local government, local economic development and quality of life in poland

GeoJournal 50: 225–234, 2000.© 2001Kluwer Academic Publishers. Printed in the Netherlands.

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Local government, local economic development and quality of life in Poland

Craig Young1 & Sylwia Kaczmarek21Department of Environmental & Geographical Sciences, Manchester MetropolitanUniversity, John Dalton Building, Chester Street, Manchester M1 5GD U.K. (e-mail: [email protected])2Department of Urban Geography & Tourism, University of Lodz, Kopcinskiego 33, 90-142 Lodz, Poland

Received 16 June 2000; accepted 3 August 2000

Key words:decentralisation, economic development, foreign direct investment, governance, institutional thickness, localeconomic development, local government, quality of life, tourism

Abstract

The establishment of local self-government was a key part of the post-1989 transformation in East and Central Europe.Local government in both Western and East and Central Europe has increasingly been expected to play a role in localeconomic development (LED). Local government is one important agent in the complex processes of building ‘institutionalthickness’ to ensure the development of local economies and the quality of life of inhabitants. This paper presents the resultsof a national postal questionnaire survey of the LED role of the lowest level of local self-government in Poland, the gminaor commune. The paper establishes a baseline of knowledge regarding: the local economic problems faced by communes;their attitudinal, strategic and organisational responses; and the main factors which are hindering the communes’ LED role.

Introduction

The establishment of local self-government and territorialdecentralisation are an integral part of post-1989 processesof transformation in East and Central Europe (ECE) (foran overview see Baldersheim and Illner, 1996). Politicaldecentralisation was seen as essential for dismantling thecommunist past and creating a new political and economicorder (Regulska, 1997a). It created local government bodieswhich had to increase their initiative in maintaining a levelof service provision to local populations (Mitchneck, 1997).In addition to the provision of public services local govern-ments were also envisaged as playing an important role inlocal economic development (LED) through the regulationof the wide range of factors which underpin the growth anddevelopment of local economies. Development became a lo-cal policy concern with implications for changing the spatialstructure and the direction of growth of the economy. Thusreform aimed at providing local government with the legaland economic powers to support the development of theircommunities through the implementation of plans and strate-gies (Grochowski, 1997). While there is now a reasonableliterature detailing the nature of local government reform inECE (see, for example, Regulska, 1997a; Baldersheim andIllner, 1996; Cielecka and Gibson, 1995; Coulson, 1995),a relatively neglected area is the role of local governmentin LED in ECE countries (though see, for example, Hardy,1998; Hardy and Rainnie, 1996; Young, 1997; Mitchneck,1995, 1997; Hausner et al., 1997; Herrschel, 1997, 1998;Stenning, 1997). However, this is an important issue in un-derstanding the nature of post-socialist transformations andhow they are being mediated by spatial contingencies. As

local government constructs policies which reflect their ownpriorities they are both shaped by an already existing set ofinstitutional resources, and in turn themselves shape (to adegree) geographical variation in development. Though therelationship between institutions and trajectories of devel-opment is a complex one, local government in ECE playsan important role in the mix of institutions underpinningvariation in development paths.

Thus the aim of this paper is to outline how Polish gmina(or communes), the lowest level of local government inPoland, are involved in LED. This is achieved by presentingthe results of a national postal questionnaire survey of theLED role of communes. After discussing the context of localgovernment reform and the role of local authorities in LED,the survey methodology is outlined and evaluated. The paperthen presents the results of the survey which seek to estab-lish a baseline of knowledge regarding the local economicproblems faced by communes; their attitudinal, strategic andorganisational responses; and the main factors which arehindering the communes’ LED role.

Local government reform and local economicdevelopment

After decades of central planning, post-1989 political decen-tralisation processes in ECE aimed to solve many problemsthrough establishing new centre-local relations, includingincreasing the responsiveness of government to the needs oflocalities (Regulska, 1997a). In Poland, the establishment oflocal self-government at the commune level was the primaryoutcome of decentralisation. The new local government was

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designed to operate in a similar way to local authoritiesin Western democracies. In North America and WesternEurope, economic change associated with changes in theglobal economy and the deregulation of markets, combinedwith political perspectives favouring neo-liberal solutions toeconomic challenges, have apparently empowered localities(e.g. Harvey, 1989; Bennett and Krebs, 1991). While the im-pact of this ‘new localism’ has been questioned (e.g. Moore,1990; Lovering, 1995; Peck and Tickell, 1994), observersagree that local authorities now have to take a greater re-sponsibility for responding to changed market conditions,and this is particularly true of the transforming economiesof ECE (Mills and Young, 1986; Hall and Hubbard, 1996;Bennett and Krebs, 1991; Mitchneck, 1997; Stenning, 1997;Hausner et al., 1997).

In Poland, the decentralisation and reform of the statehas involved a two-stage process. Initially, local self-government at the gmina or commune level was establishedin 1990. This did relatively little to reorganise the territo-rial structure. The central state lay above 49 voivodeships(regions or provinces) and 267 new districts (‘rejony’),while the lowest level of government (and the only electedlocal self- government) comprised some 3,300 gminas. Re-form at the regional and county level was the subject ofpolitical debate in the early 1990s but for political rea-sons was not considered favourably in the mid-1990s be-cause post-1993 governments in Poland lacked the politicalcommitment to administrative decentralisation (Regulska,1997b; Grochowski, 1997). From 1996, however, the es-tablishment of county and regional level self-governmentwas considered in depth and, after the passing of severalActs in 1998, was established from January 1999. Thenew structure comprises elected self-government at threescales: 16 new regions, 373 counties or ‘powiats’, and2,489 communes (a non-elected state regional voivod hasbeen retained, however, to carry out legal supervision ofthe activities of the three levels of self-government). Thenew voivodship (regional) self-governments are responsi-ble for regional development policy programmes incorpo-rating regional public services, sustainable developmentand economic development (competitiveness and innova-tiveness of regions, promotion and international economicrelations). Powiats are responsible for separately definedpublic service tasks distinct from the gminas (an officialdescription of the 1998-99 reforms ‘A New State for NewChallenges’ can be read on theInformation Service of theChancellery of the Prime Minister of Polandwebpages athttp://www.kprm.gov.pl/admin/SITE/anew.htm). However,the gminas (communes) and their powers established by the1990 Local Government Act remain. The gminas are thebasic and most important level of public administration.

The key outcome of the 1990 reform was a partial shiftin power from centralised state to local self-government, andthe development of local structures which cut across sectoralinterests, adapting them to local contexts (Jensen and Plum,1993). The aim was to enable local government to: developthe required infrastructure for the operation of local govern-ment; improve the quality of life and human resources of

localities; regulate privately owned businesses and facilities;and to support productive activities and private enterprise(Grochowski, 1997).

To achieve this the 1990 Local Government Act gavecommunes the right to own property, collect certain taxes,manage their financial resources, and act within a legalframework on all matters concerning the development andmanagement of the commune (Regulska, 1997b). Com-munes thus gained responsibility for spatial managementand environmental issues, infrastructure (water, waste, elec-tricity and heating), public transport, some roads, communalproperty, education, culture, social welfare and public or-der. In addition, the Act also gave communes autonomy ina range of areas which are particularly relevant in support-ing LED. Thus communes can set up organisational bodiesand companies, and sign agreements with other entities. Thecommunes may also conduct economic activity going be-yond their statutory functions if required by social needs. Inthe case of tasks exceeding the capacity of one communeinter-communal co-operation is also permitted. The 1999reforms did not reduce the significance or powers of the gmi-nas. Indeed, they now receive additional resources for somefunctions, and changes to the tax system have increased theirfinancial independence. In addition, it is likely to take sometime for the new regional powers to start having a significantimpact, particularly on economic development.

The legislative framework within which gminas operatemay not be particularly well defined, but it does afford com-munes flexibility in tackling LED. Ideally, local governmentaction should provide the right circumstances for invest-ment, innovation, entrepreneurship and economic growth(this section draws on Bennett and Krebs, 1991). Govern-ment statutory functions can have wider economic benefits,either directly (through planning, infrastructural investmentor training) or indirectly (providing efficient services whichimprove the climate for business and reduce costs for busi-nesses). Local government has four main groups of policyinstruments: fiscal policy (such as incentives and taxation),expenditure policy (e.g. reducing business costs by investingin services and infrastructure), debt policy (spreading thecost of development) and administrative policy (especiallyminimising the barriers to investment and wealth creation).For successful LED there must be minimal barriers and com-pliance costs for endogenous and inward investment throughefficient service provision and facilitative action while bal-ancing local social and environmental requirements.

These policy instruments should be especially significantin the ECE context. Economic transformation in the regionhas been guided by neo-liberal principles of market and tradeliberalisation, privatisation, internationalisation of economicactivity and attracting foreign direct investment (FDI). Al-though their ability to influence these processes varies, localgovernments are seen as an important part of the institu-tional, regulatory and governing processes underpinning thepath of transformation and internationalisation (Swain andHardy, 1998). In particular, there is a need to create highlevels of what is termed ‘institutional thickness’ (Amin andThrift, 1994a; Pavlinek and Smith, 1998) or ‘capacity build-

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ing’ (Bennett and Krebs, 1991). Thickness or capacity arisesfrom the presence of institutions which are developing aneconomic awareness and strategy through collaborative andcollective interactions between institutions sharing a com-mon industrial purpose. Appropriate institutional thicknesscan ‘hold down the global’ (Amin and Thrift, 1994b) in localeconomies and enhance their economic competitiveness by‘embedding’ international investment locally.

The paper and its methodology

The aim of this paper is to establish a baseline of knowl-edge about the role of local government in LED in Poland.There have been positive results associated with these firstexperiences of local self-government (Grochowski, 1997).However, there are limits to the role of local government inLED. Local authorities can lack sufficient resources to im-pact on the local economy, particularly where this requiresintervention in private business (Moore, 1990), and canhave relatively little impact on attempts to mediate globalprocesses (Peck and Tickell, 1994), and can be subjectto organisational and economic constraints (Moore 1990;Hausner et al., 1997). The nature of reform in Polandhas added particular problems to these limitations. In re-ality, Poland remained a highly centralised country wherepre-1999 administrative structures had not adapted to thechanged political and economic system (Grochowski, 1997;Regulska, 1997b). At the time this survey was undertakenthere was still a lack of a clear division of responsibilitiesand fiscal arrangements between central and local govern-ments. Central government exercised strong control over themajority of functions which should be the concern of localgovernment, and local authorities lacked a clear picture oftheir budgetary resources and the rules of inter-governmentalfinancial transfer. Studies suggest that although regional andlocal level institutions do play an important part in regionaldevelopment in Poland, there is evidence to indicate thatcurrent formal structures lack an appropriate institutionalthickness to significantly affect development trajectories.Local government structures are often weakly developed,and in some cases are circumvented by foreign direct invest-ment (Hardy, 1998), while some consider that overall localgovernment can do little more than to define the requiredoutcomes of LED (Grochowski, 1997). While it is not thepurpose of this paper to evaluate the significance of localgovernment in LED, these limitations must be borne in mindin the analysis of their role.

In order to address the research aim a postal question-naire was distributed to a c.12% sample of Polish communeauthorities (392 in total). A random sample was drawnproportionately to the relative frequency of communes ofdifferent sizes and functions within each of the then existingforty nine regions of Poland. Four categories of communeswere sampled: regional capitals (a total of 49, response rate56%); urban communes with>10,000 population (total 71,response rate 52%), urban communes with<10,000 popula-tion (total 82, response rate 30%) and rural communes (total178, response rate 34%). The overall response rate was 40%

(147 replies), an acceptable rate for postal questionnaire sur-veys, with a slight bias towards larger, urban communes inthe resulting sample. These categories were chosen to berepresentative of the population size structure of the com-munes. This was also necessary because of the nature oflocal government, where the size of commune authorities interms of the number of councillors is proportionate to popu-lation size. Thus the sample allowed the effects of communesize on patterns of organisational and strategic responses tobe controlled.

Since regional disparities have increased in Poland dur-ing the post-socialist period (Weclawowicz, 1996; Gorzelak,1996) the questionnaires were distributed proportionatelywithin a regional typology which reflected geographicalvariation in the degree of transformation of the Polish econ-omy, as this may influence the actions and attitudes of localauthorities. Weclawowicz (1996) categorises regions intofive levels of progress or stagnation. For the purposes ofthis analysis the top two categories were amalgamated, aswere the bottom two categories, to produce three categorieswithin each of which c.12% of communes were sampled.The more progressive regions were those containing themajor urban and industrial centres, such as Gdansk andSzczecin in the north, Lodz and Warsaw in the centre, andCracow, Katowice and Wroclaw in the south and south-west.The intermediate category includes Poland’s western borderand regions associated with medium-sized cities and ag-glomerations (such as Bydgoszcz, Koszalin or Lublin). Theleast progressive regions are located in the east of Polandand around the more progressive regions of central Poland,areas which have historically undergone less development.The response rates were 34% from the more progressive re-gions, 44% for the moderately progressive regions, and 39%from the stagnating regions. Again a slight bias in responsesfrom the larger, urban communes is present, particularly inthose responses from the least progressive regions. This biasshould be kept in mind when interpreting the results below,but it is not so significant as to severely affect the findings ofthe survey. The results are taken to be representative of theexperience of Polish communes as a whole, but any signifi-cant variation by type, size or regional location of communesis highlighted in the analysis below.

Local government, local economic development andquality of life

Local economic development problems

The process of capacity building, as noted above, firstlyinvolves developing an economic awareness. Thus the firstaim of the research was to establish what commune au-thorities saw as the main factors causing problems for LED(Table 1). The factors which are proving the most problem-atic are those to do with the nature of the local economyitself and with some of the specific resources necessary forLED. The key factor identified here is the lack of indus-try, entrepreneurs and new technology. In particular, thelack of a food processing industry is highlighted as a key

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Table 1. The main factors hindering economic devel-opment (percent)

Local economic problems 98

Poor infrastructure 91

Public finance and legal regulation of finance 78

Demographic and social problems 47

Problems with agriculture 44

Lack of capital, investors and FDI 38

Problems in local government 22

Disadvantageous geographical location 21

Environmental problems 12

Source: Questionnaires

problem, particularly in the rural communes. Poland’s agri-cultural sector is capable of producing high volumes of foodbut lacks a modern processing sector to help develop a highvalue-added industry (Kapoor, 1998). Thus for the majorityof communes the lack of economic transformation itself is aproblem. Other communes cited problems with the generallyslow pace of economic change, restructuring and privatisa-tion, and the limited nature of local demand. These problemsare compounded by the shortage of suitable land for thecommune to use to promote LED, and the lack of clarityover the ownership of land and buildings which might beuseful in this respect.

The poor quality of the commune infrastructure was alsohighlighted as a very significant problem. 75% of communesreported the low level of provision of technical infrastruc-ture, including water, sewage, housing, public buildings,energy and telephones, as a problem, partly for the impli-cations for the quality of life of the inhabitants and alsowith respect to trying to attract new investment. This is avery basic but serious point in Poland. In 1990 44% of citieshad no sewage plant, tap-water was often unsafe, and therewas a lack of resources for maintaining the infrastructure(Swianiewicz et al., 1996). Communications and transportare also important in this category. A third main factor inthis category, and one which is felt more strongly in the ruralcommunes, is the lack of a tourist infrastructure.

As noted above, at the time of this survey local gov-ernment was operating in a context in which centre-localrelations were not clear, particularly with regard to financialarrangements. Thus, the third most important set of factorsare those related to the level and regulation of public finance.35% of communes stated that their commune budget was toosmall. Other communes noted problems with low incomesto the local budget, the low incomes of the local popula-tion, and problems with accessing cheap loans and credits.Commune authorities also highlighted the limitations of thelegal system regulating local authority finance. In particu-lar, it is felt that too high a proportion of local taxes isretained by central government and too low a proportion ofthem is returned to commune authorities, especially giventheir statutory duties. The 1999 reforms included new legis-lation on the decentralisation of public finance designed toestablish a legal framework for financing the new regionaland county self-government. Though designed to introduce

clear and transparent assignment of financial responsibili-ties, legally the system of gmina financing remains basicallyunchanged, thus these problems are likely to continue.

The main demographic and social factor is high un-employment which one quarter of communes reported ashindering LED. Other factors were more typical of the ruralcommunes, including ageing populations, rural depopula-tion as the young and better educated migrate to cities, anda mental attitude of resistance to change and a lack of ini-tiative. A higher proportion of rural communes also reportedproblems with an over-dependence on agriculture, with toomany small farms and low profits or declining markets foragricultural produce. This reflects the desperate need toreform Poland’s large agricultural sector to increase produc-tivity, reduce over- employment and foster better links withbuyers (Meth-Cohn, 1998).

LED problems are compounded in around 40% of com-munes by a lack of investors and local capital, and problemswith attracting FDI. Around one-fifth of communes reportedproblems connected with the operation of local government,such as the need for spatial planning, better support forentrepreneurs and the requirement for improved strategicplanning, in the struggle to attract investment. In some com-munes promotional systems to attract investment were feltto be underdeveloped. These complaints were made morefrequently by regional capitals and urban communes. Poorgeographical location, in terms of distance from urban ar-eas and markets, and poor connectedness were a problemfor 20% of communes. Environmental problems are alsohighlighted by 12% of communes, particularly the lack ofenvironmental protection, although conversely some com-munes cited the restrictions imposed by having designatedenvironmental areas within their boundaries as hinderingdevelopment.

Local authority attitudes to LED problems

Local governments thus face a task of significant propor-tions in their efforts to encourage LED in the face of theseproblems. However, the attitude of local government to theirsituation is largely positive. Overall, 84% of commune au-thorities thought that they should play a key LED role. Thisfeeling was particularly strong in the rural communes (91%),as in these locations the local authority is often the onlyorganisation present to fulfill this role. Regionally there issignificantly less agreement with this position among thecommunes in the areas of least economic progress, partic-ularly those located along Poland’s eastern border, one-thirdof which believe that the key LED role should be played bythe private sector, perhaps because the problems faced in thisregion are to large to be tackled by local government. Whatis clear, however, is that there is very strong support at thelocal (commune) level for local government to be a key actorin LED.

The reason most frequently given for holding this viewwas that the commune authority has the best local knowl-edge about development needs and opportunities (Table 2).The commune authority was also considered as the key ac-tor in LED because it is seen as being the most appropriate

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Table 2. Why the commune authority should or should not play a key LED role

(a) YES, BECAUSE:

Percent

Commune authority has the best local knowledge 20

Commune authority should decide about development 14

Commune authority should create a good climate for develeopment 10

Commune authority has the necessary resources 5

Commune authority is the only actor which can coordinate development 5

Better LED leads to higher taxes and a better quality of life 5

Commune authority is democratically elected and represents the community 4

(b) NO, BECAUSE:

Commune authority should only define the main direction for development 8

External investors and local entrepreneurs should provide initiative, 6

with support from the commune authority


organisation for local decision making, particularly with re-gard to creating a good climate for economic development,and this view is emphasised for a proportion of communesbecause they see themselves as having been elected to fulfillthis role. Otherwise, communes felt that they should play arole because they have the necessary resources and the pow-ers to act as co-ordinators of development. Some communesmake a clear link between the local authorities’ role and LEDon the grounds that improving LED would generate moretaxes for the commune and a better quality of life for theinhabitants. Of the minority of communes who do not seea key role for local authorities in LED this is because theythought that they had only a smaller guiding role to play indevelopment, and that the main decision making processesshould be provided by the actions of the private sector re-sponding to market mechanisms. These points suggest thatattitudes within local authorities regarding their potentialrole are markedly different from assessments which sug-gest that they can do little more than ‘define the requiredoutcomes’ of LED (Grochowski, 1998, p. 214). The needfor co-ordination of economic development activities at theregional level was also highlighted by the communes andthe establishment of the new regional government may besignificant in the future.

A further aspect of developing an economic awarenessinvolves identifying the strategic opportunities in the localeconomy which offer the best opportunities for LED (Ta-ble 3). The key opportunity which almost all communes feltthat they were able to exploit is industry. 55% of communesthought that their existing industrial functions would con-tinue to offer the best possibilities for LED available to them,which gives strong support to those interpretations of trans-formation which stress a continuity of localised industrialstrengths and traditions and the path-dependent nature of re-gional development using inward investment to build uponpast LED trajectories (Pavlinek and Smith, 1998; Smith,1997). One key example of this is that 39% of communessaw food processing as the key industrial opportunity fordevelopment. This builds upon strengths in agro-food pro-duction, but recognises the need for significant FDI to assist

privatisation, restructuring and the provision of a properindustrial infrastructure.

The next most significant opportunity was considered tobe tourism and recreation, with the rural communes in par-ticular stressing the development of agro-tourism (around25% of rural communes). Regional capitals and the urbancommunes place more hope in the development of services,which overall was cited by one-third of communes as a de-velopment opportunity. The agricultural sector is still seenas an important area for future LED, particularly in ruralcommunes. Less frequently cited opportunities include anadvantageous geographical location, the construction indus-try, growth in SMEs and, for a few communes, a goodtechnical infrastructure. A small proportion of communesare placing emphasis on the role of the newly establishedSpecial Economic Zones (specific areas where financialincentives are used to attract inward investment).

Strategic responses at local government level

A key element of capacity building in LED is the develop-ment of strategy in order to exploit the opportunities presentin a locality. As a first stage in appreciating the role ofcommunes in this area, the survey aimed to assess whatcommune authorities saw as their key functions (Table 4).A large majority of communes think that attracting inwardinvestment should be their key LED function, reflecting aperception of their role as being important agents in theprocess of building institutional thickness to hold down theglobal. This involves promotion and marketing, looking forand assisting investors, preparing communal land to makeit attractive for investors and manipulating the local taxsystem to provide incentives for investment. The next twomost significant functions are also partially related to attract-ing investment. Creating a good climate for LED involvescommune authorities taking steps to create a good climatefor local entrepreneurs, SMEs and investors. Improving thetechnical infrastructure is important in order to raise the stan-dard of living of local inhabitants, and at the same time tomake the commune more attractive to investors by offeringa good infrastructure for business and for the workforce.

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Table 3. The main opportunities for economic development (percent)

Industry 94 Good location and connectedness 19

Tourism 78 Construction 12

Services 34 SMEs 12

Trade 23 Good technical infrastructure 8

Agriculture and fisheries 22 Special Economic Zone 3


Table 4. The key functions of the communeauthority (percent)

Attracting inward investment 81

Creating a good climate for LED 42

Improving the technical infrastructure 42

Spatial and LED planning 41

Other LED functions 29

Co-operating with other organisations 14


LED planning and spatial planning to manage the com-munes’ resources are also seen as important functions. OtherLED functions include applying for grants, offering training,assisting restructuring and improving local government ser-vices, while co-operation with a range of other organisationsis also seen as an important function.

To operationalise these functions, communes have iden-tified key strategies for achieving LED (Table 5) which arebased around local government’s ability to implement fiscal,expenditure, debt and administrative policies in a way ap-propriate for local development. The most frequent type ofstrategy development is to develop the communes’ compe-tency in planning and in making the best use of the resourcesavailable. Thus the development of strategy itself was seenas a key goal of activity in combination with spatial man-agement and planning. Public expenditure on infrastructureworks to create local employment, and the buying and/orpreparation of land and buildings for economic purposes,were seen as important ways of developing the local resourcebase, reflecting the fact that the public administration systemis one of the major investors in most localities (Regulska,1997b). The development of the resource base through theimprovement of the communes’ technical infrastructure isalso an important strategy, both to improve people’s qualityof life, and to make the area more attractive for inward in-vestment. 10% of communes also stressed the developmentof the tourist infrastructure. Promoting the commune to in-ward investors was the third most important strategy, withthe emphasis on place promotional activities, searching forinvestors, facilitating the investment process, and manipu-lating local tax systems to attract investors. The third partof capacity building, developing collaborative and collectiveinteraction between institutions, was also seen as important.Establishing co-operation with other organisations (the EU,foreign and Polish cities, the private sector, other communesand the commune inhabitants) and applying for additionalsources of finance were cited by about one-quarter of com-

Table 5. Commune authorities’ key strategies for tacklingLED (percent)

Planning and management of commune resources 79

Development of infrastructure 76

Promotion and marketing 63

Co-operation with other organisations 27

Applying for additional finance 24

Supporting local entrepreneurs and SMEs 17


munes, with support for local entrepreneurs also identifiedas an important strategy.

Reflecting the emphasis placed by commune authoritieson attracting investment as their key LED function muchstrategic emphasis is placed on the need to incorporateprivate capital in development. The majority of communeauthorities thought that both Polish private capital (93% ofcommunes) and foreign private capital (85%) would play animportant role in future LED. However, it was significantthat one quarter of rural communes did not see any likeli-hood of FDI playing an important role in the development oftheir communes, suggesting that they did not consider them-selves strong enough to influence larger economic processesin order to attract and embed inward investment in theirlocalities.

The importance given in these strategic responses to thisperceived need to be a part of the institutional thickness re-sponsible for attracting and embedding inward investmentis reflected in the emphasis placed upon place promotion.Overall, place promotion of some sort is undertaken by91% of communes (100% of regional capitals and largerurban communes). Rural communes (83%) and communeslocated in stagnating regions (82%) are less likely to en-gage in promotion as their budgets are too small, but evenin these cases a significant majority of communes under-take promotion. This promotion is geographically targetedinternationally (64%), nationally (79%), regionally (86%)and within the commune (75%). Rural communes and com-munes of<10,000 population are significantly less likelyto attempt to promote their locations internationally (54%and 36%, respectively, compared to 100% of regional cap-itals) and nationally (57% of rural communes compared to100% of regional capitals). A similar pattern is found forcommunes located in stagnating regions with only 46% ofthem promoting themselves at an international level com-pared to 68% of communes in the more progressive regions.It is clear that communes vary in their belief in their ability

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Table 6. Target for attracting inward investment (percent)

Industry 84 Trade 8

Tourism 67 Restaurants and hotels 7

Services 19 Housing construction 5

Sport, education and leisure 11 Agriculture 4


to contribute to the development of the institutional thick-ness required to attract and embed inward investment. Thelower proportion of communes targeting international cap-ital reflects a belief among some that they simply cannotinfluence processes of internationalisation and FDI, and thisis particularly true of the communes in rural and stagnat-ing regions which lack resources and probably sufficient andsuitable partners. Nevertheless, the majority of communesfeel that they must be involved in promotion, despite therebeing question marks over its effectiveness (e.g. Lovering,1995).

Again, the path-dependent nature of development is il-lustrated by the fact that industry is the main target forpromotion aimed at attracting inward investment (Table 6).While a range of industrial types are targeted, investment inthe food processing industry is the most sought after (28%of communes). Some evidence of attempts to diversify thelocal economic base is provided by the fact that tourismis the next most sought after type of investment, followedby the service sector. Sport, education and leisure are alsoimportant targets.

Organisational responses within local government

The first aspect of the organisational structure addressed wasthe extent to which commune authorities have establishednew internal departments to deal with aspects of LED as ameasure of the degree of organisational innovation to tackleLED. Overall, 64% of communes have established new de-partments. The relative size of commune authorities is animportant influence on this result. The number of council-lors in an authority is proportional to the population size ofthe commune. Thus larger communes have more personnel,and resources, available to establish new departments. Thus100% of the authorities of regional capitals have establishedat least one new department, with the proportion droppingto 38% of rural communes. The lack of a new department totackle a particular set of issues does not mean that they arenot being dealt with, but the presence of a new departmentdoes indicate a particular organisational response to specificLED problems.

The main type of new department created are thoseconcerned with promotion, marketing and assisting FDI(Table 7). Tourism is the next most significant area of de-velopment for which new departments have been created.What is significant here is that by far the majority of newdepartments created are focused on influencing economicprocesses outside of the locality (such as FDI or nationaland international tourist flows). Rather less emphasis hasbeen placed on a range of departments dealing with aspects

of local restructuring, such as training, finance and assist-ing privatisation and restructuring of the economy. Lessfrequent initiatives are specialist commune units focusingon city or town development, business support and man-agement of commune property, aspects which are morecommonly dealt with as a normal function of the communeauthority. This reflects the opinion of communes that theirkey function is attracting inward investment, but may sug-gest an overemphasis on seeking external solutions to localproblems, rather than concentrating on supporting the localeconomy in other ways, such as those noted above. Given theincreasingly intense nature of place based competition forexternal resources and inward investment at a global scalethis organisational response may need evaluation in the longterm as only so many localities can be successful.

One significant element of the complex processes of ca-pacity building and developing institutional thickness areprocesses of collaborative and collective interaction betweeninstitutions. In Western systems of local governance muchemphasis has been placed on various forms of partnershiparrangements in achieving institutional thickness (Bennettand Krebs, 1991). Thus the survey sought to establish anoverview of the frequency and type of partnership(s) be-tween commune authorities and other organisations. Themajority (88%) of communes had developed some kind ofpartnership arrangement(s) to assist LED. However, bearingin mind that communist rule left regions administrativelyweak and underdeveloped, there is variation in the ability ofcommunes to engage with other organisations, from regionalcapitals (4% of which do not engage in formal collaboration)and urban communes>10,000 population (5% did not), tourban communes<10,000 population (13% did not) andrural communes (20% did not). There is also significant ge-ographical diversity and variation by commune type in thenumber of other institutions which communes collaboratewith. A higher proportion of regional capitals and the largerurban communes have formal links with four or more otherorganisations than the other categories of communes. This isrelated partly to the larger sized communes having more per-sonnel and resources to develop formal links, and partly tothe fact that there are more potential regional partners in andaround the more urbanised and industrialised communes.

This variation is further reflected in the degree of com-plexity of partnership arrangements. While some communeshave no partners at all to assist with LED, others have formeddiverse partnerships with organisations at the international,national and regional/local scales which produces a complexpattern of governance arrangements. Internationally, linksare formed with global organisations (the World Bank, USPeace Corp, UNDP), EU programmes such as STRUDERand PHARE, and organisations representing other nations inthe region (such as the Polish-German Association for Eco-nomic Support or the Polish-Lithuanian Economic Cham-ber). At a national level the key links are with governmentministries and departments (e.g. the Treasury or the Ministryfor Environmental Protection); national chambers estab-lished to promote development in certain sectors (especiallythe Tourist and Agricultural Chambers); national founda-

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Table 7. Main types of new LED departments created within commune authorities(percent)

Promotion and marketing 51 Finance for local entrepreneurs 10

Tourism 22 Assisting restructuring 8

Retraining the unemployed 16 City/town development unit 6

Economic development 13 Centre for business support 3

Training local entrepreneurs 12 Management of communal property 3

Assisting privatisation 11


tions (e.g. the Foundation for the Development of the WaterSupply in Rural Areas); and with other types of nationalassociations (such as the Association of Polish Employersor the Union of Rural Communes in Poland).

Numerically, regional and local institutions form themost important types of partners. In particular, the regionalgovernment (voivodship) (73% of communes), RegionalDevelopment Agencies (53%) and the Chambers of Com-merce and Industry (23%) are the most frequent partners.Co-operation with Unions or Associations of Communes,made possible under the 1990 Act, are also an importanttype of partnership (14% of communes). Other types oflocal partners include various organisations for supportingentrepreneurship and the local economy, and some key lo-cal actors such as large state owned enterprises and powerplants. Formal association with the representatives of pri-vate capital is maintained by 18% of communes, which isperhaps disappointing given the emphasis placed on the needfor private capital to assist LED, and indicates a low level ofpublic-private partnership.

The majority of communes thus engage in a varietyof partnership arrangements, ranging from simple partner-ships with one other organisation to complex, multi-scalearrangements, as a part of attempts to achieve the appropri-ate institutional thickness required to assist LED. However,there is considerable variation in local governance struc-tures, suggesting a complex geography of capacity buildingand institutional thickness, and hence the ability of lo-calities to influence processes of LED, internationalisationand FDI. Local government, and its relationship with otherinstitutions, thus forms one important component in the‘constellation of institutions’ which underpin the varied anddivergent pathways of regional development emerging in thewake of central planning (Swain and Hardy, 1998; Hausneret al., 1997).

Limitations on the LED role of commune authorities

The extent to which local government can intervene in LEDcan be limited by organisational and economic constraints.In Poland, the key limitation for commune authorities in car-rying out their LED role is the financial limitations imposedby their budgets which are generally considered too smallfor their statutory duties (Table 8). Budgetary problems areheightened by the fact that many local populations have lowincomes and thus cannot pay high taxes, and that credit ishard to come by. The second major problem, the legal frame-

work within which communes operate, is closely relatedto this point. Communes noted a need for political decen-tralisation and a strengthening of local government whichsupports assessments that previous reforms have been toolimited (Regulska, 1997b; Grochowski, 1997). At the timeof this survey, there was a feeling that in certain areas thereis too much central decision making without considerationof local needs and opportunities. One key financial area isthat communes cannot control the proportion of local taxeswhich are retained locally. In addition, in some areas (suchas education and certain roads) decisions are made by cen-tral government, but have to be financed by the commune.Communes are also limited in their ability to manipulatelocal taxes, being legally restricted to setting the level ofreal estate tax. In these terms, the decision making pow-ers of communes and their areas of competence are felt tobe too limited. The reforms of 1999 are intended to decen-tralise decision-making considerably. They may bring moreco-ordination at a regional and sub-regional level to develop-ment, but as noted above the new financial regulations leavegminas in a very similar situation.

A series of other points were also identified, includingthe problem of the poor technical infrastructure of com-munes and a shortage of industry and industrial investment.Some communes are having problems getting the privatesector to co-operate with them in development. Some lo-cal authorities lack the skills, knowledge and personnel toachieve good local self-government, and report problemswith achieving partnerships with other organisations. Thispoint reflects broader calls for new professional standardsand training for local government employees to make localgovernment more effective (Grochowski, 1997). The ma-jority of the problems identified here were also noted byHausner et al. (1997) in their study of south-east Poland.

Conclusion

The aim of this paper was to establish a baseline of knowl-edge about the role of local government in LED in Poland.The focus has been on identifying the basic characteristics ofthe problems faced by commune authorities, and how theyhave responded to their situation in terms of their attitudes toinvolvement in LED, the strategic responses developed, andthe new organisational forms adopted to tackle development.The paper has not attempted to evaluate the performance oflocal authorities, or their ability to contribute to important

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Table 8. Main factors hindering the LED role of commune authorities (percent)

Financial limitations 50

Problems with the legal framework for communes 27

Poor technical infrastructure 8

Private sector not cooperative 5

Lacking local industry/industrial investment or too agricultural 3

Lack of intellectual resources and personnel 3

Problems in establishing permanent cooperation with other organisations 3


processes such as building institutional thickness. However,it does provide a systematic survey of the general charac-teristics of local government involvement in LED which isrequired as background knowledge for in-depth case studiesaddressing such questions. Despite the further reforms of1999 the main findings here are still relevant for the futureLED role of the communes. How effective Poland’s new ex-periment with local governance will be remains to be seen,but the problems and strategies identified in this analysis willremain important in the immediate future.

Local government at the commune level in Poland faces anumber of problems associated with local development. Keyamong these are the nature of local economies themselvesas attempts are made to move to a market economy, thepoor quality of local infrastructure, the nature of centre-localrelations and a lack of investment and capital, both localand FDI. In the face of these problems commune authoritieshave a positive attitude to their LED role, seeing themselvesas key agents at the local level for regulating development.There is an emphasis on the role of industry in the pro-posed development of most communes, and while this inmany cases builds on established strengths, it also high-lights the importance placed on attracting inward investmentwhich is considered to be a key function of the communeauthority. Strategic developments reflect this emphasis, withmanaging local resources, developing the infrastructure andpromotion being the main areas of strategy development.This is also reflected in organisational changes within com-munes with the vast majority of new departments focusingon promotion, marketing, attracting FDI and tourism. Theformation of partnerships is important in most communes,but there is considerable variation in the degree and natureof local collaborative arrangements, and in particular thereis less collaboration with the private sector than communeauthorities wish. More in-depth work is required to assessthe degree of development of institutional thickness and theability of local government in collaboration with other or-ganisations to ‘hold down the global’. However, what isclear from these results is that there is considerable spatialvariation in the organisational arrangements in which localgovernment is involved. As local government struggles toassist development in localities, this uneven geography ofgovernance will have implications for the spatially complexand uneven nature of transformation.

Acknowledgements

The research for this paper was undertaken while Dr Youngwas in receipt of a Visiting Professorship at the Depart-ment of Urban Geography and Tourism, University ofLodz. Financial support was received from the Departmentof Environmental and Geographical Sciences, ManchesterMetropolitan University. Thanks are due to Professor SLiszewski, Dr Jacek Kaczmarek and all the commune au-thorities who responded to the survey.

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