Central Europe, and Poland in particular, have been very rewarding places to work in over the last two decades.  While Jeff Sachs was but an outside candidate for the World Bank Presidency earlier this decade, and Leszek Balcerowicz has returned to academia and his think tanks after being vilified when holding public office in Poland, this country owes an immense gratitude to these two bold and hard-thinking professors, who authored and implemented the ‘big bang’ economic reform of liberalization and privatization in 1990, which laid the path for 25 years of uninterrupted Polish growth since 1992. 

Having studied the insipient ‘economics of transition’ under Stanislaw Gomulka at LSE in the early 1990s, Alex was fortunate to work with Jeff Sachs and his crack team of Harvard economists in Russia and Boston in 1993/94.  Sachs believed what he preached, and the gospel was initially based on classic economic theory (Adam Smith’s invisible hand, i.e. the working of the liberalized markets in a world where property rights are secure and economic assets privatized), expanded over time as he, and many of us practitioners, came to appreciate that in markets where there were very limited working institutions and enshrined or historic rules of economic conduct, the institutional facilitation of markets was just as important. 

Poland was fortunate in three ways: 

  • in its strong catholic and nationalist foundations, it maintained an ethic set of rules of conduct that survived the half-century of forced communist experiments;

  • it had a market set of legal rules and institutions from the pre-WW2 second republic, which it reenacted through fiat, thereby creating the basics for a working institutional framework for a market economy; and

  • Poland’s people, resilient and resourceful through centuries of oppression, separations, and historical challenges, have taken to liberalized markets like fish to water; having enjoyed greater degrees of travel freedom, relative to Warsaw Pact brethren, they developed arbitrage skills by cross-border economic travel to optimize the lousy consumer goods’ allocation of Goskomstats, and did not look back in deploying these skills when the markets opened up in 1990.

Poland's GDP (PLN bn; current prices)

Source: GUS (Polish Main Statistical Office)

Poland’s success as an economy, and as a liberal and maturing democracy, is owed first and foremost to these people – its entrepreneurs, its intellectuals, its dissident politicians, its risk-taking youth, its proud and fiercely independent and spirited citizens.  Working amidst them for the last 20 years, and counting, has been a privilege and, as a German, a redemption of sorts.

We count ourselves fortunate to have been part of this transition from command to market economy, to have been witnesses to the ever-rising numbers of skyscrapers and shopping malls that reflect the growth in purchasing power of companies and the growing middle class, and to be able to contribute to these developments from time to time.

But there are more chapters to be written in order to document this journey, as the people of Poland and its regional neighbors work hard to overcome 50 years of communism and fulfill their ambition to catch up with western Europe. Europe, which has gotten a bad name of late, as seen through the eyes of our clients in the west and our local entrepreneurs in the east, is a very dynamic and resourceful place, a continent in which people learn from mistakes and become stronger with adversity.

Poland's GDP per capita (PLN k; current prices)

Source; GUS (Polish Main Statistical Office)

Warsaw, which was largely destroyed in the Warsaw Ghetto uprising of 1943, the Warsaw uprising against the Nazis of 1944, and vindictive Nazi dynamite commandos thereafter, has been rebuilt and is the proud location of our firm.  It is a city worth visiting, and one that you can fall in love with, despite its historic scars; see the attached link for more good arguments to that effect; I Love Warsaw (FB)

Below please find some interesting articles on the Polish economy as further reading: