Country Listing

Poland Table of Contents


Reliance on Technology in the 1970s

In the early 1970s, East-West detente, the accumulation of petrodollars in Western banks, and a recession in the West created an opportunity for Eastern Europe to import technology and capital from the West to restructure and modernize its industrial base. Poland was relatively late in introducing this so-called "new development strategy," but it eventually went further in this direction than its Comecon allies. The share of trade with Comecon declined, and trade with other countries increased quite dramatically during the first half of the 1970s.

The technology import strategy was based on the assumption that, with the help of Western loans, a large-scale influx of advanced equipment, licenses, and other forms of technology transfer would automatically result in efficient production of modern, high- quality manufactured goods suitable for export to the West. Under those conditions, repayment of debts would not be difficult. Expansion of exports encountered considerable difficulties, however, partly because of the oil crisis and stagflation in the West, but mainly because the central planners remained unable to effect the required changes in the structure of production. The investment drive, financed by foreign borrowing, exceeded the possibilities of the economy. Removed from direct contact with the foreign markets, centralized selection of exportables was ineffective in expanding the markets for Polish goods. At the same time, the dependence of the economy on imported Western materials, components, and machines inevitably increased. By the middle of the 1970s, large trade deficits had been incurred with the Western countries. The negative balance of payments in convertible currencies increased from US$100 million in 1970 to US$3 billion in 1975. During the same period, the gross convertible currency debt increased from US$1.2 billion to US$8.4 billion. Unable to expand exports to the West at the necessary pace, Polish planners began centralized restriction of imports. This policy in turn had an adverse effect on domestic production, including the production of exportables.

Data as of October 1992