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Bulgaria Table of Contents


Industrial Policy

The cost of Bulgaria's industrial growth was substantial. Besides environmental problems, the commitment to heavy industry came at the expense of light industry--especially food processing and textiles--and agriculture. These were sectors in which prewar Bulgaria had relatively high production potential. But de-emphasis held the official annual NMP growth figures for light industry and agriculture to 7.5 and 2.8 percent, respectively, between 1956 and 1988.

In the postwar command economy, the chief beneficiaries of this emphasis were the chemical, electronics, and machinery industries. Their respective share of total industrial production rose from 1.9, 0, and 2.4 percent in 1939 to 8.8, 14.4, and 15 percent in 1988. Similar statistics indicate big drops in production shares for the food processing and textiles industries--from 51.2 to 23.3 percent, and from 19.8 to 5.1 percent, respectively, in the same period.

Besides the unchanging commitment to heavy industry, two other major trends appeared in postwar industrial policy. The first was steady and substantial support for a basic ferrous metals industry, regardless of cost, in order to reduce dependence on imports. The second was an effort to produce machinery competitive in international markets, with special emphasis on electrical equipment.

A result of the first policy was the Kremikovtsi Metallurgical Complex. In 1954 Soviet-supported geological surveys indicated major new deposits of higher quality iron ore that would support a second complex to supplement the existing V.I. Lenin Ferrous Metals Combine at Pernik. Although the deposits were actually found to be inadequate, the extremely expensive Kremikovtsi plant finally opened in 1963 and used Soviet iron ore to produce over half of the national production of steel and iron through 1978.

The Kremikovtsi complex brought numerous problems. By the mid1970s , over 75 percent of its ore and coking coal was imported. Costs were inflated by premium wages paid to maintain the labor force and by delays in construction and delivery. Production at Kremikovtsi consistently failed to meet planned targets, and less than three-quarters of plant capacity was used. The enterprise never showed a profit; in 1989 it lost 99.5 million leva despite receiving 600 million leva in state subsidies. Using 15 percent of the country's total energy output, Kremikovtsi generated only 1 percent of national income in the late 1980s.

The strategy of heavy equipment production for export fared better than did metallurgy in the 1970s and 1980s. In fact, the most competitive Bulgarian industries were those most committed to export markets. The machine building and electronics industries averaged 16 percent growth between 1960 and 1980 while their combined share of export value jumped from 13 to 55 percent from 1960 to 1982. The primary exports in these sectors were forklift trucks and electrical hoisting gear produced by the Balkancar enterprise. Computer equipment and chemicals also showed improved export performance.

Bulgaria's postwar industrialization was clearly positive in some sectors. Two notable examples were the construction of electric power plants in the 1950s, which made possible the nationwide spread of industry, and the development of an electrical equipment industry that produced exportable products. Nonetheless, as the 1980s drew to a close, it became increasingly clear that even the most competitive sectors had serious problems that the BCP's halfway reforms could not solve. After the initial postwar climb, four decades of socialist central planning had left the industrial sector in a very poor state.

Data as of June 1992