NATIONAL INTELLIGENCE SURVEY 14; POLAND; THE ECONOMY

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I_1 �:16IT M IM161 p l_F9 :W*111:1bIs1li 1.3963 /_a:l11l11 11111 MIy1:iIIYIIfLIkIIl�
Poland
CONIM"m
In Cho C-M" swuv dared Smc "s" Jvro.
Dutc trends
S. Structure of tbo em mw
1. AgrIculau+rti 141st ies, and for. -sby
a. Aairiltum
b. Fbhmcs
c Fcratry
Z ncls and pw*w
R. `ilud coat and coke
b. Hrown toa!
C- PeImleum gad aatww gps
d. �e povmr
I N"Is And rnlr,eralf
a, reff as Ifietillum
h. Noalcrroue metallurgy
Nonmedallie minerals and cumtructiw
mmlcciwd
1
d
4
B
A
9
B
ll
is
II
is
12
!3
14
Srzmt No FCpsir-m Dimzm
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FIGURES
Page
Page
Page
4. Manufacturing and construction
15
4. Economic reform
25
a. Machine building
15
5. "Janpower
26
b. Chemicals
17
D. Foreign trade
27
Q Light industry
18
1. Size and structure
27
d. Food processing
19
2. Economic relations with Communist
13
e. Construction
19
countries
29
Production of machinery and
3. Economic relations with the West
30
5. Domestic trade
20
a. Background
30
C. Economic policy and management
21
b. Plans
31
I. Policy
21
4. Balance of payments
33
a. Communist countries
1 Economic planning and administration
23
b. Industrial West
34
3. Finance
24
5. Organization
34
FIGURES
ii
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Page
Page
Fig. 1
Supply position of selected basic
Fig. 13
Mining and industrial centers map)
12
materials table)
2
Fig. 14
Output of metals, minerals, and
Fig. 2
Indexes of GNP, industrial product
construction materials table)
13
lion, and agricultural production
Fig. 15
Production of machinery and
(chart)
3
equipment (table)
18
Fig. 3
Output, employment, and fixed
capital (table)
Fig. 18
Production of principal chemicals
Fig. 4
Volume indexes of output in selected
branches of socialized industry
Fig. 17
Distribution of investments, by
(table)
4
economic sector (table)
22
Fig. 5
Land utilization chart)
4
Fig. 18
Distribution of investments in
Fig. 6
Production and yields of principal
socialized industry (table)
22
crops (table)
5
Fig. 19
Economic indicators (table)
23
Fig. 7
Livestock and livestock products
Fig. 20
Estimated labor force table)
26
table)
5
Fig. 21
Geographic distribution of foreign
Fig. 8
Number and size of private farms
trade chart
27
Fig. 9
and plots (table)
Threshing of grain by private Polish
6
Fig. 22
Value of foreign trade table)
28
farmers (photo)
7
Fig. 23
Commodity structure of foreign trade
Fig. 10
Private farm market in Poland
(chart
28
(photo)
7
Fig. 24
Commodity structure of foreign trade
Fig. 11
Land -use pattern (map)
9
(table) I....
30
Fig. 12
Production of fuels and power
Fig_. 25
Selected commodity trade with non-
table)
10
Communist countries table)
31
ii
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The Economy
A. Basic trends (C)
Poland is the largest of the East European
Communist countries.' At the end of 1979 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 ELsi 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 CNP. 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 corre-
spondingly smaller Share for consumption. In 1971,
about 30% of Poland's GNP went into investment and
another 20% went into government services,
'Throughout this chapter, references to Communist Eastern
Europe refer to the group of count.-:es encompassing Bulgaria,
Poland, Czechoslovakia, East Germany, Hungary, and Romania.
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 fc, 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,
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
t:l "chinery 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
U.S. standards, and the quality of industrial output is
low. Neglect in the postwar periot 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 froe world
markets and have been little influenced by Western
technology and marketing methods. Instead,
1
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FIGURE I. Supply position of selected basic materials, 1971 (U /OU)
(Thousand tons, except as indicated)
PRODUCTION
AS PERCENT
'Commercially processed meat.
technological progress has been tied closely to Soviet
supplied blueprints, licenses, and technicians. As a
result, much of the country's industry, although it
covers a large part of domestic consumption and
provides exports to other Communist countries and to
less- developed Western countries, cannot meet the
standards of the advanced market economies. This is
particularly true of the Polish machine building
industry. Its continued growth since the late 1950's has
depended particularly on Soviet willingness to buy
increasing quantities of Polish machinery. In Poland's
industrial sector, only the food processing industry sells
any sizable part of its output to the industrial West.
Communist Party leader Gierek, who succeeded
Wladyslaw Gornulka after the workers' riots in
December 1970, is continuing with Gomulka's plan to
increase Polish imports of advanced technology from
the industrial West. The plan for 1971 -75 calk for
purchases of Western capital equipment to double
over the previous 5 years. Since the bulk of such
purchases is financed by credits, Polish hard currency
indebtedness will increase considerably. A doubling of
imports of Western capital equipment in 1972 alone
resulted in an increase of Poland's estimated medium-
and long -term indebtedness to the industrial West
from $1.2 billion at the end of 1971 to $1.5 billion at
the end of 1972.
B. Structure of the economy
Poland has maintained satisfactory rates of
economic growth throughout the postwar period,
except during the early 1950's. GNP increased at an
average yearly rate of 5% between 1950 -70, and 6% in
1971 -72 (Figure 2). Moreover, Poland avoided the
sharp declines in the rate of growth that East Germany
and Czechoslovakia suffered in the early 1960's, and
has maintained a growth rate higher than that of
Hungary, dough lower than that of either Bulgaria or
Romania. The rate of growth -if industrial production,
especially producer goods, has been high, averaging
7% a year during 1961 -70 and 8% during 1971 -72.
(U /OU)
Net agricultural output �less feed, seed, and
waste� increased at a rate of only 1.8% a year during
1961 -72, a rate considerably slower than those of
Bulgaria and Romania. Value added in agriculture,
however, has increased more rapidly in Poland than in
any other East European Communist country,
reflecting the slower growth of industrial inputs in
Poland. The growth of value added in Polish
agriculture is estimated to have averaged 3.';% a year
during 1961 -70 and 5.7 a year during 1971 -72.
(U /OU)
In 1972 about 47% of the GNP originated in
industry and 21% in agriculture. The pattern of
employment in the economy is quite different from
that of output; in 1972, 36% of the 16.8 million
working population were employed in agriculture,
while 29% worked in industry and 35% in other
nonagricultural occupations. The importance of
industry to the Polish economy is largely the result of
policies of the country's Communist government. As
late as 1950, the relative shares of industry and
agriculture were about the reverse of those in 1972:
agriculture contributed 41% and industry 24% of
GNP. (U /OU)
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DOMESTIC
OF APPARENT
OUTPUT
IMPORTS
EXPORTS
CONSUMPTION
Crude petroleum
395
7,894
0
4.8
Bard coal (million tons)
145
1
30
135.0
Coke (million tons)
17
0
2
116.7
Iron ore
2,078
12,430
Insig
l,$.3
Pig iron
7,497
1,552
90
88.7
Rolled steel
9,568
1,044
1,255
103.3
Zinc and zinc products
4,163
110
90
99.5
Copper, refine(!,
93
34
29
94.9
Chem;cal fertilizers
1,786
2,245
853
56.3
Cement
13,082
614
146
96.5
Grain
19,890
2,946
111
87.5
Meat and meat products
1,862
263
172
95.3
Cotton
0
145
0
0
Sawn wood (thousand cubic meters)
6,998
353
714
105.4
'Commercially processed meat.
technological progress has been tied closely to Soviet
supplied blueprints, licenses, and technicians. As a
result, much of the country's industry, although it
covers a large part of domestic consumption and
provides exports to other Communist countries and to
less- developed Western countries, cannot meet the
standards of the advanced market economies. This is
particularly true of the Polish machine building
industry. Its continued growth since the late 1950's has
depended particularly on Soviet willingness to buy
increasing quantities of Polish machinery. In Poland's
industrial sector, only the food processing industry sells
any sizable part of its output to the industrial West.
Communist Party leader Gierek, who succeeded
Wladyslaw Gornulka after the workers' riots in
December 1970, is continuing with Gomulka's plan to
increase Polish imports of advanced technology from
the industrial West. The plan for 1971 -75 calk for
purchases of Western capital equipment to double
over the previous 5 years. Since the bulk of such
purchases is financed by credits, Polish hard currency
indebtedness will increase considerably. A doubling of
imports of Western capital equipment in 1972 alone
resulted in an increase of Poland's estimated medium-
and long -term indebtedness to the industrial West
from $1.2 billion at the end of 1971 to $1.5 billion at
the end of 1972.
B. Structure of the economy
Poland has maintained satisfactory rates of
economic growth throughout the postwar period,
except during the early 1950's. GNP increased at an
average yearly rate of 5% between 1950 -70, and 6% in
1971 -72 (Figure 2). Moreover, Poland avoided the
sharp declines in the rate of growth that East Germany
and Czechoslovakia suffered in the early 1960's, and
has maintained a growth rate higher than that of
Hungary, dough lower than that of either Bulgaria or
Romania. The rate of growth -if industrial production,
especially producer goods, has been high, averaging
7% a year during 1961 -70 and 8% during 1971 -72.
(U /OU)
Net agricultural output �less feed, seed, and
waste� increased at a rate of only 1.8% a year during
1961 -72, a rate considerably slower than those of
Bulgaria and Romania. Value added in agriculture,
however, has increased more rapidly in Poland than in
any other East European Communist country,
reflecting the slower growth of industrial inputs in
Poland. The growth of value added in Polish
agriculture is estimated to have averaged 3.';% a year
during 1961 -70 and 5.7 a year during 1971 -72.
(U /OU)
In 1972 about 47% of the GNP originated in
industry and 21% in agriculture. The pattern of
employment in the economy is quite different from
that of output; in 1972, 36% of the 16.8 million
working population were employed in agriculture,
while 29% worked in industry and 35% in other
nonagricultural occupations. The importance of
industry to the Polish economy is largely the result of
policies of the country's Communist government. As
late as 1950, the relative shares of industry and
agriculture were about the reverse of those in 1972:
agriculture contributed 41% and industry 24% of
GNP. (U /OU)
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Largely as a result of postwar economic policies,
Poland now has a highly diversified industrial sector.
Mining and mefallurgy, including large hard coal and
iron and steel industries, brown coal mining, and zinc,
copper, sulfur, and aluminum ore mining and
processing, make up a sizable segment of Polish
industry, accounting for about 19% of gross industrial
output and 15% of industrial employment in 1971.
Machine building and food processing are Poland's
two largest industries, contributing 27% and 18
respectively, of industrial output in 1971. The
manufacture of chemicals, one of the most rapidly
expanding industries in the economy, accounted for
about 9% of industrial output in that year. (U /OU)
In its postwar program for economic growth, the
Communist government concentrated a large share of
its resources on the development of industries that had
little economic significance in prewar Poland -iron
and steel, machine building, and chemicals -and on
the development of newly discovered or unexploited
resources -brown coal, copper, and sulfur. As a result
of these policies, the new industries have developed
rapidly. According to official figures, the 1971 output
in machine building, which accounted for only 7% of
gross industrial output in 1950, was 28 times the 1950
level, whereas the output of chemicals, which had
accounted for less than 2% of the total output, was 18
times the 1950 level. Although the large prewar
industries -hard coal, textiles, and food processing
were relatively neglected during the postwar period
and have grown more slowly, they are still as
important as the newer sectors and are now receiving
increasing attention. The shares of gross output,
employment, and fixed capital in various branches of
industry are shown in Figure 3, and the growth of gross
output by branch is shown in Figure 4. (U /OU)
Poland, like the other Communist countries,
experienced difficulties in the mid- 1950's as a result of
forced growth in heavy industry. It was obliged
temporarily to hold down the growth of investment
and relax its efforts in heavy industry in order to
permit consumption to reach an acceptable level and
to allow fuel, power, and raw material production to
catch up with industrial requirements. Since 1958, the
Polish Government again has maintained a high rate
of investment to achieve high rates of industrial
growth. This goal has been tempered, however, by
concern that ,consumption should increase at a slow
but steady rate and that a balance should be
maintained between the production of fuels and other
raw ma:arials and the growth of the industrial sectors
that consume them. The pattern of Poland's industrial
development since 1958 has been geared to export
possibilities, to a much greater extent than in the early
FIGURE 3. Distribution of output, employment, and fixed
capital, by branch of socialized industry, 1971 (U /OU)
(Percent of industry totals)
3
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FIGURE 2. Indexes of GNP, industrial production, and
agricultural production (U /OU)
GROSS
EM ?LOY-
FIXED
BRANCH
OUTPUT
MENT
CAPITAL
Electric and thermal power....
8.6
8.8
18.6
Fuels
7.8
9.7
17.6
Ferrous metals
7.8
4.8
8.3
Nonferrous metals............
3.3
1.4
3.8
Machinery and equipment.....
86.9
31.3
15.0
Chemicals
9.0
6.8
18.0
Construction materials........
3.8
4.7
5.9
Wood processing, paper, and
paper products
5.0
6.1
4.0
Textiles, clothing, leather......
13.8
17.9
6.5
Food
17.4
11.8
9.5
Other
8.7
4.5
5.4
Total
100.0
100.0
100.0
3
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FIGURE 2. Indexes of GNP, industrial production, and
agricultural production (U /OU)

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FIGURE 4. Volume indexes of output in selected branches
of socializ3d industry (U /OU)
(1950 =100)
Total 347 523 782 847
1950's. Large investments in coal, chemicals, copper,
and food processing are aimed largely at increasing
long -run export capacity. (U /OU)
1. Agriculture, fisheries, and forestry (U /OU)
a. Agriculture
Poland is the largest agricultural producer in
Eastern Europe (excluding European U.S.S.R.). About
62% of the land area is devoted to agriculture
including 48% under cultivation and almost 14% in
meadows and pastures (Figure 5). The amount of
arable land per capita �about 0.46 hectare, in 1971
ranks among the top 10 countries in Europe. Poland's
climate and soil permit cultivation of a wide variety of
crops. Fairly mild winters with moderate rainfall are
4
favorable to the cultivation of winter grains. The frost
free season is long enough for the successf ul cultivation
of most summer grains, sugar beets, and potatoes. The
predominantly sandy soils, however, require good
management to make them highly productive.
The agricultural sector has adequate investment
funds, but industrial inputs are not available in
sufficient quantity and quality. The socialized
agricultural sector is much better supplied than the
private sector with most types of agricultural
machinery, fertilizer, breeding stock, and new varieties
of seed. Storage and shipping facilities are inadequate
as a result of persistent sho�tages of building materials
and transportation equipment, especially refrigerated
trucks, so that serious losses occur from spoilage.
Moreover the regime has had scant success in recent
years in attracting trained young men to the farms and
keeping them there, so that a manpower shortage
occurs during the harvest -eason even though about
36% of the Polish labor force (6 million persons) work
in agriculture. The preference of trained agronomists
and graduates of agricultural colleges for ad-
ministrative positions in the cities rather than for jobs
as advisors on farms further complicates the
introduction of new agricultural technology.
The principal crops grown are wheat, rye, barley,
oats, sugar beets, and potatoes. Of the total area sown
in 1971, 57% was in grains, 18% in potatoes, 6% in
industrial crops (sugar beets, oilseeds, tobacco, and
flax), 14% in fodder crops, and 5% in other crops. Rye,
of which Poland is the world's second largest
producer, is the country's most important grain crop,
occupying 45% of the total grain acreage. The total
area annually planted to ;sops in Poland has been
gradually declining since 1960. In addition, there has
been a shift in acreage from grain �which covered
about 60% of sown land in 1955 �to fodder and
industrial crops. Declining prices in the world sugar
market led Poland, a surplus producer, to cut back
sugar beet acreage some 14% between 1965 and 1970.
Nevertheless, the output of sugar beets continued to
increase because of the larger input of fertilizer; only
in 1969 �a bad weather year �did, output fall below
the 1961 -65 annual average. The rising price of sugar
in the international market may induce Polish officials
further to stimulate domestic output by boosting
producer prices for sugar beets.
Poland has made relatively good progress since the
mid- 1950's in raising yields per hectare of major grain
crops and since the mid- 1960's, for root crops. Yields in
the immediate postwar period were far smaller than
those on the same lands prior to World War II, the
drop being particularly sharp in the former German
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FIGURE 5. Land utilization, 1971 (ti /OU)
1960
1965
1970
1971
Electric power
356
591
894
972
Coal
152
180
222
232
Other fuels
192
306
506
539
Ferrous mining and metallurgy..
278
398
517
550
Nonferrous mining and metal
lurgy
273
359
573
663
Metal processing
676
1,198
1,995
2,167
Machinery....................
737
1,465
2,653
3,006
Chemicals
482
906
1,678
1,827
Conn +.ruction materials.........
377
546
754
803
Wood processing and paper.....
336
455
594
628
Textiles and clothing...........
291
391
562
597
Food processing
243
300
348
373
Total 347 523 782 847
1950's. Large investments in coal, chemicals, copper,
and food processing are aimed largely at increasing
long -run export capacity. (U /OU)
1. Agriculture, fisheries, and forestry (U /OU)
a. Agriculture
Poland is the largest agricultural producer in
Eastern Europe (excluding European U.S.S.R.). About
62% of the land area is devoted to agriculture
including 48% under cultivation and almost 14% in
meadows and pastures (Figure 5). The amount of
arable land per capita �about 0.46 hectare, in 1971
ranks among the top 10 countries in Europe. Poland's
climate and soil permit cultivation of a wide variety of
crops. Fairly mild winters with moderate rainfall are
4
favorable to the cultivation of winter grains. The frost
free season is long enough for the successf ul cultivation
of most summer grains, sugar beets, and potatoes. The
predominantly sandy soils, however, require good
management to make them highly productive.
The agricultural sector has adequate investment
funds, but industrial inputs are not available in
sufficient quantity and quality. The socialized
agricultural sector is much better supplied than the
private sector with most types of agricultural
machinery, fertilizer, breeding stock, and new varieties
of seed. Storage and shipping facilities are inadequate
as a result of persistent sho�tages of building materials
and transportation equipment, especially refrigerated
trucks, so that serious losses occur from spoilage.
Moreover the regime has had scant success in recent
years in attracting trained young men to the farms and
keeping them there, so that a manpower shortage
occurs during the harvest -eason even though about
36% of the Polish labor force (6 million persons) work
in agriculture. The preference of trained agronomists
and graduates of agricultural colleges for ad-
ministrative positions in the cities rather than for jobs
as advisors on farms further complicates the
introduction of new agricultural technology.
The principal crops grown are wheat, rye, barley,
oats, sugar beets, and potatoes. Of the total area sown
in 1971, 57% was in grains, 18% in potatoes, 6% in
industrial crops (sugar beets, oilseeds, tobacco, and
flax), 14% in fodder crops, and 5% in other crops. Rye,
of which Poland is the world's second largest
producer, is the country's most important grain crop,
occupying 45% of the total grain acreage. The total
area annually planted to ;sops in Poland has been
gradually declining since 1960. In addition, there has
been a shift in acreage from grain �which covered
about 60% of sown land in 1955 �to fodder and
industrial crops. Declining prices in the world sugar
market led Poland, a surplus producer, to cut back
sugar beet acreage some 14% between 1965 and 1970.
Nevertheless, the output of sugar beets continued to
increase because of the larger input of fertilizer; only
in 1969 �a bad weather year �did, output fall below
the 1961 -65 annual average. The rising price of sugar
in the international market may induce Polish officials
further to stimulate domestic output by boosting
producer prices for sugar beets.
Poland has made relatively good progress since the
mid- 1950's in raising yields per hectare of major grain
crops and since the mid- 1960's, for root crops. Yields in
the immediate postwar period were far smaller than
those on the same lands prior to World War II, the
drop being particularly sharp in the former German
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FIGURE 5. Land utilization, 1971 (ti /OU)

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FIGURE 6. Production and yields of principal crops (U!OU)
1950 -55 195640 1961 -65 1966 -70
AVERAGE AVERAGE AVERAGE AVERAGE 1971 1972
Production (million tons):
Wheat 2.0 2.3 3.0 4.3 5.5 5.2
Rye 6.1 7.5 7.5 7.5 7.8 8.
Barley 1.1 1.2 1.4 1.7 2.4 2.8
Oats 2.1 2.5 2.6 2.9 3.2 3.2
Potatoes 30.8 36.3 43.7 47.9 39.9 48.7
Sugar beets 6.5 7.7 11.4 13.6 12.6 14.3
Yields (quintals' per hectare):
Wheat 13.1 16.1 19.7 23.2 26.5 25.4
Rye 12.3 14.6 16.1 18.3 21.1 23.1
Barley 13.4 16.2 19.4 23.0 27.2 27.3
Oats 13.0 15.2 17.1 20.5 24.1 23.8
Potatoes 117.0 131.0 154.0 176.0 150.0 184.0
Sugar beets 187.0 211.0 267.0 324.0 299.0 327.0
*One quintal 100 kilograms (220.46 pounds).
territories, where advanced agricultural technology
had been employed before the war. The neglect of
agriculture and attempts at collectivization in the
early 1950's resulted in slow recovery to prewar levels
of productivity. The acquiescence of the Gomulka
regi ne in permitting a private agricultural sector to
operate stimulated a rapid increase in yields per
hectare in the late 1950's and in the 1960's. The
average annual yields of Poland's important grain
crops were 25% to 45% larger in 1966 -70 than in 1956-
60 (Figure 6). Because of inferior agricultural
technology, however, yields are generally still lower in
Poland than in West European countries with similar
soil and climatic conditions.
Livestock production has been expanding in recent
years and accounted for nearly 47% of the gross value
of agricultural output in Poland in 1972. The numbers
of hogs and cattle have risen over the past decade,
reaching postwar peak levels of 17.3 million and 11.5
million, respectively, in 1972 (June 30 census). Sheep
raising is far less important, and after small increases
in the mid- 1960's, the number of sheep has been
declining since 1968 (Figure 7). The number of horses
also has declined in Poland, but to a lesser degree than
in other East European countries. The small private
farms that are still characteristic of Polish agriculture
continue to use horses both for draft power and for
local transportation.
The overall increase in livestock production during
the 1960's enabled Poland to increase the domestic
consumption of meat and other animal products and
to remain an important exporter. Red meat production
FIGURE 7. Livestock and livestock products, selected years (U /OU)
1955 1960 1965 1967 1969 1970 1971
Number of livestock (thousand
head):
Horses
2,560
Cattle
7,912
Hogs
10,888
Sheep
4,243
Production:
Red meat** (thousand tons)
894
Whole milk (thousand tons).....
9,903
Eggs (billians)
4.2
Wool, upwashed (thousand tons).
9.8
1972 1975 PLAN
2,805 2,554 2,643 2,633 2,585 2,501 2,422 2,300
8,695 9,947 10,768 11,049 10,844 11,076 11,452 '*12,150
12,615 13,779 14,233 14,356 13,446 15,243 17,347 �+17,000
3,662 3,061 3,321 3,239 3,199 3,180 3,110 ra
1,148 1,334 1,409 1,500 1,478 1,481 1,615 t1,850
12,808 13,330 14,480 14,672 14,935 15,038 15,759 **18,gl8
5.6 6.3 6.3 6.7 6.9 7.1 7.5 7.8
9.0 7.5 8.6 8.8 8.9 9.1 9.0 na
na Data not available.
*June 30 census.
"Dressed carcass weight, including edible offals.
***Mid-point of planned range.
tcomputed using planned percentage increases.
5
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increased 29% etween 1960 and 1970, while the
output of milk and eggs went up by 17% and 23
respectively. Meat exports, most of which go to
Western countries, increased rather rapidly in the first
half of the decade (to about 220,000 tons in 1965), but
dropped to 172,000 tons by 1971. Efforts to better
satisfy domestic demand for meat required not only a
cut back in exports but also large imports of pork in
1970 -71 by the Gierek regime, with the result that in
1971 Poland was a net importer of meat. Incentives
offered to livestock producers and improved feed
supplies boosted pork production in 1972 above the
planned level and sharply lowered import require-
ments.
Poland's most important meat exports are bacon
and canned ham. Most of the bacon is sent to the
United Kingdom, and most of the canned ham is sold
in the United States. Exports of fresh beef ta Western
Europe are also large. In addition to meat, Poland
exports sizable quantities of butter and eggs, although
exports of both have dropped since the mid- 1960's as
West European production caught up with demand.
The increase in livestock production has required
Poland to import large quantities of feedgrains
(including whea.) and oileake. G ain imports, which
amounted to about 1 million tons a year until 1956,
rose rapidly after that year and averaged 2.7 million
tons a year during 1961 -65. GraRn imports were
subsequently cut back in support of the plan of
becoming self sufficient in grain; they totaled about
2.2 million tons per vear dorir:g 1966 -70. The plan was
doomed to failure, however, as livestock production
stagnated and Poland had to import 2.5 million tons
of grain in 1970. Gierek's planners eliminated self
sufficiency in grain production as a goal in the 1971-
75 plan, and 2.9 million tons were imported in 1971.
During 1956 -66, over two- thirds of t!ie grain
imports came from the West; close to one -third of the
total came from the United States alone. Since 1966,
the U.S.S.R. has supplied an increasing share of the
grain imports, while the U.S. share has dwindled, due
mainly to the cutoff of P.L. 480 credits in 1964.
During 1957 -64, the United States supplied $538
million in credits on favorable terms, enabling Poland
to import grains to build up its livestock production
and boost exports of meat and dairy products. The
profitability of meat exports has declined in recent
years not only because low -cost P.L. 480 credits dried
up, but also because an expanding domestic market
for animal products has reduced the share of output
available for export to Western Europe. In view of
recent Soviet grain production difficulties, Poland, in
6
1972, purchased a larger share of its grain from the
United States and other Western countries. This can
be expected to continue in the short run.
Polish agriculture is characterized by small,
privately owned farms, rather than by the large
collectives typical of other Communist countries.
About 83% of Poland's agricultural land is in private
hands, 15% in state farms, and less than 2% in
cooperative (collective) farms. The private sector
embraces over 3 million farms with an average area of
5.4 hectares of land each (Figure 8). Between 1949 and
1956 Poland tried to get peasants to join collectives,
subjecting private farms to heavy taxation and
discrimination in the allocation of industrial materials
and equipment, but the collectivization effort was not
pushed as hard as in other Communist countries, and
by 1956 collective farms included less than 10% of all
the agricultural land. In June of that year,
collectivization as a goal was dropped, and existing
collectives were allowed to disband. Although the
number of collectives has fluctuated since then, the
dissolution of collectives has generally kept pace with
the formation of new ones. The collectives, which now
comprise less Than 2% of the agricultural land,
generally include holdings that were too small and too
poor to be farmed as individual unite Agricultural
circles economic organizations of private farmers
organized mostly for mechanization purposes, and
akin to some West European cooperatives -have been
encouraged among farmers. Private ownership of land
remains inviolate, however, and there has been no
pressure to convert these organizations into collectives.
Figures 9 and 10 show the threshing of grain on a
private farm and a private farm market in Poland.
Socialized agriculture in Poland is represented
chiefly by the state farms, which are operated much
like state enterprises in other sectors. State farms hold
15.1 of the agricultural land. They were formed for
the most part after World War II on abandoned
FIGURE 8. Number and size of private forms and
plots (U /OU)
1960 1970
SIZE OF FARM Number
(Hectares) (1,000)
0.1 -0.49........ 347.7
0.5- 1.99........ 829.9
2.0- 9.99........ 2,029.6
10 and over..... 384.7
Percent
of total
9.7
23.1
56.5
10.7
Number Percent
(1,000) of total
376.8 11.1
756.9 2f.3
1,891.2 55.6
373.2 11.0
Total........ 3,591.9 100.0 3,398.1 100.0
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estates in the former German territories. They have
since gained some new acreage from reclaimed land
and through annexation of private farms whose
owners died without or deeded their farms to the
state in return for pensions. Most state investment in
agriculture in the past has been channeled into state
farms for the purpose of developing new farming
methods and improving plants, seeds, and livestock
breeds.
The small size of the typical private sector farm and
the noncontiguous nature of the plots (in some
instances plots were separated by several miles)
prompted the regime to initiate a series of land reforms
on 1 January 1968. The reforms sought to increase the
size of the average private farm and to consolidate
landholdings by obligating the state to purchase small,
marginally productive or scattered landholdings for
subsequent resale in the form of contiguous plots; to
guarantee a pension to older farmers who turn over
land to the state; and to sell land from the state land
fund to private farmers, as well as to state farms to
enlarge their holdings. So far, the program has met
with only limited success. Between 1968 and 1970
about 500,000 hectares were relinquished by the state
land fund, of which only 43% was sold to private
farmers. While the total number of private farms
deelinei slightly, the number having less than two
hectares each increased.
Since the mid- 1950's, Poland has tried to increase
efficiency and promote technical change in
agriculture by greatly increasing the allocation of
resources to the sector. In an effort to end agricultural
stagnation, the Gomulka government nearly doubled
average annual investments in the sector during 1956-
60, compared to those of 1950 -55. Total outlays in
agriculture rose 48% during 1961 -65 and 68% during
1966 -70 over the levels of the preceding 5-year periods.
Agricultural investments as a percentage of total
investments have risen steadily since 1956, as shown in
the following tabulation:
1950 -55 10.1
1956 -60 12.5
1961 -65 13.9
1966 -70 16.1
1971 -75 (plan) 14.0
1971 15.6
1972 14.7
During 1966 -70, agriculture accounted for a greater
percentage of investments than at any other time
during the postwar period, although the 16.1% share
was less than the 16.5% share planned for that period.
The shortfall was due mainly to the fact that private
investments, which made up roughly one -third of all
agricultural investments in that period, did not meet
expectations because of the limited availability of
building materials and agricultural machinery. The
1971 -75 plan envisions that about 55% of the total
investments in agriculture will be generated by private
farms. In 1971, the private sector's share of
agricultural investments was 38 the highest level in
a decade. Deliveries of industrial goods fertilisers,
building materials, and machinery�to agriculture
also showed a large improvement but still fell siort of
demand.
Although the Polish Government has continued to
espouse the long -range goal of socializing agriculture,
the retention of private ownership has enabled it to
avoid the costly and less productive investments that
other Communist countries have had to make in new
collective facilities to replace privately -owned
buildings. Moreover, the willingness of peasants to
work harder on their own farms than on collectives has
generally resulted in more efficient use of machinery
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FIGURE 10. Private farm market In Poland (U /(;U)
FIGURE 9. Threshing of grain by private Polish
farmers (U /OU)

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and 'fertilizers in Poland than in most other East
European Communist countries. On the other hand,
private ownership presents the Polish Government
with unique problems of control. The government sets
goals for production and marketing of farm
commodities as well as for raising the level of
technology by increasing the use of machinery,
fertilizers, and improved types of seed. It can achieve
these goals only by indirect methods such as price
incentives, allocation of industrial inputs, and peasant
education.
The government had relied to some extent on
compulsory deliveries of agricultural products to guide
farm output, but abolished them as of 1 January 1972.
This was an important step toward improving
efficiency of farm production, because it eliminated
state interference in the farmers' sphere of decision
making as regards specialization. The bulk of state
procurement of agricultural commodities is now made
through "voluntary" sales by private farmers. These
sales are made in part under contract, in which the
farmer agrees in advance of harvest or livestock
slaughter to sell certain quantities of produce or
livestock products to the state at a specified price. The
farmer may also sell commodities to the state in
quantities over and above those contracted. In an
effort to encourage the signing of contracts, the state
has generally offered a slightly higher price for
contract than for above contract sales. Farmers who
sign contracts with the government are also generally
given priority in obtaining supplies of fertilizer, feed,
seed, and building materials in state or cooperative
stores.
Since taking power in late 1970, the Gierek regime.
has also stimulated output in the private sector by
raising prices of slaughter livestock on three separate
occasions, abolishing state control over sales of coal to
farmers, settling land property rights, reforming the
tax system, initiating a rural health service, and
establishing new local administrative units. The
success of these policy changes is most evident in the
sharp increase in procurement of livestock in 1972, as
well as in gains in total livestock output compared to
1970 and 1971. With retail food prices frozen,
however, the subsidy cost to the government for
livestock products is rising rapidly, as are farmers'
incomes. This situation could lead to some upward
adjustment in prices that farmers pay for industrial
inputs and services.
The Polish caloric intake (over 3,000 calories per
day) is among the highest in Communist Eastern
Europe and compares favorably with that of the
United States. The share of starches in the diet,
however, is considerably higher than in most other
0
northern European countries, and the share of meat;
dairy products (except milk), fruits, and vegetables is
correspondingly lower. Demand for pork his exceeded
supplies since 1968; per capita annual meat
consumption increased nearly 4 kilograms between
1968 and 1971 to 56 kilograms. By 1975, meat
consumption is planned to rise to 63 kilograms per
capita.
b. Fisheries
Poland's fishing fleet has almost tripled in size since
1960, reaching 141,700 gross register tons in 1071.
Coastal and deep -sea fishing netted a new high of
488,500 tons of fish in 1971 mainly cod and
herring� nearly 3 times the catch in 1960. All of this
increase was. derived from Atlantic Ocean catches. In
addition, commercial fisheries caught 13,600 tons of
fresh -carter fish. The total catch of fish in 1972 was
520,400 metric tons. Polish exports of fish averaged
about 53,000 tons annually during 1969 -71, compared
with only 7,000 tons in 1950. Imports of fish �about
40% from the U.S.S.R� amounted to 13,400 tons in
1971. Per capita consumption of fish was 5.7 kilograms
in 1971, among the highest in Eastern Europe.
e. Forestry
Forests covered about 8.5 million hectares in 1971,
or more than one fourth of Poland's land area (Figure
11). More than 80% of the forest land is under state.
control. Timber resources, maii.ly coniferous wood,
are adequate for domestic needs and have ''jeen an
important source of hard currency earnings. Since
1965, the annual timber cut has ranged between 16.4
million and 18.5 million cubic meters. Sizable timber
exports have been achieved by cutting timber at a rate
in excess of natural growth and by holding down
domestic use. Exports of sawn wood were a record
952,000 cubic meters in 1964, but they dropped to
820,000 cubic meters in 1970 and 714,000 cubic
meters in 1971. Most of the sawn wood has been sold
to Western countries. In recent years sales of timber,
furniture, and paper accounted for about 5% of
Poland's total hard currency earnings. Poland imports
some cellulose for its paper and textile industries.
2. Fuels and power (U /OU)
a. Hard coal and coke
Poland is one of the world's largest producers of
both hard coa1 and coke. Output of hard coal in 1971
reached 145 million tons, and coke production
'By definition, hard coal includes both bituminous and
anthracite coals. According to the international standard, hard coal
is defined as coal having a gross calorific value of more than 5,701;
kilocalories per kilogram on a moist, ash -free basis.
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amounted to about 17 million tons. Coal production
in Poland has increased steadily throughout the
postwar period, because of a shortage of other fuels,
especially crude oil, and because of strong demand for
coal on international markets. Since 1970, ;coal
production has increased by 5 million to 6 million tons
(about 4 per year, and the planned growth rate
through 1975 is the same. Four- fifths of the hard coal
output is consumed domestically, and one -fifth is
exported.
Coal has been an important source of foreign
exchange since the end of World War II. In 1571, coal
exports totaling 30 million tons earned the equivalent
of more than US$400 million, $220 million of which
was in hard currency. About one -half of the exports
have been going to the Communist countries, mainly
the U.S.S.R., Czechoslovakia, East Germany, and
Hungary. Major importers in the non Communist
world have been Italy, France, Finland, Denmark,
Japan, and Austria. Coking coal exports amounted to
about 6 million tons, or 20% of total.exports of hard
coal, in 1971. Growing Western concern over air
pollution should help keep the demand high for low
sulfur Polish coal. Poland imports about 1 million tons
of high -grade coking coal per year, most of it from the
Urbanized or industrialized area
Forest
AGRICULTURE
Oats, potatoes, livestock
Rye, potatoes, livestock
Wheat, sugar beets, livestock
U.S.S.R. Approximately 2 million tons of coke are
exported annually. Major recipients are the U.S.S.R.
and East Germany.
Polish hard coal is nearly all bituminous and is
extracted almost exclusively from deep mines. Reserves
are concentrated in the Upper and Lower Silesian
basins along the Polish- Czechoslovak border and in
the newly- discovered coal basin in eastern Poland
between Lublin and the Polish Soviet bt;rder. Total
possible reserves are estimated at about 100 billion
tons to a depth of 1,000 meters and 150 billion tons to
a depth of 2,000 meters.
Hard coal is by far the most important source of
primary energy in Poland, although its share is
declining slowly. The percentage shares (actual and
planned) of energy consumption, by sources of energy,
are as follows:
Hard coal
Brown coal
Petroleum
Natural gas
Other peat, wood, water,
1965 1970 1975 Pr.AN
81.8
76.4
68.6
5.8
5.4
6.9
7.0
10.4
13.7
2.1
6.2
8.4
and recovered fuels) 3.3 1.6 2.4
Total 100.0 100.0 100.0
9
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FIGURE 11. Land -use pattern (U /OU)

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FIGURE 12. Production of fuels and power (U /OU)
1950 1955 1960 1965 1970 1971
Hard coal (million tons) 78.0 94.5 104.0 119.0 140.1 145.5
Brown coal 4.8 6.0 9.3 22.6 32.8 34.5
Coke (million metric tons) 6.0 10.0 11.9 14.5 16.5 16.8
Crude petroleum (thousand tons) 1f:3.0 180.0 194.0 339.0 424.0 395.0
Petroleum procacts thousand metric
tons 271.0 686.0 876.0 3,517.0 7,481.0 8,331.0
Natural gas (million cubic meters) 183.0 393.0 549.0 1,378.0 5,182.0 5,383.0
Electric power:
Production (billion kw.- hr.)......... 9.4 17.8 29.3 43.8 64.5 69.9
Installed capacity (million kw.) 2.7 4.2 6.3 9.7 13.9 14.
The patter of fuel consumption in Poland differs
sharply from the world pattern, in which coal and
petroleum each account for about one -third of total
consumption. Output of fuels and power is shown in
Figure 12.
In the early 1950's, the regime tried to increase coal
production rapidly with a minimum of investment,
relying on forced labor, overtime work, and the use of
military personnel in mining. Since 1956, coal mining
has received much greater emphasis in Poland's
investment program, and large expenditures have
gone into both the construction of new manes and the
modernization of old ones. The production of coking
coal has received special attention, and its share of the
hard coal output has increased from about 1.5% in
1950 to 25% in 1971.
The showcase of the Polish coal industry is an
automated coal mine opened in Katowice in 1968.
The Jan mine, named after Minister of Mining Jan
Mitrega, operates with a handpicked staff of 160
miners and 69 engineers. It combines modern
equipment- including computers-with up -to -date
techniques, and serves as a training ground for mining
specialists from all over Poland. By Polish standards,
production results claimed at the mine have been
impressive: 15 tons per man -day, as compared with an
average of about 3 tons in other Polish mines.
b. Brown coal
Poland has large deposits of brown coal, located
mainly in two areas: the Turow Basin in southwestern
Poland near the Pol6ii -East German border, and the
Konin -Turek Basin in the eastern part of Poznan
province. A major new brown coal deposit was
recently discovered in Belchatow, about 40 kilometers
south of Lodz. Development of a mine in this area is
expected to begin in 1976.
'For diacritics on place names see the list of names on the apron
of the Summary Map in the Country Profile chapter and the map
itself.
Brown coal mining on a significant scale was
initiated in 1956; since then output has been rising
rapidly. The output of 34.5 million tons in 1971 was
almost six tames the 1955 output. Part of the financing
of brown coal development has come from East
Germany, through credits repayable in deliveries of
brown and hard coal. Most Polish brown coal is used
in powerplants.
e. Petroleum and natural gas
Poland imports all but a small fraction if its supply
of crude oil. In 1972, domestic production amounted
to only about �347,000 tons. Extensive geological
surveys are still conducted with Soviet assistance, but
no major fields have been found in recent years, and
prospects for greatly increased domestic production
are not bright. Ir_ fact, production has declined during
the past four years.
Crude oil imports, all from the U.S. S. R., totaled 9.7
million tons in 1972. In order to meet long deferred
needs, Poland doubled its imports during 1961 -63,
1964 -65, and again during 1966 -69. Imports will
probably continue to increase rapidly through 1975.
Because the U.S.S.R. may not be relied upon to
continue supplying increasing amounts of crude to
meet future Polish needs, Poland is seeking to import
oil from the Middle East. Agreements were reached in
1973 with Iran and Iraq to supply crude oil.
Crude oil is processed at the major refining and
petroleum complex at Plock, about 75 miles
northwest of Warsaw. The refinery, which began
operating in August 1964, had a capacity of 2 million
tons in 1966 and about 7 million to 8 million tons at
the end of 1972. The present capacity of the Plock
complex represents one -third of the planned size of the
works. Oil from the U.S.S.R. is brought to the refinery
via the Council for Economic Mutual Assistance
(CEMA) pipeline, v.hich crosses Poland from the
U.S.S.R. to East 'Cermany. The 24 -inch pipeline,
completed in December 1963, has been joined by a
parallel 28 -inch line which was recently completed.
10
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Construction is now in progress, under a contract
with Snam Progetti of Italy, on a major new petroleum
refinery at Gdansk. The refinery, scheduled to be
completed in 1975, will be supplied with 3 million
tons of crude oil annually from Kuwait under a long-
term contract with British Petroleum. Plans are also
being made for the construction of a third major
refinery, to be located at Blachownia Slaska in
southern Poland; this plant is to have an annual crude
charge capacity of 6 million tons when completed in
1977. Crude oil may be supplied to it from the Middle
East via a pipeline through Yugoslavia, Hungary, and
Czechoslovakia.
The rapid expansion of refining capacity has made
it possible for Poland to increase output of petroleum
products from 876,000 tons in 1960 to 10.0 million
tons in 1972. In the latter year, Poland produced
about 80% of its supply of kerosene, fuel oils, and
lubricating oils, as compared with only 30% in 1964.
Sizable natural gas deposits discovered in recent
years in the Carpathian foothills, and the promise of
still greater discoveries, have encouraged the
leadership to emphasize natural gas in the country's
fuel baiance. Since 1960, gas production has risen
rapidly, from 0.5 billion cubic meters to 5.8 billion
cubic meters in 1972. A further increase in natural gas
production to between 12 billion and 13 billion cubic
meters by 1975 is planned.
In 1968, reported gas reserves were on the order of
40 billion cubic meters. Since then, estimates have
been revised sharply upward to 100 billion cubic
meters or more. Several major pipelines have become
operative and others are under construction. The most
important line now in operation links the Rzeszow
area, Poland's largest gas basin, with the fertilizer
plant at Pulawy and extends to Lublin and Warsaw.
d. Electric power
The electric power industry has grown steadily
throughout the postwar period, with particularly rapid
increases occurring in the 1960's and early 1970's.
Since 1960 the national electric power capacity nearly
tripled, and Poland now ranks first in the Communist
East European area in electric power generating
capacity and production. Production in 1972
amounted to 76.4 billion kilowatt -hours (kw. -hr.). At
the end of that year, the installed generating capacity
was 16.1 million kilowatts (kw.). In 1971, the electric
power industry accounted for 12.6% of Poland's fixed
assets and 2.6% of the country's gross industrial
output.
Industry consumes two thirds of the total electric
power output. The chemical and metallurgical sectors
are the principal industrial consumers of electricity,
using 47% of the total industrial allocation. Other
principal industrial consumers are the fuel,
metalworking, wood and paper, textile, and food
industries. The remaining electricity is allocated to
households, commercial and governmental establish-
ments, and the transport, agricu!tural, and public
utility sectors of the economy. All urban areas have
household electricity, and by 1971 all state farms and
most private farms were electrified.
Thermal powerplants account for 95% of the total
electric power cayacrty, and hydroelectric plants, the
remainder. Thermal powerplants are fueled almost
exclusively by domestic hard coal and brown coal.
.almost one -half of the capacity is in the south central
part of the country, where the largest concentrath of
industry, the greatest urban density, and most of the
hard coal mines are located. The largest powerplants,
all thermal, are the 2- million -kw. Turoszow Turow,
the 1.2- million -kw. Laziska Gome, and the 1.2-
million-kw. Patnow. The combined capacity of these
three powerplants comprises about 28% of the total
national capacity.
Use of waterpower is limited because most of the
rivers have small volumes of flow and the
predominantly flat terrain would require a consider-
able expenditure of resources for dams to impound
large reservoirs.
Transmission of electric power is accomplished by a
national network encompassing 460,000 kilometers of
transmission lines, including more than 5,700
kilometers of extra -high voltage (220 and 400 kv.)
lines. High voltage transmission lines cover a
considerable portion of the country, connecting all
important powerplants and providing service to the
principal industrial and urban centers. The greatest
density of transmission facil :es is in the south central
part of the country, which includes the Upper Silesian
Basin. The highest voltage transmission line (400 kv.)
extends to this area from the large Turoszow Turow
powerplant in the southwest. The distribution system
ai!ows for exchanges of electricity with Czecho-
slovakia, East Germany, and the U.S.S.R. These
exchanges have local significance in the border areas
but have little effect on the national power supply.
Future development of the electric power base calls
for an increase in generating capacity to about 20.5
million kw., with an annual production of 96 billion
kw. -!a. by the end of 1975. The planned increase is to
be accomplished primarily through construction and
expansion of thermal powerplants. Two of the thermal
plants under construction, the Kozienice and Gryfino
Dolna Odra, are in the 1- million -kw. class. The largest
11
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generating units in use have a capacity of 200,000 kw.
Until recently, units of this size were imported from
the U.S.S.R.; however, domestic industry now
produces units of this size, and research has begun on
the manufacture of 500,000 -kw. units. The first
500,000 -kw. unit is to be installed in 1975 or 1976 and
will be imported from the U.S.S.R. Poland has
recently announced plans to build its first nuclear
powerplant. Scheduled to have a capacity of 444,000
kw., it is expected to be operational by 1982.
3. Metals and minerals (C)
a. Ferrous metallurgy
Poland has the largest iron and steel industry in the
East European Communist area (excluding the
U.S.S.R.) and the tenth largest in the world, ranking
slightly behind Belgium. In 1972, the ndustry
produced about 7.5 million tons of pig iron, 13.5
million tons of crude steel, and 9.2 million tons of
rolled products. With the exception of coking coal, the
industry is dependent on imports for most of its raw
materials. Although there are relatively large iron ore
deposits, they are difficult to mine and have an
average iron content of only 34 From a peak level of
about 3.0 million tons during 1966 -68, domestic iron
ore production decreased steadily to 1.8 million tons in
1972. In the latter year, imports of iron ore, about 85� %0
of which came from the U.S.S.R., amounted to 12.5
million tons. Although the U.S.S.R. will continue to be
its principal supplier, Poland plans to increase imports
of iron ore from other current suppliers, Mcluding
Brazil, Sweden, and India, to help cover its growing
needs. Poland depends on imports for all alloying
metals and ores for the production of ferroalloys.
The Polish iron and steel industry is located mainly
in the Katowice- Krakow area in the southern part of
the country (Figure 13). The province of Katowice
contains a cluster of about a dozen plants which, in
1971, employed 105,000 workers or 60% of the
industry's labor force and accounted for 5.9 millit n
tons of crude steel and 4.0 million tons of rolled
products, each representing 46% of the industry's
output. The largest single enterprise is the Lenin
Metallurgical Plant, located at Nowa Huta, near
Krakow. This integrated combine, which began
production in 1955, had a labor force of 27,000 and an
output of 5.3 million tons of crude steel and 3.4
million tons of rolled steel in 1971. Total Polish output
of iron and steel, as well as other important metals and
minerals, is shown in Figure M.
The iron and steel industry enjoyed a high priority
in tNe industrialization drive of the early 1950's,
Circles and segments indicate relative importance
0 Mining, iron and steel, nonferrous metallurgy
0 Machine building (including transportation
and electrical equipment, metalworking,
specialized machinery)
0 Food processing
Chemicals (including basic chemicals, petroleum.
refining, fertilizereartificial fibers, synthetic
rubber, pharmaceuticals)
Light industry (textiles, clothing, woodworking, paper)
Petroleum pipeline ;o Iron ore
0 Hard coal Lead and zinc
Brown coal
5019W 11.7
FIGUI,',E 13. Mining and industrial centers (U /OU)
12
r
law
Labifa
15 stslaws Nala
tiacMN
Tannbri"
Ilalar
I (lzeufw
Wilwy Pitt
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FIGURE 14. Output of principal metals, minerals, and construction materials (U /OU)
(Thousand tons unless otherwise indicated)
1955 1960 1965 1970 1971 1972
Iron ore 1,699 2,182 2,861 2,554 2,078 1,800
Pig iron na 4,2L3 5,375 6,984 7,186 7,480
Crude steel 4,426 6,681 9,088 11,795 12,738 13,476
Rolled steel 2,925 4,422 6,130 8,136 8,721 9,216
Zinc -lead ore 2,378 2,461 2,688 3,583 3,851 3,988
Zinc metal 156 176 190 209 220 228
Lead metal....,,,,,,,,,,,,,,,,, 34 40 41 54 60 56
Copper ore 1,006 2,356 2,508 6,552 9,037 11,486
Refined copper 16 22 72 93 131
Aluminum 20 26 47 99 100 102
Elemental sulfur 12 26 431 2,683 2 2,927
Cement 3,813 6,599 9,573 12,180 13,082 13,986
Bricks (million unite)� 2,740 3,489 3,516 3,660 3,820 3,915
Burnt tiles (million unite) 127.0 100.0 99.1 82.9 79.7 61.11
Building and industrial lime..... 1,538 2,166 2,874 3,586 3,819 4,097
Window glass (million square
meters of 8- millimeter sheets)... 16.1 22.5 32.6 48.5 48.9 55.1
na Data not available.
*Excluding production in peasant groups, which in 1972 amounted to 134 million units.
receiving 16% of total industrial investment during
1951 -55. Most of the outlays went into the
construction of new facilities, including the Lenin
plant. The rate of investment in iron and steel was
progressively reduced after 1955, however, to 9.6% of
total industrial investment during 1956 -60, 8.3%
,luring 1961 -65, and 6.5% during 1966 -70. In spite of
this !owered priority, the industry has maintained a
steady rate of growth by concentrating investment on
the elimination of bottlenecks and the expansion of
existing facilities, particularly for the production of
such items as cold rolled strip and sheet, tinplate,
galvanized sheet, and wire. On balance, however,
results have not been entirely satisfactory. The
industry is still geared predominantly to the making of
steel by the traditional open hearth method. Poland's
only oxygen- converter steel mill was put into
operation in 1966, and the output of steel by this
method in 1972 was only one -fifth of total output, a
very low share compared with more advanced steel
producing countries. Even though Poland normally
exports more steel than it imports, exports are
generally weighted heavily with such low -value items
as rails, heavy plate, and semifinished products,
Whereas imports include a larger share of high -value
items such as alloy steel, light flat rolled products, and
special tubular steels.
Poland has embarked on an ambitious program of
expansion and modernization of its steel industry
during the 1970's. Planned investments during 1971-
75 total 50 billion zlotys, or twice as much as in the
1966 -70 period. Production of crude steel is scheduled
to reach 15 million tens by 1975, and the quality and
:assortment of products are to be improved
substantially. In the latter half of the decade a large
integrated combine, now under construction, is to be
put into operation in the Katowice area, with an
annual crude steel capacity of 4.5 million tons. It will
be equipped with large modern blast furnaces and
oxygen converters A principal product will be
semifinished steel for use in nearby plants, where
rolling and finishing capacities are to be expanded and
diversified.
b. Nonferrous metallurgy
Although generally small by world standards,
Poland's nonferrous metals industries are among the
largest in Eastern Europe. In the domestic economy
these industries rank considerably behind the Polish
iron and steel industry in terms of employment and
value of annual output. In 1971, employment in
nonferrous metallurgy amounted to about 57,000, or
about one -third of that of ferrous metallurgy; the
value of output in nonferrous metallurgy was nearly
36 billion zlotys, or 40% of that of ferrous metallurgy.
Poland ranks ninth among world pri- Jucers of zinc
but is second only to the U.S..R. among all
Communist countries. Its output s more than
adequate for domestic needs. In 1972, Poland
produced 228,000 tons of zinc and exported 97,000
tons of zinc and zinc plate. Nearly all of Poland's zinc
13
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output is derived from domestic zinc -lead ores; the
remainder is obtained from concentrates imported
mainly from non- Communist countries, including the
United States. Total output of zinc -lead ores was
about 4.0 million tons in 1972. The relatively small
amount of lead contained in these ores is the basis for
the production of metallic lead, supplemented
occasionally by small imports of lead concentrates.
The traditional source of Polish zinc, the sulfide ores of
the Bytom Basin, is being exhausted, and a growing
share of the national output is being derived from
oxide ores in the Olkusz�Chrzanow region, where a
highly mechanized mine is under development at
Pomorzany. About one -third of the current metal
output is refined by old, horizontal retort plants, some
of which were built in the last century. Although no
definite schedule has been established, the retorting
methods are to be replaced by modern processes.
Considerably greater use is planned for the Imperial
Smelting Process, which currently accounts for about
one -sixth of total zinc output. The process was
adopted in 1968 in a new refinery at Miasteczko
Slaskie, near Katowice. Difficulties were encountered
in mastering the new process, but these reportedly
have been overcome. The electrolytic process, which
accounts for nearly one -half of current zinc output,
may also see greater use.
Domestic lead output 65,000 tons in 1972� covers
about three quarters of domestic consumption. The
remainder is supplied by imports of metallic lead,
mainly from the U.S.S.R., Yugoslavia, and the United
Kingdom. Cadmium, a coproduet of zinc ore, is
produced in excess of domestic requirements and is
exported to other Communist countries and to the
West.
Production of refined copper has increased by no
less than 500% between 1960 and 1972, from 22,000
tons to 131,000 tons. Poland is the largest producer of
copper among the Communist countries of Eastern
Europe., and by 1975 it is expected to attain an annual
output of 200,000 tons. This level of production will
enable Poland to rneet its domestic needs, now rising
rapidly in the electrical and telecommunications
sectors, and will provide a sizable export surplus.
Poland's objective is to become a major world
producer of copper. Polish planners already are
seeking foreign financial assistance to develop an
industry capable of producing tip to 600,000 tons of
copper annually.
The rapid _owth already achieved in copper
production and the potential for future expansion
derive from the dis, Overy of rich copper ore deposits in
southwestern Poland in the late 1950's, which are
14
estimated to be the seventh- largest in the world. Two
major mines, financed ip part by a US$125 million
credit from Czechoslovakia, were opened in 1966 at
Glogow and Lubin to exploit these deposits.
Substantial progress also has been ,Wade in the
development of a third major mine at Rudna. This
project, which has been helped vlong by a
multimillion dollar long -term credit from France, is
scheduled for completion in 1974. The volume of
copper ore mined in Poland in 1972 was estimated at
more than 10 million tons, and the planned output for
1975 is 14.5 million tons. Smelting and refining
aperations are carried out at Glogow and Legnica.
Poland's production of aluminum is small by world
standards and ranks second to that of Romania in
Eastern Europe. Output in 1972 amounted to 102,000
tons, or enough to cover roughly two- thirds of
domestic needs. Imports from the U.S.S.R. made up
the deficit. Although years of research have been
devoted to the development of techmyltes to obtain
aluminum from domestic clays, only limited
experimental use has been made of such techniques,
and Poland remains dependent on imports for its
aluminum raw materials. Some bauxite is imported
from Hungary and Guinea for domestic processing
into alumina, but most local requirements for alumina
are met by imports, principally from Hungary. A
contract has been signet with Yugoslavia calling for
annual deliveries to Poland of 120,000 tons of alumina
over a 10 -year period, beginning in 1976.
Poland has two aluminum reduction plants, each
with an annual capacity of about 50,000 tons. One
plant, located at Skawina, was built with Soviet
assistance and was put into operatimi in 1954. A newer
plant, employing French refining technology, was put
into operation at Konin in 1966. Because of its
location in a nonindustrial area, operations at the
latter plant were hampered for some time by a
manpower shortage particularly of skilled techni-
cians needed to supervise the French process.
Although these problems have been overcome, Poland
has not gone ahead with its initial plans to expand
capacity at Konin to 100,000 tons per year, due
apparently to the lack to low -cost electric power (the
use of lignite, the fuel source for the required
additional power, apparently would he uneconomi-
cal).
c. Nonmetallic minerals and construction
materials
Poland has the third richest deposits of native sulfur
in the world. The deposits, discovered during 1953 -56
at Tarnobrzeg, contain about 100 million tons of pure
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sulfur. Sulfur mining in Poland began on a significant
scale in 1961. Since then, output of elemental sulfur
has increased rapidly to about 3.0 million tons in 1972.
By 1975, output may reach 5 million tons, a level
currently exceeded only by the Unite% States.
Favorable geological conditions permit much of the
incremental output to be mined by the highly efficient
Frasch process.
Sulfur exports have kept pace with domestic
production and have become a major source of foreign
exchange. Exports increased from 241,000 tons in 1965
to 1.8 million tons in 1970, 2.1 million tons in 1971,
and, according to a preliminary report, 2.5 million
tons in 1972. By 1975, Western experts estimate
Poland will be exporting about 4 million tons per year.
At present, more than 75% of the exports go to non
Communist countries.
Salt is found in abundance in Poland, and a small
amount is exported annually. The country has only
small resources of other nonmetallic minerals, and
depends on imports for its entire supply of potash and
all but a small fraction of its supply of phosphate rock.
Poland has extended credits to the U.S.S.R. for the
development of Soviet potash and is being repaid in
deliveries of this material during 1970 -80. The
arrangement has resulted in the U.S.S.R.'s replacing
East Germany as Poland's principal source of potash.
Poland also receives large annual deliveries of apatite
concentrates from the U.S.S.R.
Poland produces a wide variety of construction
materials. The 1972 production of nearly 14 million
metric tons of cement resulted in Poland ranking as
the eleventh largest world producer and the largest
among the East European countries. Cement output is
inadequate to meet Polish demand, however, even
though output has been growing at approximately a
7% annual rate for several years. The shortage has
compelled Poland to become a net importer of
cement, which is purchased primarily from the Soviet
Union, although limited quantities are exported
primarily to East European countries. This cement
shortage should eventually be alleviated by the futurf
completion of what will be the two largest Polish
cement plants. The larger of these two plants is to
receive its kilns and other equipment from the Soviet
Union and is scheduled to begin production in 1976.
Construction on the smaller one is expected to
commence during 1973. The production of cement, as
well as othe, construction materials, is shown in Figure
14.
Poland produces sufficient quantities of lime and
plaster to satisfy the needs of its construction industry.
Since 1970, the output of lime for construction and
industry has grown annually at a rate exceeding 6
The output of wall materials has increased fairly
steadily at a slower pace than lime, although the
growth rate of production of brick wall materials has
been suLstantially less than all wall materials
considered together. Poland has adequate clay
resources to support increased brick production, but
has invested relatively little in the expansion of brick
capacity, which reflects a Polish preference for
substitute wall mated; 's. Finally, the production of
burnt tiles has continued its secular decline.
In addition to cement, Poland carries on
international trade in several construction materials. It
has been a net exporter of window glass for several
years, although in recent years this market has failed
to grow. Poland's largest window glass customer is the
United States, which has purchased a growing
proportion of window glass exports. Other construc-
tion materials exported by Poland include limestone,
dolomite, fire clay, gypsum stone, gypsum cement,
lime, and clay brick. Several construction materials are
imported however, such as limestone, dolomite,
kaolin, graphite, asbestos, asbestos cement, brick
facing tile, and pre -cast concrete.
4. Manufacturing and construction (C)
a. Machine building
Machine building is Poland's largest industry,
accounting for 27% of total industrial output in 1971.
As the focal point of Poland's industrialization efforts
throughout the postwar period, machine building has
been accorded top priority in the allocation of
investments, skilled labor, materials, and the best
available management. Although the share of total
investment going into machine building declined
somewhat after 1955, the industry (including metal
processing) still received about 15% of total industrial
investment during 1956 -65. This share increased to
19% during 1966 -70. The gross value of output
increased over 300% between 1960 and 1971. Exports
increased even more rapidly than production. In spite
of the rapid growth of its machine building industry,
however, Poland remains highly dependent on imports
for complex modern machinery.
The Polish machine building industry produces a
wide variety of p�ducts. Transportation equipment
including railroad locomotives and cars, ships, and
automotive equipment� accounted for about 34% of
total output in the industry in 1971. "Electrotechnical
equipment," the term used by the Poles to describe
such items as generators, transformers, cables, and
electronic equipment, comprised 17% of total
15
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FIGURE 15. Production of machinery and equipment (U /OU)
(Thousand tons, except as indicated)
no Data not available.
�1 July 1960 prices.
"Over 100 deadweight tons (d.w.t.).
machinery output. "Metal products," the is rni used to
cover mainly domestic household equipment,
accounted for 18 The production of specialized
machinery such as machine tools, agricultural,
metallurgical, and mining ma. ^hinery, construction
equipment, boilers, and internal combustion engines
accounted for 28% of total machinery output.
Production of selected items of the machine building
industry is shown in Figure 15.
Throughout the postwar period, Poland has been an
important producer of railroad locomotives and rolling
stock. It is second only to the U.S.S.R. in the
production of freight cars in the Communist world.
Although production declined c ,ring the 1966 -70
plan period, by 1971 output had nearly recovered to
the peak level of 16,600 units produced in 1966.
Generally, about two- fifths of the freight car output is
exported, predominantly to the Soviet Union. Until
1960, Poland produced and exported large numbers of
steam locomotives, first to the U.S.S.R. and later to the
Peoples' Republic of China. Since 1961, however, it
has been building mainly diesel and electric
locomotives for domestic use.
Poland ranks twelfth in the world in shipbuilding.
Among Communist countries it is second only to tl :e
Soviet Union. Output at Polish shipyards- confined
mainly to three maior yards at Gdynia, Gdansk, and
Szczecin (Stettin) almost quadruplet!. during 1955 -66
(to 433,000 d.w.t.) and increased another 62% through
1972 (to 700,800 d. w. t.
The rapid growth in shipbuilding capacity has
enabled Poland to increase the size of its own
merchant fleet to i 2 million d.w.t. and to sell a
considerable number of ships abroad. About 75% of
Polish- manufactured ships are exported, mainly to the
U.S.S.R. During 1960 -70, th. Soviet Union purchased
77% of total Polish exports of ships, representing an
aggregate capacity of 2,331,000 d.w.t. The Poles now
claim that every fifth ship in the Soviet nonmilitary
fleet is Polish- built. In 1971, the number of ships
delivered to the U.S.S.R. dropped sharply, while sales
to the industrial West -which had been negligible
totaled 229,000 d.w.t., of which 119,000 d.w.t. went
to Norway and 64,000 d. w. t. went to West Germany.
Polish shipyards build and export a variety of small
to medium -class ships, including ore and coal carriers,
tramps, coasters, general cargo, timber carriers,
tankers, cutters, factory trawlers, training ships, and
scientific research vessels. So far, the largest ship
launched is a 55,000 -ton general cargo vessel. The
Gdynia shipyard started construction of a 105,000 -ton
vessel in 1972 and has b preparations to build a
larger building dock, where 200,000 -ton and 400,000
ton vessels are eventually to be built.
Poland has a small but rapidly expanding motor
vehicle industry. In 1971, the industry manufactured
90,000 passenger cars, 49,600 trucks, 9,900 buses,
41,200 tractors, and 176,600 motorcycles and motor
scooters.
16
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1965
1968
1969
1970
1971
Metalworking machine tools (thousand
units)
34.5
33.0
33.4
33.4
na
Mining machinery
164.0
175.0
191.0
201.0
na
Metallurgical equipment
40.1
43.2
43.6
47.4
46.3
Chemical machinery.
57.3
57.8
62.1
68.4
no
Construction and roadbuhding equipment.
46.9
77.6
92.3
107.0
109.0
Food- processing equipment.............
43.2
54.5
57.4
56.9
48.6
Textile machinery.....................
17.0
16.3
17.4
18.6
20.2
Agricultural machinery, excluding tractors
(thousand zlotys")
3,630.0
4,344.0
5,118.0
5,547.2
6,287.0
Tractors, two -axle (thousand units)
20.6
29.9
36.7
39.5
41.2
Roller bearings (million units)
34.1
42.2
45.4
51.4
na
Electric rotary engines (1,000 kw.)
4,533.0
5,649.0
6,684.0
7,429.0
7,391.0
Transformers over 20 kv: a. (1,000ko: a.).
5,427:0
7,562.0
8,486.0
8,423.0
10,058.1
Merchant ships (thousand d.w.t.s
359.0
479.0
454.0
51.8.0
600.0
Freight cars (thousand units)
16.3
12.6
14.0
15.5
16.4
Locomotives (units):
Diesel
319.0
279.0
347.0
351.0
295.0
Electric
72.0
109.0
91.0
75.0
85.0
no Data not available.
�1 July 1960 prices.
"Over 100 deadweight tons (d.w.t.).
machinery output. "Metal products," the is rni used to
cover mainly domestic household equipment,
accounted for 18 The production of specialized
machinery such as machine tools, agricultural,
metallurgical, and mining ma. ^hinery, construction
equipment, boilers, and internal combustion engines
accounted for 28% of total machinery output.
Production of selected items of the machine building
industry is shown in Figure 15.
Throughout the postwar period, Poland has been an
important producer of railroad locomotives and rolling
stock. It is second only to the U.S.S.R. in the
production of freight cars in the Communist world.
Although production declined c ,ring the 1966 -70
plan period, by 1971 output had nearly recovered to
the peak level of 16,600 units produced in 1966.
Generally, about two- fifths of the freight car output is
exported, predominantly to the Soviet Union. Until
1960, Poland produced and exported large numbers of
steam locomotives, first to the U.S.S.R. and later to the
Peoples' Republic of China. Since 1961, however, it
has been building mainly diesel and electric
locomotives for domestic use.
Poland ranks twelfth in the world in shipbuilding.
Among Communist countries it is second only to tl :e
Soviet Union. Output at Polish shipyards- confined
mainly to three maior yards at Gdynia, Gdansk, and
Szczecin (Stettin) almost quadruplet!. during 1955 -66
(to 433,000 d.w.t.) and increased another 62% through
1972 (to 700,800 d. w. t.
The rapid growth in shipbuilding capacity has
enabled Poland to increase the size of its own
merchant fleet to i 2 million d.w.t. and to sell a
considerable number of ships abroad. About 75% of
Polish- manufactured ships are exported, mainly to the
U.S.S.R. During 1960 -70, th. Soviet Union purchased
77% of total Polish exports of ships, representing an
aggregate capacity of 2,331,000 d.w.t. The Poles now
claim that every fifth ship in the Soviet nonmilitary
fleet is Polish- built. In 1971, the number of ships
delivered to the U.S.S.R. dropped sharply, while sales
to the industrial West -which had been negligible
totaled 229,000 d.w.t., of which 119,000 d.w.t. went
to Norway and 64,000 d. w. t. went to West Germany.
Polish shipyards build and export a variety of small
to medium -class ships, including ore and coal carriers,
tramps, coasters, general cargo, timber carriers,
tankers, cutters, factory trawlers, training ships, and
scientific research vessels. So far, the largest ship
launched is a 55,000 -ton general cargo vessel. The
Gdynia shipyard started construction of a 105,000 -ton
vessel in 1972 and has b preparations to build a
larger building dock, where 200,000 -ton and 400,000
ton vessels are eventually to be built.
Poland has a small but rapidly expanding motor
vehicle industry. In 1971, the industry manufactured
90,000 passenger cars, 49,600 trucks, 9,900 buses,
41,200 tractors, and 176,600 motorcycles and motor
scooters.
16
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To reduce a growing backlog of demand and to
boost foreign sales of motor vehicles, Poland in 1967
embarked on a major program to expand and
modernize its capacity for manufacturing passenger
cars. The program has centered on the renovation of
production facilities at the Fabryka Samochodtow
Osc-bowych plant at Zeran on the banks of the Vistula
near Warsaw. In 1971 the Zeran plant turned out
about 60,000 "Polish Fiats," the Polish version of the
Fiat 125. In October 1971, Poland signed a
cooperation agreement with Fiat for the construction
in Poland of a new model car, the Fiat 126, a relatively
low- priced small car, which will be produced in new
facilities at Bielsko -Biala and Tychy. About 75% of
the Italian supplies of equipment for the plant are to
be repaid by deliveries of Fiat 126 components
produced in Poland. Annual production is to begin at
3,000 units in 1973 and is to reach 150,000 units by
1979. Poland hopes to boost the total number of
automobiles per 1,000 inhabitants from 15 in 1970 to
25 in 1975.
Western technology is playing an increasingly
important role in the Polish motor vehicle industry. In
addition to the new Fiat deal, Poland has recently
signed an agreement with the French firm of Berliet
for the modernization of the Jelcz bus plant. The
capacity of the plant eventually will be expanded to
5,000 buses annually, of which 1,700 will be produced
under the Berliet license. The assembly of buses began
in December 1972, largely from imported com-
ponents. By 1975, more than one -half of the parts are
to be made in Poland. Licenses purchased before 1970
include Weber carburetors, Leyland diesel. engines for
trucks, Armstrong shock absorbers, and Westinghouse
brakes.
Large amounts of agricultural machinery, mainly
for domestic use, are produced in Poland. The country
also exports and imports some items, including tractors
and harvesters. Branches of the machine building
industry that produced agricultural equipment
received a high priority during 1966 -70 in order to
support the high rate of investment and mechaniza-
tion in agriculture. Poland currently is upgrading
certain types of tractors and combines with the
installation of high compression Leyland ent!ines,
manufactured under license.
Poland produces much of its own mining,
metallurgical, and construction equipment as well as
textile machinery. It also exports a number of items in
these categories, but it still depends on imports for
many types of modern special purpose equipment. It
buys such items as giant conveyors from East
Germany, truck mounted cranes from Czecho-
slovakia, and modern textile machinery from Western
Europe. Production sharing ventures with Jones
Cranes and Cole Cranes of the United Kingdom,
Stetter of West Germany, Steyr Daimler -Puch of
Austria, and Koehring International and International
Harvester of the United States provide for cooperation
in the production of heavy -duty cranes, concrete
mixers, trucks for construction sites, hydraulic building
machinery, and heavy tractors and crawlers.
Poland also has imported a considerable amount of
chemical machinery. Throughout the 1960's a high
priority was given to expansion of the chemical
industry, and Poland imported chemical equipment
fro.a Czechoslovakia, East Germany, and the
U.S.S.R., as well as from Western countries,
particularly West Germany, the United Kingdom, and
France.
Poland has traditionally been an important
manufacturer of machine tools, producing abou, 350
different types in 1971. Many of the tools lack the
precision, fine tolerances, and durability of Western
tools, however, and others seem to be over- engineered.
Nevertheless, almost one -half of all types of machine
tools are exported, and machine tools are almost the
only type of machinery and equipment for which the
Poles have developed a steady export market in the
industrial West. Since 1965, a growing number of
agreements have been signed with Western industrial
firms in the hope of improving the country's ability to
sell machinery outside the Communist countries.
Some agreements provide for Poland to manufacture
certain items of machinery under Western license. In
other cases, Poland has contracted to produce
components of complete installations to be sold jointly
with Western firms.
Poland produces sizable quantities of military
equipment for its own use and for export to the
U.S.S.R. It is the second- largest producer of
conventional armaments among the East European
Communist countries, after Czechoslovakia. Poland
manufactures tanks, armored personnel carriers,
military aircraft, medium landing ships, submarine
chasers, and naval auxiliaries. The country also
imports large amounts of military equipment from the
U.S.S.R., the value of which was estimated at between
$175 million and $200 million in 1971.
b. Chemicals
The Polish chemical industry produces a wide
variety of products, ranging from basic chemicals to
more sophisticated goods such as chemical fibers,
synthetic rubber, and pharmaceuticals (Figure 16).
The industry has been granted a high priority in
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FIGURE 16. Production of principal chemicals and chemical products (U /OU)
(Thousand tons, except as indicated)
economic plans throughout the postwar period and
has received a sizable share of total industrial
chemical fiber output consists of ravon. The
production of synthetics, such as nylon, orlon, and
investment. During 1961 -71, this share amounted to dacron, has been growing rapidly, while the
production of rayon has remained about the same
about 14
The output of the chemical industry has increased
rapidly. In 1971, it was more than 18 times that of
1950 and twice that of 1965. The industry has been
exceeded in its rate of growth only by the machine
building industry. In 1971 the chemical industry
accounted for 9% of total industrial output, compared
with 1.6% in 1950 and 5.5% in 1960.
Poland produces large amounts of sulfuric acid,
synthetic ammonia, nitric acid, caustic soda, chlorine,
and hydrochloric acid. Recent emphasis has been
placed on increasing the production of fertilizers to
support agriculture and also for export, and on the
development of a large -scale petrochemical industry
to provide the basis for an increased output of plastics,
synthetic fibers, and synthetic rubber. Petrochemical
facilities at the Plock refinery have started production,
using petroleum from the U.S.S.R. Poland's natural
gas deposits may also be used for petrochemical
production.
Poland is by far the largest producer of nitrogenous
and phosphatic fertilizers in Communist Eastern
Europe. In 1971, the output of nitrogenous Fertilizer
was nearly three times as large as in 1965, and the
output of phosphatic fertilizer was twice as great.
Phosphates and apatite from the U.S.S.R. are used in
making phosphatic fertilizer. The entire supply of
potash fertilizer is imported, mainly from the U.S.S.R.
and East Germany. Spain and West Germany supply
smaller amounts.
Poland produces more than 80% of the chemical
fibers used domestically. More than half of the
18
since 1965.
Poland started producing synthetic rubber in 1959.
By 1971, output covered more than 40% of domestic
consumption. In 1965, Poland purchased a plant of
Western origin to produce butadiene for use in the
manufacture of synthetic rubber, thus eliminating the
need to import this material.
Production of plastics has been increasing rapidly.
Output in 1971 was 2.6 times that of 1965, with the
production of polyvinyl chloride _-ore than tripling.
Polyvinyl chloride, polyethylene, and polystyrene
together made up 52% of the output in 1971.
c. Light industry
Light industry, including textiles, clothing and
footwear, leather and fur processing, woodworking,
and paper processing, represented almost 18% of gross
industrial output in Poland in 1971. Output in this
sector has grown far less rapidly than in the machinery
and chemical industries.
Several branches of light industry were well
developed before World War II, especially the textile
industry, which was the focal point of Poland's
industrialization in the late 191h century. Throughout
the postwar period, however, light industry has been
neglected in the distribution of investments, materials,
and skilled management. During 1960 -65, all
branches of light industry together received only 8.3%
of total industrial investment; this share was raised to
9.8% during 1966 -71. Because of the low rate of
investment, replacement of machinery and equipment
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1950
1955
1960
1965
1970
1971
Sulfuric acid (100% basis)
285
450
685
1,062
1,901
2,255
Soda ash (98% basis)
149
219
533
614
657
682
C tustic soda (96% basis)
65
102
174
224
326
331
Culcium carbide (75% basis)
172
211
321
488
533
544
Nitrogenous fertilizer (as N)
78
154
270
394
1,030
1,081
Phosphorus fertilizer (as P 2
82
132
207
344
599
705
Chemical fibers
24.8
53.9
77.8
104
138
151
Synthetic fibers
Insig
0.5
4.5
21.6
53.8
66.2
Plastics
3.5
11.7
55.4
118
269
na
Polyvinyl chloride
0
0
13.4
26.4
85.0
93.8
Pharmaceuticals (million zlotys
163
963
2,751
6,717
12,504
na
Synthetic rubber
0
0
20.2
39.2
61.7
66.2
na Data not available.
�1 July 1960 prices.
economic plans throughout the postwar period and
has received a sizable share of total industrial
chemical fiber output consists of ravon. The
production of synthetics, such as nylon, orlon, and
investment. During 1961 -71, this share amounted to dacron, has been growing rapidly, while the
production of rayon has remained about the same
about 14
The output of the chemical industry has increased
rapidly. In 1971, it was more than 18 times that of
1950 and twice that of 1965. The industry has been
exceeded in its rate of growth only by the machine
building industry. In 1971 the chemical industry
accounted for 9% of total industrial output, compared
with 1.6% in 1950 and 5.5% in 1960.
Poland produces large amounts of sulfuric acid,
synthetic ammonia, nitric acid, caustic soda, chlorine,
and hydrochloric acid. Recent emphasis has been
placed on increasing the production of fertilizers to
support agriculture and also for export, and on the
development of a large -scale petrochemical industry
to provide the basis for an increased output of plastics,
synthetic fibers, and synthetic rubber. Petrochemical
facilities at the Plock refinery have started production,
using petroleum from the U.S.S.R. Poland's natural
gas deposits may also be used for petrochemical
production.
Poland is by far the largest producer of nitrogenous
and phosphatic fertilizers in Communist Eastern
Europe. In 1971, the output of nitrogenous Fertilizer
was nearly three times as large as in 1965, and the
output of phosphatic fertilizer was twice as great.
Phosphates and apatite from the U.S.S.R. are used in
making phosphatic fertilizer. The entire supply of
potash fertilizer is imported, mainly from the U.S.S.R.
and East Germany. Spain and West Germany supply
smaller amounts.
Poland produces more than 80% of the chemical
fibers used domestically. More than half of the
18
since 1965.
Poland started producing synthetic rubber in 1959.
By 1971, output covered more than 40% of domestic
consumption. In 1965, Poland purchased a plant of
Western origin to produce butadiene for use in the
manufacture of synthetic rubber, thus eliminating the
need to import this material.
Production of plastics has been increasing rapidly.
Output in 1971 was 2.6 times that of 1965, with the
production of polyvinyl chloride _-ore than tripling.
Polyvinyl chloride, polyethylene, and polystyrene
together made up 52% of the output in 1971.
c. Light industry
Light industry, including textiles, clothing and
footwear, leather and fur processing, woodworking,
and paper processing, represented almost 18% of gross
industrial output in Poland in 1971. Output in this
sector has grown far less rapidly than in the machinery
and chemical industries.
Several branches of light industry were well
developed before World War II, especially the textile
industry, which was the focal point of Poland's
industrialization in the late 191h century. Throughout
the postwar period, however, light industry has been
neglected in the distribution of investments, materials,
and skilled management. During 1960 -65, all
branches of light industry together received only 8.3%
of total industrial investment; this share was raised to
9.8% during 1966 -71. Because of the low rate of
investment, replacement of machinery and equipment
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in this sector has been minimal and improvements in
technology slow. Most investment has gone into the
expansion of plants and equipment.
The level of technology and the quality of output in
Polish light industry are low compared with those of
Western countries. Few items produced are attractive
enough car are of sufficiently high quality to be sold
profitably in developed Western countries. Many
items sold in the industrial West can be marketed only
at unprofitably low prices; thus, the bulk of Poland's
light industry exports go to other Communist
countries. Principal exports are clothing, footwear,
textiles, and furniture.
Th. -ow quality of output has also been a problem
in the domestic market; it has discouraged the growth
of sales beyond essential requirements and resulted in
a rapid accumulation of stocks, particularly of
clothing and household articles, during the 1960's.
The Polish Government recognizes that the
assortment, design, and quality of light industry goods
must be improved if the country is to increase its
exports and sell more profitably to the industrial West,
meet increasing Soviet demand for high quality
consumer goods, and raise the level of living of the
Polish population. The regime has already taken steps
to encourage better marketing abroad. Restrictions on
the use of labor have been removed, and export
enterprises are being given easy access to investment
funds for those opportunities that promise a quick
return in foreign currency.
d. Food processing
The output of the large and diversified food
processing industry accounted for about 18% of total
industrial output in 1971. Its relative importance has
declined considerably since 1950, when it accounted
for about one -third of Poland's industrial output.
Throughout the postwar period, growth of output in
food processing, which is closely linked to the growth
of agricultural production, has been the slowest of all
sectors of industry except coal mining. In 1969, Poland
exported 14% of its total output of foodstuffs of
animal origin and 6% of its output of foodstuffs of
vegetable origin. In 1971, exports included four- fifths
of the domestic output of bacon and canned hams.
About three fourths of the exports of processed foods
go to the industrial West. These exports account for
about one fourth of Poland's hard currency export
earnings.
Poland gained considerable food processing
capacity, particularly in suga refining, brewing, and
distilling, with the acquisitk)n of the former German
territories. The industry has been subjected to much
the same neglect as light industry. It received only 6%
of total investment in industry during 1950 -55 and 9%
during 1956 -71. Recently, however, in an attempt to
modernize the industry, especially the export- oriented
sectors, the government decided to purchase Western
equipment. Contracts have already been signed for
two meat processing plants each from West Germany
and the United States, two sausage plants from the
United States, and five powdered milk plants from
Italy.
e. Construction
Poland's construction industry has grown rapidly
throughout the postwar period. The total volume of
construction in 1971 was about twice the volume in
1960 and nearly five times the volume in 1950. Private
activity represented about 12% of the total volume of
construction in 1971. Industrial building has
accounted for the largest part of construction.
Residential building accounted for 17% of the total
value of construction in the socialized sector in 1971
and farm building for somewhat less that 4
Resit' �ntial construction has been severelv
neglected, and new housing construction has not kept
much ahead of the retirement of old stock. Official
census data indicate that between 1950 and 1960 there
was virtually no change in the number of persons per
room and a slight increase in the ratio of families to
dwellings in urban areas. Between 1960 and 1970,
however, there was a slight decline in the ratio of
families to dwellings �from 1.17 to 1.14 �for the
whole country, and a substantial decline in the
number of persons per room �from 1.66 to 1.37.
Useful floorspace in 1970 was less tl?an 13 square
mciers per capita, as compared with abo 18 square
meters in Czechoslovakia and East Germs ny.
Even though housing is generally considered
Poland's "number one welfare problem," Gierek has
resigned himself to a worsening of the housing
shortage through the mid- 1970's. The planned rate of
growth in housing construction by the socialized sector
(4.7% a year) is barely above the actual 1966 -70 rate.
The 1.1 million dwellings to be built by 1975 are, by
Polish estimates, 600,000 fewer than needed simply to
house the expected additional population. In fact, the
Poles face a formidable task in their attempt to
eliminate the housing shortage by 1990, especially
considering that resources will have to be devoted to
improving the size and quality of dwellings as well as
increasing their number.
The housing problem in Poland has been
compounded by shortages of repair facilities and
materials. Rents set by the government are so low that
19
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they fail to provide adequate funds to cover the cost of
current repairs. Failure to make the necessary repairs
has resulted in substantial losses of dwelling space.
In addition to a shortage of housing, Gierek is faef-d
with the problem of inadequate facilities, especially in
rural areas. Although Poland has made great strides in
this area, there is still much room for improvement, as
shown in t' z! following tabulation of dwellings
supplied with various facilities (in percentages of
respective totals):
Because labor is generally plentiful, mechanization
of the construction industry has not advanced as far as
in most other East European Communist countries.
Recent attempts to raise labor productivity are
reflected in six production sharing ventures between
Poland and Western firms in the construction
equipment field. These agreeements provide for
cooperation in the production of heavy -duty cranes,
concrete mixers, trucks for construction sites, hydraulic
building machinery, heavy tractors and crawlers, and
axles for construction equipment and vehicles. Two of
the agreements are with Koehring International and
International Harvester of the United States.
5. Domestic trade (U /OU)
The bulk of Poland's domestic trade is carried nut
by socialized wholesale and retail trade organizations,
at prices fixed or regulated by the state. In 1971,
private trade accounted for only 1.1 of total retail
sales and 2.2% of the total spent at eating places.
Trade in producer goods among state industrial
enterprises is carried out by the enterprises themselves
or by marketing organizations attached to industrial
associations. Goods are sold at prices that are fixed by
the producing enterprise, association, or ministry, and
are intended to reflect !o some degree both production
costs and level of demand. Consumer goods produced
in the socialized economy are distributed through state
and cooperative wholesale and retail organizations.
Retail prices are set to achieve the social goal of
maintaining low prices for basic commodities and to
balance projected supply and demand.
20
The Ministry of Internal Trade directly controls a
large share of wholesale trade and some retail trade.
Organizations attached to the ministry conduct
wholesale trade in most ordinary consumer items such
as textiles, clothing, food, and housewares; they
conduct both wholesale and retail trade in certain
specialized items such as jewelry, pharmaceuticals,
and cultural materials. Socialized retail trade is
organized in separate urban and rural networks. The
urban retail network includes state retail stores, most
of which are subordinate to local people's councils,
and cooperative stores under the state controlled
Union of Consumer Cooperatives. The former account
for about two- thirds of urban retail sales and the latter
for about one third. Rural retail trade is dominated by
the Peasant Self -Aid Cooperative. Rural cooperative
stores supply peasants not only with consumer goods
but also with seed, fertilizer, and building materials.
Restaurants are part of the state trade network in both
urban and rural areas.
Because of the retention of private ownership in
agriculture, state purchases from the private sector
have a much larger role in Poland than in other
Communist countries. These state purchases are made
by procurement organizations attached to the
Ministry of Food Industry and Purchases and the
Ministry of Internal Trade. Compulsory deliveries,
which once made up a sizable share of the purchases,
were abolished on 1 January 1972. Most procurement
;s done under contract. Under this system, a farmer
ag-ees in advance to sell a certain quantity of his
produce at the price offered by the state.
Private or free market trade in Poland includes
direct sales by farmers to private traders and
individual consumers :.nd sales by private artisans and
retailers. Although it comprises only a small share of
total trade, private trade is an important supplement
to the socialized trade system, especially in providing
fresh produce, good quality clothing, and repair
services to the population. The role of private retail
outlets has varied considerably s'nce 1950, when they
accounted for 17.9% of all retail sales. Efforts to
extend state control over the domestic trade network
reduced the share of private outlets to 2.3% in 1956.
Following the 1956 uprising, however, the Gomulka
regime adopted a more liberal policy toward private
retail trade in an effort to improve the supply of goods
and services to the population, and the share of retail
sales made in private outlets rose to 4.7% in 1957.
Since then, however, private retail trade has declined,
while socialized trade has increased rapidly. By 1971,
the share of private outlets in aggregate retail sales
dropped to 1.1
At the end of 1971, there were 198,593 retail outlets
and 14,619 eating places, compared to 159,682 and
10,235, respectively, in 1960. Most retail stores are
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1960
1966
1970
Urban areas:
Piped -in water
55
67
75
Water closet
36
48
56
Bathroom
26
40
na
Gas supply
34
43
48
Central heating
13
25
na
Rural areas:
Piped -in water
4
6
12
Water closet
2
3
5
Electricity
62
84
na
Gas supply
Negl.
Negl.
1
na Data not available.
Because labor is generally plentiful, mechanization
of the construction industry has not advanced as far as
in most other East European Communist countries.
Recent attempts to raise labor productivity are
reflected in six production sharing ventures between
Poland and Western firms in the construction
equipment field. These agreeements provide for
cooperation in the production of heavy -duty cranes,
concrete mixers, trucks for construction sites, hydraulic
building machinery, heavy tractors and crawlers, and
axles for construction equipment and vehicles. Two of
the agreements are with Koehring International and
International Harvester of the United States.
5. Domestic trade (U /OU)
The bulk of Poland's domestic trade is carried nut
by socialized wholesale and retail trade organizations,
at prices fixed or regulated by the state. In 1971,
private trade accounted for only 1.1 of total retail
sales and 2.2% of the total spent at eating places.
Trade in producer goods among state industrial
enterprises is carried out by the enterprises themselves
or by marketing organizations attached to industrial
associations. Goods are sold at prices that are fixed by
the producing enterprise, association, or ministry, and
are intended to reflect !o some degree both production
costs and level of demand. Consumer goods produced
in the socialized economy are distributed through state
and cooperative wholesale and retail organizations.
Retail prices are set to achieve the social goal of
maintaining low prices for basic commodities and to
balance projected supply and demand.
20
The Ministry of Internal Trade directly controls a
large share of wholesale trade and some retail trade.
Organizations attached to the ministry conduct
wholesale trade in most ordinary consumer items such
as textiles, clothing, food, and housewares; they
conduct both wholesale and retail trade in certain
specialized items such as jewelry, pharmaceuticals,
and cultural materials. Socialized retail trade is
organized in separate urban and rural networks. The
urban retail network includes state retail stores, most
of which are subordinate to local people's councils,
and cooperative stores under the state controlled
Union of Consumer Cooperatives. The former account
for about two- thirds of urban retail sales and the latter
for about one third. Rural retail trade is dominated by
the Peasant Self -Aid Cooperative. Rural cooperative
stores supply peasants not only with consumer goods
but also with seed, fertilizer, and building materials.
Restaurants are part of the state trade network in both
urban and rural areas.
Because of the retention of private ownership in
agriculture, state purchases from the private sector
have a much larger role in Poland than in other
Communist countries. These state purchases are made
by procurement organizations attached to the
Ministry of Food Industry and Purchases and the
Ministry of Internal Trade. Compulsory deliveries,
which once made up a sizable share of the purchases,
were abolished on 1 January 1972. Most procurement
;s done under contract. Under this system, a farmer
ag-ees in advance to sell a certain quantity of his
produce at the price offered by the state.
Private or free market trade in Poland includes
direct sales by farmers to private traders and
individual consumers :.nd sales by private artisans and
retailers. Although it comprises only a small share of
total trade, private trade is an important supplement
to the socialized trade system, especially in providing
fresh produce, good quality clothing, and repair
services to the population. The role of private retail
outlets has varied considerably s'nce 1950, when they
accounted for 17.9% of all retail sales. Efforts to
extend state control over the domestic trade network
reduced the share of private outlets to 2.3% in 1956.
Following the 1956 uprising, however, the Gomulka
regime adopted a more liberal policy toward private
retail trade in an effort to improve the supply of goods
and services to the population, and the share of retail
sales made in private outlets rose to 4.7% in 1957.
Since then, however, private retail trade has declined,
while socialized trade has increased rapidly. By 1971,
the share of private outlets in aggregate retail sales
dropped to 1.1
At the end of 1971, there were 198,593 retail outlets
and 14,619 eating places, compared to 159,682 and
10,235, respectively, in 1960. Most retail stores are
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small and fairly specialized, although in recent years
Poland has built an increasing number of department
stores, self- service food stores, supermarkets that sell
both food and nonfood items, and mail -order houses.
Certain retail outlets, such as gasoline stations, are too
few to serve adequately the needs of the population;
therefore, the government has occasionally en,
couraged private establishments as a means of
reducing such inadequacies and increasing the
number of jobs for the growing labor force. As of the
end of 1972 there were no visible results.
Retail sales increased by about 7.2% a year during
1961 -70 (a little more than 6% per capita), about the
same rate as that achieved during 1956 -60. Under
Gierek, retail sales rose 7.8% in 1971 and 12.5% in
1972. Food and beverages comprised 43% of retail
sales in the socialized trade network in 1971, and
nonfood consumer goods accounted for 42
Nonconsumer goods, such as building materials,
agricultural tools and machinery, fertilizers, seeds, and
oil products, accounted for 15 In the rural trade
network, nonconsumer goods accounted for 32% of all
retail purchases. Sales of nonfood items have grown
somewhat faster than sales of foodstuffs.
Retail prices of consumer goods and services rose
about 14% between 1960 and 1970. Gomulka's
decision to increase prices sharply just before
Christmas precipitated -he 1970 riots. Not only were
prices of food and fuel to rise sharply, but also prices of
I building materials, cotton, and textiles. Gierek
rescinded the food price increases and froze prices for 2
years. This freeze was extended through 1973 and
again through 1974. As a result, retail prices of
consumer goods sold exclusively through the socialized
network dropped 0.8% in 1971, while retail prices of
consumer goods sold throughout the entire network
rose only 0.5 Prices of foodstuffs declined 0.1 and
prices of nonfood items dropped 2.6 At the same
time, retail prices of nonconsumer goods rose 4.9
largely because of the substantial increases in prices of
certain construction materials.
Under Gierek, the 1971 -75 goals for raising the
standard of living were revised slightly upward.
Personal consumption is now slated to increase at an
average annual rate of 7 compared with a rate of
5% achieved during 1966 -70. Gierek has, however,
told the workers that substantial improvements
probably cannot be achieved even by 1980.
Gierek's appeal for patience and understanding was
helped by favorable economic ;rends in his first two
years. Personal consumption rose strongly in 1971 -72,
stimulated by substantial imports of meat �made
possible by a Soviet loan of $100 million in hard
currency; larger than usual imports of grain �much of
it from the West; and a substantial increase in imports
of manufactured consumer goods.
In spite of the fairly rapid growth of incomes and
retail purchases in Poland, there is still unsatisfied
demand for high quality goods of all types, including
foodstuffs. Although sales of foods have risen less
rapidly than sales of nonfood items, there have been
rapid increases in the consumption of meat, animal
fats, eggs, tea, chocolate, and alcoholic beverages. The
consumption of grain products and potatoes has
declined. There is still unsatisfied demand for better
cuts of meat, milk products (including cheeses), fresh
fruits and vegetables, and imported specialty foods.
The basic demand for clothing has been satisfied, as
well as the demand for most consumer durables such
as vacuum cleaners, stoves, refrigerators, washing
machines, bicyclos, and motor scooters. There is
considerable unsatisfied demand for attractive, high
style clothing and for automobiles. The new, relatively
inexpensive Fiat 126 �to be manufactured under a
cooperative arrangement with Fiat of Italy �will help
fulfill some of the demand for automobiles, but
ownership of an automobile by the average citizen is
still a far distant goal. The government has capitalized
to some extent on the demand for highy quality
consumer goods by importing Western goods and
reselling them in special stores to Poles who have
received cash gifts of convertible currency from friends
and relatives abroad. The inability to satisfy local
demand has also resulted in a considerable black
market for Western goods in Poland.
More serious than the unsatisfied demand for goods
is the housing shortage. The rate of housing
construction is still so low that even those with
sufficient money must generally wait a long time to
get an apartment -5 years or more in the larger cities.
In order to ease the inflationary potential of this
situation, the government has encouraged people to
save for downpayments on cooperative apartments.
Families with a per capita monthly ir_come of 1,500
zlotys or more are ineligible for inexpensive socialized
housing and must purchase cooperative apartments in
order to get into a new building.
There is also a large unsatisfied demand for services
in Poland, particularly constructioni and repair
services. It is common for carpenters, bricklayers,
plumbers, and shoe repairmen employed in socialized
enterprises to do private work on the side, usually
using tools and materials taken from the enterprises.
C. Economic policy and management
(U /OU)
1. Policy
Poland's major economic goals throughout the
postwar period have been rapid economic gro.vth and
the development of modern industry. After the
consolidation of Communist control over most of the
21.
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FIGURE 17. Distribution of investments, by economic sector* (U /OU)
(Percent of total)
1950 -55 1956 -60 1961 -65
Industry 43.7
Construction 1.8
Agriculture 10.1
Transportation and communications..... 13.1
Trade... 3.0
Housing 13.8
Education, science, culture, and commu-
nity services 9.6
Other 5.7
Total 100.0
38.7 40.8
2.6 3.1
12.5 139
8.9 10.3
8.9 2.9
21.7 18.0
10.8 10.4
1.8 1.1
1966 -70 1971
39.4 40.2
4.0 3.6
16.1 15.4
11.2 13.0
3.8 2.2
15.5 15.6
9.2 8.5
1.4 1.4
100.0 100.0 109.0 100.0
*At 1971 prices. Components may not add to ,tals shown because of rounding.
economy in the )ate 1940's, Poland adopted Stalinist
type economic policies aimed at increasing industrial
output as rapidly as possible with little regard for the
development of other sectors of the economy or for the
general standard of living.
In the latter half of the 1950's, Poland backed away
from the Stalinist model, partly for ideological reasons
and partly because of the severe economic difficulties
created by forced growth. In 1956 -60 the overall rate
of growth of investments was reduced, and there was
some cutback in the share of investments going into
industry. This reduction, along with a sharp drop in
the share allocated to defense and administration,
allowed a rapid rise in outlays for housing and
agriculture (Figure 17). Within industry there was
some shift in priorities, away from heavy industry and
into the material and consumer goods sectors that had
been neglected in the earlier years (Figure 18). The
regime, apparently satisfied that it had largely
corrected the imbalances, sharply reduced the share of
investment going into housing in 1961 -65 and again in
1966 -70; this compounded the already serious housing
shortage. The shale of investment going to agriculture,
on the other hand, continued to increase during 1961
70 but dropped slightly in 1971.
Except during the mid- 1950's, investments have
risen much more rapidly than consumption. Starting
from a low base in 1950, investments rose at an
average annual rate of 11 in 1951 -55, but dropped to
a rate of 9% in 1956 -60 and to 7% during 1961 -71. On
the ether hand, funds available for personal
consumption rose at an average annual rate of 5%
during 1951 -60 (mainly because of the 10% annual
growth reportedly achieved during 1954 -57), 3%
during 1961 -65, and 4% during 1966 -70. As the result
of a decline in the rate of population growth after
1965, per capita personal consumption rose at a rate of
over 3.5% in 1966 -70, as compared with 2% in the
FIGURE 18. Distribution of investment in socialized industry (U /OU)
(Percent of total)
*At 1961 prices.
*At 1971 prices.
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1956 -60*
1961 -65
1966 -70
1971
Electric power
11.5
12.1
10..'
11.5
Coal
19.0
15.3
10.0
9.8
Other fuels
7.0
6.4
6.3
Ferrous mining and metallurgy
9.6
8.3
6.6
7.9
Nonferrous mining and metallurgy
8.0
3.4
5.0
6.0
Metal processing
/4
3.4
4.1
4.9
Machinery
11.8
14.8
16.7
Chemicals
11.6
12.5
15.9
11.3
Construction materials
8.3
6.4
6.0
6.3
Wood processing and paper
8.8
3.7
3.9
3.5
Textiles and clothing
4.8
4.1
5.1
5.8
Food processing
9.0
8.7
8.6
7.8
Other
4.9
3.3
8.5
2.3
Total
100.0
100.0
100.0
100.0
*At 1961 prices.
*At 1971 prices.
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FIGURE 19. Economic indicators (U /OU)
(Average annual percentage increase;
na Data not available.
*July 1972 version.
*Socialized sector only.
preceding period. The Gierek regime, in its first year,
managed to increase per capita consumption 5
Gierek's long -term economic policy is aimed at
raising both the rate of economic growth and the share
of output devoted to consumer welt -.;e. Gierek's goals
for 1971 -75, as announced in July 1972, are generally
higher than in Gomulka's draft of 1969. The plan is
fairly ambitious in that it projects a more rapid rise in
national income than was achieved in 1966 -70, while
at the same time calling for a slower growth of
investment and employment. Real wages and
consumption are also planned to grow more rapidly
than in 1966 -70 (Figure 19).
In recent years, the Polish Government, like those of
the other East European Communist countries,
became increasingly concerned with the widening gap
in technology, productivity, and levels of living
between Eastern and Western Europe. Under
Gomulka, controls over investment were tightened,
strict ceilings were placed on employment levels in an
attempt to increase labor efficiency and productivity,
and plans were made to reorient industrial production
to satisfy consumer interests more fully. Gomulka also
expressed the intention to increase imports of
technologically advanced machinery and equipment
from the West. Gierek has continued these policies but
has discarded the ceilings on employment in response
to the political need for full employment. The desire to
increase imports of advanced technology has become
even more pronounced under Gierek.
2. Economic planning and administration
The basic goals of economic development and the
general policies to be followed in implementing them
are decided at the top levels of the Communist Party
(Polish United Workers Party). The regime sets forth
the goals for economic development in plans that
cover, in varying detail, periods ranging from a month
to 5 years or more. The principal guidelines for
economic development have been incorporated in
national economic plans, of which there have been
five during the postwar period, covering the following
periods: 1950 -55, 1956 -60, 1961 -65, 1966 -70, and
1971 -75. Annual plans established in the context of
the 5 -year plans, and quarterly and monthly plans
placed in the context of the annual plans, set forth
operational targets for the producing units in the
economy.
The plans establish goals for nearly all types of
economic activity. Production is specified in physical
units for the most important items and in value terms
for all sectors and branches of the economy. Targets
also are set for employment, productivity, costs,
investment, foreign trade, retail sales, transportation,
state procurement of agricultural commodities, wages,
real income, consumption, and national income. The
5-year plans also contain regional plans for each
province and for the major cities. In support of the
annual economic plans, the Ministry of Finance draws
up financial plans that outline the flow of funds
within the economy to correspond to production,
investment, and consumption goals. The government
tries to rely on indirect controls, prices, and persuasion
to implement the plans for personal consumption and
for output in the nonsocialized sectors of the
economy mainly agriculture. Direct administrative
controls are exercised over most investments and over
the socialized economy, which includes nearly all
production outside of agriculture.
The lines of control in the socialized sector extend
from the ministries, through industrial associations, to
the enterprises. There are several ministries that
oversee production units in socialized industry and
construction, including the Ministries of Mining and
Power, Heavy Industry, Chemical Industry, Light
Industry, Engineering Industry, Food Industry and
Procurement, Forestry and Timber Industry, and
Construction and Building Materials. Other ministries
also may have some responsibility for production; for
example, the Ministry of Communications oversees
the manufacture of telephone instruments and
switching equipment by TELKOM Association.
The industrial associations, formed in 1958,
comprise groups of enterprises engaged in similar lines
of production; e.g., iron and steel, machine tools, and
textiles. The associations have gradually taken over
some of the functions and authority of both the
enterprises and the ministries; the ministries now have
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1966 -70
1971 -75
1971 -72
ACTUAL
PLAN*
ACTUAL
National income
6.0
7.0
8.9
Personal consumption.........
5.1
6.9
na
Investment.....
8.0
7.7
*14.3
Industrial production.........
8.3
8.5
*9.5
Heavy industry............
9.0
8.6
*9.5
Consumer goods............
6.3
8.2
*9.0
Agricultural production.......
1.8
3.6 -3.9
5.9
Employment
2.6
2.2
na
Average real wage
1.9
3.4
5.7
Labor productivity in industry.
4.6
5.4
5.7
Housing construction.........
4.8
4.7
n a
Exports
9.2
9.2
13.1
Of which:
To industrial West.......
9.6
8.9
14.6
Imports
8.2
9.7
16.6
Of which:
From industrial West.....
10.4
11.8
36.0
na Data not available.
*July 1972 version.
*Socialized sector only.
preceding period. The Gierek regime, in its first year,
managed to increase per capita consumption 5
Gierek's long -term economic policy is aimed at
raising both the rate of economic growth and the share
of output devoted to consumer welt -.;e. Gierek's goals
for 1971 -75, as announced in July 1972, are generally
higher than in Gomulka's draft of 1969. The plan is
fairly ambitious in that it projects a more rapid rise in
national income than was achieved in 1966 -70, while
at the same time calling for a slower growth of
investment and employment. Real wages and
consumption are also planned to grow more rapidly
than in 1966 -70 (Figure 19).
In recent years, the Polish Government, like those of
the other East European Communist countries,
became increasingly concerned with the widening gap
in technology, productivity, and levels of living
between Eastern and Western Europe. Under
Gomulka, controls over investment were tightened,
strict ceilings were placed on employment levels in an
attempt to increase labor efficiency and productivity,
and plans were made to reorient industrial production
to satisfy consumer interests more fully. Gomulka also
expressed the intention to increase imports of
technologically advanced machinery and equipment
from the West. Gierek has continued these policies but
has discarded the ceilings on employment in response
to the political need for full employment. The desire to
increase imports of advanced technology has become
even more pronounced under Gierek.
2. Economic planning and administration
The basic goals of economic development and the
general policies to be followed in implementing them
are decided at the top levels of the Communist Party
(Polish United Workers Party). The regime sets forth
the goals for economic development in plans that
cover, in varying detail, periods ranging from a month
to 5 years or more. The principal guidelines for
economic development have been incorporated in
national economic plans, of which there have been
five during the postwar period, covering the following
periods: 1950 -55, 1956 -60, 1961 -65, 1966 -70, and
1971 -75. Annual plans established in the context of
the 5 -year plans, and quarterly and monthly plans
placed in the context of the annual plans, set forth
operational targets for the producing units in the
economy.
The plans establish goals for nearly all types of
economic activity. Production is specified in physical
units for the most important items and in value terms
for all sectors and branches of the economy. Targets
also are set for employment, productivity, costs,
investment, foreign trade, retail sales, transportation,
state procurement of agricultural commodities, wages,
real income, consumption, and national income. The
5-year plans also contain regional plans for each
province and for the major cities. In support of the
annual economic plans, the Ministry of Finance draws
up financial plans that outline the flow of funds
within the economy to correspond to production,
investment, and consumption goals. The government
tries to rely on indirect controls, prices, and persuasion
to implement the plans for personal consumption and
for output in the nonsocialized sectors of the
economy mainly agriculture. Direct administrative
controls are exercised over most investments and over
the socialized economy, which includes nearly all
production outside of agriculture.
The lines of control in the socialized sector extend
from the ministries, through industrial associations, to
the enterprises. There are several ministries that
oversee production units in socialized industry and
construction, including the Ministries of Mining and
Power, Heavy Industry, Chemical Industry, Light
Industry, Engineering Industry, Food Industry and
Procurement, Forestry and Timber Industry, and
Construction and Building Materials. Other ministries
also may have some responsibility for production; for
example, the Ministry of Communications oversees
the manufacture of telephone instruments and
switching equipment by TELKOM Association.
The industrial associations, formed in 1958,
comprise groups of enterprises engaged in similar lines
of production; e.g., iron and steel, machine tools, and
textiles. The associations have gradually taken over
some of the functions and authority of both the
enterprises and the ministries; the ministries now have
23
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relatively little responsibility for planning and direct
administration of production. The associations
perform the main tasks of assigning goals and issuing
directives to enterprises and allocating investment
funds within individual branches o" ndustry. In many
cases, they also perform marketing and research
functions.
Another level of control was set up by an October
1969 decree which authorized the establishment of
combines groupings of enterprises engaged in the
production of parts and components for a specific final
product. A combine is supposedly responsible for all its
constituent units and is expected to organize research
and development, draft plans for the purchase of
licenses, and conduct market research. It may be
directly responsible to a ministry, or it may remain
under the authority of an industrial association.
Economic plans are worked out by the State
Planning Commission (attached to the Council of
Ministers), partly on tiie basis of projections of
capacity made by the enterprises, combines,
associations, and ministries. General goals are
established by the Commission for the various
branches of industry. These are generally routed
through the ministries to the appropriate industrial
associations, which then allocate their share of
investment funds, materials, and labor, and assign
various goals among the member enterprises. Each
association and enterprise makes up its own economic
plans on the basis of the goals and directives handed
down from above. The enterprises and associations
have considerable freedom of action within the
limitations imposed by these goals and directives.
3. Finance
Before Gomulka's accession to power, all
investments :n the postwar Polish economy, except
some private investments in agriculture, had been
made by the state. The bulk of state investment was
allocated directly through the state budget, and self
financing by enterprises was small. State enterprises
paid most of their earnings into the state budget. After
1957, enterprises were allowed to retain a small
portion of their earnings in the form of enterprise
funds and development funds, as a bonus for fulfilling
goals and increasing their profits. These funds were to
be used primarily for worker housing and recreational
facilities rather than for reinvestment in production.
The use of bank credit by enterprises was limited to
woi!cing capital and to certain small loans for
investments that promised a fast return. The major
role of banks in the investment process was to disburse
budgetary funds as allocated by the economic and
financial plans and to oversee enterprise use of these
funds.
24
Since 1965, the use of retained earnings and
interest bearing bank credit to finance enterprise
investment has increased, thereby reducing the
amount of time spent by enterprises in obtaining
investment funds as compared with the previous
system. The use of retained earnings and bank credit
also made enterprise management conscious of capital
costs. All large investment projects, however, are still
financed directly through the state budget.
Slightly less than one -third of planned budget
expenditures in FY73 are allocated to finance
production, transportation, and trade under the
category of financing "enterprises and other units of
the socialized economy." Other budgetary expendi-
tures include 19% for social and cultural services,
about 6% for social insurance payments, 8% for
national defense, and 5% for administration.
The largest part of budget revenue -77% of that
planned in 1973 �has come from socialized enterprises
in the form of turnover (sales) taxes on most consumer
goods and many producer goods, and from transfers of
a large part of the profits of producing and trading
enterprises. About 6% of budget revenues in 1973 are
to come from social insurance collections, 7% from
taxes on wages and salaries, and 2% from taxes on
private property, of which the largest component is the
land tax in agriculture. Most of the residual revenues
originate in state borrowing, including lotteries.
The Polish banking system, under the Ministry of
Finance, includes a number of banks, all of which
have branches throughout the country. On 1 January
1970, this system underwent its first major reform in
more than two decades. The key reform provided for
the amalgamation of the Polish Nationa! Bank and
the now defunct Investment Bank. As before, the
National Bank performs the traditional functions of
central banks in the non- Communist countries and
controls the current operations of industrial
enterprises. It has also assumed a major new role in
investment financing, previously accorded to the
Investment Bank. The Polish National Bank
administers all nonagricultural investment funds
provided for in the state budget and controls the
operations of construction enterprises. By creating a
single authority with overall responsibility for initial
investment decisions, working capital, and investment
refinancing, the Polish planners evidently hope to
curtail the widespread practice of exorbitant cost
overruns.
The reform also enlarged considerably the
responsibilities of the General Savings Bank
(Powszechna Kasa Oszczednosci �PKO), which, until
'Poland's fiscal year is the calendar year.
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1 January 1970, was restricted to holding checking and
savings accounts of the population. The PKO now also
provides credits for private housing construction and
major home repairs, formerly functions of the
Investment Bank, and provides credits for installment
sales ;n place of the now- defunct Installment Sales
Organization. A branch of the PKO, the Bank of the
Polish Welfare Fund, handles transfers between Poles
living abroad and their families in Poland.
Poland also has a number of savings and loan
cooperatives that operate in much the same fashion as
Western savings and loan banks holding savings
accounts and issuing short -term credits. Total savings
deposits in the PKO and savings and credit
cooperatives, together with loan -and- relief funds of
trade unions, have grown rapidly; they increased
about sevenfold during 1956 -60 and sixfold during
1961 -71, totaling app: )ximately 149 billion zlotys at
the end of 1971. The per capita volume of savings
deposits in Poland is currently about 5.6 times the
average per capita monthly gross income.
Other banks in Poland include the Bank of
Commerce, which handles all payments and
settlements connected with international commodity
trade and services. The Bank of Agriculture
administers the Agricultural Development Fund,
handles budget financed investments in agriculture,
and provides credits to enterprises subordinate to the
Association of the Timber and Timber Products
industry.
All property and personal insurance in Poland is
issued by the General Insurance Agency, which is
owned by the state and directed by the Ministry of
Finance.
4. Economic reforms
Poland was the first Communist country, aside from
Yugoslavia, to experiment with economic reform. In
the more liberal atmosphere following the 1956 revolt
and the coming to power of Gomulka, there was
widespread criticism of the highly- centralized, Soviet
type, command economy. A reform program known as
the New Economic Model was published in June
1957, and various elements of it went into effect
during 1957 -58. Although changes were less far
reaching in practice than on paper, the scope of
central planning and control was reduced and
decisionmaking in the economy was partially
decentralized. Most of the impetus for reform was lost
after 1958. Economic conditions improved, and the
regime tightened central controls in 1959 -60 in order
to push investments.
By 1963, Polish interest in economic reform was
revived, largely because of the failures evident in
existing economic puiicies, but also in response to the
adoption of reform programs in other Communist
couptries. The leadership charted a program of
economic reform, approved it at the Fourth Party
Congress in November 1964, and proposed to
implement it during 1966 -70. The program contained
most of the major features of reform programs in the
other Communist countries: some reduction of central
planning and control, greater use of the profit motive
to guide production, decentralization of investment,
and a strengthening of management. It also reduced
direct investment allocations from the budget, in favor
of financing investments through the retained
earnings of enterprises and the use of bank credit.
The Polish leadership at the Fifth Party Congress in
November 1968 announced a new concept of
"planning from the bottom upward." In essence, the
new concept provided for an enlarged role for
individual enterprises in the drafting of the 1971 -75
plan by requiring each enterprise to draft its own 5-
year plan for development, as well as several
alternative versions, on the basis of general guidelines
from the State Planning Commission. By nominally
enlarging each enterprise's role in plan formulation,
the national planners wished to inspire managers and
workers alike to greater on- the -job efforts, and also to
diffuse responsibility for shortcomings that might
appear in the plan's execution. Besides its traditional
role in the planning process, the State Planning
Commission assumed new responsibilities in the area
of technological forecasting.
In the winter of 1969 -70, Gomulka gave in to Party
pressure for further modifications. A key part of the
program consisted of tightening control of employ-
ment and introducing incentive wages and bonuses
into industry. Implementation of the reforms led to
drastic reductions in overtime work in 1970, and to a
slowdown in the rise of employment and real wages.
At that time, the regime unveiled its new incentives
system, a complicated formula for tying bonuses to
profitability, among other things. A special formula
was devised for shipbuilding linking bonuses in part
to the sales prices received for ships. About 80% of ship
output through 1975 was targeted for export, and the
workers resented having their bonuses depend on
factors outside their control.
The announcement of retail price increases �which
sparked the December 1970 riots �was in line with the
long standing wish of planners and economists to
revamp the price structure to channel excess demand
to consumer manufactures other than the heavily
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subsidized food products. By the end of 1970, excessive
demands for meat and other agricultural products
seemed to make such action necessar,
When Gierrk gained power after the riots, he
scrapped the incentives system (except for experiments
earlier under way in selected enterprises) and
eventually rescinded the food price increases. In 1972
the regime came up with anew program for improving
the system of planning and management, which gave
greater responsibility to tae enterprises and also
strengthened central controls. In 1973, 35 Polish
industrial enterprises, associations, and combines were
to begin experimentation with their planning and
management systems. Among other things, these
enterprises would be able to decide on the use of
investments -to be financed out of their own profits or
from bank loans. So far 28 large economic units and
all state -owned trading organizations ha begun such
experimentation, and modifications are to be
introduced gradually to other economic units. While
realizing its too early to evaluate results of the
experiments, the Poles claim that the enterprises so far
involved have attained exceptional increases in
production.
5. Manpower
In addition to the high rate of capital investment,
an important factor in Poland's ability to maintain
high rates of industrial growth has been the existence
of labor reserves that fed the expansion of industrial
employment throughout most of the postwar period.
In the early 1950's, Poland was able to increase its
industrial labor force rapidly by transferring large
numbers of workers from agriculture: between 1950
and 1955 the industrial labor force increased by an
estimated 587,000 (4.7% a year), while the
agricultural labor force declined by about 644,000
(Figure 20). Wholesale transfers of labor from
agriculture to industry stopped after 1956, when the
excess agricultural employment was eliminated and
the decision of the Communist Party to retain private
FIGURE 20. Estimated labor force* (U /OU)
(Thousands of persons)
ownership of farming encouraged people to btay in
farming. In later years, the government took more
affirmative action to keep workers on the farms by
strengthening monetary a