NCPA - National Center for Policy Analysis

Poland Role Model For Economic Transition

May 14, 1996

Market researchers say Poland is developing the largest and most stable middle-class of any country in the former Soviet bloc. Even the return to power by former communists has not been enough to stifle an urge among Poles to start up and invest in capitalistic enterprises.

The population of Poland is nearly 40 million -- by far the largest in central Europe.

  • Poland's first mutual fund company has 256,000 active accounts.
  • Car sales, especially of imports, were up 40 percent in the first three months of this year.
  • Car loans were up 40 percent as well, a sign that Poles are now willing to use credit instead of paying for everything in cash.
  • Formerly notorious for stashing their savings under their mattresses, Poles are now turning to savings banks -- where deposits were up 14 percent last year.
  • And the country's economy grew by a stunning 7 percent last year -- its fifth straight year of expansion and the fastest-paced economy of any European country.

Economists estimate the number of private business that employ more than five people at more than one million.

While the growth of a middle class is undeniable, there is still plenty of room for further progress.

  • Western market researchers put the proportion of Poles in the middle class still at only 10 to 15 percent -- defined as a household of four with two earners bringing in $800 to $1,600 a month.
  • The average Pole earns just $300 a month.
  • Still, inflation-adjusted incomes rose last year by 5.3 percent -- nearly triple the 1.9 percent gain of 1994.

As for other former Communist nations, the Czech Republic and Hungary have prosperous, though much smaller, populations and the wealth is mostly centered in their capitals. Romania, Bulgaria, the Ukraine and Albania are still struggling to cast off the old command economy mentality and are said to be years away from developing a meaningful middle class. And Russia seems mired in corruption and political instability.

Despite the evident progress, one still hears the same wish one frequently hears expressed here in the United States. To quote the Polish owner of a label-manufacturing company: "I would be more optimistic if the state would take its hands off business."

Source: Jane Perlez, "A Bourgeoisie Blooms and Goes Shopping," New York Times, May 14, 1996.


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