Poland-ECONOMIC PROSPECTS

Poland was the first of the East European Comecon nations to initiate a move from a centrally planned economy to a Westerntype market economy. In many ways, however, the economic crisis that the postcommunist governments inherited in Poland was more severe than that in other countries undergoing the same transition. The early stages of Poland's transformation proved more difficult, more painful, and took longer than expected. Nevertheless, the first three postcommunist years brought a number of important achievements: elimination of shortages in the domestic consumers' market; considerable reduction in the rate of inflation; the quick dismantling of the mechanism of the command economy; marketization and liberalization of economic life; internal convertibility of currency; a very rapid "small privatization" and a more uneven "large privatization"; the creation of some of the legal and institutional framework fundamental to a market economy; and an impressive expansion in hard-currency exports. The banking system had moved decisively away from the previous state monopoly system, but the seventy commercial banks operating in 1992 still did not constitute a full Western-style commercial system. The stock market established in 1990 awaited the impetus of faster privatization to expand beyond its initial modest scale. Overall, by 1992 these initial steps had built a rather sound base for further progress in the near term and provided reason for guarded optimism over the long term.

Geographic location, the cause of many tragic events in Poland's history, provides a potentially major advantage in the new context of a united Europe. Good commercial relations with neighbors on both sides--Germany, Ukraine, Belarus, and Russia-- promise rapid recovery from the end of the Comecon era. The political aspects of economic policy making have been problematic in the early reform years, as factionalism has hindered government implementation of needed legislation. The impact of politics is especially noticeable in the privatization process, which was slowed dramatically by three changes in the privatization ministry between 1989 and 1992 and by attendant bickering over methodology and priorities. Nevertheless, possessing relatively favorable human and natural resources, and having taken some of the basic steps to repair the distortions of centralized management, the Polish economy showed signs in 1992 of becoming an open modern industrial system that could ensure a reasonable standard of living for its population.

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A number of English-language sources provide an overview of the Polish economy before and after the fall of the central planning system. Doing Business with Eastern Europe: Poland, a publication of Business International, outlines trade conditions in the 1980s from the viewpoint of Western business. Dariusz Rosati's Poland: Economic Reform and Policy in the 1980s and Poland: The Economy in the 1980s, edited by Roger Clarke, describe the reforms attempted by the last communist regimes in response to the failure of the system and the social upheavals that resulted. Poland: Politics, Economics, and Society by George Kolankiewicz and Paul G. Lewis describes economic conditions in the 1980s as they interacted with social and political changes. Several journal articles written by Zbigniew Fallenbuchl between 1990 and 1992 describe in detail the mechanics of Poland's postcommunist economic transition, including trade policy, banking and finance, and privatization issues. The statistical yearbook published annually by the Central Statistical Office in Warsaw is the fundamental source of economic statistics, but it is available only in Polish. (For further information and complete citations, see Bibliography.)

Data as of October 1992