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Czechoslovakia Industry
Czechoslovakia inherited the bulk of existing industrial
assets following the breakup of the Austro-Hungarian Empire after
World War I. Industrialization continued in the interwar years.
Even before World War II, the country's armaments and heavy
industries were producing commodities accepted throughout the
world. World War II left Czechoslovak industrial facilities
largely intact. In the late 1940s, Czechoslovakia was one of the
most industrialized countries in the world, and the quality of it
products was comparable to that of other industrialized
countries.
After the KSC took control of the country, the industrial
sector--particularly defense and heavy industry--received
priority in terms of investment funds, labor, and materials.
Industry was the leading sector in expansion of the economy. The
industrial base grew rapidly, as recorded by the official index
of industrial production. Starting from a base of 100 in 1948,
the index increased to 371.9 in 1960 and 665.5 in 1970. The late
1970s witnessed some deceleration in industrial growth, and the
index increased from 921.4 in 1975 to 1,156.7 in 1980. In 1985
the index reached 1,322. The figures suggested substantial
growth, and industry's overall performance since World War II had
in fact been impressive. However, various Western studies of the
computation of the index of industrial production in communist
countries indicated a significant upward bias relative to the
calculated planned rate of growth of industrial production used
for planning purposes. The main cause of the bias appeared to be
higher prices recorded for newly introduced products; in many
cases, there was little or no difference between the new product
and a similar item produced the year before. The bias appeared to
be larger in such branches as machinery and chemicals and tended
to enhance plan results. Over time, the bias also led to
overstatement of the structural change in fast-growing branches
of industry that were introducing new products.
In 1985 the most important branches of industry in terms of
the monetary value of their contribution to the economy were
machinery, electrical engineering, metalworking, chemicals,
asbestos, rubber, and ferrous metallurgy (including ore
extraction). Important manufactured products were vehicles,
railroad goods, aircraft, electrical goods, heavy machinery, and
precision equipment. During the 1970s, Czechoslovakia had signed
specialization and joint investment agreements with other Comecon
members, committing the country to specific long-term obligations
in particular production branches (machine tools and railroad
locomotives, for example), partly to ensure the inflow of energy
and raw materials. In the 1980s, Czechoslovakia was--except for
the Soviet Union--Eastern Europe's only builder of heavy-duty
nuclear power equipment and was a joint supplier of such products
to other Comecon members. For export, Czechoslovakia specialized
in smaller units, while the Soviet Union supplied the larger
capacity reactors. In the early and mid-1980s, as part of an
effort to "restructure" the industrial economy, the government
sought to reduce the relative importance of metallurgy within the
industrial sector, cutting back particularly on such traditional
products as pig iron, raw steel, and rolled ferrous products in
favor of more profitable and less energy-intensive branches.
Despite its favored position within the economy, the
industrial sector had serious weaknesses in the mid-1980s. A
particularly significant problem was the high energy and material
inputs required for a unit of industrial output. Czechoslovak
machinery was often heavier than comparable West European
equipment and was usually less productive. The slow rate of
technological innovation had caused a decline in the country's
share of machinery markets in developing nations, noncommunist
industrialized countries, and Comecon countries in comparison
with the 1950s. Related problems were design limitations and
lengthy project completion times, which frequently caused
investments to be less productive than hoped. In addition, old
equipment was retired slowly. In 1986 the average age of
industrial machinery and equipment was 12 years; 10 percent of
the machinery was more than 25 years old, and the percentage was
reportedly increasing. These circumstances contributed to the low
productivity of Czechoslovak workers compared with their
counterparts in Western Europe. Moreover, the overall quality of
Czechoslovak exports was frequently below world standards;
official government pronouncements emphasized the inadequate
technological level of activities in the economy as a whole.
Imbalances persisted between supply and demand, both at home and
on foreign markets. In 1986 a prominent Czechoslovak economist
argued that industry's problems stemmed in part from inadequate
specialization, insufficient use of foreign licenses, and
cumbersome restraints on research projects.
Most of these problems had already existed in some form
during the 1970s, and the government had introduced several
measures intended to correct the deficiencies. Laws introduced in
1971 (which went into effect in 1975) had granted limited powers
and a degree of decentralization to the intermediate level of
administration, positioned between ministries and production
enterprises. The intermediate level consisted of associations of
industrial enterprises in the same or closely related branches,
resembling trusts. The intent was to reduce overhead
expenditures, such as planning and research, while promoting
innovation and technological development. Changes also were
introduced in the wage and price systems in an attempt to improve
efficiency. Despite these measures, there was reason for
continuing dissatisfaction in the 1980s.
Data as of August 1987
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