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Can public intervention improve local public sector economic performance? The analysis of Special Economic Zones in Poland

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Kopczewska K.

Central European Economic Journal

2019

vol. 6

issue 53

Boosting the local economic growth and cohesion policy may be supported by using the public intervention. The local governments may benefit directly and indirectly from the place-based policy implemented as Special Economic Zones (SEZ). SEZ directly increase the employment and the number of firms, while, indirectly, they can raise the local public sector financial performance in the long run by increasing revenues from personal and corporate income taxes. This article assesses the efficiency of this policy at the local level in the context of an institutional environment and inter-agent local diffusion. It also uses the statistical methodology based on the comparison of the empirical density distributions of the economic and financial indicators within the institutional groups to detect the global shift or divergence or convergence patterns. This article examines the Polish experience of public intervention in 1995–2016 with 14 SEZ located in more than 350 different locations. It proves that in general, the financial and economic situation of the municipalities with SEZ did not improve. An institutional analysis of the SEZ operating conditions indicates that the weak operating requirements for SEZ firms together with a poor location cannot constitute a catalyst for local development.

Dynamic Fiscal Solvency with Consumption and Capital Taxes

45%

Kudła J., Kopczewska K., Kocia A., Kruszewski R., Walczyk K.

Central European Economic Journal

2018

vol. 5

issue 52

To finance public expenditure a government needs to raise revenue, which mainly comes from taxes and borrowings. During a financial crisis, however, financing of budget deficit is particularly difficult because of a rise in debt servicing costs that crowd out other expenses and raise the concern for government solvency. In extreme cases, governments are constrained to tax, as borrowing opportunities are strictly limited or unavailable. Still, governments can choose from tax menu options (income and consumption taxes), given the flexibility of the tax mix. This article presents a long-term dynamic model of fiscal solvency that shows the equilibrium the revenue maximising government can obtain with reasonable tax rates when capital income can be shifted and there are constraints on the consumption tax. Specifically, the solution predicts a positive level of bonds in the long-term equilibrium and the tax rates dependent positively on the abundance of the tax bases.

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2 Central European Economic Journal

1 2020

1 2019

2 Kopczewska K.

1 Kocia A.

1 Kruszewski R.

1 Kudła J.

1 Walczyk K.

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Can public intervention improve local public sector economic performance? The analysis of Special Economic Zones in Poland

Dynamic Fiscal Solvency with Consumption and Capital Taxes