Understanding Poverty in Poland

by World Bank Group (Contributor)

This report is the product of the Poverty Assessment and Social Safety Net Reform mission that visited Poland in December of 1993. Poland was the first country in Eastern Europe to reestablish democracy and a market economy. The opening of the economy to the forces of international competition and the collapse of the Council for Mutual Economic Assistance (CMEA) initially led to a massive contraction of output and a sharp rise in unemployment. In the second half of 1992, however, the economy started to rebound, spurred by the rapid expansion of a private sector that now accounts for more than half of GDP. Yet this wrenching systemic transformation has led to ever-widening income disparities and poses the central problem of how the fruits of economic growth can be enjoyed by all - including the poor. The present report addresses the key policy questions of who the people with the lowest incomes are and how their situation has evolved in the transition, how important growth is for reducing poverty, how the labor market enables the poor to lift themselves out of poverty, and to what extent social transfers are targeted to the poor and how they can - given a tight budget constraint - be restructured to reduce poverty.

201 pages, Paperback

First published July 1, 1995

About the author

The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and most famous development bank in the world and is an observer at the United Nations Development Group. The bank is based in Washington, D.C. and provided around $61 billion in loans and assistance to "developing" and transition countries in the 2014 fiscal year. The bank's stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity. Its five organizations are the International Bank for Reconstruction and Development (IBRD), the International Development Association (IDA), the International Finance Corporation (IFC), the Multilateral Investment Guarantee Agency (MIGA) and the International Centre for Settlement of Investment Disputes (ICSID).

The World Bank's (the IBRD and IDA's) activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation and rural services), environmental protection (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, and electricity), large industrial construction projects, and governance (e.g. anti-corruption, legal institutions development). The IBRD and IDA provide loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the country's economy as a whole. For example, a loan to improve coastal environmental management may be linked to development of new environmental institutions at national and local levels and the implementation of new regulations to limit pollution, or not, such as in the World Bank financed constructions of paper mills along the Rio Uruguay in 2006.