FOR Communication 32/2018: The 100th anniversary of regaining independence and the standard of living in Poland
- On the eve of World War I in 1913, at the end of the Second Polish Republic in 1938, and at the end of the Polish People's Republic in 1988, the standard of living in Poland was about 20% of that in the USA. Due to the development during the Third Republic, it stands at around 50% now.
- After the first decade, the Second Polish Republic abandoned the path of reforms and openness to foreign capital, attempting instead to use the state as an engine of its growth. Only with market reforms and economic openness of the Third Polish Republic we started to close the development gap between Poland and the USA. Today the PiS government, as the authorities of the Second Polish Republic previously, is under the illusion that the state can replace entrepreneurs and foreign investors.
The first decade of the Second Polish Republic, when the state took on the role of the regulator, proved to be a relative success – even though Poland was cut off from its traditional markets by the outbreak of communism in Russia and a customs war with Germany. Postwar reconstruction, the inflow of foreign capital and economic reforms helped to regain pre-war levels of the standard of living even in comparison with the booming economy of the US.
The second decade turned out to be a period of direct state intervention and economic stagnation. Despite the low level of industrialization, The Great Depression affected Poland just as much as the US, due to mistakes in monetary policy. The state was ineptly attempting to replace foreign capital as the growth engine, which was finally interrupted by the outbreak of World War II (Koryś, 2015).
Although post-war reconstruction was dynamic and Western territories provided access to deeper capital resources, the Polish Peoples’ Republic suffered failure as well. Gierek’s thrust of investments on credit collapsed, and in the 80s Poland plunged into stagnation (Bukowski et al., 2015).
Systematic reduction of the development gaps between Poland and the US had not started until the Third Republic when our country returned to the path of regulatory reforms and openness to foreign capital as well as gained access to the European common market. However today the PiS government, like the authorities of the Second Republic of Poland, is under the illusion that the state can replace entrepreneurs and foreign investors.
Author:
Rafał Trzeciakowski, economist
http://rafal.trzeciakowski@for.org.pl
