Economy of The Socialist Federal Republic of Yugoslavia - 1950s and 1960s

1950s and 1960s

In 1950s socialist self-management was introduced, which reduced the state control of the economy. Managers of socially owned companies were supervised by worker councils, which were made up of all employees, with one vote each. The worker councils also appointed the management, often by secret ballot. The Communist Party was organized in all companies and most influential employees were likely to be members of the party, so the managers were often, but not always, appointed only with the consent of the party. In 1950, Yugoslavia's GDP ranked twenty-second in Europe.

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 working force steadily increased. Due to Yugoslavia's neutrality and a 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. In 1965, a new dinar was introduced. The previous dinar, traded at a rate of 700 to the U.S. dollar, was replaced with a new dinar traded at 12.5 to the U.S. dollar.

The fact that Yugoslavs were allowed to emigrate freely since 1960s caused many to find work in Western Europe, notably Germany. The emigration was mainly caused by force deagrarization, deruralization, and overpopulating of larger towns. The emigration contributed to keeping the unemployment checked and also acted as a source of capital and foreign currency. The system was institutionalized into the economy. From 1961 to 1971, the number of guest workers from Yugoslavia in West Germany increased from 16,000 to 410,000.