17 - 23 May 2001
Issue No.534
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Al-Ahram Weekly On-line 17 - 23 May 2001 Issue No.534 |
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Poland: a success story
Poland has made huge economic and political advances since the end of the Cold War and is, in many ways, the envy of the region. But its outstanding economic and political achievements have come at great social cost. Today, three million Poles are without work. Unsurprisingly, the popular mood has lately moved towards the left.Politically, Poland has managed in 11 years to move from a totalitarian and authoritarian regime to a multi-party democracy based on the rule of law and parliamentary politics. In the economic arena, it has outstripped most of its eastern and central European neighbours in adapting to the market economy. Poles proudly point to the recent report of the Organisation of Economic Cooperation and Development (OECD), which judges that Poland's ambitious economic reform programme of the past decade was the most succesful in eastern and central Europe. Likewise, Poles celebrate a recent EU report which confirms that market mechanisms have been successfully applied to the economy. Poland's economic and political achievements have improved its prospects of joining the EU. The country has already shown its determination to make the sacrifices needed to join international forums. It laid off half its army to win membership of NATO. Its economic and political reforms show its commitment to achieving EU membership.
Poles are eager to continue in the same vein; they want their economy to be among the 20 largest in the world within the next decade. They have reason to be hopeful. Gross Domestic Product in 2000 was over US$160 billion. Income per head is US$4,000 per year. Poland also attracted some $50 billion in Foreign Direct Investment over the past decade. Last year alone, the inflow of foreign investment was US$8.5 billion, according to Under-Secretary of State to the Treasury Jacek Ambroziak.
Speaking to Ibrahim Nafie, Ambroziak described how those figures were achieved, saying that after the 1989 revolution, the treasury floated the Polish national currency, the zlotti. Beforehand, the foreign exchange market was based on artificial, multi-tiered exchange prices, and the zlotti was grossly overvalued. Between 1990-1993, a flexible foreign exchange rate was introduced. After 1993, the foreign exchange market was completely liberalised, making it an instrument of economic transformation.
The second most important task of the economic reform programme, said Ambroziak, was relinquishing the dirigiste policies used before 1989. Then, production was centralised, and sheltered from open market forces. Nor was it motivated by profit.
The decision to privatise public sector enterprises in 1990 began the privatisation process in the retail and service sectors. At first changes were cautious. Initially, the shares of only five companies were floated on the stock exchange. But soon afterwards the privatisation process quickened. Between July 1990 and July 2000, 5,243 public companies were privatised; 2,147 companies remain state-owned.
Ambroziak explained that the stock exchange was a main instrument of economic reform. The stock exchange was created in 1990 and modelled on the Paris bourse. However, the Warsaw Stock Exchange has a limited number of quoted companies, because privatisation has mainly been carried out by strategic investors. The reason behind the relative success of the Polish privatisation programme is the keen interest taken by foreign investors in Poland. German investors, in particular, have been keen to invest in Poland and account for 14 per cent of investment in privatised Polish firms. Investors from the United States (eight per cent), the Netherlands (four per cent), France and Sweden (three per cent each) have followed the Germans. In total, foreign investment in Poland has amounted to some US$50 billion over the past decade. Foreign investors now own a 40 per cent share in privatised Polish companies. Poland aims to continue with its privatisation plans. The government aims to privatise 85 per cent of the Polish economy by 2005, and 90 per cent by 2010. Privatisation has reached the banking sector, railways, communications, energy, mining and the arms industry.
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