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World's busiest shopping street? Think Warsaw

POLAND'S ECONOMIC BOOM

By Lucian KimSpecial to The Christian Science Monitor / December 24, 1998



WARSAW

Holiday shoppers pack the sidewalks of Nowy Swiat, Warsaw's main shopping street, in the last days before Christmas.

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Women in fur coats dart into exclusive cosmetic shops, while young couples admire the shimmer of gold in jewelry shop windows.

One of the Polish capital's main thoroughfares, the street - whose name means New World - has become a showcase for the new wealth produced by Poland's booming economy.

The results of a recent study surprised even local shopkeepers here: A German property consulting company found that Nowy Swiat draws the highest foot traffic out of 14 comparable streets worldwide, including New York's Fifth Avenue and the Champs-lyses in Paris.

From the drabness of a socialist command economy, Poland has burst into a sophisticated consumer culture in less than a decade.

"It's beyond the expectations I had then," says Janusz Lewandowski, Poland's first privatization minister, caught leaving the Christian Dior shop on Nowy Swiat. "Now we take it for granted. I'm trying to make use of the new opportunities," he says.

Not even Russia's crisis could scratch confidence of Poles in their robust economy.

While other East-bloc countries were still reeling from the ease with which they deposed their communist governments, Poland wasted no time in applying harsh economic reforms in 1990.

As a result, rampaging inflation has since fallen to below 10 percent, and the Polish currency, the zloty, is stable. Deregulation spawned thousands of private businesses and attracted large foreign investors, who see in Poland a market of nearly 40 million people.

Its people endowed with a keen business sense, Poland had an additional advantage over its post-communist neighbors: Under economic hardship, Poles were forced to be resourceful and the regime never managed to extinguish private initiative.

A commercial tradition

"Poland has always had a strong commercial tradition - and it has survived," says Krysztof Bucholski, head of the Nowy Swiat Association, a newly founded business organization representing 32 merchants. "Even before 1989, Poles were traveling around Europe doing small-time trading."

As vice president of the Gdansk Institute for Market Economics, Bohdan Wyznikiewicz has been tracking the boom in Polish business with a sense of personal satisfaction. He studied economics together with Leszek Balcerowicz, finance minister and the architect of Poland's reforms, and advised the first government on its risky leap into laissez-faire capitalism.

Four steps to success

Wyznikiewicz names four important reasons why Poland has done so well in comparison with other post-communist economies. First, the government quickly and resolutely implemented the 1990 package of reforms known as "shock therapy."

Second, the full deregulation of the economy meant that virtually anybody could start up a business. During the Communist era, there were only 70 registered foreign trade organizations in Poland; today there are tens of thousands.

The key to deregulation's success was the fact that Poles - unlike Czechs or Romanians - already had the cash to start up businesses. "People had accumulated capital through 'suitcase trading,'" says Wyznikiewicz. "Some were selling eggs or butter in Berlin, others were dealing in cars."