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Poland and economy
Since the turning point of 1989, Poland has undergone great political, social and economic changes. The introduction of democratic structures, the shift from a command economy to the free market and wide-ranging systemic reforms are all achievements of which Poles can be proud.
The start of the economic reform process was extremely tough, though few in Poland doubted how the new economic system should look. Communist rule had over many years brought the country - and an increasingly impoverished society - to its knees. During the period of transformation, the Polish economy was still therefore in an awful state and radical reform was selected as the only solution to save it. To this day, Polish opinion is still divided as to the effects of this decision. But there is little doubt about one thing: without such reforms the costs of the transformation would have been significantly higher and Poland would not have come as far down the road towards the EU as it has.

In January 1990, state-controlled prices were lifted and from then on food and trade margins were largely shaped by market forces. The market reform plan assumed that prices would rise on average by 50%. In fact, they rose at the time by 78% and some goods and services by even as much as 600%. But this was a first step towards prices as they operate in developed capitalist economies. Furthermore, demand and supply were again activated.

There was also a revolution in the liberalisation of international trade. The zloty became convertible to other currencies and internal convertibility was also established, providing another platform for dynamic economic growth. New markets in countries that had been treated not so long before as ideological as well as economic enemies were opened up to Polish companies. The EU and USA became the key directions in which Polish goods were exported.

The Leszek Balcerowicz Plan, its author being Finance Minister in the early 1990s, liberalised domestic prices and led to rising imports, a tightening of enterprises’ pay structures and financial policy in relation to enterprises, the introduction of interest rates above the rate of inflation, the stabilisation of the zloty against the dollar and the introduction of zloty exchangeability. The Polish economy stabilised and opened up to the world.

But liberalisation and stabilisation would not have brought any long-term effects and an efficient market system if not for structural reforms. Banking and lending policies were reformed, while newly reshaped ownership relations, independent enterprises and strengthened domestic competition all had massive impacts. Capital and labour markets also started to operate in Poland.  

Consistently implemented economic policies led Poland in a relatively short time on to the list of the most dynamically developing economies in Europe. Already by the mid-1990s Poland had become known as the ‘flying Eagle of Europe’ and the ‘Tiger of Europe.’

One fundamental priority of successive governments has been economic growth. This is not only a condition of improving Poles’ standards of living, but is also a foundation for realising the strategic goal of catching up with the developed economies of Europe and the rest of the world. The means of achieving this goal is EU membership. To this end all main political forces in Poland are agreed, although there are differences, of course, on how to achieve it.

The reforms of the transition period and subsequent hard and consistent monetary policy gave the Polish economy solid foundations: a strong currency and permanently falling inflation (currently at about 1%). The implementation of systemic reforms and responsible government policies, as well as improved global competitiveness, mean that expectations of a return to fast-track economic growth are justified.
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