Country Listing

Yugoslavia Table of Contents


Planning and Pricing

In 1990 the Yugoslav economy ostensibly operated on a system of economic planning. Throughout the 1960s and the early 1970s, planning was "indicative": federal authorities handed down plans with detailed, specific goals to be achieved, with little input from below. In 1976 a radically new system of voluntary planning, called "social planning," was established. Plans of five years or longer were formulated from the bottom up, with the participation and agreement of all parties concerned.

The planning process started when federal authorities announced the timetable for the overall plan and major intermediate goals. Following the general government program, enterprises and their subordinate organizations drew up microplans, while macroplans were formulated within and among all the local governments and self-managed communities of interest. This was done simultaneously at all levels without any hierarchical approval system. Individual plans were modified through discussion with all parties concerned; the result was then written into binding social contracts. Enterprises and other bodies constructed self-management agreements that addressed specific aspects of the plan, such as the supply of materials and the amount of new capacity required. Annual assessments and adjustments provided adaptability to changing conditions. The Yugoslav economy's dependence on imported technical equipment for growth meant that changing world markets often made such adjustments necessary.

The consensual approach to planning proved ineffective in Yugoslavia. It was time-consuming and, because social compacts were voluntary and therefore unenforceable, plans were largely ignored except in rare instances of federal government intervention. Extreme decentralization of planning also meant that cooperative projects among republics and provinces were not well coordinated. This inefficiency particularly hindered development of national solutions for maintaining the energy balance and distributing foreign exchange.

Until the 1960s, price controls were set at particular points in the chain of production. Such control points were the initial sale of a raw material and the release of a final product for sale on the retail market. Intermediate prices were determined by supply and demand. This combined pricing system worked fairly well to moderate inflation until many price controls were removed in 1964. By the late 1980s, pricing again was moving distinctly toward free market determination. The 1990 reform removed price controls on 85 percent of all commodities. Price controls remained only on essentials such as electricity, gasoline, oil, coal, some raw metals and nonmetal minerals, medicines, and railroad, postal, and telephone services.

Data as of December 1990