncken`s et al. contribution on young entrepreneurs` activity in Poland and

Germany, following half of Hofstede`s cultural dimensions ... 130

6.5.2 Wenneker`s et al. regression series on uncertainty avoidance`s influence on the

rate of Business Ownership ... 132

XVI

6.5.2.1 Description of examination arrangement, regression variables,

correlations, control variables, dummies as well as rough

confirmation of certain repercussions of uncertainty avoidance on

entrepreneurship

...

132

6.5.2.2 Direct effects of the uncertainty avoidance level on the rate of

Business

Ownership

...

133

6.5.2.3 Depiction of respective indirect effects ... 134

6.6 Collection of characteristics of entrepreneneurs and their actions, attempt to interpret

these particularities with the toolcase of Dyczewski`s Polish national value listing ... 135

6.6.1 Introductive key date on the situation of Polish private business in the

pre-and early post transition period ... 135

6.6.2 Changes of the legal framework envisaging to create a more entrepreneurship-

friendly climate, effects there of within the first decade reforms ... 137

6.6.3 Family, kin and friends as microcultures Polish private enterprises`

lifecycle is commonly incorporated to ... 138

6.6.4 Darrell`s idea of the christian entrepreneur transferred to a brief reasoning on

religion as determinant for startups in Poland ... 141

6.7 Reflections on the dependence of Ukrainian entrepreneurship particularities on Ray`s

selection of traditional and communism-related national values ... 146

6.7.1 Covered in the deepest shadow of the Kremlin towers: Circumstances of

non-state-owned establishments in the former Ukrainian SSR ... 146

6.7.2 Basic facts on the Ukrainian micro-enterprise sector, evolution manifestations

between 1991 and 2004 ... 147

6.7.3 Assessment whether the worldview of life`s dirty rules is still effective within

modern Ukrainian business owners ... 149

6.7.3.1 Corruption: Ukrainians` well-tried lubricant to keep the economic

geardrive running today? ... 149

6.7.3.2 Cherishment of clan, friendship and colleagial ambience and distrust

of more outward parties as controverse social effects for business

operation

...

152

6.7.3.3 Have Ray´s communism-breeded values , a.o. among private

businessmen outlived the recent change of an era? ... 153

6.7.3.4 Digest of cognitions on illicit business habits ... 154

6.7.4 Creativity and skill of independent thinking, neglected by state order under

XVII

communism, reassessed under the light of patent application activity in recent

years resp. arrangement of R&D efforts... 154

6.7.5 Paragraph explaining why the author dared to omitt the treatment of Orthodox

faith in Ukraine connected to entrepreneurship characteristics ... 159

6.8 Verification of hypothesis 5 and brief comparison of interdependences between

national values and entrepreneurship in Poland and Ukraine ... 160

Conclusion ... 161

Annex ... XXIII

List of paper and report references ... LXVI

Directory of book-based sources ... VC

Registry of online sources ... CIII

Owiadzenie ... CIXX

XIX

Registry of tables

tab. 1: Initial conditions of the diverse blocks of former and present socialist countries in

connection to level of development, economic resources and growth ... 7

tab. 2: Prospectives of CEEC`s convergence in terms of GDP to OECD countries ... 8

tab. 3: Export performance of the Polish plan economy towards the Soviet Union ... 14

tab. 4: Comparison of prices in exports allocated to the Soviet Union with prices reigning on third

markets: Poland, 1989 ... 15

tab. 5: Assumptions on the outcome of the Soviet Trade Shock based on several macoeconomic

effects

... 15

tab. 6: Development of real GDP in Central and Eastern Europe ... 18

tab. 7: Prediction of long-term growth and prosperity within the conglomerate of CEEC ... 20

tab. 8: Macroeconomic key data of the Polish economy for the end of the 1990 ... 23

tab. 9: Totalizing result sheet of Orth`s and Koenig`s variance test on the chosen emotive states

significance connected to the sample participants` exposition to the model-like FMCG

apples and mineral water ... 82

tab. 10: Scores for Inglehart`s bipolar value dimensions for the accession states of the 2004 and

2007 enlargement rounds, data stated for 1999 ... 88

tab. 11: Illustrations the new thresholds and requirements of characteristics for SME adopted by

the European Commission in January 1

, 2005 ... 109

tab. 12: Wenneker`s at al. correlation matrix as preparative for the regression model on direct and

indirect influences of UA on Business Ownership ... 132

tab. 13: The rate of Business Ownership regressed by uncertainty avoidance and a selection of

other, socio-economic indirect variables as direct factor of impact ... 133

tab. 14: Representation of regression results (direct) for the three temporal samples used ... 133

tab. 15: Corresponding regression on BO rate with uncertainty avoidance as indirect factor and the

addition of suitable year dummies ... 134

tab. 16: Representation of regression results (indirect) for the three temporal samples used ... 134

tab. 17: Correlation matrix of the whole set of dependent (present and potential self-employment)

and independent variables (Freytag and Thurik) ... 135

tab. 18: The influence of a series of culturally related variables on the preference for

entrepreneurship and factive entrepreneurship in the 25 EU member states and the US .. 135

tab. 19: Compilation of private households` inventory after the breakdown of communism ... 141

tab. 20: Influence of socio-cultural factors on the existence and if so scope of land and real estate

property in CEEC during 40 years of communist era observed ... 141

tab. 21:Balance sheet of structural reforms in 5 CEEC with accent on the GDP share of Ukraine`s

private sector ... 148

tab. 22: Inventive power of Ukrainian citizens, sufferably expressed by the ratio of number of

patent propositions and variants of specification of aggregated economic yield ... 148

tab. 23: Numeric incidence of Ukrainian and British companies in different strata determined by

the scope of employees ... 155

Index of figures

fig. 1: Matrix representation of CEEC´s points of departure for economic transition ... 7

fig. 2: Diagram of Van de Mortel`s three transition stages with stress on possible two-way

development

... 10

fig. 3: Estimated time accomplishing reforms concerning state intitutions, economic structure and

property rights ... 10

fig. 4: The Cultural Iceberg model as depiction of overt and covert traits of NC ... 35

fig. 5: Abraham Maslow`s original five-level pyramid of human needs (simplified depiction) ... 69

fig .6: Norwood`s perfection of Maslow`s basic BHN model by the storey "spirituality" ... 69

fig. 7: Seven-level variant of Maslow`s hierarchy of human needs, extention by cognitive and

aesthetic components ... 69

fig. 8: Hertnon`s Theory of Universal Human Needs Matrix arrangement ... 72

fig. 9: Hertnon`s and Ten Berge`s evolution of the Universal Human Needs Model as nautilus ... 72

depiction

fig. 10: Analytical needs and desires ... 74

fig. 11: Emotional needs and desires ... 74

fig. 12: Physical needs and desires ... 74

fig. 13: Well-being level needs and desires ... 74

fig. 14: Conceptual scheme of connections between personal and social values, diverse human need

categories and customer behaviour ... 75

fig. 15: Conceptual diagram of selected emotions aroused by advertising, the consumption incentive

as soon as mental procedures as "black box" and advertisement attitude as upstream

component

... 82

XXI

figs. 16 and 17: Shopping trends and purchase behaviour product features, shopping frequency,

segmentation into social groups ... 88

fig. 18: Prevalence of and loyalty to branded, low involvement convenience goods ... 88

fig. 19: Questionaire concerning diverse properties/advantages of branded convenience goods ... 88

fig. 20: Survey candidates being seriously involved in preparatifs for starting up, displayed by

activity status and gender ... 115

fig. 21: Level of EU citizens` involvement in business foundation, displayed function to country of

origine (average of 2001-2004) ... 115

fig. 22: Percentage of self-employed who started up either as act of necessity, out of opportunity or

for other reasons (OECD countries plus Croatia and Slovenia) ... 115

fig. 23: Ratio of opportunity and constraint as ignition for BO (OECD countries plus Croatia and

Slovenia) ... 115

fig. 24: Percentage of persons attributable to certain status of work to envisage the possibility to

open up a company within the next term ... 115

fig. 25: Rate of positive evaluation of oneself`s business skills function to age ... 117

fig. 26: Rate of positive evaluation of oneself`s business skills according to activity status ... 117

fig. 27: Rate of positive evaluation of oneself`s business skills depending on the founded business`

lifecycle ... 117

fig. 28: Rate of positive evaluation of oneself`s business skills related to level of development of

Polish governmental districts ... 117

fig. 29: Demographic distribution in Ukraine and Russia for 2003 according to age cohorts ... 122

figs. 30 and 31: Evolution of the demographic structure in Ukraine and Russia a) in 2025 and b) in

2050 (prediction) ... 122

fig. 32: Business environment in Poland and Ukraine in 2002, average score by dimension and

country on a scale of 1 (minor obstacle) to 4 (major obstacle) ... 138

fig. 33: Sources of financial support tapped by Polish private business founders ... 141

fig. 34: Amplour of decisions of self-sufficience, reliance on state support and a miscellaneous

approach alongside dimensions of personnel extensiveness ... 154

XXIII

List of abbreviations:

ANOVA analysis - Analysis of Variance

B2B Business to Business

B2C Business to Customer

BCI Business Competitiveness Index

BCR Brand Concentration Ratio

BHN Basic Human Needs

BO- Business Ownership

B-V-A system belief-value-attitude system

B-V-A-N system belief-value-attitude-need system

CC Corporate Culture

CEEB Central and Eastern European and Baltic Countries

CEC Central European Country

CEEC - Central and Eastern European Countries

CIS Community of Independent States

CMEA/COMECON Council for Mutual Economic Aid

CPI customer price index

c.p. - ceteris paribus

CPSU Communist Party of the Soviet Union

CR Concentration Ratio

CSSR Czechoslovak Socialist Republic

EBRD European Bank of Reconstruction and Development

EN - entrepreneurship

EoS Economies of Scale

EU European Union

FDI Foreign Direct Investment

FMCG Fast-Moving Consumer Goods

FSU - Former Soviet Union

GDP Gross Domestic Product

GNP Gross National Product

GCI - Growth Competitive Index

GEM Global Entrepreneurship Monitor

GLS Generalized Least Square

XXIV

IDV individuality/collectivity index

IVCO - individualism/collectivism

L-G-B-T Lesbian-Gay-Bisexual-Transgender issue

LTO long-term orientation

MAFE masculinity/femininity

MAS masculinity/femininity index

MTV Music Television

NC national culture

NI national identity

NV national values

OSL - Ordinary Least Squares (regression)

pd product innovation

PD power distance

PDI power distance index

Pl and Uk Poland and Ukraine

pz process innovation

R&D Research and Development

SME Small and Medium-sized Enterprise

SSR - Soviet Socialist Republic

TAI - Technology Achievement Index

ToT - terms-of-trade

UA uncertainty avoidance

UAH Ukrainian Hrvynia

UAI uncertainty avoidance index

USSR Union of Soviet Socialist Republics

Introduction

The stepwise and finally sudden collapse of the Soviet Union and its sphere of influence which

befell between 1989 and 1991 retraced the political and economic map of Europe thoroughly and

probably triggered the largest-scale transformation process of modern times immense both in

terms of territory, shattering and then restructuring of political and military balance kept during the

Cold War period and several levels of catching up in perspective of future EU admission and EI

(European Integration). In the course of the past 15 years, the transition process of CEEC (Central

and Eastern European Countries) has been elucidated under diverse aspects of this newly created

economic section as the following sketchy literary glimpse shall clarify:

Rodrik,

Roland & Verdier

and Kornai

dealt with the reasons of the Soviet trade shock resp. the

consequences of the sharp contraction of the national production graph, Van Mortelen

and Aidis &

Sauka

presented and discussed models on discernible stages of transition, attributed features of

structural and regulatory politics to the single levels and reflected on the possible time of perfection

of that transitory period.

In addition, Aghion & Blanchard

as well as Gaddy & Ickes

focussed on

the speed of transition in the context of the highly controversially discussed approaches of

gradualism versus shock therapy (Big Bang)

and De Melo et al.

examined the impact of disparate

initial conditions on the transformation trajectory. Finally, Fischer & Sahay,

Dabrowski et al.

and Wyplosz

drew a balance of the achievements and imperfections discernible after twice 11

resp. 10 years of transition process whereas Licht et al.

assessed the progress which CEEC had

D. Rodrik, 1992, Making sense of the Soviet Trade Shock in Eastern Europe : A Framework and some

Estimates, National Bureau of Economic Research, Cambridge, Massachusetts.

G. Roland and T. Verdier, 1997, Transition and the Output Fall, University of Michigan Business School, Ann

Arbor, US.

J. Kornai, 1990, The Road to a Free Economy, Shifting from a Socialist System: The Example of Hungary,

W.W. Norton publishing, New York.

E. Van de Mortel, 2002, An Institutional Approach to Transition Processes, Ashgate, Aldershot, Hampshire.

R. Aidis and A. Sauka, 2005, Entrepreneurship in a Changing Environment: Analyzing the Impact of

Transition Stages on SME Development, ECSB, Turku, Finland.

R. Aidis, 2005, Entrepreneurship in Transition Countries: A Review, SSEES University College, London.

P. Aghion and O.J. Blanchard, 1994, On the Speed of Transition in Central Europe, NBER Macroeconomicy

Annual, MIT Press, Cambridge, Massachusetts, US.

C. Gaddy and B. W. Ickes, 2002, Russia`s Virtual Economy, Bookings Institution Press., Washington D.C.

V. Popov, 2006, Shock Therapy versus Gradualism Reconsidered: Lessond from Transition economies after

15 Years of Reforms, New Economic School, Moscow and Institute of European and Russian Studies, Carleton

University, Ottawa, Canada.

M. De Melo, C. Denizer, A. Gelb and S. Tenev, 1997, Circumstance and Choice: The Role of Initial

Conditions and Policies in Transition Economies, The World Bank Development Research Group, Washington D.C.

11 S. Fischer and R. Sahay, 2000, The Transition Economies after ten Years, NBER, Cambridge, Massachusetts, US.

M. Dabrowski, S. Gomulka and J. Rostowski, 2000, Whence Reform? A Critique of the Stiglitz Perspective,

London School of Economics and Political Science.

C. Wyplosz, 1999, Ten Years of Transformation: Macroeconomic Lessons, Graduate Institute of International

Studies, Geneva, and CEPR, London.

A.N. Licht, C. Goldschmidt and S.H. Schwartz, 2003, Culture Rules: The Foundations of the Rule of Law and

made within the first 12 years of national restructuring in connection to a functioning juridical

apparatus and governmental institutions. This enumeration chain's of papers last link differs from

the residual links since it tries to effect the bridging between the description of tangible measures

executed in economic politics and elements of NC (National Culture) as upstream action catalysts,

namely by regressing rule of law by selected components of Schwartz`s BHV (Basic Human Value)

nomenclature.

Joyously, Licht et al. apparently recognized that the Hofstede model of NC

dimensions

seldom is applicable to more than either an as introduction into issues of NC or for the

treatment of fairly superficial aspects of culture a cognition which unfortunately cannot be

attributed to lots of other colleagues which tried to cross-over aspects of transformation research

with theories of cultural studies. As exemplary cases, the following publications shall be

mentioned: Hauke`s study on knowledge transmission a.o. (among others) in Polish enterprises

where NC foundations are after all slightly elucidated by the Hofstede-like approaches prepared by

Trompenaars & Hampden-Turner;

Zadoroshna besides feeding her analyses with social and

local "soft" variables - seemingly relied in her research paper about a.o. cultural influence on FDI

(Foreign Direct Investments) decisions completely on this Dutch scholar's renowned as contested

NC characteristics

probably thanks to the relatively large country pervasion and comfortable

comparability of dimension values;

eventually Bouncken`s et. al examination of motives of BO

(Business Ownership) in Poland and Germany,

which in fact provides an interesting comparison

between countries within and off transition, but backs its contemplation merely on three dimensions

of Hofstede`s model, omitting UA (uncertainty avoidance).

It is exactly at this limited application of instruments from the in fact spacious toolbox provided by

the generic and partial aspect of NC where this work is meant to be planted. The author's incentive

to choose this topic was not only to show how "soft" cultural factors influence economic activity as

"éminence grise", but above all to refine the examination of NC influence on the CEEC transition

Other Norms of Governance, University of Michigan Business School, Ann Arbor, US.

15 ibid.p. 26.

S.H. Schwartz, 1994, Universals in the Content and Structure of Values: Theoretical Advances and Empirical

Tests in 20 Countries, Advances in Experimental Social Psychology, New York.

G. Hofstede, 2001, Culture`s Consequences: Comparing Values, Behaviours, Institutions and Organisations

Across Nations", B&T publishing house, Beijing, second edition.

A. Hauke, 2006, Impact of Cultural Differences on Knowledge Transfer in British, Hungarian and Polish

Enterprises, Fondazione Eni enrico Mattei, Milan and University of Economics, Pozna.

F. Trompenaars and C. Hampden- Turner, 2002, Siedem wymiarów kultury znaczenie rónic kulturowych

wdzialalnoci gospodarczej (Riding the waves of culture- understanding cultural diversity in business), Oficyna

Wydawnicza, Kraków.

20 B. McSweeney, 2003, Is National Culture a Myth?, Royal Holloway School of Management, London.

O. Zadoroszna, 2006, The impact of Cultural and Social Biases on Investment Decisions and Trade in the

context of attracting FDI to particular countries, Annual EERC/EROC Research Conference, Kiev.

22 G. Hofstede, 2007, Cultural Dimensions, ITIM, Stockholm, URL:

www.geert-hofstede.com

(11.08.2007).

R.B. Bouncken, J. Zagvodzina, A. Golze and A. Mrozewska, 2006, A Comparative Study of Cultural

Influences on Intentions to found a New Venture in Germany and Poland, CEROM, Montpellier, France.

process by discussing less cited, maybe more useful theoretical propositions. Subsequently, the NC

complex is broken down on cultural values and BHN (Basic Human Needs) before transferring it

to two especially adequate matters of economic science.

In addition, the graduand was decided to dare the cross-over of two fields of research which

appealed to the author due to his speciality of cross-cultural studies resp. of a sojourn as exchange

student in Poland, accompanied by respective occupation with issues of transformation in CEEC.

The major objective of this work is besides economic considerations to estimate how far Poland

and Ukraine have grown on the social and cultural EI path layer of inter-country convergence

which is assumedly even more difficult to achieve than consensus in an economic and political state

union

- what are the causes of the present state of evolution and what inferences for future

transformations steps can be deducted thereof.

In terms of more specific terms of reference, so-to-speak research question antedating each chapter

of the corpus, the author posed the following hypothesis:

In the section about national identities, the embracing question is the following, since it is suspected

that the course of history of both nations observed moulded the tangible layers of NC and thus

indirectly the development of mental EU convergence:

Hypothesis 1: Design and intensity of national identity contribute to Polish and Ukrainian

aggregated opinion about their home countries` role on the European theatre and general

emotions about the contact to Europe

In order to be able to proceed solidly on the territory of BHN, the frame of research is meant to be

solidified by retrieving answers to whether the very existence of needs varies across nations or

merely their degree of intensity by claiming the following fact:

Hypothesis 2: The scan of advertising in Poland (Pl) and Ukraine (Uk) reveals types of human

needs which are not part in commonly cited BHN theories; in other words: human needs are

culture-specific instead of universal.

The structure and intensity of BHN like in the case of other features alongside the N-B-V-A

(Needs-Beliefs-Values-Attitudes) axis are a fairly difficult entity to seize; what may be observed

and thus measured at utmost is when the bearer satisfies a need by an overt action, e.g. when he

buys soap to satisfy his needs of body spruceness. However, purchase decisions are decided by so

many factors, e.g. branding, packaging, CRM (Customer Relations Management) etc. that it seems

I. Rojsek, 2000, A comparison of the purchasing and consumption behaviour of Slovenian and other Eastern

European consumers , International Marketing Review, Bingley, UK, p. 510.

25 S. Marker, 2003, Unmet Human Needs, op. cit.

more rewarding to observe what conditions of internal tension are activated by advertising as

intermediate entity and possible incentive of acquiring the item promoted.

Hypothesis 3: Advertising of fast-moving resp. durable consumer goods delivers indications

on single elements of Poles` and Ukrainians` human need structure

Experts of transformations studies commonly consider a brisk small-business sector and salubrious

entrepreneurial spirit as high-impact fuel for economic growth. Given that all economic subjects,

ergo self-employed as social subdivision as well, absorbed their macroculture´s body of thought and

finally economic behaviour, the main point of interest of the last chapter is:

Hypothesis 4: Entrepreneurial motivation and the founding rate as well as design of Small

and Medium-Sized enterprises (SME) are influenced by the set of national values prevailing

in the Polish and Ukrainian society

Concerning methodology and approach, it shall be mentioned that the thesis is backed on secondary

data resp. that the initial half provides an introduction into the topics of transition and NC is given

while in the main section, three issues are theoretically handled, then subsumed on both countries

separately; afterwards, the outcomes are compared and the findings digested with regard of the

target countries` transition process.

As for the agenda provided for the two following main parts, the proceeding will be roughly

designed as follows:

In the first chapter, general particularities, e.g. content and length, of transition phases in CEEC are

discussed on the basis of two stage models elaborated by the EBRD (European Bank of

Reconstruction and Development)

and Van den Mortel

. In addition, macroeconomic benchmark

data are briefly presented to round up the economic founding of the thesis.

In chapter 2, the complex of culture is narrowed down on NC by effecting a literature review about

definitions like Cateora`s and Ghauri`s

, an extensive discussion of classic models like

Hofstede`s,

Trompenaars`

or Hall`s

and a fugitive outlook on ulterior suggestions like

26 European Bank of Reconstruction and Development, 1997, Transition Report 1997, London.

E. Van de Mortel, 2002, Institutions - Transition Processes, op. cit. p. 23.

P.R. Cateora and P. N. Ghauri, 2000, International Marketing -European Edition, McGraw-Hill publishing

Company, London, 3rd edition, pp. 109-116.

G. and G.J. Hofstede, 2004, Cultures and Organisations: Software of the Mind, McGraw-Hill Professional,

Bemont, California, US, pp. 39-240.

C. Hampden-Turner and F. Trompenaars, 1997, Riding the Waves of Culture: Understanding Diversity in

Global Business, McGraw-Hill publishing, Bemont, California, US, second edition, pp. 4-10.

E.T. Hall, 1990, The Hidden Dimension, Anchor publishing house, Jacksonville, Florida, pp. 1-20.

Throsby`s thoughts on cultural capital.

Chapter 3 eventually extracts dimensions of the deployed model sample which are expected to suit

the corpus` observations. In this intention, the selected NC characteristics are assorted and digested

into four overall entities mainly meant as instruments for ulterior research due to problems of

data procurement.

The corpus begins with chapter 4, which deals with the development of Polish and Ukrainian NI

(National identity) in the course of history, the impact of communist body of thought and life under

real socialism thereon and repercussions of the detected NI structure on the nations` position

towards the EU and ingoing transition.

The first section of chapter 5 provides a theoretical basis for the BHN concept, though.

Afterwards, suitable model elements are applied in the approach to scan advertising productions

published in the post-socialist era in the aim to examine whether BHN are universal or culture-

biased resp. to draw a sketch of local BHN activation levels and contingently detect changes therein

since the collapse of the East Block.

The thesis ends with the transfer of Dyczewski`s resp. Rays NV listing to the question how SME

(Small and Medium-Sized enterprises) scope and structure, entrepreneurial behaviour and the start-

up process are influenced by the central element of the B-V-A (Beliefs-Values-Attitude)

continuum.

After the common theoretical entering, the accent is laid on attachment to family

surroundings in Poland resp, the "foul rules and views of existence" in Ukraine. Key readings for

this section were the GEM (Global Entrepreneurship Monitor) Report for Poland

resp. papers by

Dixon & Polyakov

resp. Senchuk & Yacoub

for Ukraine.

D. Throsby, 2005, On the Sustainability of Cultural Capital, Macquarie University, Sydney.

133

R. Culatta, Richard and S.A. Goldberg, 1995, Stuttering therapy. An integrated approach to theory and

practice, Allyn and Bacon publishing, Boston, p. 111.

K. Baclawski, M. Koczerga and P. Zbierowski, 2005, Studium przedsibiorczoci w Polsce w roku 2004,

Global Entrepreneurship Monitor, Pozna, Poland.

D.F. Dixon and E.V. Polyakov, 1998, The Path to Private Business in the USSR, Business and Economic

History, Amsterdam

M. Yacoub and B. Senchuk, 2000, An IF Survey of Ukrainian Small Enterprises, The World Bank Group,

Washington D.C. and IFC, country section Ukraine, Kiev.

Chapter 1

The role of Poland and Ukraine in the Council for Mutual Economic Aid

(CMEA) and their position during its breakdown

1.1 Introduction to manifold transition CEEC matters : definitions, stage models, end point of

transition

Prior to immersing into the distinct circumstances of the transformation process of Pl and Uk, it

seems opportune to briefly review the relevant literature on what transition from a centrally planned

to a market economy actually means and to examine models which clarify the chronological and

above all semantic order of transition into a poly-phase continuum.

1.1.1 Overview on definitions of the transformation issue

A coarse, general definition of transition is delivered by the EBRD, saying that the task of political

and economic reorientation in post-socialist countries is primordially about adapting the totality of

economic, financial and legal institutions in the former CMEA region, principally state-managed

ones, since the overwhelming majority of respective facilities were not kept in private hands

- to

the rules of game of market economy

: a.o. demand-site determined generation of goods and

services, perceptive of rents both for suppliers and consumers, stimulation for self-managing

owners to gain a competitive advantage, e.g. through innovation.

In addition, the EBRD thematic

report designates the process of transition both as desired final state, but also as end in itself.

Here, the diplomat disagrees on the first opinion, reasoning that the ultimate goal of formerly

communist countries should after all be to catch up at least the EU-15 average in political and

economic development. However, the second statement is less controversial since it can be affirmed

that during this change in practically all domains of Poles` and Ukrainians` existence, both peoples

have the chance to see its identity reflected in the mirror of constant comparison to Western

neighbours and "brother countries" in transition.

Institute for Economic Research and Policy Consulting, 2007, Statistics of Ukraine`s Economy; Historical

Data 1991-2001, Kiev, table 8.3 A, URL:

ier.org.ua/tables

(06.04.2007).

38 European Bank of Reconstruction and Development, 1994, Transition Report , London, p. 3

R. Aidis and A. Sauka, 2006, EntrepreneurshipEnvironment: Analyzing the Impact of Transition Stages on

SME Development, European Council for Small Businesses and EN (ECSB): second Inter-RENT Online Publication, p.

40 European Bank of Reconstruction and Development, 1994, Transition Report , op. cit.

1.1.2 Epitome of the scholars` dispute on the significance of disparate initial conditions

Concerning the significance of different initial conditions predominantly the cleavage between

CIS (Community of Independent States) states and former satellites of the SU

expressed a.o. by

degree of technical progress and social achievements, economic hold-up towards the FSU (former

Soviet Union), macroeconomic imbalances, time of affiliation to the CMEA block, negative

asymmetric shocks of the aggregated production function like social turmoils, state of institutions

and the nature of relations to the EU.

It is particularly the last enumeration link which is likely to

gain in importance function to the progression of the transformation process and might serve as not

unessential explanation why Poland became a member of the EU in 2004 whereas in the case of

Ukraine, not even serious accession negotiations have taken place so far.

< figure 1 about here >

Thus, whereas the characteristics of initial conditions can be figured out in a rather straightforward

way and their existence is largely confirmed in literature, economists do not attribute unanimously

an importance to these factors which may cause path diversions between the transforming CEEC.

For instance, Merlevede claims that the findings effected by de Melo

and other research

colleagues concerning the impact of manifold inequalities after the collapse of the East Bloc

certainly influenced a transition country's pace and quality of development, but that negative

economic and political conditions are gradually levelled by means of appropriate stabilisation

politics.

< table 1 about here >

For the present work, this scholarly dispute is of inferior significance because most of the features

of disparity in initial conditions which are commonly cited refer to macroeconomic facts and lie

consequently astray of a view on CEE integration based on cross-cultural studies part the status

gap of Pl and Uk in terms of relations to the EU.

1.1.3 Revising literature in quest of accounts of transformation models

J.F. Linn, 2004, Economic (Dis)Integretion Matters: The Soviet Collapse Revisited,Transition in the CIS:

Achievements and Challenges, Academy for National Economy, Moscow, p. 9.

42 ibid. p. 2.

I. Burakovski, L. Vinhas de Souza, R. Schweickert, V. Movchan and O. Bilan, 2005, Ukraine: «Sandwiched»

between the European Union and Russia, GDN, New Dehli, India, p. 2.

M. De Melo, C. Denizer, A. Gelb and S. Tenev, 1997, Initial Conditions - Transition Economies, op. cit. table

B. Merlevede, 2000, Growth in transition economies: A review of the literature, University of Antwerp,

abstract and p. 23

Now that some light has been shed on the nature of transition in post-socialist countries and on the

meaning of disparate initial conditions, the moment is appropriate to review the corresponding

literature in the purpose to retrieve clearance on what steps of transition can be distinguished and

what are its characteristics. Such a compilation of chronological and semantic models may be

helpful for the problem to discern on which stage of economic and institutional transition Pl and Uk

probably are. In fact, findings on overt and thus directly measurable features of transition

constitutes a basis for the exploration of most often covert, upstream influences of NC on this

process.

1.1.3.1 Approaches based on GDP growth

During the research of publications, one soon encounters approaches like the change of GDP (Gross

Domestic Product), studies on the influence of institutional change on economic development or

corruption perceived by inhabitants of CEEC, but these proposals have two severe drawbacks:

Generally, all solutions are based on only one indicator of transition and thus lack of substance if

studied on their own; furthermore, GDP as independent variable is ambiguous because it is not

sufficient to consult the pure numeric modification of GDP, but one should also study the error

variables which distort the results, e.g. massive aid in the case of Albania.

< table 2 about here >

The approaches of corruption and institutional change seem more promising, especially the latter

one in which Reiser found out strong correlation between institutional reforms and economic

upturn;

however they are not utilizable for the purpose to examine transitional stages because both

models omit the important early phase of transition, since their time row begins in 1995 resp. 1993.

1.1.3.2 A stepwise model of the transformation process presented by EBRD

In contrast, the EBRD offers a more comprehensive, diversified model on the single phases of

transitions and its indicators, departing from a two-step evolution path:

In the years following the collapse of the central planning system, a formal economic and

institutional framework has to be established, i.e. privatisation (small-scale) , liberalisation of

economic activities (market operation according to the free game of supply and demand forces,

quasi free interior and foreign trade) and rebalancing macroeconomic frame conditions.

One could

baptise these measures static or structural phase of transition.

R. Aidis and A. Sauka, 2006, Entrrepreneurship changing environment... , op. cit., appendix 6.

47 M. Raiser, M. Di Tommaso and M. Weeks, 2001, The measurement and determinants of

institutional change: Evidence from transition economies, EBRD working paper series, London, p. 1.

48 European Bank of Reconstruction and Development, 1997, Transition Report 1997, op. cit.

In the second phase, the achievements of the initial transition years are extended in order to thrust

the drive of economic growth. Major challenges are in this respect the accomplishment of

privatisation (large-scale), structural and organisational improvement of company output,

installation and implementation of a reasonable competition policy, establishment of modern

infrastructure and reforms of the financial sector.

Given that all efforts of this step comprise market and institutional circumstances in the purpose to

accelerate the development path to a stable market economy,

this period may be called dynamic or

deepening phase of transition.

A striking comment Aidis and Sauka add to the compilation of particularities of the second phase is

that institutional reforms and the liberalisation of markets intends to change the behaviour of

economic subjects in CEEC.

A first attempt of interpretation would be that in the first years after

the overthrow, people were firstly excessively occupied by relaunching vital domains of private and

public life and were still considerably biased by socialist-style economic and institutional processes

whereas in the era after the country's stabilisation a change of mindset began.

For the present thesis, the mentioning of changes in behaviour within the post-socialist societies

constitute a crucial part of the EBRD transition process model because behaviour represents the

most obvious, tangible element of NC according to the N-B-V-A continuum

, the Cultural Iceberg

model

and other depictions of cultural levels. Thus, this elaboration may serve as a gateway

towards the inner layers of Polish and Ukrainian NC.

The EBRD solution already delivers important facts on the chronological process of transition, yet

it is rather roughly subdivided into only two steps and lacks a.o. of assumptions of how long the

single stages of transitions are likely to last.

1.1.3.3 Van de Mortel`s three-stage depiction ode transformation process

Van de Mortel`s three-step models remedies these imperfections by arguing that a short additional

phase precedes the process of economic and institutional stabilisation and dynamics (grouped on

one level). According to Van den Mortel, transformation is already determined by the question if a

country can decide its strategy of reform before the overthrow or if its development path is imposed

by the sudden breakdown of the old system. If the country was not surprised by the changes, the

selection of an appropriate transformation strategy can only succeed if the reigning political

structures allow this step a promise which is seldom fulfilled since the political leaders of the

49 ibid.

R. Aidis and A. Suka, 2006, Entrepreneurship changing environment, op. cit., p. 9-10

251

R. Culatta, Richard and S.A. Goldberg, 1995, Stuttering therapy..., op. cit.

52 G.R. Weaver , 1993, Contrasting and Comparing Cultures, University Press of Mississippi, p. 160.

incumbent apparatus are usually all but inclined to think about the country´s future after the system

they are involved in will have disappeared. The first stage of transition is the more likely to be

accomplished the huger past experience with systemic changes are within a certain country. Thus,

Van de Mortel seems to be part of the camp of economists who attribute great importance to

differences in starting conditions, in particular NI elements like language and values compared to

the cultural sphere transition is meant to head for in our case EU-27 conglomerate.

The first transition stage is normally short and ends when the concrete reform process of legislation

and restructuring begins.

The procedures which takes place in the second transition stage are roughly congruent with the ones

in the EBRD compilation, yet they differ in the perception of privatisation and the focus on

behaviour. In fact, Van de Mortel poses a demand on the quality of disintegration of formerly state-

owned companies which appears like a cue for contemplations on EN and values systems treated in

the last chapter of this work when she argues that companies have to be transferred to the private

hand in the way that the new proprietors are instructed in decision-making, i.e. in behaving like true

businessmen.

According to Van de Mortel, the troubling consequence of insufficient deployment of legal and

economic framework is the regression to the initial stage so-to-speak a countrywide penalty lap.

Moreover, this model stresses the change of corporate behaviour, personal attitudes and cultural

traits as part of the overall stabilisation of the country's economy.

This last comment is certainly interesting, however, it remains to be explored partly in chapters 5

and 6 below - whether the NC for post-socialist countries will be so adaptive

that it will change in

fact within one single transition stage - albeit a long one - , even until the supposed end of

transition anyway.

In the final stage of transition, the institutional framework is established and economic subjects tend

to optimize their business behaviour in order to gain maximum output. Unlike the EBDR model,

Van de Mortel includes at this stage the risk a transition country bears to relegate to the second

level when the population does not achieve the expected level of wealth. Yet, the most important

comment connected to this thesis is that transition can only be completed successfully if the formal

and informal institutional conditions are well coordinated. In the attempt to decipher informal

factors, Aidis` and Sauka`s interpretation is adopted, saying that the term comprises cultural

E. Van de Mortel, 2002, Institutions - Transition Processes, op. cit. p. 23

L.A. Samovar, E. Porter and L.A. Stefani, 1998, Communication between Cultures A Reader, Wadsworth

Company, Bemont, California, p. 47.

elements, especially values and attitudes.

< figure 2 about here >

All in all, Van de Mortel`s solution is more refined than the EBRD approach and gives the

impression to suit better for the general issue of transition and NC as for subtopics like EN.

However, neither of the contributions delivers concrete estimations on how many years the single

measures of reforming state institutions, restructuring markets and redistribution of property rights

will last. This void is coarsely stuffed by Foley et al.,

who have established a time-scale and bar

graphs depicting the duration of major matters of change on the macro level.

< figure 3 about here >

To conclude the passage about nature and process of the transition process, critical voices shall not

be forsaken the opportunity to contribute to the discussion. Scholars like Aidis

and Gelb

find a

severe drawback of common transition stage models that the end of the process is either not

described at all or definitions are kept very vaguely, e.g. the modulation of the accomplishment of

transition to an "advanced market economy"

1.1.4 A stub of controverse on the possible endpoint of CEEC transition

When it comes to the temporal end point of transition, not all researchers are pessimistically

disposed. In fact, Dabrowski et al. deliberate that the transition from communism must be

completed because in expert circles, its course was being analysed like the one of a historical era.

However, Dabrowski et al. exclude explicitly the accomplishment of capitalist structures in CEEC,

but only the assortment into countries which probably catch up Western Europe in medium term

and those which dropped out of the convergence process.

Aidis goes as far to deliberate that since

all eight CEE members of the EU have installed this market system, the transition process is already

over.

However, it should be reflected here that Aidis is not serious to assume that the concerned

CEEC have tackled the transformation process en bloc, but that she rather used this overstated

formulation to underline that the solutions offered in literature are short-sighted and linked to

isolated variables like market structure of GDP growth which are torn out of the complex construct

55 R. Aidis and A. Sauka, 2006, Entrepreneurship changing environment, op. cit., p. 12.

P. Foley, J. Hutchinson, A. Kondej and J. Mueller, 1996, Economic development in Poland: a local

perspective, European Business Review, Bingley, UK, p. 25.

57 R. Aidis, 2005, Entrepreneurship - Transition Countries, op. cit. p. 3.

A. Gelb, 1999, The End of Transition?, chapter one in A. Brown, When is Transition Over?, W.E Upjohn

Institute for Employment Research, Kalamazoo, Michigan, pp. 39-40.

M. Dabrowski, S. Gomulka and J. Rostowski, 2000, Whence Reform? Critique Stiglitz, op. cit. p. 1.

60 R. Aidis, 2005, Entrepreneurship transition, op. cit. p. 39-40.

of economic, social and cultural transformation.

1.2 Economic and general conditions in late communist Poland and Ukraine, activity of

protest movements in the pre-transition period

In Poland, most people were not very fond of losing their independence once again after the three

Polish partitions. So, it was already in 1956 that workers protested in Pozna against the shortages

of provision with basic goods of everyday life. These riots were certainly not fruitful, but they can

be considered as starting point of the workers` protests on the shipyards of Gdask in 1970

and

the foundation of the Solidarity movement in 1980. Until the last date, the objective of the striking

groups was not to abolish the whole system, but to change it into a more liberal, market-orientated

one

. In fact, the preliminary conditions would have been relatively advantageous in Poland, since

the agricultural sector was never completely collectivized, i.e. most farmers remained proprietors of

their land in 1989, 76 % of he cultivable surface were exploited by some 2.7 million private

farms, which to over 90 % comprised less than 15 hectares of farmland

. Moreover, a small

private market survived also in communist times.

A powerful factor which made it difficult for the Polish communist party to install and maintain its

reign was firm and widespread Catholicism, a characteristic in people's belief system which not fit

satisfactorily with the atheist socialist world view. In 1979, the Polish got an organ which spread his

anticommunist posture all over the World Karol Wojtyla who became then pope John Paul II.

This clergymen hardly let anything unattempted to call his compatriots, but also people in other

communist countries to stand up against the regime

In fact, religion is a microculture which seems to exert a great influence on Poles in past and

present. That is why it should be interesting and probably fruitful for our examination of Poland's

transition towards capitalism to analyse how faith determines the development of certain branches

of the economy in special, but also the countrywide activity in total, for instance indirectly through

61 Van de Mortel, 2002, Institutions transition process, op. cit. p. 23.

N. Birnbaum, 2005, Remember Solidarity! Poland´s journey to democracy, open Democracy, London,

paragraphs 1 and 2, URL:

www.opendemocracy.net/democracy-protest/polish_democracy_2782.jsp

(02.25.2007)

slund, 2002, Building Capitalism The Transformation of the Former Soviet Block, Cambridge

University Press, p. 52.

Cultural Dimensions Poland: Agriculture, URL: www.country-

studies.com/poland/agriculture.html

(03.16. 2007).

B. Sall, 1989, Private entreprises in Poland, The Foundation of Economic Education, The Freeman online

journal series, New York paragraph 4, URL:

www.theadvocates.org/freeman/8905sall.html

(10.12.2007).

P. Polaski, 2006, Pilgrimage of Dignity: Popo John Paul II`s June 1979 Visit to Poland, University of

Richmond, Virginia, US, p. 2.

work ethics, shop closing hours, attitude towards unemployment etc.

Yet, now the moment is apt to return to the display of the overall economic situation over almost

five decades of socialism:

Roughly put, the central planning commissions were eager to control he destiny of economic

progress in the largest scope possible. This is why they fixed prices, i.e. eliminated the free game of

market forces, and adapted wages constantly in order to equalize inflation. Socialist planners´ pride

and economic vision was a powerful industry with huge, autarkic combines which were thought to

profit from considerable EoS (Economies of Scale)

. The first Schumpeter hypothesis about

productivity and efficiency of companies function to large-scale production advantages

consequently hit these bureaucrats` taste exactly yet the disadvantage of huge factory

agglomerations like high transaction costs and x-inefficiencies did not diffuse in their economic

mind. Excessive stress of industry, esp. of branches which extracted natural resources or produced

unfinished goods,

is also translated by the method planning commissions calculated the national

income balance namely not taking into account all performances delivered by the economy, but

only industrial production and the attached services.

Other macroeconomic particularities for CMEA countries were huge gaps between nominal and real

incomes, rising inflation until hyperinflation in Poland and the Soviet Union and high foreign debts

due to bonds used both for investment and consumption. In Poland, these debts reached the number

of almost 41 billion US-dollars a high figure compared to the roughly 53 billions attributed to the

SU.

About anti-governmental protest movements in Ukraine corresponding macroeconomic data will

be treated in subchapter 1.6.2 the odds are to affirm that a strong wish for independence existed

in both parts of Ukraine yet, the eastern part was closer attached to Russia than the West of the

country, many Western Ukrainians speaking Russian. Unlike Poland, the cohorts of the population

missed who could have organized such a large-scale protest movement like Solidarity

72.

The question to be posed is whether it is adequate to speak of one Ukrainian national culture only or

the western and the eastern one, yet here the author dares to simplify reality a bit in order to cohere

to the NC concept and not be entangled in opaque regional diversity requiring more specific

slund, 2002 Building Capitalism Transformation..., op. cit. p. 38.

A. Heertje, 2006, Schumpeter on the Economics of Innovation And the Development of Capitalism, Edward

Elgar publishing, Cheltenham, UK, p. 8.

C. Denizer, 1997, Stabilizaton, Adjustment and Growth Prospects in Transition Economies, The World Bank,

Washington D.C., Policy Research Department, Macroeconomics and Growth Division, p. 7.

slund , 2001, Building Capitalism..., op. cit. p. 35.

ibid. pp. 48-49.

ibid. pp. 62-63.

knowledge to satisfy this matter of fact.

Why should one deal with events which are now over for 15 years and whose roots are set at the

end of World War II? Well, the answer could sound like this: These events are assumedly essential

to understand in what direction our selected countries will develop in the future and which cultural

factors have an effect on this way. An interesting question in this context is for instance whether the

general personal predisposition of Poles and Ukrainians has changed through 40 years of

communist leadership and the clash with Westerners` way of life without "quarantine" phase in

between.

What inferences does it have when state authorities order the population not to think freely and

when this reasoning is shifted to privacy, when basic human needs like free travelling and security

are not guaranteed by the authorities?

Before namely being able to determine the impact of national culture on visible econo-political

processes, it is desirable to have at least a vague concept of how this NC looks like in Pl and Uk.

1.3 The rapid breakdown of a decade-long morbid economic system Soviet trade shock of

1989 - 91

In the respect of starting conditions, the Soviet trade shock, which disturbed the economic structure

of former satellite states in non-conform ways, helps us to draw inferences on the general condition

of these countries by the beginning of the nineties.

Since in the calculations of the planning agencies foreign trade was treated as disruptive factor

73 74

and in consequence only little trade was effected with imperialist (CP propaganda jargon) Western

countries, CMEA members depended considerably on the Soviet Union as far as activities of

foreign trade in vital branches are concerned. For instance, Hungary exported 28% of its

engineering products to the Soviet Union in 1989 and Czechoslovakia 19% in 1988.

At the same time, Poland exported only 11 % of this category of goods to the USSR (Union of

Soviet Socialist Republics) in 1990 an indication of the fact that economic dependency to the

USSR was not identical with all associated nations.

S. Wennekers, R.A. Thurik, A. van Stel and N. Noorderhaven, 2007, Uncertainty Avoidance and the Rate of

Business Ownership Across 21 OECD Countries, 1976-2004, ERIM, Rotterdam, p. 5.

M.K. Goodrich, 1991, Soviet Union: Foreign Trade, Library of Congress: Country Studies - Soviet Union

(Former), Washington D.C., chapter 15, paragraph 1,

URL:

lcweb2.log.gov/cgi-bin/query/r?frd/ctsdy:@field(DOCID+su0391)Library of Congress Call Number:DK17

.S6396 1991,

website consulted on September 25th, 2007

Rodrick 1992, Soviet Trade Shock, op. cit. pp 2 and 36, table 1.2.

< table 3 about here >

In fact, apart of the issue that Poland with its population of 38 million people represented a huger

interior market than e.g. Hungary or the CSSR (Czechoslovak Socialist Republic), this country was

more than its brother states eager to be as independent from the "Big Brother" as possible. After all,

the anticommunist protest movement began as early as in 1956, was pursued in 1980 by the creation

of "solidarno" (solidarity) among Lech Walsa and ended successfully with the liberation and

democratisation of Poland.

In the course of the crisis suffered by the Soviet economy, the GDP in Pl and Uk fell remarkably

by almost 20 % cumulatively in 1990

. This negative shock on the aggregated production function

can be above all explained by three effects: the ToT (terms-of-trade) , the market loss - principally

caused by the introduction of the dollar pricing system and the chute of the transferable rouble into

meaninglessness - and the subsidy removal effect. The result of these phenomena was that products

from those countries even lost in value on Western markets, that purchasing agents in the USSR

bought less goods from its trade partners in eastern Europe and that production sites, which most

often were already in a lamentable state, could not maintain their production in conditions profitable

to a modest degree.

< table 4 about here >

In total, the loss of this negative shock which appeared in 1990/91 is estimated to reach 2.2 billion

$ in Poland. For Ukraine, the consequences of this economic collapse are less clearly discernible

because it did not play the role as satellite state, but was part of the Soviet Union itself. This is why

separate statistics on economic actions in Ukraine before the crumbling of the east block are only

difficultly reconstructible.

< table 5 about here >

1.4 Link between economic growth and uneven initial conditions among CEEC

In order to approach our countries of interest, Pl and Uk, the first step is to divide CEE countries in

the core country of Leninist communism, the FSU itself and the other CMEA members. De Melo et

al. state

that since the fall of the Iron Curtain, these two categories of centrally planned economies

have chosen fairly different paths of economic and political development. According to these

scholars, disparities in the transformation process can, however, at utmost partly be explained by

differences in history and economic situation prevailing around 1990, given that all post-socialist

N. Birnbaum, 2005, Remember Solidarity! ..., open Democracy, London, paragraph 6.

D. Rodrik, 1992, Soviet Trade Shock..., op. cit. p. 45.

M. de Melo, C. Denizer and A. Gelb, 1996, From Plan to Market: Patterns of Transition, The World Bank

Policy Research Department, Washington D.C. p. 25.

countries weathered the communist era in more or less the same intensity and duration, and last but

not least an disparate equipment by natural resources.

What economic phenomena are hidden between these key words, however, and how do they affect

the countries` efforts to become market economies according to the Western ideal?

Well, in terms of disparities in the economic mechanisms, it seems plausible to cite a.o.

macroeconomic distortions like repressed inflation and trade dependence between adjunct states and

the USSR.

In the field of history, the picture of how each single CEE state at the time of the overthrow of

190/91 was shaped by effects which are not directly part of economic actions, but which influenced

the framework of production and trade. For instance, the countries´ adhesion time to CMEA seems

to be a factor with a certain impact on the starting position of each single former COMECON

(Council for Mutual Economic Aid) member. The presumption in this case is that the longer a CEE

country was exposed to the principle of central planning and state ownership, the more run-down

and unproductive the economy is.

Though, according to a synopsis published by de Melo and Gelb, the span of years of CMEA

membership spreads from 41 (Poland) to 47 (Albania and FYR of Montenegro).

By evaluating the

arithmetic average of 43.8 and an estimated standard deviation S of 2.39 years, it becomes evident

that this parameter has a negligible influence on the economic starting situation of CEE countries.

Moreover, the sample contains CMEA members like the CSSR whose economy functioned fairly

well compared to other Warsaw Pact states and adhered to the eastern trade block nearly at the same

time as e.g. Poland whose economy suffered more and more severely from malfunctions. Thus, one

could argue that Polish employees expressed their dissatisfaction with the communist system partly

overtly through the solidarity movement, but also silently by doing work-to-rule and thus using the

economy as a "battlefield" on which the population fought communism.

So, one difference in the transition of Poland and the CSSR was that in the further country, firstly

the economy was morbid and secondly a strong popular movement counting about 10 million

adherents

claimed the abdication of the state apparatus and called for general, democratic

elections which took place in June 1989. The outcome of these growing resistance against

authoritative power was that Solidarity won the elections sovereignly and was allowed to form a

79 M. De Melo, C. Denizer, A. Gelb and S. Tenev,1997, Initial Conditions-Transition Economies, op. cit. p. 2

80 M. de Melo, C. Denizer and A. Gelb, 1997, Initial Conditions..., op. cit. table 2.

81 D.M. Nuti, 1981, The Polish Crisis: Economic Factors and Constraints, Socialist Register, Monmouth, UK, p. 124.

M.J. Rosenfeld, 2007, The Rise and Fall of Solidarity, Robert Morris University, Moon Township,

Pennsylvania, US, URL:

www.rmu.edu/OnTheMove/findoutmore.open_page?iPage=66804&it=&icalledby=umbraco&iattr

(11.01.2007)

coalition government which was presided by Tadeusz Mazowiecki as Prime Minister and Leszek

Balcerowicz, a famous economist, as Minister of Finance and even vice Premier.

The basis of

these early democratic governments was the so-called Balcerowicz Plan envisaging the re-erection

of Polish economy in direction to the system of liberal markets.

In the CSSR, the political leaders were old and tired of bearing the charge of political power over

their country, so the way to a peaceful political change was open and led to the "velvet revolution"

. So, in the CSSR, the end of communism was reached not by a huge protest movement, but above

all by comprehension of the communist leaders and student mass demonstrations in November

1989.

1.5 Gradualism versus Big Bang

As far as the reorganisation of macroeconomic conditions, e.g. the redistribution of property rights,

political leaders and above all economists were unanimous what tasks had to be initiated, and like

with the field of examination concerning number, content and interdependencies of phases of

transition in CEEC as well as institutional reaction thereon,

different theoretical concepts were

developed; yet, scholars split up in two camps in context to the problem how the existing misfits

should be cured.

Radicalists demanded that the old communist structures should be overcome as soon as possible

and desirably in one huge effort, the Big Bang also called shock therapy. Besides the reasoning

that without crucial variables like a hardened budget constraint have to be set up before the

economy is able to begin its trajectory towards market economy

, some representatives seemed to

fear that the former communist political and bureaucratic apparatus regained power in countries

which had experienced "hour zero". So, Balcerowicz

speaks of a "political window of

opportunity" in which firstly the ancient elites are weakened and secondly the population is

A. Åslund, 2002, Building Capitalism - The Transformation of the Former Soviet Block, Cambridge

University Press, p. 53.

Anonymous, 2007, Leszek Balcerowicz-«Plan

Balcerowicza»,URL

:balcerowicz.wirtualia.pl/planbalcerowicza.htm

, (03.23.2007).

ibid. p. 55.

T.G. Ash, 2002, The Polish Revolution: Solidarity, Yale University Press, New Haven, Conneticut, US, 3rd

edition.

E. Hanley and D.J. Treiman, 2003, Did the Transformation to Post-Communism in Eastern Europe Restore

Pre-Communist Property Relations?, CCPR, Los Angeles, US, p. 2.

P. Murrell, 2003, Institutions and Firms in Transition Economies, Kluwer Academics Press, New York, pp. 6-

C. Wyplosz, 1999, Ten Years of Transformation..., op. cit. p. 9.

90 ibid. p. 10.

L. Balcerowicz, 1994, Understanding Postcommunist Transitions, Journal of Democracy, Washington D.C.

pp. 77-86.

prepared to suffer a preliminary worsening of their living situation in the hope of being

recompensed for the deprivations in a near radiant future.

On the other side, gradualists claim in general that it is not only sheerly impossible, but even

dangerous to attack the bunch of economic tasks precipitously. More detailed objections to fast

transformation are a.o. that caretakers do not set about the most urgent problems, but about those

who are solvable most easily and quickly.

Another argument are high economic and social

adjustment costs (capital demolition, uncontrolled unemployment, loss of trust in transformation

process among the population),

discrepancies between requirement of abilities in new jobs and the

qualification status of the existing workforce

, time distortions of measures like abolishing state

subsidies and undesired, difficultly rebalancable effects, e.g. galloping unemployment, and finally

political discomforts (the losers of economic transformation might form coalitions and block the

transition process).

< table 6 about here >

So far general statements of radicalists and gradualists on the speed of transformation.

Though, which direction did the persons in charge of Poland`s and Ukraine`s socio-economic fate

select for their country?

Poland is commonly placed in the category of Big Bang countries,

but this judgement is largely

undifferentiated because whereas Poland e.g. opened itself soon to market economy, installed a

democratic regime, its privatisation rate is regrettably slow.

After one decade of transition, a growing number of economists is no longer certain whether the

gap between Poland as past royal example of successful radicalist reforms and Hungary as

representative of successful gradualism is still remarkably wide. Experience rather teaches us that

both theories are converging because the speed of change is forcedly slowed down resp. speeded

up.

Like in Hungary, political leaders of Ukraine have opted for the gradualist approach of transition,

however it has been implemented in a fairly different and, as it is assumed here and there, faulty

way.

It namely turned out that not few members of the circles of power have an interest of the

D.M. Nuti and R. Portes, 1993, Central Europe: The way forward, Centre for Economic Policy Research.,

London, p. 12

M. Dewatripont, and G. Roland, 1992, Economic Reform and Dynamic Political Constraints, Review of

Economic Studies, Blackwell publishing, Boston, pp. 298.

94 P. Aghion and O.J. Blanchard, 1994, Speed of Transition - Central Europe, pp. 303-307

P. Murrell, 1991, ...Economic Reform of the Centrally Planned Economies, op. cit. pp. 9.

C. Wyplosz, 1999, Ten Years - Transformation..., op. cit. p. 12.

G. Kolodko, 2004, Transition to a market system: Gradualism versus Radicalism, TIGER working papers,

Warsaw, paragraph 1, URL:

10.2139/ssrn.590864

(11.12.2007).

98 ibid.

P.R. Gregory 1999, Ten Years of Transformation, Frankfurt Institute for Transformation Studies,

Ukrainian status quo to be conserved be it because they are corrupt, keen on preventing from

bankruptcy companies they are attached to whatsoever or because they favour the old communist

model of managing people and economy to be maintained. The practical consequences of such

egocentric or backward-turned attitudes are that cost-inefficient enterprises are released of tax

payment as compensation for the deletion of state subsidiaries or that companies who have unsold

goods on stock can sell these to the state as exchange for tax exemptions.

100

This practice implies

that companies are not forced to sack employees even if their marginal product of labour is beneath

their salary and that investment funds are not canalized towards the place of their most effective

production. Gaddy and Ickes created the expression virtual economy whose hallmarks are an

economy which creates negative social excess because production costs are superior to prices of

finished goods, a state who decides arbitrarily which company has to pay taxes and which not, thus

not just relieving itself from the allegation of corruption

101

and finally a country where one finds

too many reasons to progress only sluggishly in the reform process.

102

1.6 General socio-economic facts of Pl and Uk today compared to 1990/91

103

1.6.1 Balance sheet line of Poland´s evolution in economy and politics since the previous mid-

generational timespan passed

In order to understand why Pl and Uk have been living a different political and economic

development since 1991 Poland is a member of the European Union since May 2004, Ukraine not

yet and the annual GDP growth is also disparate with around 7% in 2006

104

resp. 2.6 % in 2005

105

- it should be examined what kind of starting conditions the countries had and how this status,

which was detained at the end of the era of Soviet socialism, determined economic growth, political

and juridical reforms and fostered the process of social and economic liberation and thus the basic

requirement to launch EI on quite a few levels.

Frankfurt/Oder, Germany, p. 11.

100

C. Gaddy and B. W. Ickes, 2002, Russia`s Virtual Economy, op. cit. p. 36.

101

A. Shleifer and R. Vishny. 1993, Corruption, NBER, Cambridge, Massachusetts, US, p. 3.

102

P.R. Gregory, 1999, Ten Years of Transformation, op. cit. p. 11.

103

M. de Melo, C. Denizer, A, Gelb and S. Tenev, 1997, Initial Conditions - Transition Economies, op. cit. p.

42.

104

Bureau of European and Eurasian Affairs, 2007, Background Note: Ukraine, U.S. Department of State,

Washington D.C., paragraph 4, URL:

www.state.gov/r/pa/ei/bgn/3211.htm

(03.16.2007).

105

World Bank, 2007, country official data, Country Brief 2007: Ukraine,

URL:

web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/UKRAINEEXTN/0,,menuPK:328543~pagePK:14

1132~piPK:141107~theSitePK:328533,00.html

(03.19.2007)

Almost 20 years after Mikhail Gorbatchev released the Poles into a future beyond central planning

and Soviet control in December 1988

106

, Polish economy has fairly well recovered - the more so

that in 1989 and 1990, the output had declined by 6 %. Compared to other CEE countries, Poland`s

GDP shrank only during 2 years and then changed the sign towards growth.

107

By 2000, annual

national yield has already reached 144 % of the level of 1990 the highest growth of all CEE

countries or 398 billion US-dollars compared to 232 as expression in absolute figures.

108

recent sources like country statistics of the OECD state the GDP with 483 billion dollars in 2004 at

a growth rate of 5 %. Converted in GDP per capita, the average individual wealth grew from $ 6030

in 1990 to $ 12650 in 2004.

Yet, there are also domains where present Poland finds itself in a worse position than in communist

times, e. g. the unemployment rate. Yet, after the breakdown of the socialist economist system, the

figures had to rise because the zero unemployment was artificial, so to speak state-decreed

109

with

low productivity (unsatisfactory marginal product of labour).

Since 1990, unemployment rose, reaching 14 %, slightly fell in the mid-nineties to reach a bottom

value of 10 % and rose in the new millennium to oscillate around 19% until today.

110

< table 7 about here >

Other important macroeconomic transformation figures:

exchange rates

In 2005 and the first half of 2006, the Polish Zloty gained in value towards the US-Dollar and the

Euro, the exchange rate being 3,23 resp. 3.10 PLN for one dollar and 4.03 resp. 3.90 PLN for one

Euro. In this respect, the revaluation of the Polish currency by effacing four zeros in 1995 seems to

have positively contributed to the purchasing power of the Zloty. According to data provided by

the European Central Bank for the Zloty rates between 1999 and 2007, the Polish currency

compared to the Euro oscillated between 3.4 in June 2001 and 4.9 in February 2004.

111

In close

connection to the strengthening of the national currency, the financial institutions of the country

managed to get the inflation rate, expressible through the customer price index (CPI), under control.

106

A. Åslund, 2002, Building Capitalism..., op. cit. p. 52.

107

World Bank, 2007, country official data: Poland Country Brief 2007,

URL:

www.worldbank.org.pl/WBSITE/EXTERNAL/COUNTRIES/ECAEXT/POLANDEXT

N/0,,menuPK:304804~pagePK:141132~piPK:141107~theSitePK:304795,00.html

(03.19.2007).

108

World Bank, 2007, country data Poland, op. cit. Table 1.

109

J. Kornai, 1986, Contradictions and Dilemmas: Studies on the Socialist Economy and Society, MIT Press,

Cambridge, p. 126.

110

OECD country statistical profiles: Poland, 2006, URL:

stats.oecd.org/wbos/default.aspx?DatasetCode=CSP6

(03.10.2007).

111

European Central Bank, 2007, Statistical Data Warehouse, Exchange rates 1999-2006,

URL:

sdw.ecb.europa.eu/quickview.do?SERIES_KEY=120.EXR.A.PLN.EUR.SP00.A

, (03.2.2007).

At the beginning of the Soviet trade shock in 1989

112

, the CPI rose by astonishing 259.5 %

113 114

sign that the suppressed inflation of the previous decades could no longer be confined whereas the

present augmentation rates in the 21

century with 2000 as reference year rose by 3-5 %.

115

The

evolution of the CPI goes hand in hand with low inflation rates, the GDP deflator having decreased

from 7 % in 2000 to 3 % in 2004

116

and even to 2 % in 2005.

117

privatisation ratios

Profiting from a modest private market also in communist times and thanks to huge privatisation

efforts achieved by the Polish telecommunication and energy sector, the GDP share of the private

sector rose from 60 % in 1995 to 69.5 % in 2000, and the percentage of overall activity augmented

in the same period from 64 % to 73 %.

118

Switching to the situation of the Polish labour market, the ratio of self-employed people in relation

to the total number of active persons is particularly interesting for our study since the influence of

culture on the spirit of EN is part of our culturally-moulded observation of the transition of Pl and

Uk. According to statistics published by the OECD, the rate of SO (self-employment) as percentage

of the total civilian employment oscillated between 26 and 30 % from 1990 till 2004. This means

that the opening of the country to Western Europe obviously did not boost the number of start-ups,

which is strange considering the relatively high unemployment and the opportunity to reach self-

actualisation in the job a thing which had been impossible under communism. Causes for this

theoretically illogical individual behaviour shall be discussed in this last chapter of this thesis.

Political situation in Poland, state of reforms

At the beginning of the new millennium, i.e. from 2001 to 2005, a coalition of several parties took

over political power, out of which the SDL (Democratic Left Alliance) was the most powerful

group. Since November 2005, the country is governed by the conservative Law and Justice party

(PiS) presided by Lech Kaczyski

119

a long-lasting electoral campaign's outcome which was

surprising for political scientists as well for a major part of the Polish electorate.

112

D. Rodrik, 1992, Soviet Trade Shock - A Framework, op. cit. p. 1.

113

Economic Commission for Europe (ECE), 1991, European Bulletin for Europe,United Nations, New York,

pp. 224-226

114

Economic Commission for Europe (ECE), 1992, European Bulletin for Europe,United Nations, New York,

pp. 105-106

115

In the following years, consumer prices developed the following way: 105,4 in 2001, 108, 2 in 2003, 111,8 in

2004; OECD, 2006. country statistical profiles, op. cit.

116

OECD, 2006, country statistical profiles, op. cit.

117

K. Masojada-Chotowska, 2007, Poland: Commercial market review 2007, Knight Frank, department Poland,

Warszawa, p. 2

118

W. Quaisser and A. Reppegather, 2001, Polen, Osteuropa-Institut, Munich, pp. 5-9.

119

Government of Canada, 2007, About Poland, paragraph 3,

URL:

geo.international.gc.ca/canada-europa/poland/right_nav/about_poland_685-en.asp

(03.25.2007).

It is doubtful that this government will promote Poland´s promotion in the process of economic and

political transition and European Integration, given the president's aversion towards Europe in

general and Germany in special.

120

Unfortunately, the political guidelines seem to be profound, close-minded Catholicism and

nationalism and no liberal, pro-European spirit.

121

It is left to be researched if this legislature if no

second one follows only represents an insignificant slow-down of the transition process or a

serious threat.

Subsidies history and present situation

In many communist countries, the state had to grant generous financial support to factories and

agricultural exploitations so that food and commodities could be offered to the population at the low

prices which were guaranteed by the political leaders.

122

In Poland, this financial aid must have

been particularly important for the economic output since during the Soviet trade shock, the subsidy

removal effect was as high as 0.67 billion dollars.

123

Since Poland joined the European Union on May 1

, 2004, it has the right to receive subsidies,

mainly compensation and fallow ground payments in the agricultural sector and money versed

from EU structural funds in order to help Poland to reach the Objective 1 attributes, which mainly

should guarantee less developed regions of the EU to reach certain standards.

124

In the case of

Poland, the subsidies are above all allocated to recondition and extend the qualitatively and

quantitatively poor street, esp. motorway, network.

Although in Poland, lots of issues connected to infrastructure economic sectors etc. should be

promoted, it only received 4.2 % of the European Union´s overall regional aid expenditures, i.e.

about 4 billion Euro. Out of this sum, 1.5 billion Euro were spent on agriculture and rural

development. After all, financial support rose by almost 50 % in 2006 compared to 2004 (2.72

compared to 4.03 billion).

125

FDI

120

D. Crossland, 2006, Spiegel, 2006, Poland`s Hypersensitive Twins, Spiegel Online International, Berlin,

URL:

www.spiegel.de/international/0,1518,426197,00.html

(03.27.2007).

121

T. Kitlinski, P. Leszkowicz and J. Lockard, 2005, Poland´s Transition: From Communism to Fundamantalistic

Hetero-Sex, Bad subjects, paragraph 2,

URL:

bad.eserver.org/issues/2005/72/kitlinskileszkowiczlockard.html/view?searchterm=Kitlinski%20Poland%60s%20transiti

(05.12.2007).

122

J. M. Montias, 1962, Central Planning in Poland, Yale University Press, New Haven, Conneticut, US p. 251.

123

D. Rodrik, 1992, Soviet Trade Shock..., op. cit. p. 24.

124

Regionalpolitik Inforegio, 2007, Ziel 1: Unterstützung der Entwicklung der am wenigsten wohlhabenden

Regionen. European Commission, Brussels, paragraph 1,

URL:

ec.europa.eu/regional_policy/objective1/index_de.htm

(04.05.2007)

125

European Commission (Budget), 2006, Allocation of 2005 EU expenditure by Member State, Brussels, pp.

68-69, URL:

http://ec.europa.eu/budget/documents/revenue_expenditure_en.htm

(03.31.2007).

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Details

Titel

European spirit, adaption to market economy and national identity in Poland and Ukraine

Untertitel

National culture and its influence on the European Integration, advertising and entrepreneurship

Autor

Matthias Reichhard (Autor)

Jahr

2008

Seiten

284

Katalognummer

V229110

ISBN (eBook)

9783836612838

Dateigröße

3035 KB

Sprache

Englisch

Schlagworte

polen sozioökonomischer wandel wirtschaftsentwicklung europäische integration ukraine cross-cultural value national eastern europe countries entrepreneurship

Arbeit zitieren

Matthias Reichhard (Autor)

, 2008, European spirit, adaption to market economy and national identity in Poland and Ukraine, Hamburg, Bedey Media GmbH, https://www.diplom.de/document/229110

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