Polish Surpise

The Polish Surprise

Market economy

It is an economic system under which the allocation of production input (resources) and output is determinedby demand and supply.

Civil law

Legal system based on very detailed set of laws organized into codes (judges apply the law)

Democracy and individualism

political system in which the government is by the people, exercised either directly or through elected representatives.

individualism emphasizes the moral worth of the individual

In 1989, Poland elected its first democratic government after more than four decades of Communist rule.(political system) Since then, like many other eastern European countries, Poland has embraced market-based economic policies, opened its markets to international trade and foreign investment, and privatized many state-owned businesses. In 2004, the country joined the European Union, giving it easy access to the large consumer markets of Western Europe. All this helped transform Poland into a major exporter. Exports account for about 40 percent of gross domestic product (in contrast, they account for around 12 percent in the United States). As a consequence, between 1989 and 2010, Poland recorded the highest sustained growth in the region. Real GDP doubled over this period, compared to a 70 percent increase in neighboring Slovakia and 45 percent in the Czech Republic.

Poland’s government has also been fiscally conservative, keeping public debt in check, not allowing it to expand during the recession as many other countries did. This led to investor confidence in the country. Consequently, there was no large outflow of funds during the 2008–2009 economic turmoil.

A tight monetary squeeze in the early 2000s, which was designed to curb inflation and ease Poland’s entry into the European Union, headed off the asset price bubble, particularly surging home prices that hurt so many other economies around the world. Ironically, the Polish government had been criticized for its tight monetary...