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 SGH REPORT – KARPACZ 2020

 
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Central and Eastern Europe 

 
 
As a result of the COVID-19 pandemic all the areas of human activities are under greater pressure to apply digital solutions. / A considerable number of industries and sectors recorded an income drop by 50%–90% or more.

Authors
dr hab. Mariusz Próchniak, prof. SGH, prof. dr hab. Juliusz Gardawski, prof. dr hab. Maria Lissowska, dr Piotr Maszczyk, prof. dr hab. Ryszard Rapacki, dr hab. Aleksander Sulejewicz, prof. SGH, dr Rafał Towalski.
 
Before the transformation, Poland was one of the least economically developed countries in the CEE-11 group; in respect of GDP per capita at PPP it exceeded only Romania. / In 1990–2019 the fastest growing economy in the CEE-11 group was Poland, whose GDP rose more than 2.5 times (the index was 256). It means that the average annual growth rate was 3.2%. The only CEE country that had undergone transformation and had a similar development rate was Slovakia (2.5% annually). / In 1990-2019 Poland managed to reduce the economic development gap with all the old Member States of the European Union (except Ireland)

Authors: 
dr hab. Mariusz Próchniak, prof. SGH, prof. dr hab. Juliusz Gardawski, prof. dr hab. Maria Lissowska, dr Piotr Maszczyk, prof. dr hab. Ryszard Rapacki, dr hab. Aleksander Sulejewicz, prof. SGH, dr Rafał Towalski.
 
The COVID-19 crisis is going to exacerbate the business activity decline in the EU that has lasted for two years now. / The drop in output and sales recorded in the EU in March and April 2020 was the deepest in the last 20 years. / Indices reflecting changes in the economic sentiments in the Visegrad Group recorded the largest decline in history. / Only 9% of Polish manufacturing and trade companies were not affected by adverse effects of COVID-19 restrictions, while one in four perceived them as severe. / In response to impediments for business activity, companies mostly cut non-employee related expenses (52%) and reduce working time (50%).

Authors:prof. dr hab. Elżbieta Adamowicz, dr Sławomir Dudek, Grzegorz Konat, dr hab. Katarzyna Majchrzak, prof. SGH, dr Ewa Ratuszny, dr Konrad Walczyk.
 
The global rate of RES (renewable energy sources) generation proves that it has been the fastest developing source of energy in the last decade. / The global rate of electricity production from RES (in TWh) was 12.59% for wind power, 28.91% for solar power and 6.98% for other sources, while in the European Union the rates were 4.63%, 7.29% and 3.44% respectively. This means that EU is below the global average and, what is even worse, below the average for OECD countries. / Poland has a large share of wind power (12.8 TWh) and a small share of solar power (0.3 TWh). / In Central and Eastern Europe the countries usually apply relatively passive renewable energy policy. / The COVID-19 pandemic caused a demand and supply shock on the market of energy raw materials. It also showed that the European Union depends too much on the imported RES technologies and RES intermediate products.

Authors: dr Krzysztof Księżopolski, dr Dariusz Kotlewski, dr Grzegorz Maśloch.
 
Poland is an undisputed leader among the CEE countries in respect of number of introduced instruments of innovation policy. / The most common form of support for innovation in Central and Eastern Europe are research grants. / Development of information and communication technology (ICT) during and after the coronavirus pandemic may be a driving force of many economies.

Authors: dr hab. Arkadiusz Michał Kowalski, prof. SGH, dr hab. Małgorzata Stefania Lewandowska, prof. SGH, prof. dr hab. Krystyna Poznańska, prof. dr hab. Małgorzata Rószkiewicz, dr Małgorzata Godlewska, dr Marta Mackiewicz.
 
Poland has the best developed capital market among the CEE economies. / Poland is the only country of CEE region classified as a developed market. Czechia, Hungary and Romania are still regarded as emerging markets, while Bulgaria, Croatia, Slovakia and Slovenia are classified as a still lower group – frontier markets. / The first phase of COVID-19-related falls on the Warsaw Stock Exchange occurred already by the end of February, when the WIG index dropped by 14% within five business days.

Authors: dr Marek Dietl, dr Mateusz Mokrogulski.​
 
7. MIGRATION PROCESSES IN THE COUNTRIES OF CENTRAL AND EASTERN EUROPE – TRANSFORMATION FROM NET EMIGRATION TO NET IMMIGRATION COUNTRIES
Central and Eastern Europe countries are subject, at a various pace, to transformation from negative to positive net migration rate. / A characteristic feature of CEE countries is a relatively low percentage of immigrants in their societies – the share of foreign citizens was the largest in the Czech Republic (4.1%), while in the next country – Hungary – it
was only 1.4%, and in Poland it was 0.3%. / In 2019 Poland for the first time experienced a larger outflow of money sent by immigrants (USD 7.1 billion, or 1.3% of GDP) than the inflow of money from emigrants (USD 6.5 billion, or 1.2% GDP). In the remaining countries of the region transfers inflowing from emigrants prevailed over outflows sent by immigrants staying on their territories. / In 2018 around 1.1 million foreigners could be staying in Poland, which means that they accounted for almost 5% of the total supply on the Polish labour market, while five years later the share was less than 1%. / The work of immigrants contributed on average to GDP growth by around 0.5 percentage points annually. / The COVID-19 epidemic should not substantially change the transformation-related trend of shifting from negative to positive migration ratio in the countries of Central and Eastern Europe.

Authors: dr Paweł Strzelecki, dr Marta Pachocka.
 
8. LOCAL RESPONSES TO THE ISSUE OF SMOG IN THE COUNTRIES OF CENTRAL AND EASTERN EUROPE
In Europe alone smog encumbers the economy with healthcare costs of EUR  4  billion a year and waste of working time worth EUR 16 billion. / Costs generated by smog due to lower work productivity, expenses of the health sector and lower agricultural production will reach 1% of global GDP by 2060. / Among almost 3 thousand cities analysed by WHO almost half of one hundred cities most polluted with PM10 are located in Poland. / Polish Supreme Audit Office has estimated the costs of bad air quality (PM2.5 concentration) only in five controlled regions for approximately PLN 12.6 billion a year. / Electromobility and micromobility are an opportunity for European cities to revolutionize communication systems and face up to challenges of air quality improvement. The COVID-19 pandemic is going to popularize micromobility.

Authors: dr hab. Ewelina Szczech-Pietkiewicz, dr hab. Magdalena Kachniewska, prof. SGH, dr Dominika Brodowicz, dr Anna Para.
 
9. SILVER ECONOMY – AN OPPORTUNITY FOR DEVELOPMENT FOR THE COUNTRIES OF CENTRAL AND EASTERN EUROPE
The percentage of people aged 65+ in the countries of Central and Eastern Europe is going to increase threefold from 11.4% (Slovakia) – or 16.2% (Bulgaria) in 2000 to 27.7% (Hungary) or 31.5% (Lithuania) in 2050. / The best situation in respect of income is in Slovenia, where only 4.6% of households are in the group of the 25% households with the lowest income in the society. Bulgaria and Romania are at the opposite end (as much as 83.6% and 79.7% of households respectively). In all the countries of the region women are in a worse position than men in respect of income. / In all the countries of the region, except one (Czechia) over a half of the elderly struggle to make ends meet. / In Poland 23.1% of older people often experience constraints caused by a shortage of money.

Authors: dr Anita Abramowska-Kmon, dr Radosław Antczak, dr hab. Paweł Kubicki, prof. SGH, dr hab. Jolanta Perek-Białas, dr Zofia Szweda-Lewandowska.
 
10. PENSION SCHEMES AS A CHALLENGE FOR NEW EU MEMBER STATES FROM CENTRAL AND SOUTHERN EUROPE
The 2020 crisis caused by the global pandemic is going to be the next challenge for pension schemes, due to forecast decrease in employment and worse situation of public finance. / For the sake of those working today, or the future pensioners, the upper limit of working age should be raised, as in CSE countries it is even by 10 years lower than in Sweden. / Even if birth rate grew significantly, it would affect the pension system financing only in 3–4 decades.

Authors
: dr hab. Agnieszka Chłoń-Domińczak, prof. SGH, dr Ewa Cichowicz, prof. dr hab. Marek Góra, dr hab. Joanna Rutecka-Góra, prof. SGH.
 
11. SYSTEMS OF SUPPORT FOR START-UPS IN THE CENTRAL AND EASTERN EUROPE
Estonia, Poland, Lithuania, Czechia and Slovenia are the leaders of development of start-up support systems in Central and Eastern Europe. / The start-up support infrastructure is the worst developed in Albania, Bulgaria and Croatia. / As a result of the pandemic it will be more difficult for start-ups to receive financing from venture capital funds.

Authors
:
 dr hab. Rafał Kasprzak, prof. SGH, dr hab. Marcin Wojtysiak-Kotlarski, prof. SGH, dr Albert Tomaszewski, dr Mariusz Strojny, dr Małgorzata Godlewska, dr Anna Masłoń Oracz, dr Elena Pawęta, dr Maria Pietrzak, dr Tomasz Pilewicz, Olga Pankiv, Bartosz Majewski, Mirosław Łukasiewicz, Hanna Rachoń, Kamil Flig.
 
12. TRENDS IN THE FISCAL POLICY IN THE COUNTRIES OF CENTRAL AND EASTERN EUROPE: TAXATION OF ENTERPRISE INCOME
Taxation systems in place in CEE are far from theoretically effective models. The current direct tax system in CEE countries comprises in fact diversified national tax systems. / Income taxes encumbering enterprises do not prevail in the tax revenue structure of CEE countries. / Fiscal instruments encouraging enterprises to undertake innovative activities, purchase or develop new technologies have been to a various extent applied by CEE countries. / Convergence research indicates that in times of crises income tax systems in CEE countries were usually becoming similar to each other.

Authors
:
 dr hab. Paweł Felis, prof. SGH, dr hab. Michał Bernardelli, prof. SGH, dr hab. Marcin Jamroży, prof. SGH, dr hab. Jacek Lipiec, prof. SGH, dr Elżbieta Malinowska-Misiąg, dr Joanna Szlęzak-Matusewicz, Grzegorz Otczyk.

13. TRENDS IN THE FISCAL POLICY IN THE COUNTRIES OF CENTRAL AND EASTERN EUROPE: TAX OBLIGATIONS OF ENTREPRENEURS​​
Fiscal policy in Poland in the analysed period was mostly oriented towards maximisation of the fiscal effect, practically disregarding the expenses incurred by enterprises, including small and mid-sized ones. / Analysis of judgements of the Polish Supreme Administrative Court indicates that the time between the moment of an economic event determining the size of VAT and the issuance of a final decision appealed in a court is usually about 5 years. / Many changes that were to be introduced in connection with the COVID-19 pandemic were delayed (such as changes concerning the new SAF-T, new rules of tax deducted at source, new matrix of VAT rates or deferral of tax on retail sales). Thus, the legislator in a way admitted that there will probably be problems with implementation of new instruments.

Authors
dr hab. Dominik Gajewski, prof. SGH, dr hab. Aleksander Werner, prof. SGH, dr Piotr Karwat, dr Adam Olczyk, dr Jarosław Wierzbicki.
 
 
 
 
 
EDITORS OF SGH REPORT
 
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Professor Hanna Godlewska-Majkowska, Ph. D. Professor of Economics, Head of the Business Environment Unit in the Institute of Enterprise of the Collegium of Business Administration. Vice Rector for Cooperation with the Environment at SGH Warsaw School of Economics (2016-2020).
Professor Piotr Wachowiak, Ph.D. is a Professor of SGH Warsaw School of Economics and the Director of the Institute of Management at SGH. Currently he holds a post of the Rector at SGH Warsaw School of Economics.
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Mariusz Strojny, Ph.D is a Doctor of Economics, Assistant Professor in the Institute of Value Management and a Representative of the Rector for Technology Transfer at SGH Warsaw School of Economics. Warsaw School of Economic Forum Report Scientific Editor.
 
Bartosz Majewski the Director of the Centre for Entrepreneurship and Technology Transfer at SGH Warsaw School of Economics and cooperates with the Institute of Management of SGH.
 
 
 
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