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After the fall of communism, several different countries decided that it was time to reform both current economic and political policies. Two countries that have had major economic reforms are Poland and the Czech Republic. However, the process of that change is different, each country had a different idea of how to become a new economic power in the 1990’s.

In December 1989, the new government, led by members of the labor union Solidarity, launched a reform program designed to transform Poland's economy into a free-market system. Price controls were lifted, while wage controls were imposed. State enterprises were transformed into joint-stock companies, and many were scheduled for eventual privatization or purchase by foreign investors. The restructuring of the Polish economy resulted in a massive layoff of workers and a rapid rise in unemployment. Poland's GDP declined sharply in 1990 and 1991.

Poland had relied heavily on agriculture and would have been easier to reform if its exhausted industrial regions could have been abandoned. Poland may have been the first to try a rapid, sweeping conversion, deemed by the press as “s

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Although the economy remained strong by Eastern European standards, with one of the highest standards of living in the Communist world, the policies adopted by the Communist government led to long-term economic decline in Czechoslovakia. Nearly all aspects of economic planning and management came under the control of the central government. Gross domestic product (GDP) increased by approximately 2 percent in 1994. The voucher plan successfully transferred large parts of the economy to private ownership. Business boomed in Prague and other cities in the mid 1990’s as entrepreneurs established new companies.

The result of “shock therapy” for Poland was to emerge out after the fall of the former reigning communism, to take leaps and bounds in economic development. The country's foreign debt has remained modest. When the Communists came to power in Czechoslovakia in 1948, they created a highly centralized economic system. After the collapse of Communism in 1989, the new leaders of Czechoslovakia had to deal with this legacy. However, rather than reformers gaining approval, the renamed communist party captured the largest number of seats in the Polish parliament in the elections that month. A number of reform measures were adopted, including a voucher privatization plan, which gave citizens, for a low administrative fee, coupons that could later be traded for stock in companies. ” This conversion was to a capitalism and free market. Most of the country's economic assets were placed in state hands; economic managers and decision-makers were cut off from their counterparts in the West; and foreign trade was conducted almost exclusively with other Communist countries. In the early and mid-1990s Poland's foreign debt was significantly alleviated by concessions from creditors, which helped to attract increasing levels of foreign investment.

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Approximate Word count = 965
Approximate Pages = 4 (250 words per page double spaced)

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