Interaction between foreign financial services and foreign direct investment in Transition Economies: An empirical analysis with focus on the manufacturing sector

This paper studies the nexus between financial and non-financial foreign direct investment in Transition Economies, which are members of the EU. Three questions, which are pointed out in the theoretical literature, are discussed in the paper. We use a dataset for nine Transition Economies over the period 1996–2007, for most regressions we apply GMM and for one regression 2SLS. The empirical results lead to three important statements: non-financial FDI is positively affected by financial services FDI and by market potential. Foreign banks in the EU Transition Economies are mainly driven by non-financial FDI and the capital intensity of a country. FDI crowds out domestic investment in the manufacturing sector.     

Poland: the reform of the pension system

The paper presents the system of social security provision introduced in Poland after World War II and discusses the demographic, political and economic reasons for its failure, as well as its impact on the Polish economy. The proposed reform scenarios from two major political proponents, the Ministry of Finance and the Ministry of Labour and Social Policy, are described. The recently finalised reform proposal is now being introduced, starting with the Polish Parliament (Sejm) passing a package of three acts concerning the split of the current pay-as-you-go single system into a pillar system, with provisions made for a transition period. The paper outlines the proposed changes, including the new role of the Social Security Institution (ZUS) in Poland, the structure of the first pillar of benefits and the opportunities for private companies to participate in the social security provision through the second and third pillars.