Economic Reform in Poland and the Czech Republic essays

Economic Reform in Poland and the Czech Republic essays Economic Reform in Poland and the Czech Republic After the fall of communism, several different countries decided that it was time to reform both current economic and political policies. Two countries that have had major economic reforms are Poland and the Czech Republic. However, the process of that change is different, each country had a different idea of how to become a new economic power in the 1990s. In December 1989, the new government, led by members of the labor union Solidarity, launched a reform program designed to transform Poland's economy into a free-market system. Price controls were lifted, while wage controls were imposed. State enterprises were transformed into joint-stock companies, and many were scheduled for eventual privatization or purchase by foreign investors. The restructuring of the Polish economy resulted in a massive layoff of workers and a rapid rise in unemployment. Poland's GDP declined sharply in 1990 and 1991. Poland had relied heavily on agriculture and would have been easier to reform if its exhausted industrial regions could have been abandoned. Poland may have been the first to try a rapid, sweeping conversion, deemed by the press as shock therapy. This conversion was to a capitalism and free market. It was also the first to overcome the resultant drop in economic output. Economic growth returned as early as the first half of 1992, and voters should have begun to notice the benefits by September 1993. However, rather than reformers gaining approval, the renamed communist party captured the largest number of seats in the Polish parliament in the elections that month. This was yet another step back for the reforming process. After its initial decline, Poland's economy began to improve. Annual GDP increased between 1992 and 1997, when it reached $135.7 billion. Industrial production increased by about 12 percent in 1994, which, accompanied by a 2 percent drop in unemp...