Yugoslavia Table of Contents
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