Polish Trade Adjustment Under Convertibility
Andrej Kondratowicz and Jan Michalek
This chapter deals with two related phenomena: recent institutional and policy changes in Polish foreign trade, and the resulting adjustment in export-import flows. Of all the systemic changes attempted in Poland in the course of the reform, introducing currency convertibility should be, as we will see, singled out as the most important element.
Trade adjustment has several dimensions, including changes in volume, in composition of commodity groups, and in geographical origination or destination. While focusing on all of the above, we win try not to lose sight of the general picture of reforming the Polish economy. Foreign trade adjustment is therefore seen as but one element of a radical overall adjustment program, known as the Balcerowicz Plan (henceforth BP), 1 consisting of two sequential parts: Phase I--stabilization, and Phase II--structural change.
The necessity of attempting a radical economic reform stemmed from the deep and worsening disequilibrium characterizing the Polish economy of the late 1980s. Like all other CPES, the Polish economy was haunted by numerous incurable inefficiencies manifesting themselves at both the macro and micro levels. The notorious failure to achieve allocative, as well as productive, efficiency led to repeated attempts at reforming the economic mechanism. The repeating sequence of embarking on, and retreating from, a "decentralization" reform, which characterizes all CPEs since the 1950s, has been well documented and analyzed in the literature. 2