Democratic Institutions and Economic Reform: The Polish Case

Analyses of the economic transformation of the Polish economy and of the 1993 elections to the parliament suggest it is possible to proceed with pro-market and democratic reforms simultaneously. As demonstrated by the Polish case, the key to this process is the rate at which new enterprises are created. These enterprises, not the privatization of existing ones, are primarily responsible for the creation of a growing private economy. This evolving new economy, securely based and growing, creates a pro-reform constituency in the regions where it occurs. This constituency supports pro-reform parties. The Polish case offers important lessons about the reform process and about the way economies and political constituencies co-evolve.