Sławomir Grzegorz Kozłowski
Evolution of the Regional Policy of
Yugoslavia (1945-1990)
Annales Universitatis Mariae Curie-Skłodowska. Sectio H, Oeconomia 28, 13-43
1994
A N N A L E S
U N I V E R S I T A T I S M A R I A E C U R I E - S K Ł O D O W S K A
L U B L I N — P O L O N I A
VOL. X X V III, 2 SECTIO H 1994
R u t g e r s U n i v e r s i t y , N e w B r u n s w i c k , N e w J e r s e y , U S A
S ł a w o m i r G r z e g o r z K O Z Ł O W S K I
Evolution of the Regional Policy of Yugoslavia (1945— 1990)
E w olu cja p o lity k i region aln ej J u g o sła w ii (1945— 1990)
In term s of public opinion, Yugoslavia has become infam ous in th e last few years as a co u ntry ch aracterized by a b ru ta l civil w ar, ethnic cleansing, eru p tio n of e x tre m e nationalism , and leth a l religious discrim i nation. How ever, w e should rem em b er th a t for m ore th an fo u r'd e c a d e s Y ugoslavia w as a nice, peaceful, and econom ically prospective country. A t th a t tim e, it w as a positive exam ple of th e possibility of com bining fa st economic developm ent w ith social w elfare and ethnic justice.
O neł aspect of th e Yugoslav economic system d u rin g th a t fo rm er period is broadly described in professional lite ra tu re . It is. Y ugoslav self-m an agem ent, th e only m odel o th er th a n m a rk e t capitalism and c e n trally planned Socialism th a t w as im plem ented on a broad, national scale. B u t th e re is also a n o th e r elem ent th a t cannot be missed, a very active regional policy of a co u n try b u ilt up from m ore th an a dozen n ationalities w hich h is to ry ‘d e m o n stra tes as hav in g had dozens of bloody conflicts.
I w ould like to exam ine the. Yugoslav regional policy,-which has proven itself for decades. T he p ap er describes the1" prem ises 'of th e Yugoslav regional policy and its developm ent against a background of economic system evolution. It discusses th e scope, and form s of aid fo r u n d e r developed regions as w ell as m ain achievem ents and w eaknesses of th is policy.
T here are m an y additional aspects th a t could have influenced th e resu lts of th e Yugoslav regional policy. H ow ever, m any studies have proven th a t th e influence of various aspects of th e Yugoslav economic sy stem as related to its regional developm ent cannot be prop erly evaluated. F o r exam ple, because of th e large d ifferen tiatio n of sales ta x rates across products, and th e d iffe re n t in d u stria l stru c tu re s across regions, th e actu al b u rd e n of fed eral sale tax es w as unevenly d istrib u ted across regions. H ow
14 S ław om ir G rzegorz K ozłow sk i
u nevenly w e do n o t know. Sim ilarly, since heavy in d u stry w as concen tra te d m ainly in p a rtic u la r regions, its is not u n reaso nable to guess th a t these regions benefited m ost from m ilitary spending in e q u ip m en t (8). K ra ft (1992) (19) had sim ilar problem s w hen he tried to e v alu ate th e in fluence of economic (e.g. price distortio ns, some aspects of m o n eta ry policy, and so on) and political (such as p ersuad ing e n te rp rises to pool th e ir funds w ith o th er enterp rises) elem ents th a t influ en ced th e position of p a rtic u la r region. For these reasons m y article co n centrates only on th e ev olution of th e v ery original and active, in stitu tio n a l regional policy of Yugoslavia.
Ftig. 1. Y u g o sla v regions R egiony J u g o sła w ii
PR E M ISE S OF THE Y U G O SL A V R EG IO N A L PO LIC Y
T here are several reasons w hy the Yugoslav regional policy becam e th e solid elem ent of its economic system .1 The m ost im p o rta n t of th em w ere the sharp differences in h erited from th e h isto ry of th e Yugoslav
1 R egional d iv isio n in Y u goslavia w a s b ased on its p o litica l stru ctu re. T he
a-E volu tion of th e R eg io n a l P o lic y of Y u g o sla v ia (1945— 1990) 15
te rrito ry . Yugoslavia, w hich cam e into existence as a resu lt of W orld W ar I, was b u ilt from p arts of th e' relativ ely w ell developed A u stro -H un g arian M onarchy and p a rts of th e backw ard, sem i-feudal O ttom an Em pire. T h a t is w hy in th e tw enties, 64% of th e c o u n try ’s in d u strial production, 65% of its b a n k capital, and m ore th an 67% of its a g ricu ltu ral production w as concentrated in th e te rrito ry n o rth to th e Sava and D anube rivers, sm a lle r in term s of a re a and population th an th e so u th ern Yugoslavia. There, 66% of th e population w as agricultural, w hile th e south w as still 80% ag ricu ltu ral (7).
The situ a tio n did not im prove b etw een th e tw o W orld W ars. To some degree w orsened as a re su lt of th e protectio n ist policy of dom estic in d u stria l produ ctio n in fav o u r of developed p a rts of Y ugoslavia. The lack of sim ilar protection fo r farm products caused th e relativ e increase of
backw ardness of th e m ain ly a g ric u ltu ra l u nderdeveloped p a rt of th e country. This is p a rticu la rly evident du rin g and a fte r th e G re a t D epression w hich w as m uch m ore serious and lasted m uch longer in the u n d erd e veloped p arts of Yugoslavia th an in th e developed ones (36).
The developm ental differences w idened d u rin g th e Second W orld W ar. G uerilla activities co ncentrated in th e underdeveloped p arts of Yugoslavia, p a rticu la rly in B osnia-H erzegovina. The m ilitary o perations of th e Nazi occupants against th e p artisan s caused large losses in both fix ed assets and population. The in d u stry of th e developed p a rts of Y ugoslavia th riv e d because it produced m ilita ry equipm en t for th e G erm an occupants and w as protected by them .
As a re su lt of th is historical process, p o st-w ar Y ugoslavia inh erited enorm ous regional contrasts. N ational incom e p e r capita in th e m ost de veloped region — Slovenia w as m ore th a n th re e tim es g re a te r th an th a t of Kosovo (the least developed part), 2.8 tim es g re a te r th a n in M acedonia, and 2.4 tim es g re a te r th a n in M ontenegro. These differences w ere still g re a te r for in d u stria l p roduction. N et o u tp u t of in d u stry p e r capita in Slovenia w as 8 tim es g re a te r th an in M ontenegro, 7 tim es th a n in M a cedonia, an d 3.3 tim es th a n in Bosnia-H erzegovina. These differences w ere
accom panied by sharp in terreg io n al inequ alities in th e basic in fra stru c tu re — highw ays, railroads, electrical lines. F o r exam ple in 1950, th e d ensity o f paved roads w as 64 tim es g re a te r in Slovenia th an in M acedonia (7). T here is a lack of p ro p er statistical inform ation fo r th e period d irectly follow ing W orld W ar II b u t th e available d a ta does show these differences (see Table 1 and 2).
cedonia, M ontenegro, and S lo v en ia ) and tw o autonom ous p rovin ces in sid e th e r e public o f Serbia (K osovo and V ojvodina) and th e rest of S erb ian territory d escribed as Serbia proper.
16 S ła w o m ir G rzegorz K o zło w sk i
Tab. 1. Som e ch a racteristics of reg io n a l d ifferen tia tio n of Y ugoslavia, 1946 N iek tóre w sk a źn ik i reg io n a ln eg o zróżn icow an ia Jugosław ia w roku 1946
V alu e o f fix ed a ssets per cap ita (Y ugoslavia = 100) *
A B C D
C on su m p tion of elec trica l en ergy in in d u stry per capita (Y ugo sla v ia = 1 0 0 **) C roatia 124.7 111.4 127.1 <130.1 149.1 S lo v en ia 179.7 258.1 240;. 5 157.6 377.2 Serb ia *** 92.5 80.7 76.3 96.5 54.2 B o sn ia -H erzegovin a 6(U 77.5 64.2 52.8 74.8 M ontenegro 60.1 16.8 65.3 62.6 7.9 M acedonia 60.8 291.8 65.2 63.0 35.1
* In con stan t (1962) dinars. ** In 1951.
*** T he w h o le territory of Serbia; sep arate data for its th ree region s are
in a ccessib le. A — w h o le econom y; B — in d u stry; C — tra n sp o rta tio n and co m m u n ication ; D — u n p rod u ctive sphere.
Sources: N e k i pok aza telji..., pp. 29— 30; V in sk i (1966), pp. 423— 424, 431—433.
T he historically in h erited contrasts w ere com plicated by the m u ltin a tio nal c h a ra c te r of Yugoslavia. In terreg io n al differences th erefo re becam e in tern atio n al. The te rrito ria l b o rd er betw een th e developed and u n d e r developed areas w as a t th e sam e tim e th e ethnic b o rd e r am ong th e Y u goslav nationalities. Slovenes, Croats, H ungarians, and p a rtially Serbs
(N orthern) lived in developed areas. M uslims, M ontenegrins, A lbanians, M acedonians, and C roats and Serb sfrom B osnia-H erzegovina shared th e underdevelo p ed te rrito rie s.2 T he in h ab ita n ts of th e developed regions w ere m ostly Rom an-Catholics, w hile M uslim s and O rthodo x-C h ristians w e re co ncentrated in poorer areas. Regions w ere also se p ara te d by language and alphabet. M oreover, m any neighboring nations w ere historical enem ies. T herefore, th e failu re to dim inish in terreg ion al econom ic inequalities ’’could th re a te n th e in te g rity of th e Yugoslav com m unity and th ro w in to question th e comm on in terests of all its regions and n atio n alities” (2).
Regional policy, p a rticu la rly th e direction of investm ent, w as also rela te d to th e c h aracter and level of resources. In th e underdeveloped te rrito rie s concentration of energy resources, m etal ores and wood com b in ed w ith a large pool of p o ten tial labor have influenced th e ir in v estm en t policy. These regions contained 42.4% of th e Y ugoslav h y d ro -en erg etic p o ten tial, 47.0% of th e brow n coal reserves, 79.4% of th e lignites, 98.3%
2 In 1971, th e Y u g o sla v cen su s introduced th e category ’’M uslim s in th e eth n ic se n s e ”. This category co v ered S la v s (Croats and Serbs) w h o se an cestors u n der T urks had con verted to Islam . T his group w a s con cen trated m a in ly in B o sn ia -H erzeg o v in a . W id e a n alysis of Y u g o sla v n a tio n a l p roblem s can b e fou n d in R am et (30).
E volu tion of th e R egion al P o licy of Y u g o sla v ia (1945— 1990) 17
of the iro n ore, 81.4% of th e zinc and lead ores, 45.3% of th e wood, and m ost of th e m anganic ore (10, 31, 39).
All th ese facto rs influenced th e active regional policy of Yugoslavia. Its g en eral task w as to accelerate developm ent of th e underdeveloped regions. T h at w as im possible w ith o u t a help of rich er regions. The sources of inv estm en t in th e underdeveloped regions w ere v e ry lim ited especially in com parison w ith th e req u irem e n t for th e developm ent of highly capital- -intensiv e in d u strie s (basic in fra stru c tu re i.e. tra n sp o rta tio n , p ro du ction and d istrib u tio n of energy, etc.).
C EN TR A LLY P L A N N E D R EG IO N A L PO LICY
D uring the p o st-w ar y ears additional sources of in v estm en t w ere sen t to underdeveloped regions b u t th e system of financing evolved from being direct, c e n trally organized and controlled to th a t of cred it institu tion s. T he second elem en t of regional policy, th a t of additional financing of consum ption of public goods and services in uderdeveloped regions, existed d u rin g th e p o st-w a r period w ith o u t m uch change. These sources w ere g ran te d fo r underdeveloped regions by th e F ederal bud get subsidies. C hanges w ere m ade in scale and scope ra th e r th a n in th e form of su b sidies.
In v estm en t decisions w ere m ade directly by th e F ederal go vernm en t u n til 1956. Up to 1952 th e Yugoslav economic system w as v e ry sim ilar to th a t of th e Soviet bloc. Changes sta rte d in 1950 b u t th e y did not in fluence th e sy stem of in v estm en t allocation. The first Y ugoslav fiv e -y ea r p lan (the last y e a r of th a t p la n w as 1951 b u t p lanned tasks w ere prolonged fo r 1952) established a h ig h er level of in v estm en t and economic grow th fo r th e underdeveloped regions. For th re e underdeveloped regions, nam ely Bosnia-H erzegovina, M ontenegro and M acedonia, planned grow th of in v e stm e n t and in d u strial production w ere w ay above th e Yugoslav level. F o r B osnia-H erzegovina th ey w ere 38.5% and 110.0% above th e co u n try average, fo r M ontenegro 50.0% and 130.0%, and for M acedonia 53.8% and 426.0% respectively (24).
Also, location decisions and selection of in v estm en t priorities w ere th en being m ade by th e C enter. Special p rio rities w ere given to so-called p ro d u ctiv e investm ents (investm ent in th e sphere of m ate ria l production) p a rtic u la rly to w ard s th e m an u factu re of th e m eans of production.
The follow ing years w ere not covered by any lon g-term plan. O ne- - y e a r plans did n o t o ffer a stable regional policy. How ever, new develop m en ts w ere evident. First, in v estm en t subsidies w ere replaced by various fo rm s of credit. Second, a ttem p ts w ere m ade to connect sources w ith 2 A n n a l e s , s e c tio H , v o l. X X V U I
18 S ła w o m ir G rzegorz K ozłow sk i
local (regional) governm ents w ith th e aim of increasing th e ir in te re s t and responsibility for efficient investm ent. In o rd e r to realize th a t purpose the Federal governm ent stopped th e in te rest p aym ents paid on credits by underdeveloped regions. These regions oould use th a t m oney on building th e ir ow n in v estm en t funds. The th ird fe a tu re involved changes in the determ inatio n of th e underdeveloped area. The te rrito ry of S erb ia as w ell as some p a rts (counties or com m unities) of C roatia and ev en Slovenia w ere added to th e previous th re e republics. The last changes lasted only two years and in the last y ear of th e period (1956), special tre a tm e n t w as lim ited to only tw o regions — M ontenegro and M acedonia. D espite th e above changes, the allocation of funds for faste r develo pm ent of underdeveloped regions (both subsidies and credits) w as done in th e w ay typical of a centrally planned economy. Subsidies and credits w ere al located ad m in istrativ ely for in vestm en t projects selected by th e c e n tral governm ent. This w as done in th e last tw o years by th e G en eral In vestm ent Fund, th e cen tral in stitu tio n created especially fo r financing prioritized investm ents.
The regional policy of th e firs t po st-w ar period did n o t succeed. The gap in national incom e p er capita betw een th e developed an d u n d e r developed regions increased (see Table 2). The num bers also show th a t all ag ricu ltural regions, both developed and underdeveloped, had low er rates of economic grow th. T h at is w hy th e new fiv e-y ear plan of 1957— 1961 p u t special em phasis on the th re e m ainly ag ricu ltu ral regions (i.e. S erb ia
Tab. 2. P er capita n a tio n a l in com e by region in 1947 and 1956 * asa p ercen t of th e Y u goslav average)
D ochód n arod ow y per capita w regionach J u g o sła w ii w 1947 i 1956 r. (w p rocentach śred n iego poziom u dla kraju)
1947 1956 In crease in n a tio n a l incom e p er capita, 1947— 1956, 1956 = 100 Y u goslavia 100 100 134.7 Croatia 104.8 119.8 153.9 S loven ia 157.2 187.9 161.0 Serbia proper 102.5 88.2 115.9 V ojvodina 126a 106.1 113.4 D evelop ed regions 114,-1 119.6 141.2
Bos nia - Her zegovin a 71,4 75.5 142.5
M ontenegro 52.7 61.5 157.2
M acedonia 69.4 71/.3 138.5
K osovo 58.1 45.7 105.9
U n d erd evelop ed regions 67.5 59.5 118.7
* In con stan t (1959) dinars.
Source: M. Jeldć. K r it e r i ji , m e t o d i i o rgan izacija in d u s tr i a li z a c i je m e d o v o l n j o
r a z v ije n i h p o d r u c j a J u g o sla vije. Beograd: S a v ezn i zavod za p rivred n o p laniranije,
E volu tion o f th e R egional P o licy of Y u g oslavia (1945— 1990) 19
proper, V ojvodina, and Kosovo). It w as also th e firs t tim e w hen help was exten ded to an area sm aller th an a republic (Kosovo).
The second fiv e -y ea r plan in itially covered th e period 1957— 1961; b u t th e objectives of th e p lan w ere realized a y e a r e a rlie r in 1960. This period w as characterized by so-called ’’guaranteed in v estm en ts” w hich w ere aim ed a t stabilizing th e additional sources of funds and increasing efficiency. The system w as created to address the volatility of th e sources of add itional funds in th e one y ear plans. The new system guaranteed sources only for tasks designated by cen tral decisions w ith specified location and s tru c tu re of in v estm en t as w ell as accepted exp end itures. It w as still centralized b u t w ith its long-term p rio rities and long-term guarantees, it allowed th e use of sources m ore efficiently and w ith g rea ter responsibility on th e p a rt of th e underdeveloped regions.
M ARK ET R EFOR M S A N D R EG IO N A L PO LIC Y
In th e early sixties, Y ugoslavia experienced radical changes in its economic and political stru c tu re . The firs t of these changes occurred in 1961. S ta te m onopolization of foreign tra d e w as abolished. Instead of m any exchange rate s for d in ar (Yugoslav currency) one w as introduced. The finan cial system w as reconstructed, and th e tra d e -u n io n ’s control over th e level and d ifferen tiatio n of wages was abolished. The last changes occurred in 1965. In v estm en t funds w ere tra n sfe rre d from th e cen tral and cen trally controlled in stitu tio n s to en terp rises and banks. The role of the G eneral In v estm en t F un d w as replaced by th e banks in 1965. As a result, th e particip atio n of public sources from various levels of governm ent in th e to ta l in v estm en t of th e socialized sector decreased from 67.2% in 1960 to 15.5% in 1970. In the sam e period the p articipatio n of bank credits increased from 0.9% to 51.1% (25).
The reform s w ere reflected in th e regional policy of th a t period w hich consisted of tw o elem ents: i y ’g u aran teed in v estm en ts” begun in th e p re vious period; 2) a new ly created fu n d — th e Federal F und for Develop m en t of U nderdeveloped Regions. This F und, created by th e F ed eral act on th e p lan of socio-econm ic developm ent in 1961— 1965, w as a p a rt of th e G en eral In v estm en t Fund. The m ost im p o rta n t change was the full connection of th a t F u n d w ith underdeveloped regions. The au tho rities of th e underdeveloped regions w ere using credits from th e F u nd on th e basis of in v estm en t efficiency. They w ere giving credits in accordance w ith th e g en eral credit sy stem th a t existed in th e ir territo rie s. T here w ere some restrictio n s related to th e Fu n d — such as th e general instructions on how to utilize th e F und sources. The F und financed fa ste r developm ent
20 S ła w o m ir G rzegorz K ozłow sk i
of M ontenegro, M acedonia and Kosovo, as w ell as some p arts of Serbia p roper, B osnia-H erzegovina and Croatia.
T he m ost significant change related to th e creation of the F und was th e decentralization of in v estm en t and th e sh ift of inv estm en t m anage m e n t from the cen tral g overnm ent to the regions. In 1961— 1965, sources fro m th e F und form ed 48.6% of th e to tal am o un t of help fo r the economy of underdeveloped regions. This played an im p o rta n t role in th e ir de velo p m ent constituting 14.3% of total in vestm ent pred icted for these regions for 1961— 1965 (40).
The problem s of th e underdeveloped regions rose as one of th e p rim a ry economic concerns d u rin g th e early sixties. As a result, the new Yugoslav C o nstitution of 1963 declared th a t th e Federatio n w ould en su re th e sources fo r faste r developm ent of underdeveloped regions. The sam e C onstitution also described th e obligation of th e F ed eratio n (F ederal budget) to su p p o rt a p ro p er level of public goods and services in th e underdeveloped regions. I t w as th e beginning of a new Yugoslav regional policy, th e essence of w h ich survived u n til 1990.
C onstitutional settlem ents w ere developed in 1965 in th e form of a special legal act on th e creation of the F ed eratio n ’s F u n d for C rediting th e F a ste r D evelopm ent of th e Econom ically U nderdeveloped Republics and A utonom ous Provinces, published in Sl uzbeni list SFRJ, 1965, no. 8. It w as th e re su lt of th e previous experien ce w hich show ed th a t elim ination of regional differences is a very long process. On th e o th er hand, a con tin u a tio n of previous m ethods w ould be incom patible w ith the new eco nom ic system created by th e refo rm of 1965.
W hat w ere th e guiding principles of the Fund w hich existed tw e n ty five y ears w ith only m in or changes?
T he firs t w as th e separation of th e F u n d ’s resources from *the g eneral ru le s of th e cred it allocation. These resources w ere th en sent to aid th e econom ies of underdeveloped regions.
The second was a re stric tio n on th e area w h ere th e F ed eratio n could use these financial resources. It was restricted to republics and autonom ous provinces, w hich did n o t have th e ir ow n possibilities of th e p ro p er ^fecor nom ic developm ent. These regions w ere incorporated into fiv e -y ea r plans b y fed eral a c ts 'a n d consisted of: Bosnia-H erzegovina, M ontenegro, M a cedonia and Kosovo.
T he th ird w as th e assurance of stable sources fo r th e Fund. It w as in response to one of w eaknesses of th e policy of previous periods, nam ely th e in stab ility of th e sources and scope of help fo r th e underdeveloped regions. The basic source of th e F und rev enu es w e re paym ents of th e socialized sector w hich d u rin g tw e n ty five years evolved from th e ir in itial form s of com pulsory subsidies to obligatory credits o r in la te r periods
E v o lu tio n of th e R egion al P o licy of Y u g oslavia (1945— 1990) 21
jo in t v en tu res. The sam e fed eral acts (m entioned above) also established th e p ercen tag e of social prod u ct th a t th e socialized sector w as obliged to pay fo r th e F e d e ra tio n ’s F und (16). This w as one of the m ost im p o rta n t changes in com parison w ith previous periods. The new resolution w as based o n th e co n sta n t pro po rtio n of funds for faste r developm ent of th e underd ev eloped regions to th e social pro d uct of socialized sector. As a resu lt, th e am o u n t of th e F u n d ’s resources w as strictly co rrelated to th e g e n e ra l level of economic developm ent of th e cou ntry (4).
To achieve accelerated developm ent of underdeveloped regions, th e F ed eral a c t established in th e firs t fiv e-y ear period (1966— 1970) com pulso ry pay m en ts of 1.85% of th e social pro d uct of th e socialized sector. T h at am o u n t w as paid by socialized en terprises in all (developed an d underdeveloped) regions. It form ed a p a rt of th e o bligatory p aym ents of in te re s t on fixed assets collected for in v estm ent purposes by th e F ed e ra tion. T he F u n d ’s help came in the form of low -cost credits. ’’According to this solution th e credit relationship existed in this period only betw een th e F ed eratio n and underdeveloped regions [...]” (4). A uthorized com m ercial in v estm e n t banks in p articu la r underdeveloped regios gave fin a l users (enterprises) v ery low -cost credits. Therefore, th e sources of th e F und w e re n o t lim ited to o bligatory p aym ents (called fixed sources) b u t it also included so-called an n u al revenues from rep aym ents of given credits. O th e r sources included in te re st on given credits and in te re st on p a rts of th e F u n d located in banks.
T h e rev e n u e s of th e Fund w ere regulated by F ed eral law, b u t its d istrib u tio n w as defined by th e F u n d ’s board of governors w hich consisted of a p resid e n t and tw elve m em bers. The p resid en t and six m em bers of th e bo ard of governors w ere nom inated by th e Yugoslav federal p a rlia m ent, th e rem a in in g w ere delegates from th e six fed eral republics. I t is th en obvious th a t the c e n tra l a u th o rity played a dom inan t role. In ad di tion th e d ire c to r of th e Fund w as an e x officio m em ber of th e governing body.
In th e firs t fiv e -y ea r period, th e credits from th e F u nd w ere to be d istrib u te d in th e follow ing proportions: B osnia-H erzegovina — 30.7% M on tenegro — 13.1%, M acedonia — 26.2%, Kosovo — 30.0%. The real p ro p o rtion s w ere d ifferen t. Bosnia-H erzegovina received 28.9%, M ontenegro — 18.3%, M acedonia — 24.6%, and Kosovo — 28.2% (6, 18).
The creatio n of th e Fund did not m ean th e elim ination of th e regional policy of th e F ederation. The F und w as created as an active in stitu tio n w ith th e aim of influencing th e developm ent of underdeveloped regions. F o r exam ple, d u rin g th e firs t planning period, th e F und influenced th e econom ic d evelopm ent of th e underdeveloped regions by varyin g cred it conditions. The credits, called directed (special), w ere offered a t a low er
22 S ław om ir-G rzegorz K ozłow sk i
in terest ra te and a t m u ch longer term s of rep a y m en t th a n th e g eneral ones (2% and 20 to 30 years versus 4% and 15 years). However* th e y w ere lim ited to specific, kinds of investm ents such as in fra stru ctu re , production of energy, m etallurgy, b a sic chem ical industry, and p a p e r in d ustry , etc. All of these are capital-in ten siv e industries rela te d strongly to the n a tu ra l resources of underdeveloped regions. Those cred it conditions stro n g ly i n fluenced th e stru c tu re of in v estm en t in underdeveloped regions. In 1966— 1969, directed cred its constituted 90% of th e F u n d ’s to tal cred its w hen general credits and sm all credits fo r technical and personnel h elp w ere lim ited to 8% (18).
In 1966— 1970, th e in te re s t ra te averaged 2.1%, and th e perio d of rep ay m en t w as equal to 19.5 y ears and s ta rte d 36 m onths a fte r th e end of th e y e a r fo r w hich th e loan w as g ran ted (grace period). T his m eant, favorable cred it conditions especially w hen w e com pare them w ith the inflation rate of 10% p er annum .
E VO LU TION OF THE FU N D SIN C E 1970
The 1971— 1975 fiv e-y ear plan b ro u g ht some organizational changes in- the Fund. As a resu lt of Kosovo’s dem and, tw o m em bers w e re added to th e board of directors. Therefore, n ot only republics b u t also auto nom ous provinces (all eight regions) w ere d irectly rep resen ted (30). An im p o rtan t m odification w as m ade in th e F u n d ’s rev en u e accum ulation procedure. The previous form of obligatory pay m en ts w as replaced by com pulsory loans co n trib u ted to th e F und by e n te rp rises o f socialized sector. In th e ea rlie r period, underdeveloped regions used th e F u n d ’s resources u n d e r th e cred it conditions b u t on th e o th e r hand, rev enu es from th e socialized sector w ere in its possession forever. As a result, m eans of th e F u n d increased stead ily and could increase th e scope of help for u nd erdeveloped regions (repaym ents of cred its sum m ed up w ith obligatory pay m en ts from socialized en te rp rises and co n tin u ally increased th e total am o u n t of funds). The new procedure d rastically lim ited the. increase of F und resources. The form s of fed eratio n help w e re restric te d to the advantages w hich resulted from low in te re st rate s and long periods, of repaym ent. G enerally, th e new procedure m ea n t a d ecrease in th e particip ation of econom y as a w hole in resolving problem s of u n d e r developed regions.
In practice, th e change was realized by th e issuance of obligatory bonds w hich th e en terp rises of th e socialized sector had to buy. Emission of th e bonds w as to approach crediting of th e F un d to m a rk e t con ditions (24).
E volu tion of th e R egion al P o licy of Y u g o sla v ia (1945— 1990) 23
The second im p o rtan t change, introduced in 1970, w as the tre a tm e n t of KoSovo. As in th e previous period, th e Federal act designated th e same four underdeveloped regions, i.e. B osnia-H erzegovina, M ontenegro, Ma cedonia, and Kosovo. Also, th e F u n d ’s governing body decided how to divide its m eans am ong u nderdeveloped regions. H ow ever, th e Federal act gave special tre a tm e n t to Kosovo, w hich rem ained to 1990. B etw een 1970— 1990 Kosovo got funds in tw o ways. F irst, it received th e am ount established as a p roportion of social product generated by th e socialized sector (0.09% of social product). Second, it received a p a rt of th e resources collected by th e F und for all underdeveloped regions and divided pro p o rtion ately by th e governing body. In 1971— 1975, th e special tre a tm e n t given to Kosovo increased its p articipation in th e total aid from th e Fund from 30% of its basic sources (established in th e 1970’s from 1.85% of social product of socialized sector) to 33.3% in total. The sum of funds at th e disposal of Kosovo increased by 16.2%. The m eans of th e F un d w ere in th a t period d istrib u ted u ltim ately as follow s: B osnia-H erzegovina — 32.4%, M ontenegro — 11.4%, M acedonia — 22.9%, and Kosovo —
33.3% (16).
A n o th er change in this period Was an alteratio n of th e F ed eratio n ’s prio rities' in th e form s of v ariatio n of cred it term s. The F und ceased to play an y active role in establishing tren d s of investm en t or utilizing of credits. The same cred it conditions w ere assured for all kinds of invest m en t (23). O nly Kosovo, because of its enorm ous developm ental diffi culties enjoyed b e tte r cred it term s. Both m odifications, th e sam e con ditions for all kinds of in v estm ent and b e tte r cred it term s fo r Kosovo becam e th e stable elem ents of th e Fu n d and survived to 1990. In 1971— 1975, th e general cred it term s w ere as follows: in te re st — 4%, period of rep a y m en t — 15 years, grace period — 3 years a fte r th e end of th e y ear of crediting. F o r Kosovo th e sam e term s w ere: 3%, 19 years and 3 years. A t th e sam e tim e th e Fund repaid th e obligatory loans u n d er th e follow ing conditions.: in te re st — 4%, period of re p a y m e n t— 12 years, grace period — 3 years (6). It m eans th a t credit term s w ere b e tte r for lending en terp rises th an for th e Fund. In o th e r words, the F und had to cover th e losses w hich resu lted from a difference in th e conditions of borro w ing m oney and th e conditions of lending it for underdeveloped regions. The losses w ere covered from resources accum ulated in th e p re vious period.
The positive ev alu ation of th e F und was reflected in the new Yugoslav C onstitution of 1974. A sep arate article, 258, w as w holly devoted to the Fund.
Again, in th e second h a lf of th e seventies, some changes in th e organiza tion of th e F und w ere made. The new sta tu te converted th e F und into an
24 S ła w o m ir G rzegorz K ozłow sk i
inter^republican agency. The n u m b er of m em bers of th e b o ard of di rectors was reduced to eight w ith one delegate from each of th e eight regions (30). This m ean t an increase in the role of th e regions, at the expense of th e federal governm ent. The F ed eral act of 1976— 1980 allowed th e realization of p a rt of the obligations of en terprises from th e socialized sector in a com pletely new form . Instead of o bligatory loans, 20% of th e F u n d ’s to tal rev en u es w as to be secured by th e self-m anaged pooling of labo u r and resources of th e socialized sector. Instead of p ay in g an obligatory loan w ith low interest, an e n te rp rise could use th a t cap ital to organize in th e underdeveloped region a new productive capacity to g eth er w ith th e e n te rp rise from this region. T h at facility w ould ensure th e investor n o t only in te re st b u t also the d eliv ery of m aterials, assem bly p arts as w ell as allow for g re a te r specialization, utilization of economies of scale, etc. This solution was to increase th e efficient utilization of financial help for th e underdeveloped regions. In accordance w ith the idea of self-m anagem ent, it also w as to sh ift decision m aking to e n te r prises, i.e. th e real creditors.
For the pooling of resources th ere w ere preserved all advantages related to th e F u n d ’s credits such as long periods of re p a y m e n t (8— 12 years w ith 3 years of grace period), a low in te re st ra te (4— 12 percent) and w a rra n te d resources (4). In la te r periods this m ethod becam e common practice.
In th e analyzed period, th e planned p articip atio n of 20% of pooled resources w as not realized. The failu re resulted from a lack of p rep aratio n on th e p a rt of the en terp rises from developed regions to com bine th e resources w ith organizations from underdeveloped areas. T herefore, alm ost all aid w as fu n neled th ro u g h obligatory loans and F und credits. T he pooled resources consisted of only 2.2% of th e total obligations to the F und (38).
O ther featu res of th e F und w ere sim ilar to th a t of th e prev iou s period. H ow ever, th e special tre a tm e n t of Kosovo w as increased. T h e Yugoslav p arliam en t decided to devote 0.17% of the social p ro d u ct d ire c tly to Ko sovo and 1.80% to all fo u r underdeveloped regions. Also, th e F ederal p arliam en t decided to exclude 0.03% of social pro d u ct from g en eral funds (1.80% of social product) and devote it on th e basis of a m u ltila te ral agreem en t to financing a hy d ro -energetic system Ibar-L epenac. T herefore, th e to tal fu n ds w ere d istrib u ted as follows: 1.77% of social p ro d u ct fo r all fo u r regions, 0.20% fo r Kosovo (0.17% fo r g en eral needs a n d 0.03% fo r Ibar-L epenac system ). The d istrib u tio n of general fu nd s to th e fo u r u n d e r developed regions w as decided as before; by th e F u n d ’s governing body. M ost of th em w ere devoted to Kosovo and th e fin al d istrib u tio n of all funds w ere as follows: B osnia-H erzegovina — 30.5%, M ontenegro — 10.8%,
E volu tion of th e R egion al P o licy of Y u g o sla v ia (1945— 1990) 25
M acedonia — 21.6%, and Kosovo — 37.1%. The sh are of Kosovo increased b y 11.6% in com parison w ith th e previous 5 -y ear period (4).
T he general c re d it term s w ere as follows: in te re st 4.166%, tim e of re p a y m e n t 14 years. Conditions for Kosovo w ere b e tte r: in te re st of 3%, and a period of rep ay m en ts of seventeen and a half years. The term s for o b lig ato ry loans co n trib u ted by en terp rises of th e socialized sector w ere d ifferen t, as in previous years. The F und paid th em 4% in te rest w ith a rep a y m en t of 15 years. We can see th a t th e differences betw een credit term s fo r lenders an d conditions fo r borro w ers (underdeveloped regions) w ere n o t as su b sta n tia l as before. The F und could no t cover these d ifferences for increased sum s of credits. The resulted financial b urd en of 2.4 billion d in ars th a t accum ulated in 1971— 1975 w as in th e n e x t period tak en o v er by th e F ed eratio n (18). The beginning of repay m en ts sta rte d fo r all d eb tors (including Kosovo), as w ell as lenders th re e years a fte r th e end of th e year o f crediting o r lending. T he sam e principle existed d u rin g all of th e follow ing periods.
T he firs t h alf of th e eighties did n o t brin g any essen tial change to th e Fund. T he basic principles rem ained th e same. G en eral resources of th e F und w ere form ed a t a ra te of 1.50% of th e social p ro du ct g enerated by th e socialized sector and an additional 0.33% of th a t pro du ct w as devoted solely to Kosovo. F or both p a rts of th e Fund, 50% of th e total w as to be secure u n d e r obligato ry loans and th e o th e r h alf by pooling of labor and resources of econom ic units. As in th e previous period, th e fed eral govern m en t allow ed to utilize up to 100% of th e obligations by pooling procedure (th erefo re 50% p redicted b y th e law can be tre a te d as a planned m inim um ). The realization of th e p lan of pooling resources w as m uch b e tte r in 1981— 1985 th a n in th e previous five years. B ut 50% of th e planned to tal obliga tion (185.5 billion dinars) w as n o t realized. O nly 101.7 billion dinars (54.2% o f p lanned am ount) w as utilized in th is w ay (4). Like before, K o sovo received additional resources of 0.03% of th e social p ro du ct for th e Ibar-L ep enac system . Therefore, th e p articip ation of Kosovo in th e F u n d ’s g en eral resources, w hich w as 30%, increased to 43.5% of th e to ta l F u n d ’s resources. The propo rtio ns fo r o th e r regions w ere as follows: Bosnia- -H erzegovina — 27.4%, M ontenegro — 9.7%, and M acedonia — 19.4% (9).
C red it term s a lread y allow ed fo r rep a y m en t of all o bligatory loans b y th e F u n d ’s own revenues. F o r lenders th e re w as a 5% in te re st ra te and a 13 year term of rep ay m en t. F o r borro w ers th e rate s w e re 5.5% (for th re e regions) an d 4.5% (for Kosovo), and th e term s of rep a y m en t 12 o r 15 y ears respectively (20).
The term s fo r th e p a rt of th e resources pooled on th e basis of agreem en ts betw een en terp rises from developed and underdeveloped
26 S ła w o m ir G rzegorz K ozłow sk i
regions w ere fixed by p arties to th e contract. Also, these co ntracts ge n e ra lly offered beneficial cred it term s.
The last five years p rio r to 1990 b ro u g h t only a few m odifications to th e idea and in stitu tio n of th e Fund. The -tendency to increase th e pro p ortio n of funds accum ulated by th e pooling of resources from de veloped and ’underdeveloped regions on th e self-m anagem ent basis w as stren g th ened . The 1986— 1990 plan stip ulated th a t from th e F u n d ’s total resources form ed as 1.56% of th e social p ro du ct of th e socialized sector, 60% (50% for Kosovo) w ould be obtained th ro u g h th e pooling of labor a n d resources and th e rest th ro u g h obligatory loans. As before, th e p la n p e rm itted to increase th a t p roportion if in terested economic u n its decided to do so (29). In th e last few years, th e p ro p o rtio n of pooled resources in th e F und w as m uch g rea ter «than in th e previous period. In 1986— 1988, 57.8% of th e F u n d ’s to tal resources w ere obtained th ro u g h th e pooling procedure. For Kosovo th is proportion w as low er (56.7%), b u t in 1988 this region also achieved th e sh are stip u lated by th e p lan (60.5%). M ost of th e agreem ents, w ere p rep ared on th e basis of c re d it and no incom e share. This m eans th a t th ey did n o t o ffer th e special ad vantages of jo in t v en tu res and played a role sim ilar to re g u la r credits fro m th e
F u n d (13). . f
• Jo in t v e n tu re s of developed and underdev elop ed regions m ean a com
pletely d iffe re n t q u a n tity of,help. The possibility of using m o d em tech n o logy, know -how , and professional assistance form a p a rt of these form s w h e re reg u lar credits o ffer only financial aid. T herefore, th e in stitu tio n of in terreg io n al jo in t v en tu res (pooling labor and resources in official Yugoslav term inology) w as included into th e Yugoslav C onstitution (A m endm ent X X X IV of 1989) as a p a rt of th e F u n d ’s duties. ”In co n trast to th e previous form ulation (article 258 of the SFRY C onstitution), the fed e ra l F und is to stim u late economic d evelopm ent in underdeveloped republics and autonom ous provinces not only by credits b u t also in o th er w ays. The Fu n d has th e d u ty to stim ulate for this purpose th e pooling of lab or and resources by organizations of associated lab or.” (35).
These w ere not th e only changes m ade in th e last discussed period. One novelty of th a t period w as related to th e special d u ties of th e Republic of Serbia. According to th e new law, th e portion of resources form ed in h e r te rrito ry and devoted to th e faste r developm ent of Kosovo should be realized d ire c tly th ro u g h th e pooling of lab o u r and resources of en te rp rises fro m th e tw o developed regions of th e republic (Serbia p ro p er and Voj- vodina) and resources of organizations from Kosovo. To realize th is plan, th e p arliam en ts of S erbia and tw o its provinces p rep ared th e social ag reem en t (38). The resources of th e F und w ere to be d istrib u ted in the follow ing m an n er: Bosnia-H erzegovina — 25.2%, M ontenegro — 8.9%,
E volu tion of th e R egional P o lic y of Y u g o sla v ia (1945— 1990) 27;
M acedonia — 17.8%, and Kosovo — 48.1% (9). In o rd er to stim ulate in-, vestm ent, changes in th e fiscal policy w ere also prepared. On the basis of, th e ag reem en t of all republics and autonom ous provinces, all e n te r prises w ere released; from paying income taxes on th e p a rt of incom e invested in underdeveloped regions (29).
As w as previously explained, th e Fund w as steadily losing its active role in th e regional policy. In th e last years, its real influence w as lim ited alm ost com pletely to the establish m en t of th e proportion of funds d istrib u tion. The o th er functions w ere lim ited to bookrkeeping activities. In 1990 m o d erate effects of the long-term regional policy caused the correction- in th e approach to this institution.. In th e program of economic reform for th is year p rep ared by Y ugoslav; F ederal E xecutive Council, th e tra n s form ation of th e F und was predicted. ’’This tran sfo rm atio n is designed; to effect ad ju stm en ts, to ne?w socio-economic relatio ns in w hich jo in t ven tu res, on th e principle of shared risk... are designed to become th e : prin cip al m ethod of accelerating th e developm ent of econom ically u n d e r developed republics and SA P Kosovo... In th e system of accelerating econom ic grow th, t h e 1 F ederal F und as th e principal in stru m e n t in th e im p lem en tatio n of this policy w ould be tran sfo rm ed into an in stitu tio n in an active developm ental role, whose basic functions w ould be to stim ulate, coordinate, provide inform ation and c a rry o u t control. In this, sense, organizational m echanism s of th e tran sform ed F ed eral Fund w ould req u ire th e existence of a federal agency, a n etw o rk of agencies in th e rep ub lics and provinces, w hich w ould stim u late economic agents to. inv est in econom ically underdeveloped republics and SA P Kosovo.” (28). The activ e role of th e new F u n d ’s agencies w as to be perform ed by w orking o u t c riteria for in v estm en t subsidies, developing m ethods and procedures of p ro ject evaluation, po-financing investm ent, p articipatin g in education of e x p e rt personnel, g ran tin g professional and 'technical assistance, etc. T his w as a re tu rn to th e ideas of th e first period of th e F u n d ’s activity (1966— 1970) w hen cred it term s w ere d ifferen tiated according to field of in vestm ent. On th e .other hand, th e d ifferen tiatio n of term s had been p re p a re d a d m in istra tiv e ly in th e late sixties, w hen new regulations w ere a d ap ted to m ark e t principles (28).
OTHER FORM S OF R EG IO N A L PO LIC Y
The m ost im p o rtan t and best developed form of the Yugoslav regional policy w as th e Federal Fund. T here w ere also o th er form s. D uring all periods, th e ad hoc form s w ere organized to help p a rticu la r regions or, p ro jects of special im portance to them . B ut one stable in stitu tio n of g rea t
28 S ła w o m ir G rzegorz K o zło w sk i
influence existed since W orld W ar II. T here w ere social sources devoted for financing social services in underdeveloped regions, created as a p a rt of th e federal budget. In 1963, th e obligation to create those k in d of sources by th e F ederation w as firs t introduced in to th e C onstitution (A rticle 123). In th e C onstitution of 1974, it becam e a p a rt of a d istin ct article, 258, w hich w as w holly devoted to underdeveloped regions. The F ederation had to secu re necessary sources for regions (republics and autonom ous provinces) w hich could n ot finance th e ir social services from th e ir ow n sources. The F ederal act w as to describe conditions fo r this aid (5, 17).
In th e late seventies, a new ru le to stabilize resources from th e federal b u d g et w as adopted. Nam ely, these resources w ere allocated on th e basis o f th e established percentage of th e social p roduct of Yugoslavia. This ru le established a connection b etw een th e am o un t of available resources and th e actual state of th e Yugoslav economy. It also allow ed fo r the continuous supply of funds even du rin g periods of high inflation. The basis on w hich the resources w ere determ ined w as w id er th a n th a t for th e F ederal Fund, since it included th e p riv a te sector. How ever, this did n o t m ake m uch of a differen ce because th e Yugoslav econom y w as m ostly socialized (the particip atio n of p riv a te sector in th e Y ugoslav social p ro d u ct w as equal 21.2% in 1965, and 13.0% in 1988).
In con trast to th e Fed eral Fund, the additional source of financing social services w as organized as n on -rep ay ab le con tribu tion s from m eans sep arately classified in th e F ederal budget. These resources w ere divided in to th e general contributions intended for financing social services in all underdeveloped regions and contributions w ith p rea rra n g e d recipients. T he first p a rt w as d istrib u ted am ong all fo u r regions w ith th e general purpo se of m atching th e ir levels of consum ption w ith th e level of con su m ption in th e region closest to th e Y ugoslav average — in p ractice w ith S erb ia proper. The second one w as designated for special purposes in selected regions. D uring th e 25 years tw o regions w ere b en efitted by this in stitu tio n : Kosovo (for developm ent of th e m aterial basis of social services) and M ontenegro (by reason of its sm all n u m b er of in h ab ita n ts and resu lted in sm all d en sity of population). The sum s of these c o n tri
b u tio n s circu lated at about 0.1% of th e overall social p ro d u ct of th e
Yugoslav economy (17).
It is im p o rta n t to em phasize th a t additional co ntributions for financing social services in underdeveloped regions expanded th e ir possibilities fo r fa ste r economic developm ent. This additional financing n o t only allow ed fo r th e construction of objects fo r social services b u t also fo r th e release of th e ir ow n accum ulation fo r in v estm en t and developm ent of the econo m y. In this w ay th e in stitution of additional financing of social services
E v o lu tio n o f th e R egion al P o lic y of Y u g o sla v ia (1945— 1990) 29
Tab. 3. A d d ition al resou rces (gen eral and prearranged) of th e Y u g o sla v fed eral budget d irected for fin a n cin g social serv ices in u n d erd evelop ed regions and th eir
disb u rsem en t
D odatkow e środki budżetu fed era ln eg o (ogólne i o sp ecja ln y m przeznaczeniu) s k ie row ane na fin a n so w a n ie u słu g so cja ln y ch w region ach sła b o ro zw in ięty ch i ich
podział
Y e a r s
1966— 1970 1971— 1975 1976— 1980 1981— 1984
S hare of ad d ition al resources in social product (in percent)
0.9 * 0.83 0.93 0.79 **
Share of u n d erd evelop ed regions in total v a lu e of ad d ition al B o sn ia -H erzeg o v in a
resou rces (in percent)
40.6 40.3 35.8 29.8
M ontenegro 11.4 10.4 12.4 11.1
M acedonia 20.5 18.5 16.3 13.6
K osovo 27.5 30.8 35.5 45.5
* WIith th e e x c e p tio n of 1963 w h e n th e share w a s 1 percent.
** A v era g e for 1981— 1985. T h ese sou rces am ounted to 0.85 p ercent o f the
social product in 1981. A llo ca tio n s for ev e r y su b seq u en t yea r u n til 1985 w ere reduced by 0.03 percent.
S ources: B la g o v ca n in e t al. (1986), pp. 36—38; J u g o s l a v ia ..., pp. 194— 195, K o zło w sk i (1982), pp. 91— 92.
also becam e an in d irect form fo r stim u latin g fa ste r economic developm ent (4). The role of th a t additional financing can be seen properly if w e rem em ber th a t in various years, it constituted betw een one th ird and a h alf of to tal v alu e of th e F ed eral Fund allocated for faste r economic developm ent of underdeveloped regions.
The accum ulation and d istrib u tio n of aggregate resources (both general contribu tio ns and co n trib u tio n s for p rea rra n g e d targ ets) for additional financing of th e social services in underdev eloped regons is p resen ted in Table 3. It is im p o rta n t to add th a t d ifficu lty in accum ulating adequ ate am ounts of m oney by th e F ed eral budg et in th e last decade lim ited the real scope of help for social services in u n derdeveloped regions (16).
G enerally, th e o th e r in stru m e n ts of aid fo r u nd erdeveloped regions had an irre g u la r and u n stab le ch aracter. Therefore, a fu ll discussion of them w ould be too detailed. L et’s tu rn o u r a tte n tio n to tw o form s w hich accom panied th e Yugoslav regional policy in 1965— 1990 in d ifferen t degrees. One w as foreign credits and th e second w as th e e x tra o rd in a ry tre a tm e n t of th e least developed a re a — Kosovo. T he role of foreign credits in th e developm ent of underdeveloped regions grew system atically. The m ost im p o rta n t of th em w ere credits from th e In te rn atio n a l B ank for R econstruction and D evelopm ent (World Bank). In 1966— 1970, 33% of th em w ere d irected to underdeveloped regions. T h a t proportion in
30 S ła w o m ir G rzegorz K o zło w sk i
creased steadily d u rin g th e n e x t periods, and th e last fiv e -y ea r p lan (1986— 1990) stipulated 100% for these regions (4, 16).
The special tre a tm e n t of Kosovo displayed itself in d iffe re n t form s. F or exam ple, a fte r th e firs t five y ears of th e new regional policy (1966— 1970), the F ed eratio n took o v er some obligations of Kosovo connected w ith in te rn al and foreign loans. This and o th er sim ilar actions w ere also tak en in th e following periods. In 1981— 1985, all form s of e x tra o rd in a ry aid th e F ederation gave Kosovo v aried from 15.7% (in 1982) to 19.8% (in 1981) of combined sources of th e F ed eral Fund and federal co n tribu tion s for social services. These form s included resign ation from th e financial obliga tions tow ard th e F ed eratio n , rep ay m en ts of foreign credits by th e F e d eratio n , resignation from rep a y m n ts rela te d to th e F und or d e fe rrin g them , credits for circulating capital goods, and o th ers (16). T he o th e r regions som etim es particip ated in helping Kosovo, i.e. in 1981— 1985, th e ir no in te rest loan for th e F ederal F und allow ed Kosovo to d efer pay m en ts fo r the n e x t five years (4).
EFFIC IEN C Y OF R E G IO N A L PO LIC Y
How efficient w as Y ugoslavia’s regional policy? This question is v e ry d ifficu lt to answ er because of th e influence of m any en v iro n m ental factors which cannot be excluded from th e analysis. In th e case of th e Y ugoslav regional policy these factors w ere of special im portance. T he d rastic differences in th e level of economic developm ent, historic heritage, national differentiatio n , dem ographic problem s, and n a tu ra l resources all influenced th e economic outcom e. T herefore, th e sim plest m easu res such as social p ro d u ct are n ot sufficien t for this evaluation.
The efficiency of th e policy can be m easured by changes in th e position of th e regions in th e Yugoslav economy. A sim ple m easu re of th e success, of th e policy is th e change in proportion of th e social p ro du ct realized1 in a p a rticu la r region to th a t of the social p ro du ct in the Yugoslav econom y as a whole. These proportions show th a t th e gen eral task of th e Yugoslav regional policy was n o t realized (see Table 4). In th e postw ar period th e underdeveloped area as a w hole decreased its p ro p o rtio n in th e overall social product instead of targeted increase. The decrease of less th a n one percentage p o int is n ot su b stan tial y e t contradicts w ith the declared policy. This decrease is fully associated w ith th e period of central plann in g and centrally d istrib u ted and controlled funds. T he perio d since 1965 w hen th e F ederal F und functioned b ro u g h t sm all im p ro v em en t in th e position of underdeveloped regions. The p ictu re is sim ilar if w e use c u rre n t instead of fixed prices.
E volu tion of th e R egion al P o lic y of Y u g o sla v ia (1945— 1990) 3 Ï
Tab. 4. S hare of rep u b lics and autonom ous p rovin ces in social product of Y u g o sla v ia (in percent) *
P ro cen to w y udział rep u b lik i obw od ów au ton om iczn ych w produkcie sp o łeczn y m Ju g o sła w ii 1947 1955 Y e a r s 1965 1975 1988 C roatia 25.0 28.0 26.5 26.0 25.4 S lo v en ia 14.9 15^3 15.6 17.1 16.7 Serbia proper 25.2 23.9 24.9 24.4 25.0 V ojvod in a 10.5 9.4 11.0 10.7 10.4 D ev elo p ed regions 76.6 76.6 78,0 78.1/ 77.5» B o sn ia -H erzeg o v in a 13.8 14.1 12.9 12.8 12.8 M on ten egro 2.2 1.9 2.0 1.8 2.0 M acedonia 5..1 5.3 5.1 5.6 5.6
U n d erd ev elo p ed regions 23.4 23.4 22.0 21.9 22.5
K osovo 2.3 2.0 2.0 2.2 2.2
* In con stan t (1972) dinars.
Sou rces: B lagovöan in et al. (1986), p. 85; J u g o s l a v i a . p. 204; S t a t is ti ë k i g o d iś n ja k
J u g o s l a v ij e 1989, p. 424.
The general p ictu re is incom plete w ith o u t some com m ents a b o u t p a rtic u la r regions. In 1988, m ost of them sh ared sim ilar proportions of social product as th ey did fo rty years ago. Two of them , one developed (Slovenia) and one underdeveloped (Macedonia) increased th e ir shares. Slovenia, the m ost developed region, considerably stren g th en ed its posi tion. It grew faste r th a n th e econom y as a whole, b oth d uring th e years of c e n tra l planning and in th e tim e of m ark e t oriented economy. The p a rtic u la r position of Slovenia is also confirm ed by a com plex m u lti-fa c to r analysis (3). M acedonia, w hich also im proved its position, is th e only underdeveloped region associated for a very long tim e w ith ligh t consum er in d u stry , especially tobacco, tex tiles (cotton) and food processing. L ow er cap ital intensiveness of these in d u stries allow ed for the m ore efficient utilizatio n of lim ited resources. It w as of p a rticu la r im portance a fte r 1970 w hen regions could freely decide on th e s tru c tu re of inv estm ent. T h e re fore, th e im provem ent in th e position of M acedonia is connected w ith this period (17).
The region th a t ev id ently lost its position in th e creation of social pro d u ct is Bosnia-H erzegovina. We can observe th e grad u al decrease in its position from th e late fifties. In th e early fifties, Bosnia-H erzegovina stre n g th e n e d its position as a resu lt of th e political situation. In 1948, a fte r th e b reak w ith S talin and K om inform , B osnia-H erzegovina, a region located inside th e co u n try fa r from all land borders, was tre a te d by Yugoslav leaders as th e safest place fo r new inv estm ent (17).
T h e situation of th e underdeveloped regions seem s m ore dram atic if w e m easu re it by social pro du ct p er capita (see Table 5). U nderdeveloped
32 S ła w o m ir G rzegorz K o zło w sk i
Tab. 5. Social product by region per capita (as a p ercep t o f th e Y u g o sla v a verage) * P rod u k t sp ołeczn y per capita w region ach (poziom J u g o ła w ii = 100)
1947 1955
Y e a r s
1965 1975 1988
C roatia 104.3 136.4 120.3 123.3 128.1
S lo v en ia 163w2 194.8 *83J 205.2 202.8
Serbia proper 100.5 a 01.2 96.3 97.7 loo.y
V ojvod in a 99.6 104.3 112.5 115.1 119.0 D evelop ed regions 100.9 123,7 117.8 122.2 125.9 B o sn ia -H erceg o v in a 85.8 9Ł7 71.7 65.8 67.7 M ontenegro 93.7 8G.0 76.3 69.1 74.2 M acedonia 70.3 76.2 66.6 68.0 62.a K osovo 49.3 47.4 36.5 33.4 27.1
U n d erd evelop ed regions 77,.2 81.4 65wl 60.6 58.5
* In con stan t (1972) dinars.
Sources: B la govcan in e t al. (1986), p. 87; J u goslav!ja..., p. 204; S t a t is ti ć k i g o d iś n ja k
J u g o sla v ije 1999, pp. 421, 424.
regions w hich did n ot im prove th e ir situatio n as m easured by th e ir particip atio n in th e to tal social product, w orsened it in term s of p ro du ct p e r capita. The loss of alm ost 19 percentage points (from 77.2% in 1947 down to 58.5% in 1988) m eans a drastic w orsening of th e ir position. The process is ch aracteristic of all postw ar years ex cluding a few years in th e early fifties. D uring th a t tim e, th e con cen tratio n of inv estm en t in Bosnia-H erzegovina im proved th e statistics for th e e n tire underdeveloped area. Com parison of d ata from Table 4 and 5 show s th e im portance of th e dem ographic factor in underdeveloped regions.
The above p ictu re is ra th e r pessim istic. T he declared goals w ere not realized and underdeveloped regions w eakened th e ir economic position as m easured by social pro d u ct p e r capita. It is also confirm ed (for th e sh o rte r period of 1952— 1979) by o th er rela te d m easu res such as p er capita personal receipts, household income, and w ages (11). B u t it does not m ean th a t w e can unequivocally evaluate th e Yugoslav regional policy. The following questions rem ain : W hat w ould th e situ atio n of underdeveloped regions be w ith o u t th e regional policy and to w h a t degree did th a t policy n eu tralize th e tendency to increase th e regional differences?
The answ er is n o t sim ple. T he long period of analysis, unusually com plicated social and economic structu res, th e lack of p ro p er statistical d ata — none of these allow for a fu ll and com parable p ictu re of th e Yugoslav economy, p a rticu la rly in its sp atial dim ension. The official
sources o ffer d a ta from various years, based on d iffe re n t prices, v ery often not com parable w ith others. The special prob lem is related to th e v e ry high rates of inflation (especially in th e last decade). For the last few years before 1990, th e statistics based on co n stan t prices are not available.
E volu tion of th e R egion al P o licy of Y u g o sla v ia (1945— 1990) 33
How ever, fra g m en ta ry inform ation allows for th e evaluation of the regional policy. The F und participated in th e to tal n e t in v estm en t a t 16.3% in 1966— 1970, 25.7% in 1971— 1975, 20.2% in 1976— 1980, and 22.1% in the firs t th re e years of th e eighties (for 1966— 1970 — c u rre n t prices, for o th er periods — prices of 1972). The low p roportion for th e firs t period was rela te d to organizational problem s (4, 17). T here is a lack of detailed inform ation related to th e role of th e Fund in p a rtic u la r regions. On th e basis of various data, th e role of additional sources allocated in th e u n d e r developed regions can be highly placed. In th e second h alf of th e seventies and the early eighties, th e Fu n d financed around 15% of gross in vestm ent in underdeveloped regions (from ab o u t 6% in B osnia-H erzegovina to m ore th an 50% in Kosovo) o r ab o u t 21% of n e t in v estm en t (in 1985, th e p a rtici pation in gross in v estm en t reached ab o u t 33% fo r all underdeveloped regions and 100% for Kosovo) (14). It m eans th a t w ith o u t th e F u n d ’s sources, underdeveloped regions could only achieve about 80% of th e ir actual ra te of grow th. In th a t case, th ey could n ot keep th e ir proportion m th e Yugoslav economy.
Tab. 6. G ross in v estm en t in fix e d a ssets as a p ercent o f social product of socialized secto r *
P ro cen to w y udział in w e sty c ji bru tto w środki tr w a łe w p rodukcie sp ołeczn ym s e k tora us połecznii oneg o
1952— 1965 P e r i o d 1966— 1975 1976— 1980 1981— 1987 Y u g oslavia 35.8 30.0 33.1 28.8 C roatia 30.3 26.5 30.0 20.4 S lo v en ia 29.4 24.6 28.3 18.1 S erbia proper 40.1 31.4 ' 30.3 21.5 V ojvod in a 25.9 24.7 34.0 19.7 B o sn ia -H erzeg o w in a 37.4 36.7 41.1 26.4 M n ten egro 74.8 49.0 57.1 35.8 M acedonia 64.4 37.9 37.2 18.3 K osovo 53.0 57.9 62.8 41.1
* In co n sta n t (1972) dinars. S ep aration o f th e period o f 1981—1987 is ju stified
by th e fa c t th a t in th a t period th e v a lu e of in v e stm e n t (in con stan t dinars) stea d ily d ecreased from year to year. T hat w as th e on ly such period in p o st-w a r Y ugo sla v ia .
S o u rces: J u g o s l a v ia ..., p. 203; S ta t i s t i c k i g o d is n ja k J u g o s l a v ij e 1989, pp. 424— 425.
The scope of help can also be m easured in an in d irect w ay (see T able 6). For th e postw ar period, th e p roportion of in v estm en t to the social p ro d u ct of th e socialized sector in th e underdeveloped regions was above th e Y ugoslav average. A t th e sam e tim e, ’’...the ra te of inv estm en t in developed republics and V ojvodina w as low er th an Yugoslav average th o u g h accum ulativ e and rep ro d u ctiv e possibilities w ere g re a te r fo r th em 3 A n n a l e s , s e c t i o H , v o l. X X V U E
