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Dissertations, Theses and Plan B Papers -- Abstract

Taylor, Gary Lee. The Economic Conversion in Poland. Plan B Paper, 1993. Major Professor: Bonnen. 

Poland, after forty years of Communist domination, has taken the first steps toward a Western-style, market-oriented economy. On January 1, 1990 the Solidarity-led government embarked upon the "great leap forward", an immediate, single step from the command system that had been dominant for the past four decades to a free market system.

As part of this conversion process Poland has implemented an economic reform package designed to alleviate the problems created by the previous, socialist system. The goals of this plan are to control inflation, eliminate centrally controlled socialist regime into a market economy. The program contains a series of austerity measures that include (1) a sharp reduction or total elimination of state subsidies to both producers and consumers, (2) elimination of price controls, (3) introduction of legilations to outlaw monopolies, (4) liberalization of trade, (5) making the zloty convertible on the world market, (6) increasing the private ownership of the country's assets, and (7) reform of the banking and tax systems. Assistance in this endeavor has been provided by the International Monetary Fund (IMF), loans from the World Bank, and debt holders assurances to write off some or all of the massive foreign debt, in excess of $40 billion, in an economy with a gross domestic product of $63.86 billion in 1990 (International Financial Statistics).

Poland's final goal in this process is to establish a strong, stable, market-oriented economy, based on the principles of private ownership, liberalized trade, and increased integration with Europe and the rest of the world. At the present time the success of the "Balcerowicz Plan", named for the finance minister of the Solidarity government, is a topic of debate in both Poland and the rest of the world. Over the past two years some of the objectives have been achieved; hyperinflation has been curbed, most prices liberalized, the zloty has been made convertible, and most subsidies have been removed. However, the problems of balancing the budget, reorganizing the resource and product allocation system, both the intermediate and final stages, and stabilizing the exchange rate still remain.