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 APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200070030-5

The Economy

A. Basic trends (C)

Poland is the largest of the East European Communist countries. At the end of 1972 it had a population of 33.3 million people and a land area of 120,600 square miles—slightly smaller in area than Pennsylvania, Ohio, and Kentucky combined, but with a population density approximately equal to that of Pennsylvania and Ohio. The economy has grown rapidly throughout the post-World War II period, and it is now in an intermediate stage of development—much less advanced than the economies of France and West Germany but far ahead of those of Mexico and Brazil. The Polish economy is unique among the economies of Communist Eastern Europe in its retention of a private agricultural sector.

Poland's gross national product (GNP) amounted to US$54.6 billion in 1972 (1971 prices). In terms of GNP per capita, Poland ranks behind all industrialized West European countries, and it is only moderately well-off by Communist standards. Poland's per capita GNP of US$1,650 in 1972 was not significantly different from those of Bulgaria ($1,620), Hungary ($1,700), and Romania ($1,470) but well below those of Czechoslovakia ($2,540) and East Germany ($2,650). The most nearly comparable West European per capita GNP was in Ireland, with a per capita GNP in 1972 of about $1,740. Per capita GNP in the rest of Western Europe, except for Spain, Portugal, and Greece, was much greater.

The difference in standards of living in Poland and in Western Europe is even greater than the difference between levels of per capita GNP. In its efforts to achieve rapid industrial development, Poland's Communist government has devoted a larger share of the national product to investment than is generally the case in Western countries, leaving a correspondingly smaller share for consumption. In 1971, about 30% of Poland's GNP went into investment and another 20% went into government services, administration, and defense. Personal consumption, which accounts for more than 60% of GNP in most Western countries, accounted for only 50% in Poland. Even though the government has directed a larger proportion of the country's resources to investment throughout the postwar period, there has also been some growth in consumption.

In spite of its dependence on imports for a number of important industrial materials, Poland's raw material base, on balance, has been a positive factor in its postwar industrial growth. The country is poor or entirely lacking in iron ore, petroleum, manganese ore, potash, phosphate rock, and cotton, and must import the bulk of its supplies of those materials (Figure 1). Poland also imports large quantities of grain, which it uses to a large extent to expand its livestock production; livestock products are a major source of foreign exchange. The pattern of postwar industrial development, which emphasized iron and steel, aluminum, and more recently, petroleum processing and petrochemicals, has intensified the country's dependence on imported raw materials and increased its vulnerability to a cutoff of supplies. Poland's own extensive resources of coal, zinc, sulfur, and timber, as well as its large, diverse agricultural output, are important sources of export earnings, which enable the country to pay for the imported raw materials and machinery it has required for rapid industrialization. Coal, timber, and agricultural and food products are the source of about three-fifths of the hard currency export earnings. In spite of the rapid growth of machinery exports to other Communist countries, fuels and materials still make up about one-third of Poland's total exports to those countries.

Polish technology is inferior by West European and US standards, and the quality of industrial output is low. Neglect in the postwar period has, to a large extent, left Poland's prewar industries with outdated equipment. The new industries, including iron and steel, machine building, and chemicals, have been developed largely in isolation from the free world markets and have been little influenced by Western technology and marketing methods. Instead,

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APPROVED FOR RELEASE: 2009/06/16: CIA-RDP01-00707R000200070030-5