Yugo Economics

[Michael Hoover]

> > Investment and Property Rights in Yugoslavia
> > by Milica Uvalic
> > In this book, Milica Uvalic examines the theoretical and empirical issues
> > related to investment in Yugoslavia since 1965. 
> > the author argues that
> > the fundamental causes of problems in Yugoslavia are generic to socialist
> > economic systems, rather than the specific characteristic of
> > self-management.
> > Ian
> 
> in addition to Yugoslavia's multi-national character and disparities in 
> economic development between different regions, post-WW2 Yugoslavia was 
> one of Europe's most Third-World like countries...only about 10% of 
> population worked in construction, manufacturing, mining while about 75% 
> lived in villages cultivating land using traditional implements... 
> 
> calling for rapid industrialization, Yugoslavia's first Five Year Plan 
> (1947-52) required large food, fuel, and raw materials imports...with 
> tension already growing between itself and the Soviet Union, the 
> government's 1948 decision to accept Marshall Plan money resulted in 
> expulsion from the Cominform...because Yugoslavia's exports could not 
> pay for necessary imports, the country ran large large trade deficits 
> financed by US credits and loans...by the end of the first plan, 
> chronic balance of payments deficit and foreign debt already existed...
> 
> problems associated with Yugoslavia's market socialism notwithstanding, 
> these circumstances were aggravated by its inequitable incorporation 
> into capitalist world market...First-Third World relations indicate how 
> this works against both economic development and social justice, so 
> Yugoslavia's socialist self-management could be considered a relative 
> success until 1980s foreign debt and inflation combined to create a
> crisis that the government attempted to manage via an IMF agreement
> that provided new loans and rescheduled the debt in exchange for
> relaxing foreign exchange controls, opening a foreign exchange market,
> and cutting inflation by reducing domestic lending (the first use of
> monetarism)...
> 
> as Michael Harrington wrote in 1970:
> "Without the presence of a single soldier Western capitalism thus
> makes itself a senior, and often dominant, advisor to the Yugoslavian
> government." (_Socialism_, p. 295)     Michael Hoover