Poland’s Independence and Standard of Living in Poland

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100 years ago, Poland regained independence, but its economic success started only 30 years ago. Neither the Second Polish Republic after World War I, nor the socialist People’s Republic of Poland after World War II managed to significantly increase standard of living compared to the United States.

Only after market reforms started in 1989 bringing economic openness and inflow of FDI Third Polish Republic has been steadily closing the gap.

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 Law and Justice government, similarly to the authorities of the Second Polish Republic in the past, is under the illusion that the state can replace entrepreneurs and foreign investors.

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The first decade of the Second Polish Republic, when the state limited its role to some regulatory activities, 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.

Post-war reconstruction, with 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 USA.

The second decade of the interwar period turned out to be dominated by direct state intervention and economic stagnation. Despite the low level of industrialization, the Great Depression affected Poland just as much as the USA, 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. First Secretary of PZPR Edward Gierek’s thrust of investments on credit collapsed, and in the 1980s Poland plunged into stagnation (Bukowski et al. 2015).

Systematic reduction of the development gaps between Poland and the USA had not started until the Third Republic, when our country entered the path of free market reforms and openness to foreign capital, as well as gained access to the European common market.

Rafal Trzeciakowski
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