ABSTRACT
The significance of the Polish economic transition extends well beyond Poland. Poland is the largest, in terms of area and population, of the post-communist Eastern European countries that are not former republics of the Soviet Union. Poland’s location between Germany on the one hand and Ukraine, Belarus, Lithuania, and Russia’s Kahningradskaya oblast’ on the other means that Poland serves as a gateway to Europe for much of the former USSR. Poland was the first former Warsaw Pact country in which the communist party (in Poland, the PZPR) was voted out of office (in 1989) and replaced by a coalition led by the opposition Solidarity movement. Poland’s “big bang” program for the transition from socialism to capitalism that is frequently dated to January 1990 was also the first of its kind, and as such had an important influence on the transition programs adopted in the former Soviet Union, as well as in other Eastern European countries.
While the Polish transition has been full of surprises and can hardly be viewed as an unqualified success, it is this observer’s opinion that the transition has on the whole been successful, especially when compared with Poland’s neighbors to the East and South. While important mistakes were committed during the transition, many of Poland’s economic problems have resulted either from developments beyond policy makers’ control or from the nature of the post-communist transition, much of which, for Poland, was unprecedented.
In terms of successes, Poland was the first country in the region to break the recessionary forces accompanying the Eastern European transition. Since March 1992, in fact, Poland has been one of 464Europe’s fastest growing economies. The restoration of growth occurred simultaneously with sustained declines in inflation rates, which were bordering on hyperinflationary levels at the start of the transition in late 1989 and early 1990. Poland since 1990 has made major progress in attaining external balance and increasing external creditworthiness; agreements were concluded forgiving significant shares of Poland’s external indebtedness vis-à-vis the Paris Club of creditor governments (in 1991) and the London Club of creditor banks (in 1994). Poland’s foreign trade has been definitively reoriented away from the former members of the Council for Mutual Economic Assistance (CMEA) toward the developed capitalist countries of the Organization for Economic Cooperation and Development (OECD). Poland has been a leader in establishing new forms of intra- and extra-regional integration. Finally, Poland has established the region’s largest private sector, and the Warsaw stock market enjoyed an impressive boom in 1993.
On the other hand, Poland’s economic successes have been neither complete nor widely generalizable to other countries. Large, inefficient state-owned enterprises (SOEs) have resisted programs for privatization, restructuring, and bankruptcy, and the banking system’s serious problems have eluded resolution. State budget deficits on the order of 3–5 percent of gross domestic product (GDP) have persisted since 1991, and foreign investment has been less than anticipated (or needed). Moreover, a largely apathetic Polish electorate, when given a chance to register its (dis)approval of the course of the economic transition, has on two occasions failed to deliver votes of confidence. The second and most definitive vote occurred in the parliamentary elections of September 1993, which led to a government formed by the PZPR’s successor, the Democratic Left Alliance (SLD), in coalition with the Polish Peasant Party (PSL), a former PZPR ally. Finally, however the pluses and minuses of the Polish transition are assessed, the Polish-style “big bang” attempted in Russia during 1992–93 can only be characterized as a failure, the consequences of which have not yet been fully understood.
