The substantial autonomy given subnational governments in managing their own economic development prevented the six republics and two provinces from developing cross-boundary economic relationships, and the political fragmentation of Yugoslavia's uniquely loose federal structure stymied efficient exchange of goods and services. Stark economic disparities among regions remained unmitigated throughout the 1980s despite numerous federal programs to redistribute wealth by integrating the natural wealth of poorer regions (such as the coal and minerals of Kosovo) into the national economy.
The three northern republics, Slovenia, Croatia, and most of Serbia, emphasized high technology in building production capacity and attracting foreign investment. By contrast, the less developed southern regions, especially Kosovo, Macedonia, Montenegro, and southern Serbia, stressed traditional, laborintensive , low-paying economic activity such as textile manufacture, agriculture, and handicrafts. This contrast produced sharp differences in employment, investment, income potential, and social services among the eight political units of the federation. For example, in the late 1980s average personal income per social sector worker in Macedonia was half that of a similar worker in Slovenia. Especially in Kosovo and Macedonia, poor economic and social conditions exacerbated longstanding ethnic animosities and periodically ignited uprisings that threatened civil war. (see Regional Political Issues , ch. 4)
Meanwhile, the federal government continued to divert the earnings of prosperous Slovenia and Croatia into its Fund for Underdeveloped Regions in the late 1980s. The Slovenes, who contributed 25 percent of Yugoslavia's hard-currency export earnings in 1989, were especially irritated by the requirement to pay as much as 20 percent of the republic's income to subsidize nonproductive enterprises in other republics; this issue fueled the drive for Slovenian secession. In 1990 Slovenian leaders announced curtailment of their contribution to the Fund for Underdeveloped Regions because they had lost hope that the mismanaged central government would ever invest their earnings profitably, and because the local economy was declining. Croatia threatened similar action if the federal government did not make concessions. By this time, economic autonomy and membership in the EEC had become attractive and plausible alternatives for Slovenia and Croatia (see Slovenia; Croatia , ch. 4).
Data as of December 1990