Fast and Furious Vs. Slow and Gentle: A Critical Assessment of the Gradualist Approach to Economic Transformation in Poland

Abstract The article engages in the debate between the big-bang and grad-ualist approaches to economic transformation in Poland after the collapse of communism. It presents the major arguments behind both strategies and reviews the empirical evidence, finding that countries that adopted the big-bang strategy performed better in the long-run. The paper challenges two main grad-ualist’s criticism of radical reforms in Poland, i.e., that the costs in the form of the so-called transformation recession were excessive, and that the big-bangers neglected institutions. In reality, in countries with radical reforms more institutional changes happened and the welfare costs were lower than in countries with gradual reforms, and these costs were also lower than commonly believed. Last but not least, the article argues that the main problem of gradualism is its “institution first” approach, which does not stand up to scrutiny.