ABSTRACT
This chapter reviews Polish economic growth and outlines the new economic strategy pursued under Edward Gierek. It analyzes some principal aspects of conventional wisdom as challenged by Polish experience. Economic growth in Poland was fueled by an investment boom, itself sustained in significant degree by foreign credit. Perhaps the major problem of political economy in Poland is to design an economic structure where the "legitimate" demand for resources does not exceed the ability of the economy to produce. Central planning was to concentrate on basic questions of macroeconomic structure and development strategy, while WOGi and their enterprises were to occupy themselves with current planning and production. The strategic goals of the reform were to strengthen central planning and simultaneously increase the independence and responsibility of enterprises and groups of enterprises. If wages are tied to output, output is expressed in current prices, and prices are controlled by the enterprise, the stage is set for enterprise-generated inflation.
