ABSTRACT
In Poland the price reform of 1982 aimed at changing relative prices and reducing monetary overhang and led to an initial jump of 100% in the price level, which translated into an accelerated inflation rate, which stabilized at 15-20% p.a. before 1987. According to S. Gomulka, the Polish reform programs were initiated by a severe decline of the internal and external credibility of macroeconomic policies in 1989, with massive subsidies leading to large budget deficits and near hyperinflation, and the rapid rise of external debt. Estimated efficiency of Western capital in Polish industry during 1961-1983 suggests that, “an infusion of Western capital into an economic system that is not sufficiently market oriented is likely to be ineffective”. Surveys conducted in the 1980s showed that the majority of Polish people desired a market solution, but without realizing the consequences or of market reforms.
