Czechoslovakia - Economy

Economy

After World War II, the economy was centrally planned, with command links controlled by the communist party, similarly to the Soviet Union. The large metallurgical industry was dependent on imports of iron and non-ferrous ores.

• Industry: Extractive industry and manufacturing dominated the sector, including machinery, chemicals, food processing, metallurgy, and textiles. The sector was wasteful in its use of energy, materials, and labor and was slow to upgrade technology, but the country was a major supplier of high-quality machinery, instruments, electronics, aircraft, airplane engines and arms to other communist countries.
• Agriculture: Agriculture was a minor sector, but collectivized farms of large acreage and relatively efficient mode of production enabled the country to be relatively self-sufficient in food supply. The country depended on imports of grains (mainly for livestock feed) in years of adverse weather. Meat production was constrained by shortage of feed, but the country still recorded high per capita consumption of meat.
• Foreign trade: Exports were estimated at US$17.8 billion in 1985. Exports were machinery (55%), fuel and materials (14%), and manufactured consumer goods (16%). Imports stood at estimated US$17.9 billion in 1985, including fuel and materials (41%), machinery (33%), and agricultural and forestry products (12%). In 1986, about 80% of foreign trade was with other communist countries.
• Exchange rate: Official, or commercial, rate was crowns (Kčs) 5.4 per US$1 in 1987. Tourist, or non-commercial, rate was Kčs 10.5 per US$1. Neither rate reflected purchasing power. The exchange rate on the black market was around Kčs 30 per US$1, which became the official rate once the currency became convertible in the early 1990s.
• Fiscal year: Calendar year.
• Fiscal policy: The state was the exclusive owner of means of production in most cases. Revenue from state enterprises was the primary source of revenues followed by turnover tax. The government spent heavily on social programs, subsidies, and investment. Budget was usually balanced or left small surplus.