|
Romania ECONOMIC STRUCTURE AND DYNAMICS
Evolution
From earliest times, the Romanian lands were renowned for
their
fertile soil and good harvests. As the Roman colony of
Dacia, the
region supplied grain and other foods to the empire for
nearly two
centuries. During the subsequent two millennia, a
succession of
foreign powers dominated the area, exploiting the rich
soil and
other resources and holding most of the native population
in abject
poverty. It was not until the middle of the nineteenth
century that
a unified, independent Romania finally emerged, opening
the way for
development of an integrated national economy.
But even after Romania had gained independence, foreign
interests continued to dominate the economy. Large tracts
of the
best grain-growing areas were controlled by absentee
landlords, who
exported the grain and took the profits out of the
country.
Outsiders controlled most of the few industries, and
non-Romanian
ethnic groups--particularly Germans, Hungarians, and
Jews--
dominated domestic trade and finance. The centuries of
outside
control of the economy engendered in the Romanian people
an extreme
xenophobia and longing for self-sufficiency--sentiments
that would
be exploited repeatedly by the nation's leaders throughout
the
twentieth century.
On the eve of World War II, agriculture and forestry
produced
more than half of the
national income (see Glossary).
Reflecting
the country's limited economic development, about 90
percent of
export income in 1939 was derived from raw materials and
semifinished goods, namely grain, timber, animal products,
and
petroleum. The most advanced industry at that time, oil
extraction
and refining, was controlled by Nazi Germany for the
duration of
the war and suffered severe bombing damage.
For several years following the war, the devastated
economy was
burdened with reparation payments to the Soviet Union,
which
already by 1946 had expropriated more than one-third of
the
country's industrial and financial enterprises. By
mid-1948 the
Soviets had collected reparations in excess of US$1.7
billion. They
continued to demand such payments until 1954, severely
retarding
economic recovery.
After the installation of a Soviet-styled communist
regime,
Romania's economic evolution would faithfully follow the
Stalinist
pattern. Adopting a centrally planned economy under the
firm
control of the PCR, the country pursued the
extensive economic development (see Glossary)
strategy adopted by the other
communist
regimes of Eastern Europe but with an unparalleled
obsession with
economic independence. The development program assigned
top
priority to the industrial sector, imposed a policy of
forced
saving and consumer sacrifice to achieve a high capital
accumulation rate, and necessitated a major movement of
labor from
the countryside into industrial jobs in newly created
urban
centers. The first step on this path was nationalization
of
industrial, financial, and transportation assets.
Initiated in June
1948, that process was nearly completed by 1950. The
socialization
of agriculture proceeded at a much slower pace, but by
1962 it was
about 90 percent completed.
Beginning in 1951, Romania put into practice the Soviet
system
of central planning based on five-year development cycles.
Such a
system enabled the leadership to target sectors for rapid
development and mobilize the necessary manpower and
material
resources. The leadership was intent on building a heavy
industrial
base and therefore gave highest priority to the machinery,
metallurgical, petroleum refining, electric power, and
chemical
industries.
Shortly after Nicolae Ceausescu came to power in 1965,
PCR
leaders reevaluated the development strategy and concluded
that
Romania would be unable to sustain the rapid rate of
economic
growth it had achieved since the early 1950s unless its
industry
could be streamlined and modernized. They argued that the
time had
come to assume an intensive development strategy, for
which the
term "multilateral development" was coined. This process
required
access to the latest technology and know-how, for which
Ceausescu
turned to the West.
Economic growth during the first twenty-seven years of
communist rule was impressive. Industrial output increased
an
average 12.9 percent per year between 1950 and 1977, owing
to an
exceptionally high level of capital accumulation and
investment,
which grew an average 13 percent annually during this
period. But
with the concentration of resources in heavy (the
so-called Group
A) industries, other sectors suffered, particularly
agriculture,
services, and the consumer-goods (Group B) industries (see
table 2,
Appendix).
After 1976 the economy took a sharp downturn. A severe
earthquake struck the country the following year, causing
heavy
damage to industrial and transportation facilities.
Ceausescu's
vision of multilateral development had made little
headway, as the
bureaucracy was unable to steer the economy onto a course
of
intensive development, which would have necessitated major
improvements in efficiency and labor productivity. The
population
was demanding production of more consumer goods, and an
incipient
labor shortage was hindering economic growth. By 1981 the
country
was in a financial crisis, unable to pay Western
institutions even
the interest on the debt of more than US$10 billion
accumulated
during the preceding decade. Obsessed with repaying this
debt as
soon as possible, Ceausescu imposed an austerity program
to
curtail imports drastically, while exporting as much as
possible to
earn hard currencies. Rationing of basic foodstuffs,
gasoline,
electricity, and other consumer products was in effect
throughout
the 1980s, bringing the Romanian people the lowest
standard of
living in Europe with the possible exception of Albania.
In April
1989, Ceausescu announced that the foreign debt had been
retired,
and he promised a rapid improvement in living conditions.
Most
foreign observers, however, doubted that he could fulfill
this
pledge.
Data as of July 1989
|
