ABSTRACT
The implementation of the first stage of economic reforms started in the summer of 1981, just several months before the declaration of martial law. Predictably, from the beginning not everything went according to plan. The number of the branch ministries was reduced to five instead of two specified by the reform blueprint. This effectively preserved the traditional administrative structure and severely limited the envisioned autonomy of enterprises. The first stage of economic reforms had created a new financial system for state enterprises, increased the importance of financial instruments, and partly reformed the intermediate level. The gradual democratization of the political life that followed was accompanied by the continuing debate on economic reform. The general recognition that the goals of the first stage of economic reform have not been reached and that continuing domination of the branch ministries precluded the economy from reaching higher performance paved the way to the second stage of reforms.
