Bulgaria

Larger Economic Units

Craftsman working at lathe, Plovdiv
Courtesy Sam and Sarah Stulberg

Spice vendor, Bachkovski Manastir
Courtesy Sam and Sarah Stulberg

Just as most reforms were being rescinded, the BCP began the last phase of postwar agricultural restructuring. Prompted by the labor shortage, the new streamlining of collective farms that began in 1969 introduced the so-called agricultural-industrial complex (agrompromishlen kompleks--APK). The new structure was to industrialize agricultural production, boost the value-added component in Bulgarian exports by processing more agricultural goods, and raise the food supply to cities without diverting labor back from industry. In the late 1960s, relatively poor agricultural performance under the existing structure had prevented those goals from being reached.

The idea of combining existing enterprises into a smaller, presumably more manageable number of units spread quickly from agriculture to industry. By the end of the 1970s, the number of associations into which industrial enterprises were grouped was reduced by half. The sixty-four new, larger associations were granted the authority to make decisions for their enterprises about new investments, bank credits, and budget subsidies. Within an association, the larger enterprises (called subsidiaries) still could sign their own supply contracts and maintain their own bank accounts, but they ceased to be legal entities. Smaller enterprises (called subdivisions) became fully dependent on their association.

The main advantage of this streamlined organization was seen as economy of scale through increased specialization and a simplified flow of information. Associations also were assumed to be better able to make investment decisions and oversee material and labor distribution than either a small number of ministries or a large number of enterprises. The new structure would link specific industrial enterprises with scientific institutes in the same way as the agricultural complexes had linked them.

These reforms proved disappointing. Reformed planning techniques continued to leave unused industrial capacity, and quality control failed to improve. Both Western and domestic customers remained dissatisfied with the quality of many Bulgarian manufactures. New planning indicators that set norms for cost reduction actually reduced quality in a number of cases. Individual members of institutes could not convey their ideas to associations or ministries, where decisions to import or to invest in new technology were made. Thus the new framework only accentuated the dangers of socialist monopoly. Party meetings and the press criticized monopolistic abuses resulting from irrational decisions at the top and poor implementation of rational policies at the enterprise level. By the end of the 1970s, a new set of reforms was prescribed.

Data as of June 1992