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Czechoslovakia Table of Contents


Chapter 3. The Economy

Facets of the Czechoslovak economy

IN THE MID-1980s, Czechoslovakia was one of Eastern Europe's most industrialized and prosperous countries. Although levels of consumption were well below those common in Western Europe, inhabitants of Czechoslovakia enjoyed a standard of living generally higher than that found in most other East European countries. Heavily dependent on foreign trade, the country nevertheless had one of Eastern Europe's smallest international debts to noncommunist countries.

The Czechoslovak economy had serious problems, however. Investments made in industry during the late 1970s and early 1980s had not yielded the results expected. Consumption of energy and raw materials was excessive. Czechoslovak leaders themselves decried the economy's failure to modernize with sufficient speed. According to many Western analysts, other constraints were inherent in the communist system imposed in the late 1940s; yet the cautious Czechoslovak leadership of the 1980s appeared reluctant to make major changes.

The differing statistical concepts and procedures used by communist and noncommunist economists make assessment of the status of the Czechoslovak economy complicated. In recent years, some Western economists have been especially vexed by what they consider to be official Czechoslovak manipulation of economic statistics. Various studies of the official industrial production index have suggested several biases, the most important of which appeared to be the inclusion of new products at increased prices, although a given product may have been almost unchanged from one manufactured a year earlier. This kind of bias could accentuate fast-growing industrial branches and sectors as opposed to slower growing ones or those that produced a standardized product, and thus the statistics could lead to a skewed picture of overall industrial growth. Foreign trade statistics are particularly difficult to assess because a variety of currency conversion methods are employed to calculate trade turnover value. Data calculated on the basis of noncommunist concepts will be identified here by the use of such Western terms as gross national product; Czechoslovak statistics will be called official data or identified by such terms as net material product or national income.

Data as of August 1987