Abstract
Poland's economy rebounded dramatically in 1992-93, several years after the nation embarded on a comprehensive program of economic transformation. This paper describes Polan's steps in the areas of public finance, monetary policy and financial sector reform, trade and exchange rate policy, and microeconomic liberalization, as well as the social impact of transition.
Abstract
Poland has received much attention recently as economic activity finally rebounded following a sharp collapse in output ushered in by the implementation in 1990 of a comprehensive program of economic transformation. The rebound has been widely viewed as indicating that the reform efforts of the past three years are at last bearing fruit. Since Poland embarked on its transformation program earlier than the other countries in Eastern and Central Europe, as well as before the countries of the former Soviet Union, this evidence of success, and Poland’s experience more generally, are believed to contain valuable lessons for the countries that are following on the road to a market economy. The focus of this Occasional Paper is on describing the salient features of Poland’s economic transformation with a view to highlighting the general characteristics of that process.
Abstract
In the 1980s, Poland experienced large changes in the financial position of the general government as the economy underwent upheavals that led to its 1990 economic transformation program.1 During 1979–81, the country had already experienced an economic crisis that had been accompanied by a sharp deterioration in its fiscal accounts. Following a series of partial fiscal reforms that modified the system of taxes and streamlined subsidies with a view to imposing greater discipline on enterprises, the financial position of the general government improved significantly during 1982–83 and remained broadly in balance during 1984–88. However, the improvement was temporary and, in 1989, general government finances deteriorated dramatically, reaching a deficit of 8 percent of GDP that was attributable more to a decline in tax revenues than to an increase in general government expenditures. The radical changes associated with the introduction of the transformation program in 1990 implied equally drastic changes for the country’s fiscal policy framework.
Abstract
There are close linkages between financial sector reforms, the conduct of monetary policy, and macroeconomic and financial stabilization. Indeed, the success of the transformation programs in previously centrally planned economies depends crucially on the development of efficient financial intermediaries and of credit and capital markets. The mammoth restructuring of the productive sectors needed for a sustained improvement in productivity and growth requires developing efficient financial markets to mobilize savings and channel them efficiently. Against this background, this section reviews the developments in the area of monetary policy and financial sector reform, concentrating on the period 1991–93.
Abstract
One of the choices facing countries in transition to a market economy concerns which exchange rate regime to adopt. In general, the selection made has reflected, among other things, the individual country’s particular economic objectives, as well as its initial conditions and the source of shocks to the economy.
Abstract
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Abstract
When Poland began its economic transformation from a centrally planned economy in 1990,1 few observers expected the sharp declines in output that would accompany the reform (see Chart 5–1 and Appendix Table A10). Traditional economic reasoning, while recognizing the importance of adjustment costs, assigned greater weight to the positive benefits of abandoning inefficient modes of production and liberalizing trade transactions. Sharply negative rates of GDP growth in Poland and in other reforming economies, however, soon shifted opinion from guarded optimism to deep pessimism. Academic papers that investigated various explanations of the “output collapse” proliferated. Macroeconomic factors such as the disbanding of the Council of Mutual Economic Assistance (CMEA) and the concomitant terms–of–trade deterioration, a policy–induced “credit crunch,” and fiscal disinflation were investigated and assigned varying amounts of blame.2 Economists and other social scientists belonging to the “institutional” school of thought felt vindicated by developments that seemed to indicate that the profound tearing down and rebuilding of institutions necessitated by the transformation process was time–consuming and expensive, a fact undervalued by more mainstream economists and policymakers.
Abstract
Since the outset of the reform effort in 1990, ital Poland has made great strides in expanding its trade in goods with the rest of the world.1 Poland has at the same time experienced a remarkable reorientation of its trade from countries of the former Council of Mutual Economic Assistance (CMEA) to those of western Europe, especially Germany. A measure of this success is the doubling of the convertible currency trade (the sum of exports and imports) between 1989 and 1993 (Appendix Tables Al4 and A15); this is equivalent to an increase of over 20.2 percentage points of GDP, from 16.9 percent to 37.1 percent of GDP (purchasing power parity basis with 1991 as base). The corresponding data for total trade (including transferable ruble trade and trade under bilateral agreements) indicates an increase of 13.1 percentage points of GDP, indicating not only a reorientation, but an expansion, of trade.2
Abstract
Poland’s pretransition social protection arrangements centered around an extensive social insurance system, which, among other things, provided for old-age, disability, and survivors pensions, health care, work injury benefits, sick pay, family allowances, and maternity benefits. In addition, there existed a limited system of local social assistance to support the poor. While, on the surface, these systems look much like the arrangements found in many market economies, the differences were in fact striking.