| Poland's current rush towards capitalism is, in essence, a reaction to that country's untenable economic situation and its growing hard currency debt. This study examines three aspects of Polish foreign trade which contributed to that situation: the effects of terms of trade changes on Poland's ability to finance imports, Poland's failed export-led growth strategy, and the importance to Poland's economy of Soviet subsidization through permitted trade deficits. Each of these aspects is the subject of a separate essay.;In our second essay, "Poland's Export-Led Growth-A Failed Experiment," the fundamental incompatibility of export-led growth as a development strategy and Poland's centrally planned system is established. The methodology employed consists of identifying prerequisites for successfully implementing export-led growth, and then applying those prerequisites to the Polish foreign trade mechanism as it existed in the 1970-80 period.;In our third essay, "Soviet Economic Policy Towards Poland in the 1980s: When the Borrower Owns the Bank," we establish that a consistent pattern of increased Soviet economic aid to East European countries in crisis was first broken in the early 1980s when, under Brezhnev's leadership, subsidization levels to Poland actually declined as Martial Law was imposed. The potential ramifications of this policy switch are then assessed through two scenarios, which indicate that the elimination of Soviet aid would severely damage Poland's economy, threatening that country's internal stability.;The first essay, "Poland's Terms of Trade for the Period 1970-86," examines whether foreign trade price changes on the developed West and Comecon markets helped or hindered Poland's ability to service and/or repay its hard currency debt. Specifically, net, gross and income terms of trade are estimated, revealing that Poland generally benefited from terms of trade changes, and particularly so with the West. Consequently, Poland's hard currency debt crisis occurred despite, rather than as a result of, world market price changes. |
