Poland The Economy
Polish coin from the early eleventh-century reign of
Boleslaw I the Brave
POLAND'S ECONOMIC GROWTH was favored by relatively rich
natural resources for both agriculture and industry.
Eastern
Europe's largest producer of food, Poland based its
sizeable and
varied industrial sector on ample coal supplies that made
it the
world's fourth largest coal producer in the 1970s. The
most
productive industries, such as equipment manufacturing and
food
processing, were built on the country's coal and soil
resources,
respectively, and energy supply still depended almost
entirely on
coal in the early 1990s.
After World War II, Poland's new communist rulers
reorganized
the economy on the model of state socialism established by
Joseph
V. Stalin in the Soviet Union. The result was the
predominance of
heavy industry, large enterprises, a topheavy centralized
bureaucracy controlling every aspect of production.
Considerations such as consumer demand and worker job
satisfaction, familiar in Western capitalist systems, were
ignored. Isolated from the processes of the marketplace,
pricing
and production levels were set to advance the master plans
of the
ruling party. The socioeconomic disproportions that
resulted from
this isolation were a burdensome legacy to the reform
governments
in the early postcommunist era.
Poland's abundant agricultural resources remained
largely in
private hands during the communist period, but the state
strongly
influenced that sector through taxes, controls on
materials, and
limits on the size of private plots. Many small industries
and
crafts also remained outside direct state control.
The Polish economy also was isolated from the
international
economy by the postwar nationalization of foreign trade.
Reforms
in the 1970s and 1980s gradually gave individual
enterprises more
direct control over their foreign trade activities,
bypassing
much of the state planning machinery. But until 1990
Polish trade
policy remained severely limited by its obligations to the
Council for Mutual Economic Assistance
(Comecon--see Glossary),
which was dominated by the Soviet Union. Although price
supports helped Poland's balance of trade within the system, they
also encouraged inefficient and low-quality production that
discouraged trade with the rest of the world.
Failure of central state planning to yield economic
growth
inspired social unrest and official policy reform in the
1970s
and the early 1980s, but no real change occurred until the
installation of a noncommunist government in mid-1989
(see The 1989 Elections and Their Aftermath
, ch. 1). With massive
public
support, the first noncommunist government imposed a
shocktherapy reform program in 1990. This program included
privatization of all parts of the Polish economy and a
rapid
shift from the unrealistic state planning system to a
Westernstyle market economy. The momentum of the early reform
days
flagged in the next two years, however. In 1992 signs of
economic
progress were very uneven. Consumer goods became much more
available, but the continued existence of inefficient
state
enterprises lowered productivity significantly,
unemployment
rose, and inflation became a serious threat after
initially being
reduced to virtually zero.
In its efforts to westernize its economy after 1989,
Poland
relied heavily on expertise and financial support from
international financial institutions. Although its
substantial
hard-currency debt was partially forgiven in 1991, the
remains of
the communist management system hindered efficient use of
foreign
capital and discouraged the foreign investment that Poland
vigorously sought. Thus, by 1992 what was initially
planned as a
brief period of painful economic adjustment had become a
much
longer ordeal that had brought mixed results.
Data as of October 1992
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