Economic_History_anim.gif (3797 bytes)  BULGARIA  

 

Bulgaria under command economy:
the three plans (1949-'60).


by Vassilis Andreoulakis

The transition to a socialist economy of the Soviet type came a bit later to Bulgaria than other E.E. countries. Most of them went into transition immediately after the war. Economists in Bulgaria believe that the transition was complete during the first two plans '49-'52 and '53-'57 but western economists believe that mainly during the third plan, '58-'60, Bulgaria picked up the soviet style. Each of these plans was aiming at extensive growth but only at specific branches of production. 

Bulgaria's first plan was a major contribution to economic development. An institution was created for the purpose of long-term planning of production. This function had been in government hands since '47. The state planning commision (DPK), came to power in 1948. Along with the main directorate of statistics (GDS), they managed to calculate income and plan fullfilment. Their main consern now was to cause rapid growth in the heavy industry by maximizing outputs and minimizing inputs. They promised heavy industry 47% of new economic investment and 17% to agriculture. Electricity and chemical production were to receive 45% of total inputs in industry. 

A huge increase was predicted (119%) for gross industrial output. The plan was fulfilled in 1952, one year before what was originally calculated. Although this increase was impressive, it could not provide all the supplies necessary for supporting the booming machinery sector, or to complete the national network for electricity. It remained unfinished and with a low quality of structures. Agriculture received 13% of the investment (instead of 17%) so the sector grew by only 11%. Subsequently other industries suffered as well.

The Chervenkov regime had a desire for heavy industrial growth for the next plan, but due to the failure of the first one they had to lower their expectations. During '53-'57 total investment was to double in the heavy industry of coal and iron extraction, but the greatest increases would go to agriculture, light industry, housing and education. A 40% rise in personal incomes was planned.

There were many obstacles to these plans of producing high quality outputs by using as little inputs as possible, efficiently. Even though investment funds were available for specialization, at low prices the Bulgarian food exports were discouraging. All imported machinery was out of date. Facilities for repairing these machines did not exist. Workers as well as managers were poorly trained. Those days, worth was not as important as party connections and credentials, if promotion was desired. Jobs in the public sector were pretty secure under that system, so there was no incentive for quality control. 

Between the years '48-'57, the industrial labor force more than doubled as well as the industrial management. Moreover, the 6000 firms that existed in 1946, had shrunk to 1650 by 1960 with an average number of employers 372 compared to the 24 average of 1946. A rapid merger of so many different firms, combined with all the inflow of new untrained labor, suggested diseconomies of scale. Facilities merged from previous existing units, were not productive enough to avoid high costs.

The "Chinese-style Great leap forward" was how the third plan, ('58-'60), was named by western economists. One of the great parts of this "leap" was a merger of pre existing collective farms into 957 giant units that each had 4500 hectares on average. Later on in the '70's, more agro-industrial complexes were created. The main goals of these plans had already been agreed upon by the central commity in April 1956. They were more conserned with fixing the things that went wrong due to the previous plans, like Chervenkov's centralism or the production of inputs-outputs for the heavy industry. Another major pressure created by the second plan was urban unemployment. Collectivisation had forced many peasents to move from the country to the main towns. There were also a lot of Artisans looking for work (most artisan shops had been nationalized), so supply of workers was way high. 

Overall, there were about 350000 job seekers by 1958. All these people had to be employed which was the reason for the huge growth targets set by the plan. By '59 some 140000 jobs were to be created followed by 400000 up to 1962. Also, the first large scale movement of bulgarian workers since the war took place. Some 10000 agriculture workers were moved to the Soviet Union for special projects. The council for Mutual Economic Assistance (cmea) for greater East European trade, had made Bulgaria responsible for food processing and agricultural growth as well as chemical fertilizers and small electronic equipment.

Overall, during the three plans ('48-'60), Bulgaria underwent some major structural changes. Industry's share of the net material product was 48% (from 23%). The collectivisation system had shifted a total of 678000 farmers (1/5 of all the labor force), into big towns. The annual increase in industrial employment was 11.5% on average during the last two plans. Moreover, about 20000 engineers and 5000 economists were certified from institutions based around science and technology within the Leninist ideology. Machine building and chemical prossesing was still the main character in Bulgarias economy. All the changes were coming about as energy resources were coming up short and labor supply was running high. The era of extensive growth had ended. It was time for intensive growth.

Bibliography:

  • S.D. Zagoroff, "The economy of Bulgaria". Washington D.C: Council for economic and industry research, 1955)

  • 2) George R. Feirel, "Growth and reforms in centrally planned economies: the lessons of the Bulgarian experiance. (New York: Praeger,1977)

  • 3) "Bulgaria, an economic assesment". Organization for economic co-operation and development, France, 1992)

  • 4) Roger Pethybridge, "the development of the communist block" D.C Health and Company, USA 1965.

 

 

 

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