Economic Reform & Income Distribution: A Case Study of Hungary and Poland

By Henryk Flakierski | Go to book overview

Preface

In this book the relationship between economic reforms and changes in the degree of inequality will be examined. In particular, the analysis will focus on whether or not the increased use of the market mechanism in some Eastern European countries has changed the pattern of income distribution in those countries.

It is very unfortunate that little work has been done in either the West or East in this field. No serious studies can be found on how income distribution has changed in the last 15-20 years in the East European socialist countries. Neither has there been any serious study of whether or not these changes are linked with decentralization of the economic mechanism. The aim of this study is to make a contribution to this topic.

I examine two countries, Hungary and Poland, in the period between 1965 and 1980, to illustrate the problem of income distribution and its connection with economic decentralization. Obviously the choice of these two countries requires some justification, which I will provide in full later. At this stage, however, I will simply say that the two countries represent a good test for my ideas. Hungary is the most advanced CMEA country in implementing a market mechanism, whereas Poland is a country in which the economic mechanism has not changed very much. Needless to say, my firsthand knowledge of the Polish economy and language has affected my choice to some degree.

However, I am aware that no matter how well those two countries illustrate the relationship between income distribution and economic reforms, other Eastern European countries must be taken into consideration. This is, however, difficult to do in one study. A comparison of several East European countries is very difficult because of the inadequacy of income inequality statistics in the socialist countries. For many years this area of statistics has been "ideologically sensitive" and deliberately neglected. Therefore I consider this study to be only a first step in the

-vii-

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