Countries of the World/COUNTRYS.BIN/dp/0413/04136.txt

Text File | 1991-06-25 | 41KB | 634 lines

$Unique_ID{COW04136}
$Pretitle{299}
$Title{Yugoslavia
Chapter 3C.   Manufacturing and Agriculture}
$Subtitle{}
$Author{Darrel R. Eglin}
$Affiliation{HQ, Department of the Army}
$Subject{percent
hectares
land
private
agricultural
industrial
production
million
cooperatives
industry}
$Date{1982}
$Log{}
Country:     Yugoslavia
Book:        Yugoslavia, A Country Study
Author:      Darrel R. Eglin
Affiliation: HQ, Department of the Army
Date:        1982

Chapter 3C.   Manufacturing and Agriculture

     Although Yugoslavia was predominantly an agrarian nation at the end of
World War II, a start had been made on industrialization. Besides traditional
industries (food processing, wood and timber products, and building
materials), crude oil extraction, mining and processing of copper, zinc, and
bauxite; steel, chemical, and textile industries; and electric power had been
established during the interwar (1919-41) period, mostly by foreign investors.
It was known that important additional natural resources were available for
exploitation. At the war's end, the country was ready for industrial expansion
regardless of the political complexion of the new government.

     When the Communists assumed control in 1945, they immediately began
adopting the Soviet economic model that emphasized development of industry,
particularly heavy industry. The extensive war damage to industrial equipment
was quickly repaired, helped by international assistance. By 1948 the official
index of industrial production was 50 percent above that of 1939. Meanwhile
the state had nationalized most of the economy including industrial
facilities.

     The Soviet economic model centralized nearly all economic decisions and
included almost complete control of economic variables. Thus consumption and
investment were controlled by plan, as was the allocation of investment funds
for development. Yugoslavia started with this system in 1945 and began
channeling the major share of fixed investment to industry out of a very high
rate of savings. The introduction of workers' self-management in 1950 and
other measures that decentralized economic decisionmaking only partly diluted
central control over the allocation of investment funds and development
policy.

     Since 1945 development policy has remained consistent in stressing
industrialization-including education, vocational training, and incentives to
workers-as the means to modernize the economy. In 1981 the primary focus
continued to be on expansion of the energy base, exploitation of other natural
resources, and development of basic industries which included metallurgy and
capital equipment. Emphasis did vacillate between the priority branches
because of specific circumstances, but the focus remained on heavy industry.
The development policy achieved its basic purpose. By the early 1960s
industry surpassed agriculture in its contribution to social product, and
by 1978 the value added by industry was more than three times that
contributed by agriculture.

     The consistent policy, supported by large investment allocations and a
flow of workers from rural areas, caused industrial output to lead the
economy in its expansion. The official index of industrial production
increased by 8.5 percent a year between 1949 and 1979. Some economists,
pointing out deficiencies in the methodology of the index, calculated the
growth rate of industrial expansion some 20 percent lower and close to rates
achieved by other rapidly industrializing countries. Even with qualifications,
Yugoslavia achieved a notably high rate of industrial growth-supported by
statistical evidence and observation over time.

     One incidental measure of industrial growth not available in statistics
is the supply of locally manufactured equipment to the country's defense
forces. This expanded from clothing and other minor items, for example, to
aircraft, submarines, surface vessels, and a wide range of infantry weapons
by the late 1970s (see Missions and Organization, ch. 5). One basic reason
for industrialization was to develop the country's defense capabilities. The
break with the Soviet Union in 1948 increased official attention on an
economic structure that would contribute to defending the state's
independence.

     Between 1949 and 1979 the fastest growing industrial branches (as
reflected in the official indices of industrial production) were oil and gas
extraction, manufacturing of electrical machinery, transport equipment,
chemicals, electric power, and oil refining. These were essentially priority
branches that started from low levels of production. Other priority branches
that were more developed in the late 1940s-such as coal mining, ferrous and
nonferrous mining and processing, and metal manufacturing-expanded output
significantly, but growth rates were considerably lower. Several non-priority
branches, such as furniture, paper, and extraction of construction materials
as well as the traditional food and beverage industries, expanded faster than
the industrial average.

     Three decades of concentrated investments resulted in an impressive
expansion in the range and depth of industrial output. The aluminum industry,
for example, expanded from one of essentially extracting and exporting bauxite
to one increasingly capable of producing aluminum ingots and manufactured
products. Manufacturing increasingly supplied the domestic market with a
wide range of consumer goods, including frozen foods, cars, refrigerators, and
television sets, and a growing amount of machinery and equipment for
additional expansion.

     The structure of industry changed markedly from that dominated by food
processing in the 1940s. In 1978 the value added by industry (in 1975 prices)
amounted to the equivalent of about US $11.7 billion, of which food processing
contributed 15 percent; textiles and clothing, 14 percent; machinery and
transport equipment, 21 percent; chemical, 8 percent; and other
manufacturing (in which metal fabrication was most important), 42 percent.
The structure of Yugoslav industry was approaching that of West European
countries.

     The government, at various levels, used many tools to influence the pace
and direction of industrial growth. Until the mid-1960s the federal government
directly allocated a substantial amount of the investment funds. Since then
recourse has been more toward such indirect measures as credit, tax
incentives, and commercial policies. Innovations and adoption of advanced
technology were encouraged by various means, including joint ventures with
noncommunist industrial firms. The Yugoslav law on foreign investment
requires 51 percent Yugoslav ownership but otherwise leaves most matters to be
worked out between the participants in the joint venture. The flow of foreign
investment has not been as large as hoped, but by 1980 several joint ventures
had been formed. One of current significance was participation by a large
international chemical firm in a large petrochemical complex at the crude
oil terminal of Krk Island.

     The focus on energy and the development of basic industries resulted in
an industrial structure consisting of a small number of large facilities with
heavy capital costs and offering relatively few jobs. In 1977 basic industries
(primarily energy, ferrous and nonferrous metallurgy, chemicals, and paper)
accounted for 56 percent of fixed assets in the socialized sector, contributed
32 percent of value added, but employed only 21 percent of the workers in the
socialized sector. Small-scale industry in Yugoslavia was usually defined as
firms that employ fewer than 125 workers. In the social sector there were a
relatively large number of such industrial facilities (perhaps 4,000), but
they contributed around 10 percent of value added by industry. In addition
there was a small private industry-basically artisans and handicrafts. Limited
data suggested that small organizations were generally efficient and provided
valuable supplements to production in larger plants. In the 1970s