Almost thirty years ago, Poland managed to radically change its economy. Without them, the country would never have been able to become on a par with European states. And these reforms have two fathers. The first of them is Leszek Balcerowicz. This brilliant economist just developed a plan for transforming the economy. The second is Lech Walesa. He introduced transformations during his presidency. Without these two prominent figures, Poland, which we now know, simply could not exist. They succeeded in what did not work out for all the politicians of the post-Soviet space who were so eager for market transformations and European values. Now, the field of activity of Balcerovich is Ukraine. Poland has become a member of the EU, but will shock therapy help this time?
Biography
The future Polish economist was born in the small town of Lipno, which is located between Wroclaw and Poznan, in 1947. From childhood, he showed good learning abilities. In 1970, Leszek Balcerowicz graduated with honors from the Foreign Trade Department at the Warsaw Main School of Planning and Statistics. Later he continued his education abroad. In 1974, Balcerovich received his master's degree at St. John's University, which is located in New York. After that, he returned to Warsaw. There, already in 1975, he defended his doctoral dissertation. In the early 1980s, Balcerovich joined Solidarity. This opposition Communist Party included many pro-Western intellectuals-technocrats of his generation. Balcerowicz did not play a prominent role in Solidarity, but he liked to collaborate with the Network. The latter was a union of enterprises that united under the auspices of the party. This was the idea of “shock therapy” for Poland. It was needed in order to transform the planned economy into a market economy.
Carier start
As one of the leaders of Solidarity wrote in his memoirs, only Balcerovich could have come up with the idea of his own program of economic transformation at a time when meat was issued on cards in the country. In 1989, the ruling Communist Party and the opposition sat down at the negotiating table. In this discussion, the future reformer was only one of the participants. However, after a few months, Rakovsky and the Communists resigned. “Solidarity” comes to power. And at 42, Leszek Balcerowicz became deputy prime minister for economics.
In power
The economist received his first important position in the first non-communist cabinet, headed by Tadeusz Mazowiecki. The leader of Solidarity, Lech Walesa, went through a dozen candidates for the post of economic vice premier. Many prominent economists have abandoned this position. But Balcerovich agreed and did not lose.
Poland in the 1980-1990s
This is an extremely difficult period in the life of the country. The financial system was completely destroyed, there was a general deficit in the economy, prices were constantly rising, and the supply of even key products was disrupted. It was impossible to do without the formation of market mechanisms. Only in this way could financial and monetary stabilization be ensured. Balcerovich got through difficult times. There was no mechanism for the transition from industrial socialism to a market economy. Everything had to start from scratch. After Balcerovich left the government, he returned to science. He taught in Warsaw, lectured at European and American universities, wrote several books about the Polish reform experience. However, the theory was never enough for him, it was necessary to test all the hypotheses in practice.
Again in the government
In 1994, the economist joined forces with former Solidarity activists and created the Freedom Union, which he headed. Over time, the new party became the largest in Poland. In parliamentary elections in 1997, she took third place. So Leszek Balcerovich returned to power. He again took the post of Economic Vice Prime Minister and Minister of Finance. In 2000, Balcerovich, anticipating the imminent collapse of the coalition, left the government, managed to be an adviser to Shevardnadze, and in 2001 became president of the National Bank of the country. He left this post in 2007. In the same year, he was awarded the title of "the largest reformer in the European Union" by the Brussels Analytical Center. In 2008, the economist became one of eight members of the expert group that was involved in developing the response to the global financial crisis. In 2016, Balcerovich was appointed representative of the President of Ukraine in the Cabinet of Ministers of the country.
The essence of reform
In the early 1990s, Poland was in a state of deep systemic crisis. In the country, such phenomena as a decrease in the general standard of living, hyperinflation and a general decline in production were observed. The strategy for overcoming the crisis involved a transition to market mechanisms, a change in the ownership structure, demonopolization of the economy, and reforms in all areas. Balcerovich’s plan included:
- A tight restrictive monetary policy. She suggested a reduction in the issue of money and an increase in interest rates.
- Elimination of the budget deficit. Most tax benefits were abolished, as were subsidies for food, energy, raw materials, etc.
- Price liberalization. Only energy carriers, medicines, rents and transportation tariffs remained under state control.
- Establishment of partial convertibility of the zloty.
- Tight restrictive income policies. It included the abolition of full salary indexation and the establishment of high progressive tax rates.
results
In 1990, the government began implementing “shock therapy”. Subsidies for agriculture were canceled. The government managed to strengthen the zloty. However, there was a cash shortage at the enterprises; bank loans became inaccessible. Therefore, the production decline began. The population began to get poorer quickly. And unemployment has increased significantly. Thus, “shock therapy”, although it balanced the budget and helped overcome hyperinflation, however, it became a factor in the deepening crisis. Therefore, it was decided to soften it. In the first place was the structural adjustment of the economy, in the center of which was privatization. Already in 1992 she brought the first fruits.
Balcerovich and Ukraine
Poland was able to overcome the legacy of the administrative economy and even enter the European Union. However, will this experience help Ukraine? Economic reforms in Poland were successful, now they are trying to adapt them to new realities. “Shock therapy” in Ukraine was launched by the Yatsenyuk government. According to Balcerovich, this helped to avoid even more difficult times. He believes that the first thing to pay attention to is the development of the private sector. And this means the need for large-scale deregulation. The fight against corruption is also important. Relevant authorities should be fully operational. At the next stage, Balcerovich proposes to stabilize the hryvnia and reduce the budget deficit. Ukraine is hindered by the close relationship between the government and the oligarchs. And this requires political will. Another side of the reforms is privatization. To attract foreign investment, reforms are needed, not their visibility. That is how Poland managed to attract money. Therefore, Ukraine can only work on its national economy and demonstrate real results. You cannot justify your failures by war and difficult times. Investors need results, not assurances of their future appearance. As soon as they are, Ukraine will receive such an inflow of foreign investments necessary for it.