Stabilization and Structural Adjustment in Poland

On attaining office in Autumn 1989, the Solidarity-led government in Poland faced two enormous tasks. First was the restoration of stability to an economy prone to hyperinflation; second, was the replacement of a crumbling command system in favour of a market mechanism, in a country whose market institutions had been destroyed under forty years of communist rule. Stabilization and Structural Adjustment in Poland recounts the events of this period and the course taken by the new government. The authors analyse the issues involved and their significance for the transition process in Poland and elsewhere. The book is divided into four parts. Part I outlines the economic and intellectual climate prior to the introduction of the government's bold plan. Named the Balcerowicz Plan after its chief architect, this aimed to liberalize and stabilize the economy simultaneously. Part II examines the macroeconomic situation in this period. The authors discuss the initial improvements - the improved balance of trade, the accumulation of foreign reserves and the increase in the external value of the zloty. These developments, however, were short lived, and the macroeconomy soon began to decline again leading to a longer than expected recession. Part III looks at the structural aspects of transition in both industry and agriculture. The authors examine the problems of introducing privatization, difficulties in the labour markets and organizational issues. Part IV discusses the social aspects of transition, with particular emphasis on health, social insurance and the environment. The book analyses the negative reaction to the Balcerowicz reforms expressed in the defeat of the government in the 1991 election. An appendix presents a chronology of major political and economic events during this period. While some of the issues discussed are peculiar to Poland, most of them are inherent to the transition process. They can, therefore, be related to other former communist countries now struggling to introduce a modern capitalist system.