Poland on the Speed and Scope of Transition

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Poland on the Speed and Scope of Transition

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Poland is a country in Central Europe, which has experienced a transition process. After World War II, the country was ruled by the workers' party, an emanation from USSR and communist party. During this period, Poland economy was centrally planned, which means that the Plan Office decided the natures of the goods produced and the quantity which each factory should issue. In the beginning of 1981, martial law was implemented under the leading power, General Jaruzelski, in order to remain with the USSR. During those years, Poland experienced very huge shortage in its economy. These lead to the important macroeconomic unbalance that the country had to face while it began its transition process.

In 1989, after elections and talks, the first non communist government in Eastern Europe was established with Tadeusz Mazowiecki, as the leader. In 1990, Lech Wałęsa became president of the new established Third Polish Republic.

Since 2004, Poland is a part of the European Union. Its GDP for 2007 was $632 billion, which made it ranked at the 22 place in global ranking according to GDP (nominal) and 52 by GDP growth rate .The inhabitants of Poland were about 38 million and the GDP per capita was $16 310 in 2007.

Shock therapy and gradualism : two alternative strategies
1. The ''shock therapy''
2. The ''gradual approach''
3. Differences and similarities
Reform process in Poland
1. Reasons for the choice of shock therapy
2. The ''Shock without therapy'' (1989- 1993)
3. The ''Strategy for Poland'' (1994-1997)
4. The last two stages: overcooling (1998- 2001) and period of accelerated growth (since 2002)
Pros and Cons of the different concepts
1. Pros and cons of shock therapy
2. Pros and cons of gradualism
The Chinese approach
1. Introduction to China's dual-track strategy
2. Comparison between transition in CEE countries and China

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[...] Shock Therapy and Gradualism: Two Alternative Strategies At first, we will introduce the two basic strategies of transition that Poland could apply: Shock therapy and gradualism Shock therapy - Introduction The concept of shock therapy or big-bang strategy as some call it was originally developed by the famous economist Jeffrey Sachs. During 1980s, he worked as an advisor for the Bolivian government and favorably helped to stop hyperinflation in this Latin American country. According to Sachs, the idea itself can be traced back to Western Germany after World War II. [...]

[...] In fact, Poland and other Eastern and Central European countries received loans from the International Monetary Fund and other international institutions, which should help to advance economic restructuring.[12] 4 Privatization of state-owned enterprises The privatization of state-owned enterprises (SOEs) is a highly complex process. On the one hand, there are a number different possibilities on how to privatize state-owned enterprises, such as mass privatization by the free distribution of vouchers, the direct sale of SOEs to in- or outsiders, management-employee buyouts and spontaneous privatization. [...]

[...] Nevertheless, after some problems at the beginning, PolandsPoland's' economy grew steadily and production output is now significantly above the level of 1989, which makes Poland one of the most successful transition economies in Central and Eastern Europe. (See chart Appendix 1 References 1 Books and papers - A. Akimov, B. Dollery, Financial Policy in Transition Economies, Problems of Economic Transition 50 (2008). - L. Balcerowicz, Understanding Postcommunist Transitions, Journal of Democracy 5 (1994). - H.W. Hoen, Shock versus gradualism in Central Europe reconsidered, Comparative Economic Studies 38 (1996). [...]

[...] Williamson, What Washington Means by Policy Reform, Institute for International Economics (1989) Websites - People on PBS, Commanding Heights: Interview with Jeffrey Sachs (2000) < http: chs.html> - Wikipedia, Balcerowicz Plan (2008) http://en.wikipedia.org/wiki/Balcerowicz_Plan - Wikipedia, Growth Rates http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(real)_growth_rate - The roots of economic growth in the long-run, < http: roots of economic growth in the long-run> 4 Charts 2 Chart 1 : GDP growth in Poland, Russia and China Source: Justin Yifu Lin, Lessons of China's Transition from a Planned Economy to a Market Economy (2005) 3 Chart 2 : GDP growth in CEE countries Source: Vladimir Popov, Shock Therapy vs. [...]

[...] Although, those new governments usually slowed down the speed of transition, but did not reverse it Pros and cons of gradualism The most obvious argument in favour of the gradual approach is the fact that there is more time to establish appropriate institutional underpinnings that are necessary to create an economic environment with well-defined, secure property rights and rules of contracts. Apart from political institutions, institutions for competitive policy should be established at an early point of time during the transition process. [...]

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