Leszek Balcerowicz has been widely hailed as the father of Poland’s economic transformation after the collapse of communism 20 years ago. It was during his stint as minister of economy – under the country’s first democratic government since the Second World War – that the prominent economist introduced the ‘Balcerowicz plan’.

The programme of shock therapy included reforms to move Poland from a communist economy based on state ownership to a capitalist market economy. Though his plans were controversial, sacrificing short-term gains for long-term expansion, Poland’s growth rate was the highest of all former communist countries from 1989 to 2000. Many have also credited Mr Balcerowicz’s moves during his time as the president of the National Bank of Poland for helping the country to weather the storm of recession more successfully than any other EU country (see next article).

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Robust state

“We are going to avoid recession this year, probably the only EU country to do so, but certainly the only one in the region of eastern and central Europe,” says Mr Balcerowicz. He adds that three factors have helped to keep the country of 38 million people out of the financial crisis: the country is the largest economy in the region and therefore less dependent on foreign markets; unlike Russia and Ukraine, Poland is not dependent on single commodities to export (and hence does not suffer from the related boom and bust); and the rate of growth in the housing market was moderate compared with the rate of growth in neighbouring countries such as Hungary and Bulgaria. “Certainly Poland has been catching up since 1991 in a sense that we were growing much faster than western Europe and this, combined with the size of the Polish economy, makes it an attractive place to invest,” he says.

Mr Balcerowicz, whose awards have included Poland’s highest decoration – the Order of the White Eagle – as well as honorary doctorates from institutions such as DePaul University in Chicago and University of the Pacific in Peru, says that the country needs to continue to enact reforms such as fiscal consolidations and complete privatisation in order to build investor confidence. “You have to be a good product, which is a stable and dynamic economy, so it is the economic reforms that are the most important to attract foreign investors,” says Mr Balcerowicz. “It is a natural phenomenon that as Poland moves fast, we will move to higher and higher value-added sectors.”

Investor appeal

When asked what appealed to investors about Poland, Mr Balcerowicz says that the country’s population is highly educated (in 1995, 11% of the college-age population attended higher education institutions, but by 2005 that figure had jumped to 30%) and there is political security. “My impression from conversations I have had with investors is that the overall view of Poland is a dynamic and stable country, which is a member of the EU, and that makes exporting easier,” he says. “And pretty much everyone who has invested in Poland will tell you Poles work very well under the right management and right incentives.”

Mr Balcerowicz says that what is most exciting about the past 20 years has been the country avoiding deep financial crises, unlike its neighbours in Hungary, the Czech Republic and the Baltics. “It is like a race car because in the long run, even if you are quick at one part of the track, if you have an accident your average speed slows down very much,” he says. “So far, Poland has avoided the serious breakdowns in growth because of relatively prudent macroeconomic management.” Now that is a race car worth investing in.

Curriculum Vitae

Leszek Balcerowicz

2000National Bank of Poland

President

1992Warsaw School of Economics

Professor of economics

1989Poland

Deputy prime minister/minister of economy (1989 to 1991 and 1997 to 2000)