reversal of privatization in Yugoslavia

Louis Proyect lnp3 at
Thu Aug 24 13:14:33 MDT 2000

>since it seems to be the rare case that you and Michael agree that it is an
>important arcticle, is it too much to ask you to split the article in two
>and post it here?

The article is much too technical to be of use here. I am planning to delve
into the statistical yearbooks of the Republic of Yugoslavia as soon as the
Business Library of Columbia opens up again after Labor Day. In the
meantime, this item from a report prepared by the US Embassy in Belgrade in
1997 might be useful:

Privatization, bank reform, and other reforms to liberalize the economy,
increase exports, and improve the investment climate in the FRY are
currently under consideration but have not yet been implemented. Over the
long run, the success of such structural adjustments will play a large role
in determining whether FRY GDP can begin to recover to former levels.
Ultimately, the FRY must undertake the necessary measures to lift the
"Outer Wall" of sanctions and join the IFIs in order to provide the
conditions to attract badly-needed private investment to the country.

Principal Growth Sectors: Government officials view as essential the
revitalization of economic infrastructure -- roads, railways, air
transport, telecommunications, and power production. Infrastructure is
generally functional but inadequate and in need of both significant
maintenance, modernization, and expansion. Financial services, advertising,
retailing, and other services are a growth industry in the FRY -- which
could allow for increased business for U.S. service and consulting firms.

Domestic authorities hope to encourage exports in agriculture, food
processing, textiles, furniture, pharmaceuticals, non-ferrous metallic
ores, and tourism to earn much needed foreign exchange. These sectors could
present U.S. firms with opportunities for sales of equipment, spare parts,
and new technologies.

Government Role in the Economy: Economic reforms were shelved and even
reversed between 1991 and 1996. The former Governor of the National Bank of
Yugoslavia (NBY) was sacked in May of 1996 for fighting publicly with
Serbian Socialist Party (SPS) and Yugoslav United Left (JUL) officials in
order to force a rapid privatization program. Thus, the FRY lags behind its
neighbors in the transition process. Large socially-owned enterprises, a
carry-over from the communist regime, remain under heavy state influence;
their boards of directors typically composed of individuals with close
SPS/JUL ties. Federal and republic governments have retained many formal
and informal levers of authority over the economy -- et. al., export/import
licenses, allocation of scarce credits, control over jobs -- and use them
liberally to maintain political dominance. Analysts estimate that state-run
enterprises owned over 80% of capital and that the private sector accounted
for only 37% of GDP in 1996.

Louis Proyect

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