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Yugoslavia The First Five-Year Plan
All economic activity for the period of the First Five-Year
Plan (1947-52) was directly managed by the Federal Planning
Commission, which, in turn, was closely supervised by the party.
The objectives of the plan were to overcome economic and
technological backwardness, strengthen economic and military
power, enhance and develop the socialist sector of the country,
increase the people's welfare, and narrow the gap in economic
development among regions.
Economic development in the first half of the planning period
was relatively successful; from January 1947 through June 1949,
the plan was approximately on schedule. Then, in late 1949,
agricultural and industrial development began to fall behind
planned rates. The targets set were very ambitious and did not
take into account Yugoslavia's inadequate power resources and
limited range of indigenous raw materials. Primarily because of
poor investment policy, agriculture had no hope of reaching its
target of 52 percent growth over 1939 levels. Only 7 percent of
total investment was earmarked for achieving that ambitious goal.
The rapid industrialization foreseen in the plan required vast
imports of fuel, food, and raw materials. Because Yugoslavia's
sparse and low-quality exports could not finance such
acquisitions, it was forced to run a large trade deficit, most of
which was financed by credits and loans from Western Europe and
the United States.
Following Yugoslavia's 1948 ouster from the
Cominform
(Communist Information Bureau--see Glossary), Cominform members
instituted an economic boycott against the country, further
slowing Yugoslavia's economic growth. Many treaties and trade
agreements among the Soviet Union, Eastern Europe, and Yugoslavia
were abrogated, loans were canceled, and nearly all trade was
halted. In 1948 trade with the Soviet Union and Eastern Europe
made up approximately 50 percent of Yugoslavia's imports and
exports, but that figure was reduced to zero by 1950. Yugoslavia
suffered doubly in the many instances when it did not receive
goods, particularly machinery and capital goods, for which it had
already paid.
However disastrous the effects of the Cominform blockade,
Tito himself estimated that it accounted for less than 20 percent
of the damage to the Yugoslav economy during the second half of
the First Five-Year Plan. The droughts of 1950 and 1952 were an
even greater economic disaster than the boycott. Another
formidable burden was the need to divert substantial resources to
rebuilding the Yugoslav military and arms industry.
By the end of the First Five-Year Plan, Yugoslavia had become
acquainted with the economic problems that would eventually
become chronic in the 1980s: an oversized balance of payments
deficit, significant foreign debt, low labor productivity, and
inefficient use of capital. But the comprehensive, long-term,
centrally directed planning approach was able to mobilize
national resources to achieve rapid postwar development in
Yugoslavia. Although inefficient, the high rate of investment in
the First Five-Year Plan ensured increased output throughout the
Second Five-Year Plan. From 1950 to 1960, industrial output rose
faster in Yugoslavia, in both per capita and total output, than
in almost any other country in the world over the same time
period.
Data as of December 1990
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