Second Yugoslavia - Economy

Economy

Despite their common origins, the economy of socialist Yugoslavia was much different from the economies of the Soviet Union and other Eastern European communist countries, especially after the Yugoslav-Soviet break-up of 1948. Though ultimately owned by the state, Yugoslav companies were collectively managed by the employees themselves, much like in the Israeli kibbutz and the anarchist industrial cooperatives of Spanish Catalonia. The occupation and liberation struggle in World War II left Yugoslavia's infrastructure devastated. Even the most developed parts of the country were largely rural, and the little industry the country had was largely damaged or destroyed.

With the exception of a recession in the mid-1960s, the country's economy prospered formidably. Unemployment was low and the education level of the work force steadily increased. Due to Yugoslavia's neutrality and its leading role in the Non-Aligned Movement, Yugoslav companies exported to both Western and Eastern markets. Yugoslav companies carried out construction of numerous major infrastructural and industrial projects in Africa, Europe and Asia.

The fact that Yugoslavs were allowed to emigrate freely from the 1960s on prompted many to find work in Western Europe, notably West Germany. This contributed to keeping unemployment in check, and also acted as a source of capital and foreign currency.

In the 1970s, the economy was reorganized according to Edvard Kardelj's theory of associated labor, in which the right to decision-making and a share in profits of worker-run companies is based on the investment of labour. All companies were transformed into organizations of associated labor. The smallest, basic organizations of associated labour, roughly corresponded to a small company or a department in a large company. These were organized into enterprises which in turn associated into composite organizations of associated labor, which could be large companies or even whole industry branches in a certain area. Most executive decision-making was based in enterprises, so that these continued to compete to an extent, even when they were part of a same composite organization. In practice, the appointment of managers and the strategic policies of composite organizations were, depending on their size and importance, often subject to political and personal influence-peddling.

In order to give all employees the same access to decision-making, the basic organisations of associated labor were also applied to public services, including health and education. The basic organizations were usually made up of no more than a few dozen people and had their own workers' councils, whose assent was needed for strategic decisions and appointment of managers in enterprises or public institutions.

The Yugoslav wars and consequent loss of market, as well as mismanagement and/or non-transparent privatization, brought further economic trouble for all the former republics of Yugoslavia in the 1990s. Only Slovenia's economy grew steadily after the initial shock and slump. Croatia reached its 1990 GDP in 2003, a feat yet to be accomplished by other former Yugoslav republics.

The Yugoslavian currency was the yugoslav dinar.

Yugoslav economy in numbers – 1990

Unemployment rate: 15% (1989)

GDP: $129.5 billion, per capita $5,464; real growth rate – 1.0% (1989 est.)

Budget: revenues $6.4 billion; expenditures $6.4 billion, including capital expenditures of $NA (1990)

Exports: $13.1 billion (f.o.b., 1988); commodities—raw materials and semimanufactures 50%, consumer goods 31%, capital goods and equipment 19%; partners—EC 30%, CEMA 45%, less developed countries 14%, US 5%, other 6%

Imports: $13.8 billion (c.i.f., 1988); commodities—raw materials and semimanufactures 79%, capital goods and equipment 15%, consumer goods 6%; partners—EC 30%, CEMA 45%, less developed countries 14%, US 5%, other 6%

External debt: $17.0 billion, medium and long term (1989)

Electricity: 21,000,000 kW capacity; 87,100 million kWh produced, 3,650 kWh per capita (1989)