ECONOMIC PLANS OF SIX EUROPEAN SATELLITE COUNTRIES THROUGH 1965: A GENERAL APPRAISAL

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP79R01141A002500050002-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 103
• Document Creation Date: January 4, 2017
• Document Release Date: May 30, 2013
• Sequence Number: 2
• Publication Date: August 1, 1962
• Content Type: REPORT

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N? 3
ECONOMIC PLANS
OF SIX EUROPEAN SATELLITE COUNTRIES
THROUGH 1965:
A GENERAL APPRAISAL
August 1962
NOT TO BE REPRODUCED IN WHOLE OR
IN PART WITHOUT THE PERMISSION OF
THE CENTRAL INTELLIGENCE AGENCY
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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NOTICE
This report has been loaned to the recipient
by the Central Intelligence Agency. When it
has served its purpose it should be destroyed
or returned to the:
CIA Librarian
Central Intelligence Agency
Washington 25, D. C.
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ECONOMIC PLANS
OF SIX EUROPEAN SATELLITE COUNTRIES
THROUGH 1965:
A GENERAL APPRAISAL
CIA/RR ER 62-28
CENTRAL INTELLIGENCE AGENCY
Office of Research and Reports
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FOREWORD
This report describes and assesses the economic plans of six Euro-
pean Satellite countries for varying periods ending in 1965. It is
concerned thereford with the general outlook for economic growth and
not with an estimate of short-term developments in the economic policies
of each country, because such an estimate requires detailed analysis
beyond the scope of this report. Because of the uncertain effects of
economic progress on stability and the great importance of noneconomic
factors, no attempt is made to judge the prospects for political sta-
bility.
Czechoslovakia, Hungary, Poland, and Albania have Five Year Plans
for 1961-65, Rumania has a Six Year Plan for 1960-65, and East Germany
has a Seven Year Plan for 1959-65. Bulgaria also has a Five Year Plan
for 1961-65, but information regarding it is so meager in some respects
and appeared so late that Bulgaria has been omitted from the report.
Some of the published plans are much more definite and detailed than
others. The East German Seven Year Plan has the formal status of a law,
but this version of the plan is now 3 years old, and certain goals have
been revised. The Polish and Czechoslovak plans also have been revised
since the first announcements. The most recent versions of these plans
take the form of a law passed by the Polish parliament in February 1961
and a resolution of a National Conference of the Czechoslovak Communist
Party in July 1960 that was adopted by the National Assembly 4 months
later.
Rumania and Albania have published only the Communist Party's "draft
directives" for the economic development of the country through 1965,
which in the case of Rumania give some objectives only as ranges or round
numbers. The Rumanian directives were approved by the Party Congress in
June 1960 -- apparently without significant changes -- but revision of
some goals in the Albanian directives was indicated in a speech by Pre-
mier Shehu in February 1961. In Hungary the Party's "draft directives,"
which covered the period 1959-65, have been replaced by a plan law for
1961-65 that was published in October 1961. Unless otherwise indicated,
all the plan goals shown in this report are the latest known figures.
For convenience the various plan periods are frequently described
in the text and tables of the report as the "period ending in 1965."
In comparing planned economic developments with those of recent years,
the period 1955-59 frequently is used for each country in order to
simplify the exposition. In this report a total percentage increase
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or an average annual percentage increase shown for a period such as
1955-59 indicates the increase from 1954 to 1959.
All dollar values shown in this report refer to US dollars. Ex-
cept for planned values of export surpluses in 1965, all dollar values
are expressed in current prices. Estimates of planned export surpluses
are expressed in the prices of the year preceding the respective plan
periods, having been obtained by applying planned percentage increases
in the volume of exports and imports to values in current prices for
that year. Values expressed in the various national currencies have
not been converted to US dollars, because meaningful rates of exchange
for the categories of goods involved are not available.
Documentation of data has been simplified by omitting detailed
sources for historical statistics and plan goals that are readily
available in official statistical yearbooks and basic plan announce-
ments. Those sources used most frequently in preparing the statis-
tical tables are listed in the first part of Appendix B. In some in-
stances, two or more of these sources have been used in deriving the
figures shown in the statistical tables.
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CONTEINTS
Page
Summary and Conclusions 1
I. Introduction 7
II. General Policies and Objectives 9
1. Growth and Structure of Output 9
a. Industry
b. Agriculture
2. Distribution of Output by End-Use
9
13
17
a. General Relationships
17
b. Specific Plans for Consumption
19
III.
Factors in Planned Economic Development
27
1. Employment and Labor Productivity
27
2. Investment
311.
a. Volume and Distribution
34
b. Prospects for Fulfillment of Investment Plans
?
?
4.1
c. Investment Costs in Industry
46
3. Supply of Key Materials
52
a. Electric Power and Fuels
52
b. Steel
55
c. Nonferrous Materials
58
d. Chemicals
59
4. Technological Progress
61
5. Agricultural Organization and Other Institutional
Changes
64
6. Foreign Trade and Economic Cooperation
67
7. Transportation Service
73
IV.
Prospects and Implications
75
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Appendixes
Page
Appendix A. Statistical Tables 83
Appendix B. Sources 89
Tables
1. Six European Satellite Countries and European Member Coun-
tries of OECD: Comparison of Increases in Production in
Selected Branches of Industry, Recent Five Year Period
and Plan for the Period Ending in 1965
2. Six European Satellite Countries and European Member Coun-
tries of OECD: Indexes of Output Per Capita of Selected
Industrial Products, 1960 and Plan for 1965
3. Four European Satellite Countries: Planned Growth of Con-
sumption Per Capita of Selected Foods During the Period
Ending in 1965
11
12
22
4, Three European Satellite Countries: Planned Growth of
Consumption Per Capita of Selected Textiles and Shoes
During the Period Ending in 1965 23
5. Five European Satellite Countries: Construction of Dwell-
ings, 1955-59 and Plan for the Period Ending in 1965 . . 25
6. Six European Satellite Countries: Planned Value of Gross
Fixed Investment During the Period Ending in 1965 . . . . 35
7. Six European Satellite Countries: Planned Growth of Gross
Fixed Investment, by Economic Sector, Under the Plan End-
ing in 1965 37
8. Six European Satellite Countries: Development of Con-
struction, 1955-59 and Plan for the Period Ending in
1965
9. Five European Satellite Countries: Relation of Gross
Fixed Investment and Growth of Output in Industry, Recent
Five Year Period and Plan for the Period Ending in 1965 .
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Page
10. Five European Satellite Countries: Planned
Growth of the Supply of Chemical Fertilizers
During the Period Ending in 1965 60
11. Five European Satellite Countries: Planned
Changes in the Geographic Distribution of
Foreign Trade During the Period Ending in
1965
12. Six European Satellite Countries: Growth of
National Income and Industrial and Agricultural
Production, 1955-59 and Plan for the Period
Ending in 1965
13. Six European Satellite Countries: Growth of In-
vestment and Consumption, 1955-59 and Plan for
the Period Ending in 1965 . . . .......
14. Six European Satellite Countries: Planned
Growth of the Park of Agricultural Tractors
During the Period Ending in 1965 and Planned
Amount of Arable Land per Tractor in 1965 . . .
15. Six European Satellite Countries: Growth of
Foreign Trade, 1955-59 and Plan for the Period
Ending in 1965
Charts
Figure 1. Six European Satellite Countries: Rates
of Economic Growth, 1955-59 and Plan for
the Period Ending in 1965
Figure 2. Six European Satellite Countries: Growth
of Investment and Consumption, 1955-59
and Plan for the Period Ending in 1965 .
70
85
86
87
88
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io
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Figure 3. Six European Satellite Countries:
Planned Growth of the Park of Agricul-
tural Tractors During the Period Ending
in 1965 and Planned Amount of Arable
Land per Tractor in 1965
Figure 4. Six European Satellite Countries: Growth
of Foreign Trade, 1955-59 and Plan for
the Period Ending in 1965
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ECONOMIC PLANS OF SIX EUROPEAN SATELLITE COUNTRIES THROUGH 1965:
A GENERAL APPRAISAL
Summary and Conclusions
All six European Satellite countries covered by this report --
Czechoslovakia, East Germany, Hungary, Poland, Rumania, and Albania --
have published 5-year to 7-year programs ending in 1965 that are aimed
at rapid and varied development of their economies. In their objectives
for growth and structural changes and in their approach to problems of
development, the new plans generally call for a continuation of the past.
As usual the underlying -- but not always explicit -- theme of the plans
is rapid industrialization.
Some aspects of these programs are ambitious although not unreason-
able; others are clearly unrealistic, especially the goals for agricul-
tural production. On the whole, the regimes appear to be relying too
much on improvements in economic efficiency to reach their goals. None
of the plans is likely to be realized in full, but a substantial rate
of economic growth is expected in each country. High rates of invest-
ment and technological progress are anticipated even though investment
goals probably will not be reached. The orientation of the plans toward
long-term growth rules out striking improvements in living conditions by
1965, but some gains should be possible.
Only the Rumanian regime has scheduled a much higher rate of indus-
trial growth than is claimed for recent years. Embarking on its own
"leap forward," the regime has planned very rapid rates of growth for
both industry and agriculture. Rates of economic growth planned in East
Germany are no higher than those for several other Satellites, but these
rates also seem unusually ambitious in view of the labor shortage and
other difficulties. Albania's economic prospects became very uncertain
in 1961 as relations with Bloc countries deteriorated, but prompt Chinese
support has done much to make the Albanian plan meaningful again, al-
though by no means reasonable in its agricultural objective. In each
country except Poland, economic development will be conditioned by com-
plete or nearly complete socialization of agriculture -- a new institu-
tional circumstance. The regimes now squarely face the perplexing prob-
lem of getting satisfactory results from collective and state farms.
In general, the economies of the Satellites and the USSR are ex-
pected to become more interdependent with the further rapid expansion
of intra-Bloc trade. The Satellite economies also should become more
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self-reliant and less dependent on Soviet credits, although perhaps not
to the extent planned. Exports typically are to be increased more than
imports to permit payments on earlier credits or, in some instances, to
permit more economic assistance to underdeveloped countries.
Problems in carrying out investment projects economically, exag-
gerated estimates of possible savings in the use of materials, and
excessive reliance on high motivation among managers and employees
are likely to prevent many objectives from being realized fully. In
adjusting to these shortcomings, the regimes almost certainly will
let most of the effect fall on consumption. Plans for housing and
consumer durables are likely to be scaled down to accommodate the
programs for productive investment. The anticipated underfulfillment
of goals for agricultural production will have a direct impact on the
objectives for consumption. Shortcomings in plan fulfillment also are
likely to have a considerable effect on the development of export sur-
pluses, limiting the programs for economic penetration of non-Bloc coun-
tries or making payments on earlier credits very difficult.
The regimes in all six countries plan continuing high rates of
growth in national income (Communist concept), reflecting their intense
desire to "catch up" with advanced Western countries as soon as possible.
These rates range from 6 or 7 percent annually in Czechoslovakia, East
Germany, Hungary, and Poland to as much as 9 or 10 percent in the other,
less developed countries. These rates generally equal or exceed the
achievements in 1955-59 and -- after rough adjustment to the Western con-
cept of gross national product (GNP) -- are somewhat higher than the
rates in Western Europe during that period.
The goals for national income are unlikely to be reached in view of
the expected underfulfillment of industrial goals, except possibly in
Hungary, and of agricultural goals in each country, but rates of growth
are not expected to fall more than 1 percentage point below recent levels.
In terms of GNP, the average rates of growth through 1965 are expected
to range from about 4 percent in East Germany to about 5.5 percent in
Poland and Rumania. Such rates of growth are very creditable but not
exceptional by Western European standards.
Although Rumania and Albania have nominally scheduled very high
rates of growth for agriculture, all of the plans are clearly aimed at
further industrialization. The planned annual rates of growth for in-
dustrial production are 13 percent in Rumania and 8 or 9 percent in the
other countries, most of them representing an increase above recent ac-
complishments. The general relationship of the rates of growth planned
for various branches of industry is similar to that of recent years in
both these countries and the countries of Western Europe. The highest
rates generally are stipulated for the chemical, metalworking, electric
power, and building materials industries.
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If major industrial goals for 1965 are approximated, the Satellites
will accomplish a further significant advance in their level of indus-
trialization. In Czechoslovakia, for example -- where outputs of coal
and aluminum per capita in 1960 were higher than in West Germany -- the
plan calls for per capita outputs of electric power, crude steel, sul-
furic acid, and cement in 1965 that are considerably higher than outputs
in 1960 in West Germany. Realization of goals for 1965 for basic indus-
trial products in Poland, Hungary, and Rumania would not generally yield
per capita outputs as high as the averages of Western European countries
in 1960, but they would compare favorably with recent levels in Italy.
The industrial plans have little slack in them, and it is believed
that most branches of industry will have difficulty in reaching their
goals. Supplies of steel and other materials are likely to prove to be
inadequate because of production difficulties and too optimistic an
appraisal of possible savings in their use. Imports of materials also
may fall below plan because of production problems in the supplying coun-
try or export problems in the receiving country that limit imports. For
the metalworking industries particularly, there also is doubt that the
large increases planned in labor productivity can be achieved, as pro-
duction capacity is being utilized more fully than before and no special
priority has been given to investment in these industries.
In support of their industrial objectives, most of the regimes have
planned a more rapid increase in industrial investment than in total in-
vestment, priority generally being accorded to the chemical, metallurgi-
cal, and electric power industries. Perhaps overoptimistically, most of
the countries are counting on investment to be more productive than in
the past, for construction periods are supposed to be shortened and con-
struction costs reduced.
Closely related to the investment programs is the intention of the
Satellites of raising substantially the technical level of economic
activity, especially in industry and construction. The hopes of the
regimes rest heavily on plans for (1) more widespread use of mass-
production techniques based on mechanization and automation, fewer
types and models of products, and growing internal and international
specialization; (2) economies in the use of materials; (3) improved
methods of work organization; and (4) periodic revision of work norms
and wage rates to maintain a strong system of incentives and pressures.
Labor is about the only resource that has not been committed fully
in the plans of most of the countries. Industrial employment generally
is scheduled to grow less rapidly than in recent years, but each coun-
try other than East Germany probably can provide more labor than is
planned. This step would involve an additional cost, however, in the
form of increased needs for housing and other urban facilities for labor
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moving from agriculture, provision of correspondingly larger supplies of
food in urban areas, and possibly some adverse effect on the growth of
production in other sectors.
Some of the agricultural plans are highly unrealistic, notably the
Rumanian and Albanian targets for increases in production of 9 to 11 per-
cent annually. Even the less extreme targets in East Germany and Hungary
are not considered feasible because of the problems involved in making
efficient producing units out of the collective farms, especially the
many new ones formed during the last 2 or 3 years. The Czechoslovak
and Polish plans seem more sound, but annual rates of growth of about
3 percent seem more likely than the scheduled rates of 4 percent.
Greatly increased inputs are needed in each country for satisfactory
agricultural progress, considering the weakness of incentives among
people who are still predominantly opposed to collective ownership but
(except in Poland) are now largely organized into collective farms. Ex-
cept in Albania, investment in agriculture is scheduled to rise by 54 to
100 percent during the plan period, much of it being earmarked for agri-
cultural machinery or construction of buildings required by the centrali-
zation of activity in collective farms.
Although mechanization of agriculture is important in the manpower
plans, permitting increased production with declining employment, progress
in agriculture depends much more on the use of fertilizers and insecti-
cides, the consumption of which is supposed to rise markedly, and on the
introduction of better seed and farming methods. Equally important is
, the avoidance of further institutional changes that would weaken incen-
tives. Difficulties would be aggravated, for example, if the regimes
abolished or restricted activity on the private plots of collective farm
members, for these plots make a large contribution to the supply of live-
stock products.
Economic development in these countries should continue to be influ-
enced favorably by a growing volume of foreign trade and increased inter-
national specialization under the prodding of the Council for Mutual
Economic Assistance (CEMA). Most of the plans do not call for foreign
trade turnover to grow as rapidly as in 1955-59, however, when autarkic
policies were relaxed somewhat and the USSR decided to supply much larger
amounts of materials to the Satellites.
Except for Albania and possibly Rumania, the countries hope to raise
exports much more rapidly than imports so that the economies not only
will be self-supporting by 1965 but can reduce their foreign debts, if
any, and in some cases give economic assistance to other countries.
Especially ambitious in this respect is Czechoslovakia, which apparently
intends to develop an export surplus of some $500 million by 1965.
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Shortcomings in reaching production goals, however, may seriously upset
the plans of the regimes in this sphere.
The present large share of the Sino-Soviet Bloc in the foreign trade
of the Satellites will generally continue. An interesting exception is
Rumania, whose trade with non-Bloc countries is to increase from 20 per-
cent of the total trade in 1959 to between 30 and 35 percent in 1965.
Some shift in trade to non-Bloc countries also is in prospect for Albania,
but much more important is Communist China's recent replacement of the
USSR as Albania's leading trade partner.
Consumption of goods per capita is unlikely to rise at the rates of
4.5 or 5 percent planned in Czechoslovakia and Poland -- much less the
higher rates planned in East Germany and Rumania -- but small gains can
be expected. An improvement in the quality and variety of the diet is
one of the principal objectives of the agricultural plans. The plans
call for the per capita availability of livestock products and other
quality foods in the more advanced Satellites in 1965 to reach current
levels in such countries as West Germany and the UK, but shortcomings
in domestic production and a tight situation in foreign trade are ex-
pected to prevent an advance of this extent. Important gains also are
scheduled in most of the countries for supplies of textiles and shoes,
but the largest advances are likely to be made in supplies of consumer
durables, which are not yet very widely owned.
Housing conditions in these countries are still rather poor. The
plans include housing programs that should improve matters if they are
carried out and -- if continued over several more plan periods -- would
alleviate one of the deepest sources of discontent among the people.
Recent progress has been promising, but these programs are a logical
area for cutbacks if the regimes decide that resources must be trans-
ferred to productive investment.
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I. Introduction
In outlining their economic plans for the period through 1965, the
European Satellite regimes have made it clear that they do not regard
their recent high rates of growth as temporary phenomena arising from
favorable but nonrecurring circumstances. On the contrary, the plans
generally express the conviction that these rates can be sustained
through 1965, and announcements by Poland and Rumania reveal a belief
that rates almost as hie' as these can be maintained through 1975 --
that is to say, almost indefinitely. The regimes recognize that some
factors underlying their rate of economic growth will be less favorable
than in the past. For example, easily exploitable reserves of indus-
trial capacity and lags in the development of foreign trade have been
reduced considerably in most of the countries, and the labor supply is
tight in two of them. The new plans apparently assume that such de-
velopments can be offset largely by a general increase in efficiency
resulting from accelerated technological development, improved economic
planning and management, and more stable political and institutional
conditions.
Even if allowance is made for differences in statistical concepts
and methods, the rates of economic growth planned by the Satellites are
somewhat higher than those projected for Western European countries by
organizations such as the European Coal and Steel Community. Statements
on the theme of "catching up with the West" have not been typically as
brash or insistent in the Satellites as in the USSR, but Satellite leaders
are well aware of the propaganda value of such announcements and no doubt
will make more of them if rates of growth in the Satellites exceed those
in Western Europe. One aim of the new Five Year Plan in Czechoslovakia
is to "create the conditions" for catching up with the living standards
of the most advanced capitalist countries. Czechoslovakia is as close
to this objective as any country in the Bloc, although the gap remains
quite large. Poland plans to match current living standards in the most
prosperous Western European countries by about 1980, and Rumania has vague
hopes of raising the welfare of its people to the level of the world's
most advanced countries by about 1975. Only East Germany has ventured to
set a specific goal for the period -- that of matching West German produc-
tion and consumption per capita by 1965 -- but it was obvious from the
outset that this goal could not be achieved.
If the fulfillment of ambitious plans promises substantial economic
progress and propaganda advantages, it is also true that deficient per-
formance may lead to economic problems and political weakness. Economic
programs in the Bloc, characteristically provide little margin for miscal-
culation, and adjustments are limited by doctrinal considerations and the
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rigidities of bilaterally arranged foreign trade. A shortcoming in one
area may therefore have serious repercussions in others. Disappointing
economic results also may lead to disputes within the leadership over
economic policy, and if the impact of reduced rates of growth is made to
fall largely on consumers, there is the risk of popular disturbances as
well.
That the USSR attaches importance to the maintenance of rapid eco-
nomic growth in the Satellites has been demonstrated a number of times
in recent years through the extension of Soviet credits to most of these
countries. Hiel rates of growth in the Satellites enhance the interna-
tional prestige of the Communist movement and increase the means avail-
able for the economic penetration of underdeveloped countries. Soviet
interest in the economic development of the Satellites presupposes, of
course, that they acknowledge the USSR as the leader of the Sino-Soviet
Bloc and pursue Soviet-approved policies unless special circumstances
dictate a temporary deviation, such as Poland's failure to collectivize
its agriculture. Albania's rejection of these conditions has led the
USSR to break off diplomatic and economic relations, but it has not
insisted that the other Satellites do likewise. The Soviet action thus
seems designed only to express strong disapproval of Albanian policy
rather than to cause the greatest possible economic difficulty, which
might lead to unwelcome internal changes and force Albania into closer
relations with Western countries as well as with Communist China.
In the following sections of the report, an attempt is made, first,
to outline the objectives of the regimes for the growth and structure
of national income and its use in investment and consumption (Section II).
This discussion is followed by an examination of plans and prospects for
employment, investment, supplies of key materials, and other factors
bearing on the economic development of the six countries (Section III).
Finally, there is a general discussion of the prospects for economic
growth and some of their implications (Section IV).
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II. General Policies and Objectives
1. Growth and Structure of Output
Satellite goals for the growth of national income and changes in
its structure largely represent a continuation of recent developments.
The planned increases in national income amount to about 6 or 7 percent
annually in the more developed countries and 9 or 10 percent in Rumania
and Albania.* Rates of growth thus are scheduled to rise slightly in
Poland, Rumania, and Albania and continue at the 1955-59 level in
Czechoslovakia and Hungary (see Figure 1** and Table 12xx*).
East Germany originally planned a rate of growth of 7.5 per-
cent for national income compared with the estimated rate of 6 percent
achieved in 1955-59, but cutbacks in goals for industrial production
and investment in 1961 suggest that this objective has been abandoned.
Economic assistance has recently been obtained from the USSR, but the
regime cannot plan, with a reasonable hope of success, an increase in
national income of more than 5 percent annually.
a. Industry
Each plan is focused on further industrialization of the
economy, although Rumania and Albania have nominally scheduled large
increases in agricultural production as well as industrial production.
The planned rates of growth for industry fall between 8 and 9.5 percent
except in Rumania, where a rate of 13 percent is sought. The scheduled
rates thus do not differ greatly from the estimated accomplishments of
recent years in Czechoslovakia and Poland but call for decidedly better
performance in East Germany, Hungary, and Rumania (see Figure 1 and
Table 12). Albania plans a considerably reduced rate of industrial
growth presumably because prospective assistance from Bloc countries
seems to be insufficient to maintain the previous rate.
* The planned increases would be somewhat smaller in terms of the
Western concept of GNP, which includes items (governmental and personal
services and provision for depreciation) that are excluded in the
Communist definition of national income and are expected to grow less
rapidly than the goods and services covered by the plans for national
income. The planned increases generally would be reduced still further
if the relative values of industrial production and agricultural pro-
duction at established prices were adjusted to reflect factor costs
more accurately.
** Following p. 10.
*** Appendix A, p. 85, below.
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The relationships between the planned rates of growth of
the various branches of industry generally are quite similar to those
of recent years both in these countries and in the European member
countries of the Organization for Economic Cooperation and Development
(OECD),* as shown by the rankings in Table 1.** One of the most gen-
eral and pronounced shifts planned in the industrial structure is the
intensive development of the chemical industry (which usually includes
petroleum processing). The planned percentage increases in output of
chemicals are the largest of any industrial branch except in East
Germany, which already has a well-developed chemical industry, and in
Albania. The plans particularly stress an expanded output of plastics,
synthetic fibers, and fertilizers.
The metalworking industries are another area of emphasis
because of their importance in the plans for investment and export.
These industries typically are scheduled to have the second or third
highest rate of growth. Large construction programs and the growing
importance of power-intensive industries such as chemicals require
in most cases relatively hie) rates of growth for building materials
and electric power. Planned increases for mining and petroleum ex-
traction and for metallurgy generally are the lowest of the heavy
industrial branches, reflecting such factors as (1) substitution of
imported petroleum for domestically produced coal; (2) substitution
of plastics and other materials for metals; (3) expected economies in
the utilization of coal, coke, and metals; and (4) growing reliance,
in some instances, on imports of metals.
Except for mining, the industries producing textiles, cloth-
ing, and processed foods commonly are scheduled to have the lowest rates
of growth, as the planned increases resemble the moderate gains stipu-
lated for personal consumption. In Rumania, however, production of
processed foods and of textiles, clothing, leather, and shoes is sup-
posed to rise nearly as fast as the total industrial production.
An impression of current and planned levels of industrial
development in the Satellites can be gained from the comparisons in
Table 2xxx of per capita outputs of nine representative industrial prod-
ucts in these countries and in the OECD countries. In East Germany, for
example, further large increases are planned in the per capita outputs
Known as the Organization for European Economic Cooperation (OEEC)
before 30 September 1961. The US and Canada are full members of the
new organization.
** Table 1 follows on p. 11.
*** Table 2 follows on p. 12.
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SIX EUROPEAN SATELLITE COUNTRIES
Rates of Economic Growth
1955-59* and Plan for the Period Ending in 1965**
AVERAGE ANNUAL PERCENTAGE INCREASES
1955-59*
National income ri
Industrial production n
(Gross except as noted)
Agricultural production (Gross)
Plan for the period ending in 1965**
***
(Official data except as noted)
CZECHOSLOVAKIA
10.5 +
9.5* 9.3
7.4 7.3
4.1
2.8 (7.??:7
6.4 6.3
7.0 6.5*
7.5 t
6t
A,
Figure 1
EAST GERMANY
9.0
6.5*
9.4
2t
4.5
HUNGARY POLAND
8.3
4.5
5.5
, 9.8
7.1 -
105 lit
RUMANIA
13
9.8
4.2
PZ
'4
9.8 8.7
8*
6.7 7'0
3.8 4.1
8.2
9.3
16.7
12
*1956-60 for Poland and Albania.
**The plan period os 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the other countries.
Some plan data are midpoints of a range.
***Planned increases in gross production may be compared most appropriately with estimated increases
in net production during the preceding period.
t Estimated.
# Estimated increase in net industrial production.
36403 7-62
ALBANIA
8.7
1.3
11.5
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Table 1
Six European Satellite Countries and European Member Countries of OECD
Comparison of Increases in Production in Selected Branches of Industry 2/
Recent Five Year Period and Plan for the Period Ending in 1965
Rank of Percentage Increases, in Descending Order
Branch of Industry
Czechoslovakia
East Germany
Hungary
Poland
Rumania
Albania
European
Member Countries
of OECD
1955-59
1955-59
Plan
for
1961-65
Plan
for
1954-58 1959-65
1954-58
Plan
for
1961-65
1955-59
Plan
for
1961-65
1954-58
Plan
for
1960-65
Plan
for
1961-65
Electric power
4
4
2
7
3
3
3
3
3
2
4
2
Mining and petroleum
extraction b
5
8
5
9
7
7
8
9
6
7
6
7
Metallurgy b
6
5
6
5
8
4
6
5
5
3
N.A.
5
Metalworking
3
3
1
2
4
2
2
2
2
4 /
1
3
Chemicals
1
1
3
3
2
1
1
1
1
1
2
Building materials
2
2
r'4
1
5
5
4
4
7
6
3
4 2/
Textiles
9
6
6
9
7
6
8
8
Clothing
7 21
(
7
t8 -ej
)4/
l/
8 li
5 1/
7/
N.A.
5 El
(
(5 fi
N. A.
Food processing
8
6
7
8
6
6
7
8
4
6
7
6
a. Data for the European Satellites during a recent 5-year period are based on estimates of the growth of net industrial production.
The estimates for Hungary and Rumania do not include handicraft production. In some instances, such as production of clothing in Hungary
and food processing in Rumania, the calculated rates of growth almost certainly exaggerate the actual accomplishment because of the ab-
sorption of handicrafts by the socialist sector of industry. Unless otherwise indicated, plan figures
documents listed in Appendix B. Data for European member countries of OECD (Organization for Economic
formerly OEEC (Organization for European Economic Cooperation), are based on source J. (For serially
Appendix B.)
b. Ore mining is included in "Metallurgy" for Czechoslovakia, Poland, and Rumania.
c. ?Machinery and equipment only.
d. Rank based on data for cement only.
e. Including leather, footwear, and furs.
f. Excluding leather, footwear, and furs.
are based on data in the plan
Cooperation and Development),
numbered source references, see
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Table 2
Six European Satellite Countries and European Member Countries of OECD
Indexes of Output Per Capita of Selected Industrial Products a/
1960 and Plan for 1965
Output Per Capita in European Member Countries of OECD in 1960 = 100
Output per capita in 1960
European member countries
Electric
Power
Coal
Crude
Steel
Primary
Aluminum
Sulfuric
Acid 2/
Chemical
Fertilizers SAV
Cement
Motor
Vehicles 2/1/
Agricultural
Tractors lie
.12/
of OECD
100
100
100
100
100
100
100
100
100 Ei
Of which:
France
98
83
117
203
95
185
112
167
91
Italy
70
14
51
66
98
54
111
73
52
West Germany
136
226
197
124
130
200
164
214
151
Czechoslovakia
113
242
153
149
95
62
130
30
159
East Germany
148
292
68
8o
99
359
102
25
35
Hungary
48
89
58
194
42
31
55
3
17
Poland
63
215
70
35
54
48
78
7
17
Rumania
26
13
30
0
29
12
58
4
62
Albania
7
4
o
o
o
o
16
o
o
Planned output per capita in 1965
Czechoslovakia
174
292
230
236
165
123
217
52
203
East Germany
229
357
92
N.A.
166
48o
161
40
N.A.
Hungary
69
102
78
218
91
81
89
N.A.
33
Poland
91
231
90
93
98
81
123
12
57
Rumania
61
18
53
51
89
77
117
N.A.
87
Albania
11
7
2
o
88
85
44
o
o
a. The underlying data on production in the European Satellites are largely from the latest editions of their official statistical
yearbooks and the plan documents listed in Appendix B. Projections of population in 1965 were obtained from the Foreign Manpower
Research Office, US Bureau of the Census. Data for the European member .countries of OECD (Organization for Economic Cooperation and
Development), formerly OEEC (Organization for European Economic Cooperation), are from sources gi and 3./.
b. Estimates for all types of coal are in terms of standard fuel units of 7,000 kilocalories per kilogram.
c. Output per capita in the European member countries of OECD in 1959 = loo.
d. Based on output data expressed in terms of nutrient content.
e. Automobiles and commercial vehicles.
f. The data are based on output in physical units, and the comparisons, therefore, are very rough because of variations from country
to country in the average size and other characteristics of the items produced.
g. Output per capita in France, Italy, and West Germany in 1960 = 100.
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of electric power, coal, and chemical fertilizers, which in 1960 were
somewhat higher than in West Germany. Per capita outputs of crude
steel and motor vehicles, however, would remain much lower in East
Germany in 1965 than in West Germany in 1960. Per capita outputs in
Czechoslovakia, which in 1960 surpassed those in West Germany only
for coal and aluminum among the nine products under consideration,
are scheduled by 1965 to exceed considerably the recent West German
levels for electric power, crude steel, sulfuric acid, cement, and
tractors.
The per capita outputs of these products in the other
Satellites, except for such specialties as coal in Poland and alumimum
in Hungary, are substantially lower than the averages for OECD coun-
tries in 1960, which reflect the low levels of output of such coun-
tries as Greece, Spain, and Turkey as well as the high levels of North-
western Europe. Realization of goals for 1565 in Poland, Hungary, and
Rumania generally would not result in per capita outputs of these prod-
ucts as high as the OECD averages of 1960, but their outputs would com-
pare favorably with recent levels in Italy. Data that would permit
comparisons of this kind for consumer goods are not readily available,
but it seems likely that on the whole they would be less favorable to
the Satellites than the foregoing comparisons for producer goods.
b. Agriculture
Agricultural goals in the Satellites typically reflect
ideology and wishful thinking more than serious economic calculation.
This deficiency has not been avoided entirely in the new agricultural
plans, some of which clearly are unrealistic. In Rumania and Albania
the planned increases of 9 to 11.5 percent annually greatly exceed
what has proved possible in recent years, as shown in Figure 1.* The
annual rate of growth of about 5.5 percent implied by the recently
approved plan for Hungary is even higher than the rate reported for
1955-59, which reflects the record output of 1959. Czechoslovakia
East Germany, and Poland have planned rates of 4 to 4.5 percent, rep-
resenting a moderate increase above the gains of recent years in
Czechoslovakia and Poland and a substantial increase above the esti-
mated gain in East Germany. The ambitiousness of these plans is
underlined by the fact that production in the base year of the plan
periods was at a postwar high in Czechoslovakia, East Germany, Poland,
and Rumania and exceeded the average of 1956-60 by 4 percent in Hun-
gary.
The relationship of the planned increases in production to
the increases in 1955-59 is affected, of course, to varying degrees by
* Following p. 10, above.
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weather conditions during the years concerned. This difficulty can be
minimized by comparing average annual levels of production for 5-year
periods, assuming in the case of the plans that the regimes would ex-
pect steady rates of growth in the absence of variations in weather.
The following tabulation shows how the implicit planned increase in
the average levels of gross agricultural production from 1956-60 to
1961-65 compares with the reported increase in production from 1951-55
to 1956-60:
Increase
in Average Annual Production
(Percent)
1951-55
to 1956-60
Plan for 1956-60
to 1961-65*
Czechoslovakia
10
17
East Germany**
8
26
Hungary
14
22
Poland
22
19
Rumania
12
54
Albania
26
41
These comparisons show that most of the regimes are hoping for spectacular
improvement in the performance of agriculture even though they face many
difficulties in getting satisfactory results from collective and state
farms, as indicated in III, 5, below.
The present unsatisfactory state of agricultural development
is much more a consequence of neglect and the impact of institutional
changes during the first long-term plans than of the failure of produc-
tion to rise in recent years. The range of recent rates of growth for
gross agricultural production in the Satellites is quite similar to that
in Western Europe. But it is only since about 1955 that the prewar level
of production has been restored in the Satellites, whereas Western Europe
achieved this level at least 5 years earlier. Even if recent rates of
growth in the Satellites can be maintained or improved on as the regimes
* Using midpoints of planned ranges of increase in Czechoslovakia,
Hungary, and Rumania. The calculations for East Germany and Rumania re-
flect the growth that will be necessary in 1961-65 if the 1965 goal is
to be reached in spite of the lack of progress during the first part of
the plan period.
** Estimated.
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attempt to raise production substantially above prewar levels, the Satel-
lites will continue to lag well behind Western Europe in agricultural de-
velopment in 1965.
East Germany, Poland, and Rumania have scheduled a more rapid
development of output of livestock products than of crops in anticipation
of substantially increased demand for high-quality foods as consumer in-
comes rise and in order to raise the value of output per unit of land.
Czechoslovakia and Hungary, however, have scheduled a more balanced growth
of crops and livestock products to provide more adequate supplies of feed
and to improve the trade balance in grains. The following are the per-
centage increases planned during the period ending in 1965 for certain
categories of agricultural production*:
East
Czechoslovakia
Germany
Hungary
Poland
Rumania
Total pro-
duction
22 to 23
36
22 to 23
22
70 to 80
Crops
23
N.A.
24
16
N.A.
Of which:
Grain
22**
21
N.A.
5
32 to 50
Potatoes
18
64
N.A.
11
55 to 73
Sugar
beets
11
23
N.A.
12
47
Livestock
products
22
N.A.
20
31
N.A.
Of which:
Meat
24
N.A.
27 to 29***
33
100
Milk
38
N.A.
25 to 27
28
100
Eggs
18
N.A.
23 to 25
27
108 to 131
For Czechoslovakia and East Germany the goals for individual products
refer to planned increases in production per hectare of sown area for
crops and per hectare of agricultural land for livestock products. Planned
increases in Czechoslovakia are based on planned levels of production in
1960. The data for Hungary refer to the increase from the 1956-60 average
to the 1961-65 average for the total production and crops and the increase
from 1960 to 1965 for livestock products.
** Breadgrains and barley.
*** Hogs for slaughter. The planned increase in production of cattle for
slaughter is 8 to 10 percent.
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With reference to crops the greatest emphasis is placed on
corn and other fodder crops needed to support the plans for animal
husbandry. No significant growth in the total area of arable land is
scheduled except in Albania, where it is to be expanded 13 percent,
but the area planted to fodder crops is supposed to increase appreciably
in several countries. Goals for crops generally are predicated on fur-
ther increases in yields, which have finally reached or moderately sur-
passed prewar levels for grains but not for potatoes or sugar beets.
In Czechoslovakia and East Germany, which have the highest grain yields
among the Satellites, the plans call for increases of 20 to 25 percent,
to levels resembling those recently achieved in France but still well
below those in West Germany and the UK. The sizable gains planned in
output of livestock products are based to a substantial extent on in-
creased yields per animal, but with the exception of Czechoslovakia a
significant expansion of livestock numbers also is contemplated, as
shown in the following tabulation*:
Czechoslovakia
East Germany
Hungary
Poland
Rumania
Planned Number in 1965
(Thousand)
Cattle
4,800
5,030
2,270
10,500
5,800
Of which:
Cows
2,300
2,600
1,110
6,600
2,900
Hogs
5,500
8,730
6,990
15,500
7,500
Sheep
600
2,600
2,450
3,900
13,000
Planned Increase During the Period Ending in 1965
(Percent)
Cattle
10
21
15
21
30
Of which:
Cows
9
22
17
12
35
Hogs
3
16
31
19
74
Sheep
-14
23
3
6
16
The figures for East Germany are based on planned numbers per hundred
hectares of agricultural land, and the planned increases in Czechoslovakia
are based on planned numbers in 1960.
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2. Distribution of Output by End-Use
a. General Relationships
The new plans generally call for emphasis on investment com-
bined with continuing improvement of living conditions -- that is, a
policy that avoids the extremes of some earlier years. All the coun-
tries except possibly Albania plan a more rapid growth of investment
than of consumption during the period ending in 1965, ruling out sharp
improvements in living conditions like those of 1956-57 but no return
to the overwhelming priority accorded investment in the early 1950's
is indicated.
Polish plans for investment and consumption are strongly
influenced by the assumption that the sizable import surpluses of re-
cent years will have to be reduced during the first part of the period
and that export surpluses will have to be established in 1964-65. As
a result, the rate of growth for national income available for domestic
use* is scheduled to drop from an average of nearly 7 percent in 1956-60
to 6 percent in 1961-65, even though the rate for national income is to
increase slightly to 7 percent. The burden of this readjustment is
planned to fall on both consumption and investment, although least of
all on personal consumption of goods, which is to rise 5.7 percent an-
nually under the present plan compared with 6.3 percent in 1956-60 (see
Figure 2** and Table 13***).
This plan assumes that Poland will not receive additional
long-term credits during the period, but the regime has indicated that
such credits will be accepted if offered on favorable terms. Credits
covering about $45 million worth of surplus agricultural products were
obtained from the US in 1961, and further credits probably will be
sought from the US and other countries in the course of the plan. Re-
ceipt of additional credits, of course, would reduce pressure on living
standards as the Gomulka regime simultaneously attempts to make the
large investments necessary for future economic growth and to start re-
paying earlier credits.
The Czechoslovak plan also provides for a more rapid growth
of national income than of national income available for domestic use,
in keeping with the growing importance of the country as a source of
economic assistance for other Satellites and underdeveloped countries
outside the Bloc. National income is to increase at about the same
* National income available for domestic use equals national income
plus net imports or minus net exports.
** Following p. 18.
*** Appendix A, p. 86, below.
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rate as in 1955-59, but rapidly rising export surpluses apparently will
prevent an equivalent gain in national income available for domestic use.
Credits extended by Czechoslovakia during the past 5 years ranked second
in volume to those of the USSR among Bloc countries and were by far the
largest in the Bloc on a per capita basis. The new plan appears to pro-
vide both for the completion of deliveries scheduled under these credits
and for the extension of additional credits during the plan period.
In adjusting its plans for domestic consumption and invest-
ment to the requirements of its foreign investment program, the Czecho-
slovak regime so far shows no marked tendency to sacrifice living stand-
ards. Consumption of goods will grow only a little less rapidly than in
1955-59 if the plan is fulfilled. The growth of fixed investment, how-
ever, is to be considerably less rapid than in 1955-59, when a sustained
drive took place.
The East German plan, as originally published, provides for
rates of growth of some 9 or 10 percent for the total net investment and
11 percent for the gross fixed investment compared with an estimated rate
of roughly 6 percent for the total consumption of goods. Moreover, the
plan was supposed to be launched with especially large increases in
investment -- 20 percent in 1959 and 14 percent in 1960. The planned
increases for 1959-60 proved to be beyond the capacity of the economy,
however, and the regime has substantially reduced the goal for invest-
ment in 1961 and presumably that for 1965 as well.
The large increase planned in the national income of Rumania
embodies high goals for both investment and consumption, but the most
intensive effort clearly is aimed at investment. In Rumania, as in East
Germany (under its original plan) and Poland, the pressure of investment
on available resources is planned to be especially strong during the
early years of the period, requiring the postponement of major gains for
consumers until the later years. The actual increases in Rumanian in-
vestment in 1960 and 1961 were so large that a rate of growth of only
7 percent in 1962-65 would be sufficient to produce the upper limit of
the range announced for the total investment during the Six Year Plan.
The Albanian plan apparently calls for a somewhat lower rate
of growth for gross fixed investment than for consumption of goods.
Albania is as eager as the other Satellites to build up its stock of
capital rapidly, but virtually all investment in machinery and equipment
depends on imports, and considerable technical assistance on investment
projects is required from other countries. Moreover, some of these re-
quirements must be financed by credits because of Albania's limited
ability to export. The value of gross fixed investment scheduled by the
regime for 1961-65 reflects rather moderate expectations of foreign as-
sistance and can be realized with an increase of only 36 percent during
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12.7
at
SIX EUROPEAN SATELLITE COUNTRIES
Growth of Investment and Consumption
1955-59* and Plan for the Period Ending in 1965**
AVERAGE ANNUAL PERCENTAGE INCREASES
1955-59*
Gross fixed investment ri
Total net investment (Accumulation) ri
8.6t
5.1
7,7
6,4
Consumption of goods
Plan for the period ending in 1965**
(Official data except as noted)
Figure 2
CZECHOSLOVAKIA EAST GERMANY
I NA.
7.2
9.9
8.6
6.2
5.4
(Personal
consumption)
15***
10.6
I N.A.
9-10t
***6.4 6_63t
(Total consumption)
HUNGARY POLAND
7.3
4.1
(Personal
consumption)
RUMANIA
9.0
7.9
8.2
? 7.1
6.3
J./
.79
(Personal
consumption)
(Total consumption)
* 1956-60 for Poland and Albania and for gross fixed investment in East Germany.
**The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the other countries.
***At current prices, which may exaggerate the actual increase in volume.
t Estimated.
36404 7-62
(Personal
consumption)
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the period if the rate of growth is steady. Consumption of goods, in
contrast, is planned to rise by 30 to 35 percent per capita (judging
from the goals for real income or wages), or some 50 to 55 percent in
all. This goal for consumption is as unrealistic as the goal for agri-
cultural production, on which it is largely based.
The recently approved Hungarian plan for 1961-65 contrasts
sharply with those of the other Satellites in its relaxation of the
investment drive of recent years. The original plan directives of 1959
specified a total of gross fixed investment in 1961-65 that could have
been realized with a moderate rate of growth after the large increases
of the preceding 3 years. Planned investment in 1961 was set at only
five-sixths of that in 1960, however, and the planned total for 1961-65
has been reduced from a range of 200 billion to 205 billion forints at
1959 prices to about 192 billion forints.
The Hungarian regime apparently has scheduled moderate in-
creases or small decreases in investment expenditures for the first
years of the period, to be followed by large increases during the later
years that would make planned investment in 1965 about 28 percent higher
than investment in 1960. According to the announcement of the Hungarian
plan, the cut in the investment goal for 1961-65 was both possible be-
cause of the considerable overfulfillment of earlier investment plans
and necessary because of stepped-up expenditures for national defense.
The 4-percent annual rate of growth scheduled for personal consumption
is somewhat lower than the rate planned for gross fixed investment and
considerably lower than the rate claimed for personal consumption in
1955-59. Although national income is supposed to increase 6.3 percent
annually, the planned rate for national income available for domestic
use apparently has been held to approximately 5 percent so that the re-
gime will have the resources necessary for payments on its foreign debts.
b. Specific Plans for Consumption
Consumers in all of the countries have prospects of mate-
rially improved living conditions if the plans for consumption of goods
are carried out. On a per capita basis the planned annual increases in
personal consumption amount to about 3.5 percent in Hungary, 4.5 percent
in Poland, and -- much less reasonably -- about 5 or 5.5 percent in
Czechoslovakia and Albania. The planned annual increases per capita in
East Germany and Rumania are still hijler, amounting to about 6 and 8
percent, respectively. Sustained gains of this magnitude seem unlikely
under almost any circumstances, and East Germany and Rumania probably
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will have difficulty exceeding much more than one-half of the planned
increases in consumption. But even this degree of success would mean
appreciable improvement of living standards. The increases planned in
the consumption of the urban population and the rural population appear
to be fairly similar in each country, but, as noted previously, the
goals established for the latter group are based on objectives for
agricultural growth that are very unrealistic in some instances.
Planned changes in the composition of consumption of goods
continue the trends of recent years with few known exceptions. One of
the principal objectives of the agricultural plans is an improvement
in the quality and variety of the diet by increasing supplies of live-
stock products, fruits, and vegetables. At the same time, the regimes
would like to reduce the proportion of the total food supply that is
imported. Per capita consumption of meat is scheduled to rise by one-
sixth to one-fifth in Czechoslovakia, East Germany, Hungary, and
Poland -- the four countries for which data are available -- and the
increases for milk and milk products are still larger in Czechoslo-
vakia, East Germany, and Hungary (see Table 3*).
Provision is made in most of the plans for an increased
proportion of goods other than food in total consumption, especially
of durable consumer goods. Sizable increases in the consumption of
certain textiles and shoes are envisioned in East Germany, as shown
in Table 4.** Such is not the case, however, for shoes in Czechoslo-
vakia, which is comparatively well off in this regard, or for fabrics
and shoes in Poland, where consumers seem more interested in increas-
ing their purchases of foods than of soft goods -- in part because of
the relatively high prices and often poor quality of such goods.
An impression of the advances planned in supplies of dur-
able consumer goods is provided by the following data for certain elec-
trical household appliances:
* Table 3 follows on p. 22.
** Table 4 follows on p. 23.
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Year Preceding
the Plan Period Plan for 1965
Stock per Hundred Households
(Units)
Czechoslovakia
Television sets 21 56
Refrigerators 11 33
Washing machines 56 67
East Germany
Television sets 6
Refrigerators
Poland
77
2 27
Stock per Hundred Inhabitants
(Units)
Television sets 1.5 6.4
Radios 13.6 18.9
Refrigerators 0.5 2.0
Washing machines 4.7 12.5
Retail Sales per Thousand Inhabitants
(Units)
Hungary
Television sets 1.4* 12.0**
Refrigerators 0.4* 2.5**
Rumania
Television sets N.A. 6.7
Radios N.A. 15.5
Refrigerators N.A. 2.6
Although it is obvious that a considerable improvement is
to be made in supplies of these products, especially of television***
**
***
1958 rather than 1960.
Approximate average annual sales during 1961-65.
Text continued on p. 24.
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Table 3
Four European Satellite Countries
Planned Growth of Consumption Per Capita of Selected Foods
During the Period Ending in 1965 2/
Consumption Per Capita
Year Preceding
Planned Increase
Unit of Measure
the Plan Period12/ Plan for 1965
(Percent)
Czechoslovakia
Flour
Kilograms
132
127
-4
Potatoes
Kilograms
121
124
2
Vegetables
Kilograms
78
83
6
Sugar
Kilograms
36.2
39.2
8
Meat
Kilograms
56
65
16
Milk and milk products
(milk equivalent)
Kilograms
196
247
26
Fats and oils (pure
fat equivalent)
Kilograms
20.3
22.5
11
Eggs
Number
179
200
12
East Germany
Meat
Kilograms
50.8
59.2
17
Milk
Kilograms
97.4
141
45
Butter
Kilograms
11.9
13.5
13
Margarine
Kilograms
10.4
10.4
o
Cheese
Kilograms
3,8
5.2
37
Eggs
Number
181
250
38
Hungary
Sugar
Kilograms
26
30.7
18
Meat
Kilograms
45.2
53.2
18
Milk and milk products
(milk equivalent)
Liters
148.1
200
35
Eggs
Number
156
187
20
Poland
Grain (processed)
Kilograms
144.4
135.0
-7
Sugar
Kilograms
28.3
35.0
24
Meat
Kilograms
4.5
5.2
16
Milk and milk products
(milk equivalent)
Kilograms
37.3
44.9
20
Butter
Kilograms
211.9
240.9
14
Eggs
Number
143.9
166.4
16
a. The plan period is 1959-65 for East Germany and 1961-65 for the other countries. Data for
Czechoslovakia are from source Li, and data for the other countries are from the plan documents
listed in Appendix B. Data shown for the year preceding the plan period differ in some in-
stances from data in the latest official statistical yearbooks. Although useful as indicators
of the planned growth of consumption, the data differ in coverage in some instances and thus are
not necessarily comparable internationally.
b. Planned consumption for Czechoslovakia.
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Table 4
Three European Satellite Countries
Planned Growth of Consumption Per Capita
of Selected Textiles and Shoes
During the Period Ending in 1965 2/
Consumption Per Capita
Planned
Unit Year Preceding Plan Increase
of Measure the Plan Period for 1965 (Percent)
Czechoslovakia
Knitwear Pieces 5.812/
Shoes Pairs 4.212/
East Germany
6.4 2/ lo 2/
5J
Cotton and
cotton-type
fabrics
Square meters
20
33
65
Wool fabrics
Square meters
2
4.5
125
Knitwear
Pieces
6.6
8.2
24
Leather shoes
Pairs
1.2
2.1
75
Poland
Cotton and
cotton-type
fabrics
Linear meters
18.5
20.3
10
Wool and
wool-type
fabrics
Linear meters
2.18
2.48
14
Knitwear (as
yarn)
Kilograms
0.66
1.07
62
Leather shoes
Pairs
1.32
1.53
16
a. The plan period is 1959-65 for East Germany and 1961-65 for the
other countries. Unless otherwise indicated, data are from the plan
documents listed in Appendix B.
b. 2/
c. This goal was raised significantly in the second half of 1961.
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sets, a great variety of other types of household appliances now fairly
common in the industrialized countries of the West are still scarce in
the Satellites. Plans for supplies of passenger automobiles are espe-
cially interesting in the light of long-term goals of catching up with
Western countries. Stocks of automobiles are very small throughout the
area at present, and even Czechoslovakia plans retail sales of only three
automobiles per thousand inhabitants in 1965. As a substitute, supplies
of motorcycles, motorscooters, and motorized bicycles as well as ordi-
nary bicycles will continue to be increased substantially.
All of the new plans include housing programs that are
significant not only for the moderate benefits that they promise during
the period but also as a test of the willingness of the regimes to make
the sustained 15-year or 20-year efforts needed for real improvement of
housing conditions. As shown in Table 51* the highest announced goal
in terms of the number of dwellings to be constructed per thousand in-
habitants is found in Czechoslovakia. By raising the annual output of
dwellings 60 percent above that of 1955-59, the Czechoslovak regime
hopes to produce an average of seven dwellings annually during 1961-65
for each thousand inhabitants. The official view is that this program
will solve the housing problem in Prague and other industrial centers
such as Karlovy Vary, Usti-on-Elbe, and Ostrava but that 5 more years
will be required elsewhere. The objectives in Poland and East Germany
are nearly as high, amounting to nearly 6.5 dwellings per thousand
inhabitants. These goals require a two-thirds increase in the annual
output of dwellings in Poland and a doubling of the annual output in
East Germany above that of 1955-59.
Rumania plans to triple the number of dwellings constructed
by the state or with financial assistance from the state, but this pro-
gram accounts for only a fraction of the total. No goals have been
announced for private construction not financed by the state, which in-
creased rapidly in 1956-58 but declined in 1959. It may be noted, how-
ever, that if private activity merely continues at the level of 1959
(104,000 dwellings) and if the plan for state and state-aided construc-
tion is fulfilled, the total annual construction during the Six Year
Plan would average about 8.5 dwellings per thousand inhabitants, or
more than is planned in any of the other countries.
In Hungary, housing conditions, although poor, are not quite
so bad as in Poland, Rumania, and Albania. Hungary's plan to construct
five dwellings annually per thousand inhabitants will require only a
small boost in its recent efforts. Like Poland, Hungary plans to make
a greater effort in urban areas than in rural areas. In Albania the
plan gives a goal only for urban dwellings; 1,360,000 square meters of
* Table 5 follows on p. 25.
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Table 5
Five European Satellite Countries
Construction of Dwellings 2/
1955-59 and Plan for the Period Ending in 196512/
Thousand Dwellings
Planned Average Annual Number
of Dwellings as a Percent
of the Average Annual Number
Constructed in 1955-59
Planned Average
Annual Number per
Thousand Inhabitants f/
Average Annual Number
Planned Total
for the Period
Ending in 1965
1955-59
Plan for the Period
Ending in 1965
Czechoslovakia
60.1
96.4
482
160
7.0
East Germany 1/
54.0
110.3
772
204
6.4
Hungary
39.3 2/
50
250
127
5.0
In Budapest
7.6
11.2
56 1/
147
6.2
Outside Budapest
31.7
38.8
194 1/
122
4.7
Poland E/
113.8
187.0
935
164
6.3
Urban
66.3
122.4
612
185
8.7
Rural
47.5
64.6
323
136
4.2
Rumania
State and state-aided 12/
16.4
50
300
305
2.7
a. Unless otherwise indicated, data are from the official statistical yearbooks and plan documents listed in Appendix B.
b. The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the other countries.
c. Based on the population at the beginning of the plan.
d. The plan includes a total of 81,000 dwellings, or 11,600 per year, to be obtained through remodeling and repair or through
conversion of space from other uses.
e. Including additions through conversion of space from other uses and through subdivision of existing dwellings.
f. /
g. Assuming the same average number of rooms per dwelling in urban and rural areas in 1955-59 and an average of 2.94 rooms per
dwelling in rural areas in 1961-65.
h. Private construction not financed by the state accounted for 84 percent of the total number of dwellings built in 1955-59.
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housing space are supposed to be built, or 75 percent more than in
1956-60. Because population is expected to grow more rapidly in Poland
and Rumania and especially in Albania than in the other countries, the
regimes will have to devote a larger share of housing construction to
the satisfaction of new needs and will have a smaller share available
for improving the housing of the present population.
In terms of the number of dwellings to be constructed per
thousand inhabitants, the objectives of the new Satellite plans are
quite similar to recent achievements in most Western European countries
(although much lower than in West Germany and Sweden). Qualitatively
and in the amount of space provided per person, however, the Satellite
programs compare less favorably with housing efforts in Western Europe,
and even if the plans are fulfilled, the Satellites will have on the
whole much less adequate housing than Western European countries in
1965.
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III. Factors in Planned Economic Development
1. R7p1oyment and Labor Productivity
Circumstances affecting the expansion of employment have differed
considerably among these countries in recent years and will continue to
differ through 1965, making increases in employment much more important
in some of the plans than in others. Trends in the population of working
age (defined here as ages 15 through 64 for both men and women) probably
will be a little more favorable in each country than in recent years.
The percentage increase in the population of working age is expected to
be slightly larger in 1961-65 than in 1956-60 in Czechoslovakia, Hungary,
Rumania, and Albania and appreciably larger in Poland, and the decline in
East Germany is expected to be sliditly smaller than in 1956-60. In most
of the countries the increase in 1961-65 equals or exceeds the prospective
increase in the total population, as the following tabulation shows,* but
the age composition of the population in East Germany is such that a 5-
percent decline in the population of working age is in prospect, even
though the total population is expected to increase slightly.
Percent
Estimated Increase
in Population
of Working Age
Estimated Increase
in Total Population
1956-60
1961-65
(1961-65)
Czechoslovakia
4.1
4.9
3.4
East Germany**
-5.9
-4.7
0.6
Hungary
1.5
2.8
2.4
Poland
3.4
8.4
7.0
Rumania
4.3
5.2
4.6
Albania
13
15
15
The ratio of actual employment to the population of working age
will be affected by a number of factors, the net effect of which is
* The data refer to populations on 1 July and were obtained from the
Foreign Manpower Research Office, US Bureau of the Census.
** Assuming that net emigration during the remaining years of the plan
period will be negligible. The estimated decline in the population of
working age during the period of the Seven Year Plan (1959-65) is 6.7
percent.
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expected to be a small decline in the ratio in Czechoslovakia, Poland,
and Albania; a small rise in Hungary; and no essential change in East
Germany and Rumania. Each country is extending its compulsory require-
ments for education, but the nature and timing of these reforms are
such that a significant effect on the size of the labor force during
the period under consideration is anticipated only in Czechoslovakia,
Hungary, and East Germany. In Czechoslovakia, full implementation of
plans to make the ninth grade compulsory would increase school enrollment
by 300,000 persons of working age, according to an official estimate, or
about three-fourths of the expected increase in the population of working
age. It is unlikely, however, that the plans will be fully implemented
by 1965, and the loss in the number of employable persons may be well
below 300,000. The reform in Hungary, which decrees compulsory education
until the age of 16 except for persons who have completed 8 years of
school and are working more than 4 hours a day, is expected to have a
comparatively small effect on the size of the labor force. East Germany
raised its requirement for compulsory schooling in 1958 but softened the
effect on the already strained labor supply by instituting work programs
in the schools and requiring that students work a year before starting
programs of higher education.
A continuing shift of people to urban areas also will tend to
reduce participation rates because the proportion of women taking jobs
is lower in cities and towns than in the countryside. Participation
rates will be affected favorably in each country, however, by a growing
proportion of men in the population of working age. Moreover, the re-
gimes plan vigorous efforts to increase participation rates among urban
women of working age as well as among older men and women. The importance
of the campaign to recruit more women is illustrated by the Czechoslovak
plan, which assumes that three-fifths of the planned increase in wage and
salary earners will be women.
Published goals are incomplete, but it appears that the major com-
ponents of employment are scheduled to increase approximately as follows
compared with the increases during the preceding period of equal length*:
* Published data on employment have been supplemented with estimates and
projections obtained from the Foreign Manpower Research Office, US Bureau
of the Census. The planned changes shown for agricultural employment in
Rumania and Albania in particular should be regarded as approximations
because they were derived as residuals.
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Increase
(Percent)
Czechoslovakia
?
Total
Nonagricultural
Sectors
Agriculture
Total
Industry
1956-60
2
14
17
-23
Plan for 1961-65
3
11
9
-19
East Germany
1952-58
9
14
12
-9
Plan for 1959-65
-6
-1
1
-29
Hungary
1956-60
3
13
17
-11
Plan for 1961-65
6
12
12
-4
Poland
1956-60
7
12
11
3
Plan for 1961-65
6
11
9
1
Rumania
1954-59
9
12
16
8
Plan for 1960-65
6
33
27 to 31
-5
Albania
1956-60
13
34
39
7
Plan for 1961-65
12
25
20
8
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These figures show that the planned changes in total employment
and its major components differ considerably among the countries and in
some instances contrast greatly with the changes of earlier years. In
East Germany, for example, rising employment made a significant contri-
bution to economic growth during the 7 years preceding the present Seven
Year Plan, but the unfavorable age composition of the population and con-
tinuing emigration during 1959-61 have combined to make the supply of
labor a major constraint on economic growth during the new plan period.
An appreciable decline in total employment seems unavoidable, and even if
the Ulbricht regime is able to reduce agricultural employment by 29 per-
cent, as planned, employment in the nonagricultural sectors is likely to
decline slightly.
Employment in Czechoslovakia is scheduled to develop in much the
same way as in 1956-60. The gain in total employment will be small, but
a further substantial transfer of labor from agriculture is supposed to
permit sizable gains in industry and other nonagricultural sectors. This
shift of labor will have somewhat less effect on the growth of nonagri-
cultural employment than in the past, however, for agricultural employ-
ment and the planned cut in it are smaller than before, and nonagricul-
tural employment is larger. For industrial employment, therefore, the
planners could foresee a rate of growth only one-half as high as in
1956-60. The Czechoslovak plan for manpower appears to be generally
feasible. In fact, it seems conservative in its objective for indus-
trial employment, which in 1960 and 1961 grew at a rate much higher
than that planned for 1961-65.
No great pressure on labor resources has yet developed in the
other countries nor seems likely to develop for some time. Total employ-
ment is expected to rise more rapidly in these countries than in Czecho-
slovakia and East Germany, and they continue to have underemployed labor
in agriculture. To a great degree, the planned increases in nonagri-
cultural employment in these countries show how much labor the regimes
believe can be absorbed efficiently and not the maximum amount that can
be made available. The problem is not so much one of simply increasing
the number of workers outside agriculture as of training and equipping
them and providing food supplies, housing, and municipal services for
them when they move to urban centers.
It appears, then, that during the current plan periods as in
earlier years, the size and rate of development of industry and other
nonagricultural sectors in these countries generally will permit only
a small reduction in agricultural employment, although increases prob-
ably will be avoided except in Albania. The Rumanian plan seems es-
pecially ambitious in this respect, for it implies that the persistent
rise in agricultural employment in the 195015 is to be halted and re-
versed through an increase of one-third in nonagricultural employment.
Poland's intention of continuing agricultural employment at the 1960
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level and limiting the increase in nonagricultural employment to only
11 percent apparently reflects the emphasis of the regime on agricul-
tural development and the assumption that agriculture will remain
largely uncollectivized in 1965. The Hungarian regime plans that agri-
cultural employment will decline much less in 1961-65 than in 1956-60.
This plan reflects increased emphasis on agricultural development as
well as completion of -6he drive to socialize agriculture, which con-
tributed to the reduction in agricultural employment in 1956-60. Total
employment is planned to grow more rapidly than in 1956-60, however,
and this growth will permit nonagricultural employment to expand at
about the same rate as in 1956-60.
In Czechoslovakia and East Gellany, the programs for much
greater mechanization of farm work are a vital part of the plans to
transfer workers from agriculture to other sectors while agricultural
production is being raised. Further mechanization is required also in
the other four countries, for production per worker is supposed to in-
crease, and some countries -- particularly Poland -- are eager to sub-
stitute machinery for animal draft power in order to save feed and to
improve the efficiency of farming operations. The mechanization pro-
grams in these four countries seem to go further than necessary, how-
ever, and the plans for mechanization appear to have been inspired more
by the ideology of agricultural socialization and large-scale farming
methods than by urgent economic need.
In spite of the high priority of industry in the plans, a fur-
ther shift of emphasis from production-at-any-cost to improved levels
of labor productivity is evident, and most of the regimes therefore
have scheduled only moderate increases in employment. Because of ex-
cess labor in industry, the Polish regime in particular has been suc-
cessful in maintaining a rapid rate of industrial growth in recent
years with little increase in employment, and it plans a rate of growth
for employment during 1961-65 that is even smaller than the rate in
1956-60 (although larger than that of 1958-60). Industrial employment
also is planned to grow less rapidly than in recent years in each of
the other countries except Rumania and is to grow less rapidly than
total nonagricultural employment in most of the countries, as shown in
the preceding tabulation.*
?
Plans for industrial employment in Czechoslovakia, Hungary,
Poland, and Albania probably can be realized and even exceeded without
strain. The increase of 4-percent planned for state industry in East
Germany may be fulfilled through further absorption of private and
cooperative enterprises, but the regime will do well to keep total
industrial employment at the 1958 level. Rumania's rather high goal
raises some difficulties -- particularly in regard to the availability
* P. 29, above.
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of workers with suitable training and experience -- and probably will
not be realized fully even though the increase in 1960 reached the
planned rate.
Employment in construction is supposed to be increased sig-
nificantly in most of the countries as part of the effort to overcome
shortcomings in the past performance of the construction sector and
accomplish the formidable tasks assigned to it. Czechoslovakia and
East Germany, however, will rely very heavily on increases in the
productivity of the existing work force. The Polish plan stipulates
rather large gains in employment in the fields of education, cultural
activities, social welfare, and municipal services. The other coun-
tries also have promised large gains in services of these kinds, and
except possibly in East Germany, some provision has been made for in-
creased employment in these fields.
Although the contribution of additional workers to the growth
of industrial production is important in most of the plans, the pre-
dominant part of this growth is to be derived from increases in labor
productivity. Rising productivity is supposed to account for nearly
all of the industrial expansion in East Germany and for two-thirds or
more of the expansion in all the other countries except Albania. In
terms of net production per worker, the East German plan specifies a
much more rapid rate of growth for labor productivity than is believed
to have been achieved in recent years, and this goal will have to be
abandoned. The rate planned in Rumania is also high, although not
higher than that estimated for 1955-59. The goals for industrial labor
productivity in Czechoslovakia, Hungary, and Poland are less extreme
but call for some improvement over the estimated accomplishments of
1955-59,* as shown in the following tabulation:
Average Annual Increase
(Percent) Planned Total
for the
Plan for the Period Ending
Estimated Period Ending in 1965
1955-59 in 1965 (Percent)
Czechoslovakia
6.5
7.4
43
East Germany
5.5
9.3
86
Hungary
4
5.7 to 5.9
32 to 33
Poland
6
7.0
4o
Rumania
8.5
8.1 to 8.7
60 to 65
Albania
5
4.9
27
* The Polish goal, however, is no higher than the increase achieved
in 1958-60.
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Because working hours are supposed to be reduced, output per
man-hour in several of the countries will have to increase even more
than the rates shown above in order to realize the goals for labor
productivity. This factor is particularly important in Czechoslovakia,
which has scheduled a cut in the work week from the present 46 hours
to 40 hours in underground mines and 42 hours in other industrial
activities. As a result, the regime expects the number of man-hours
worked to be roughly the same in 1965 as in 1960. Hungary intends to
continue its program of reducing the work week to between 36 and 42
hours in jobs that threaten health, and Albania plans to cut the work
day for workers in underground mines and construction from 8 to 7 hours
To support the large improvements scheduled in labor productivity,
considerable investment in industry is called for in each country, as
shown in the following section. If these plans are carried out, the
stock of fixed assets per industrial worker will grow by roughly one-
fourth in Poland, one-third in Czechoslovakia, and one-half in East
Germany and Rumania. Even if the investment plans are not completely
successful, as will most likely be the case, increases in fixed assets
per worker probably will be substantial.
All of the plans stress the importance of raising the technical
level of industry by modernizing old plants and incorporating the newest
technology in new plants, and although the primary aim in some instances
is to reduce capital or material costs, most of the desired technical
advances are laborsaving. Increases in labor productivity should be
especially large in such industries as chemicals, in which mechanization
and even automation of operations is to be greatly expanded.
The regimes also expect labor productivity to be stimulated by
strengthened work incentives, improved labor skills, a smoother flow
of materials, and better organization of work within the enterprise.
Attempts will be continued in East Germany and Poland to broaden the
application of "technically determined" work norms, although opposition
to them is very strong. Even in countries such as Czechoslovakia and
Rumania, where basic changes in work norms and wage rates were insti-
tuted fairly recently, further changes may well be introduced in order
to keep up the pressure for higher production. "Socialist competitions"
and other types of drives for productivity no doubt also will continue
to be used to this end. All of the plans rely on further training to
increase the productivity of workers, and incentive systems for managers
have in some cases been modified in ways that will encourage them to
give more attention to labor productivity and other factors affecting
the profitability of production.
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The Satellites generally have found it difficult to reach their
goals for labor productivity in industry, and although the measures
planned by the regimes promise continuing rapid growth of labor produc-
tivity, they probably will not be sufficient to permit plan goals to be
reached in several of the countries. In Czechoslovakia, output per man-
hour may continue to grow at rates equaling or exceeding those of 1955-59,
but output per man-year seems likely to grow somewhat less rapidly than
before if hours of work are reduced as planned. Achievement of produc-
tion goals consequently will require considerably larger increases in
industrial employment than have been planned.
Also, it seems doubtful that Rumania can maintain the rate of
8.5 percent estimated for 1955-59 if employment is boosted by more than
one-fourth, as now planned. But with a more moderate and judicious ex-
pansion of employment, recent gains in labor productivity in Rumania
probably can be continued and the productivity plan (although not the
production plan) probably can be fulfilled. Labor productivity in
Poland probably will grow at much the same rate as in 1955-59, and a
slight improvement over the achievement of that period may be possible
in East Germany, resulting in an annual rate of approximately 6 percent
in contrast to the rate of 9 percent that was planned initially. Be-
cause of the adverse effect of the 1956 revolt on the growth of labor
productivity during 1955-59, Hungary probably also will be able to im-
prove on its past performance -- possibly to the extent of reaching the
planned rate of nearly 6 percent annually.
2. Investment
a. Volume and Distribution
One of the most fundamental decisions underlying the plan
of each country except Albania and Hungary is that the already high
proportion of national income devoted to investment in fixed capital
should be increased further. Only in this way, it appeared to the
regimes, could satisfactory rates of economic growth be maintained
through 1965 and during the ensuing period of 10 or 15 years that is
also taken into account. In pursuit of this objective, Czechoslovakia
and Poland have raised the goals for investment as originally announced.
Hungary, however, has cut its initial goal for the reasons stated above.
Czechoslovakia, Hungary, Poland, and Albania now plan totals of gross
fixed investment in 1961-65 that are 50 to 60 percent greater than the
totals in 1956-60 (see Table 6*). For East Germany, the increase orig-
inally scheduled in investment during the Seven Year Plan above actual
investment during the preceding 7 years is not known precisely but un-
doubtedly is rather large. The investment goal in Rumania -- like the
* Table 6 follows on p. 35.
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Table 6
Six European Satellite Countries
Planned Value of Gross Fixed Investment
During the Period Ending in 1965
Percent
Plan for the Period
Gross fixed investment 1/
Czechoslovakia
East Germany
Reported Average
Annual Increase
1955-59 .9./
Ending in 1965
Average Annual
Increase Total
Increase
12.7
159/
8.6
10.69/
51
1039/
Hungary
89/
5.1
289/
Poland
9.09/
7.9
Rumania
8.9
10.6 to 12.9
83 to 107
Albania
18
6.4
36
Total net investment (accumulation)
Czechoslovakia
N.A.
9.9
60 h/
East Germany
N.A.
8.8 to 10.0 1/
80 to 95 1/
Hungary
7.2
8.6
51
Poland
8.2 1/
7.1
41
Personal consumption of goods
Czechoslovakia
6.2
5.4
30
Hungary
7.3
4.1 to 4.2
22 to 23
Poland
6.3 1/
5.7
32
Albania
N.A.
8.4 to 9.2 1/
50 to 55 1/
Total consumption of goods
East Germany
6.4 2/
6.0 to 6.5 1/
50 to 551/
Po land
6.5 1/
5.5
31 j
Rumania
N.A.
8.1 to 9.2
60 to 70
National income available
for domestic use
East Germany
N.A.
6.8
59
Poland
6.8 i/
6.0
34 1/
a. Unless otherwise indicated, data are from the official statistical yearbooks and plan documents listed in
Appendix B.
b. The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the other countries.
C. 1956-60 for Poland and Albania.
d. The data refer to total investment in Czechoslovakia, East Germany, and Poland and investment in the
socialist sector in Hungary, Rumania, and Albania except for the apparent exclusion of investment by collective
farms from their own funds in the last two countries. Capital repairs are included only for Czechoslovakia
and East Germany. Planned increases shown for Czechoslovakia and Albania are projections based on the assump-
tion of a constant rate of growth during the plan period. The planned increase shown for Rumania is a pro-
jection based on actual investment in 1960-61 (estimated in terms of 1955 prices) and the assumption of a
constant rate of growth in subsequent years.
e. 1956-60, at current prices, based on data in sources 115.1,2iy, and
f. Approximate increase, including construction, in source
g. Estimate based on official data at current prices and an estimated price index for investment goods.
h. /
i.29/
j? 21/
1. Estimated.
m. At current prices.
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production goals -- is extremely ambitious, specifying an approximate
doubling of investment from 1954-59 to 1960-65.
The planned increases in investment from the year preceding
the plan period to 1965 are a more meaningful measure of the intensity
of the investment programs, however, because they may appropriately be
compared with the planned increases in national income during the period.
As shown in Table 6,* the scheduled increase in investment during the
period is significantly smaller than the scheduled increase in the 5-year
or 6-year totals in all five countries for which the comparison can be
made. This relationship generally reflects the recent upsurge of invest-
ment activity, which raised to a comparatively high level the value of
investment in the year preceding the period of the new plans. For East
Germany and Poland this relationship also reflects the planned decline in
annual rates of growth of investment during the period.
The planned increases in investment in major economic sectors
reveal some similarities and also some important differences in emphasis
among the countries, as shown by the data in Table 7.** Industrial in-
vestment is scheduled to rise much faster than total investment in Czecho-
slovakia and Albania and somewhat faster than the total in East Germany,
Hungary, and Rumania. Hungary's draft plan of 1959 specified a less rapid
growth of investment in industry than in the economy as a whole, but this
relationship was sharply reversed in the new plan law, which raised the
goal for industrial investment even though the goal for total investment
was reduced. In Poland, the plan provides that industrial investment will
grow less rapidly than total investment -- although the gap between the
two rates has been progressively reduced in the various versions of the
plan -- and there is correspondingly greater emphasis on agricultural in-
vestment than in most of the other countries. A sizable increase is in-
dicated for investment in transportation and communications facilities in
each country because opportunities to use existing capacity more inten-
sively are diminishing, but only Czechoslovakia and Poland plan to raise
the share of this sector of the economy in the total investment.
In the case of "nonproductive" investment, which comprises
expenditures on housing and social and cultural facilities and thus sup-
ports economic growth only indirectly, no pronounced change in the per-
centage allocation of recent years is indicated by the scattered figures
now available except in Hungary. The new Hungarian plan substantially
reduces the increase previously planned for "nonproductive" investment
together with investment in construction and trade. Fulfillment of the
previously announced objective of building 250,000 dwellings in 1961-65
is to be achieved with about the same amount of investment as in 1956-60,
* P. 35, above.
** Table 7 follows on p. 37.
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Table 7
Six European Satellite Countries
Planned Growth of Gross Fixed Investment, by Economic Sector
Under the Flan Ending in 1965 2/
Increase Between the Indicated Periods (Percent)
Hungary Poland
(1956-60 to 1961-65) (1956-60 to 1961-65)
Czechoslovakia East Germany Rumania Albania
(1956-60
to 1961-65)
Total 67
Industry 88
Agriculture and forestry 60
Transportation and communications 77
Construction 32
Trade 4o
Housing 40
Education and culture 68
Health and social welfare 103
Municipal services
{126
Other
(1958 to 1959-65 Draft
Average) 12/ Plan 21
Plan
Law 1/
Draft
Plan 2./
Plan
Law 1/
(1954-59
to 1960-65) B./
(1956-60
to 1961-65)
65 56 to 60
4o
51
53
98 to 110
51
76 45
50 11/
45
49
110 to 125
85
54 75 to 84
70
83
82
100
12
N.A. 54
43
61
78
100
40
89
N.A.
40
15
90
N.A.
N.A.
-29
-1
9
N.A.
N.A.
59
I
3
50
37
150
N.A.
N.A.
61 to 69
(1.6
(48
54
41
( 30
60
(
N.A.
48
45
85
N.A.
N.A.
1
18
N.A.
N.A.
a. Unless otherwise indicated, data are from the official statistical publications and plan documents listed in Appendix B. The coverage
and price basis of the underlying values are as described in Table 6, footnote "c," except that capital repairs are not included in the data
for Czechoslovakia in this table, and the data used here for planned investment in Hungary under the plan law are less comprehensive than the
data in Table 6.
b. The increases are based on data in source 11/ for the total, source 12/ for industry, sources li/ and 1A/ for agriculture and forestry,
source 1V for construction (which covers only the state construction industry), and sources 116/ and 11/ for housing, together with data in
the plan law.
c. The increases are based on estimated investment in 1956-57 in terms of 1959 prices, reported investment in 1958-60 in source 1_/, and
planned investment under the draft plan of September 1959. 12/
d. The increases are based on estimated investment in 1956-57 in terms of 1959 prices, reported investment in 1958-60 in source 20/, and
planned investment under the plan law of October 1961, as indicated by a percentage breakdown of planned total investment in source 21/.
Because this breakdown is believed to refer to the planned investment total of 180 billion forints specified in the plan law rather than
the more comprehensive total of 192 billion forints mentioned in the source, the increase shown here for total investment is smaller than
that shown in Table 6, and the increases shown for the various economic sectors are understated in varying degree.
f. Except for the total increase, which is given in the plan law, the increases are based on data for 1956-60 in source 21/.
g. The increases are estimates based on data in the draft directives and source
h. Including the construction sector.
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and other "nonproductive" investments now are scheduled to rise only
one-sixth.
The planned distribution of investment during the period
ending in 1965 generally is similar in the various countries, but
there are some important differences, as shown in the following per-
centage breakdowns*:
Total
Czecho-
slovakia
East
Germany
Hungary
Poland
100.0
100.0
100
100.0
Industry
45.6
42.2
48**
40.1
Agriculture
and forestry
15.4
9.8
20
14.8
Construction
2.2
1.0***
N.A.
2.1
Transportation
and communi-
cations
10.5
9.8t
11
11.1
Trade
2.6
N.A.
2
2.2
Housing
13.9
13.3
8
18.3
Education, cul-
ture, health,
and social
welfare
5.5
3.0
N.A.
6.4
Sectors not ac-
counted for
4.3
20.9
11
5.0
Rumania Albania
100 100
59 54
13 13
2 N.A.
9 13
N.A. N.A.
7 to 8
3 to 4
6 5
* The coverage and price basis of the underlying values are as de-
scribed in Table 6, footnote "c," except that the Czechoslovak data in
this tabulation do not include capital repairs.
** Including construction.
*** State construction industry only.
t Transportation only.
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The shares of total investment allocated to industry are character-
istically large, the proportion in Rumania being particularly notable.
However, the exclusion of private and some cooperative investment from
the data on Rumania results in an overstatement of the share of indus-
try and an understatement of the share of housing (and possibly of agri-
culture).
In spite of the gains of recent years and the further gains
that are planned, the allocations for agriculture continue to be rela-
tively small. The especially large increase planned in agricultural in-
vestment in Poland would not give the sector an unusual share of total
investment, even by Satellite standards. Only in Czechoslovakia and
East Germany is the percentage share at all comparable to the share of
agriculture in the national product. Programs for the expansion and
modernization of transportation and communications facilities will con-
tinue to absorb a sizable share of total investment in each country, as
will housing, but the shares designated for the construction sector are
consistently s'mall in spite of the large percentage increases planned
in some countries for investment in this sector.
Plans for investment within the industrial sector show
strong support for development of the chemical industry. The percent-
age allocation for this branch apparently is planned to rise in each
country, generally reaching between one-fifth and one-sixth of total
industrial investment. Beyond this, the scattered information now
available indicates (1) larger shares of industrial investment for the
mining of metals and metallurgy in Czechoslovakia and Poland; (2) larger
shares for electric power in East Germany and Hungary; (3) smaller shares
for fuel extraction in East Germany, Poland, and Rumania (but not Czecho-
slovakia), reflecting greater reliance on imported crude oil in most in-
stances; and (4) smaller shares for the machinery and equipment indus-
tries as a group in all countries except possibly Rumania and Albania
because moderate expenditures on the expansion and modernization of ex-
isting plants are considered sufficient to permit much higher output.
The share of light industry and food processing in total industrial
investment generally is planned to be about the same as in recent years
or slightly higher.
The scheduled increases in agricultural investment of be-
tween 54 and 100 percent (excluding the surprisingly small increase
planned in Albania*) allow for greatly expanded purchases of tractors,
* According to Premier Shehu, an increase of only 12 percent is planned
in agricultural investment because some of the most important reclamation
projects were completed during the previous Five Year Plan. Nevertheless,
the investment allocation for agriculture is difficult to reconcile with
the planned doubling of the tractor park and the planned 13-percent in-
crease in the arable land area.
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combines, and other types of farm equipment. With farm collectivization
now basically complete except in Poland, the regimes believe that they
have the organizational basis for effective use of machinery, permitting
production to be raised with no increase -- and in some countries, a
substantial decrease -- in employment. The planned increase in the park
of agricultural tractors, for example, ranges from 63 percent in Czecho-
slovakia to about 200 percent in Rumania (see Figure 3* and Table l)4**).
Even with increases of this magnitude, agriculture generally
would remain less mechanized in the Satellites than !_t is now in Western
Europe. Differences in the average size of tractors prevent precise
comparisons, but it appears that the planned amount of arable land per
tractor in Czechoslovakia in 1965 is of the order of two or three times
that in West Germany, Austria, and the UK in 1959 and somewhat larger
than in France. The relationships planned in Hungary, Poland, and
Rumania are somewhat less favorable than the ratio in Italy in 1959,
but they are much more favorable than the ratios of 1959 in such coun-
tries as Greece and Yugoslavia.
Large amounts of investment funds also are expected to be
used for farm buildings. Many more buildings will be needed as numbers
of livestock and farm machines rise, and with the recent enlargement of
the collectivized area and consequent greater centralization of farm
operations, there is an additional need for new facilities. Extensive
programs of land improvement constitute another major claim on invest-
ment funds. In addition to the efforts planned throughout the area to
improve land drainage, substantial enlargement of irrigated areas is
envisioned in Czechoslovakia, Hungary, Rumania, and Albania.
In Poland the success of the program for agricultural in-
vestment depends to an unusual degree on the response of private peas-
ants, whom the regime expects to make large expenditures for investment.
The plan calls for private investment in 1961-65 to be nearly three times
as large as in 1956-60, rising from 38 percent to 57 percent of the total
investment in agriculture. To make such a plan more palatable, Party
Secretary Gomulka has emphasized that state investments in industrial
plants manufacturing farm equipment, fertilizers, and chemicals for plant
protection support the agricultural program very directly. It remains to
be seen whether or not the peasants are sufficiently confident about the
future of private farming in Poland to rmake such expenditures, especially
since Gomulka feels compelled to state at intervals that socialized agri-
culture is superior and that peasants eventually will want to join col-
lective farms.
* Following p. 40.
** Appendix A, p. 87, below.
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SIX EUROPEAN SATELLITE COUNTRIES
Planned Growth of the Park of Agricultural Tractors
During the Period Ending in 1965*
and Planned Amount of Arable Land per Tractor in 1965
CZECHOSLOVAKIA
PARK OF TRACTORS
(Thousands)**
Year preceding the plan period*
94 Plan for 1965
?\r'
57
EAST GERMANY
110
48
HUNGARY
POLAND
RUMANIA
ALBANIA
49
4
9
76
82
154
150
PLANNED AMOUNT OF ARABLE LAND PER TRACTOR** IN 1965
(Hectares)
CZECHOSLOVAKIA
EAST GERMANY
HUNGARY
POLAND
RUMANIA
ALBANIA
33
45
64
57
68
*The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the other countries.
Some plan data ore midpoints of a range.
**In terms of 15-horsepovver equivalents .
T Estimated.
36405 7-62
96
166t
Figure 3
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b. Prospects for Fulfillment of Investment Plans
Many of the problems that the Satellites have encountered in
the past in carrying out their investment programs undoubtedly will con-
tinue to plague them, and these problems are likely to prevent several
of the countries from reaching their goals for investment during the
period ending in 1965. The countries frequently have experienced dif-
ficulties in producing the machinery and equipment earmarked for the
investment plans and in importing the scheduled amounts because of
production problems in the supplying country or (where Western sup-
pliers are involved) insufficient foreign exchange. The objectives
that have been fixed for the metalworking industries are very high --
typically calling for an annual growth of production of 10 to 14 per-
cent -- and will not be reached easily. As pointed out later, it is
questionable whether some of the countries will be able to produce the
amount of steel scheduled for 1965 and whether any of them will be able
to manufacture the planned amounts of machinery and equipment even if
planned supplies of steel are available. Moreover, the planners were
optimistic about the extent of excess capacity in the metalworking in-
dustries and allocated investment funds to these branches accordingly.
Shortcomings in the performance of the construction indus-
try, however, often have been a greater problem than lack of machinery
and equipment and may be so again. Even if all the necessary machinery
and equipment is available, productive facilities in the key industrial
sector cannot be commissioned as planned if construction work falls be-
hind schedule. Planned values of construction have not been reached as
a rule, although this fact sometimes is obscured by inflated pricing of
construction, and the planners have had a strong tendency to overesti-
mate the extent of possible reductions in costs. As a result, major
projects usually have not been completed on schedule or at the planned
cost. In some instances, projects have cost twice as much as planned
or taken twice as long to complete.
Timely and economical construction of numerous productive
facilities is one of the most crucial tasks of the new plans, as of
earlier ones, and the stepped-up programs of housing construction also
will make large demands on the capacity of the industry. The regimes
have attempted in the past to hold down and even reduce the proportion
of construction and assembly work in total investment in the belief
that this action would facilitate fulfillment of the plan and raise the
productivity of investment. However, little change is contemplated
from the proportions of recent years or seems possible under the cir-
cumstances. Modernization of existing facilities through the instal-
lation of new equipment is stressed in the plans, but construction of
major new industrial capacities is also essential in each country, and
a substantial effort to give the population more adequate housing is
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long overdue. It is not surprising, therefore, that the regimes con-
tinue to stress "faster, better, and cheaper" construction work, al-
though these aims are partly contradictory.
The planned annual rates of growth in construction output
range from about 7 percent in Hungary to 12 percent in Rumania, as shown
in Table 8.* Czechoslovakia and Hungary have reported gains in 1955-59
that equal or exceed those now planned, but these claims may exaggerate
their actual achievements. The Polish plan calls for some increase above
the moderate rate of growth in 1955-59, and the East German plan calls
for a small increase above the high rate of that period. The rate of
growth planned in Rumania is much higher than the rate achieved during
1955-59, a period that was marked by large gains in construction output
in some years but a decline in 1957.
The relative importance of employment and labor productivity
in the expansion of construction output is scheduled to change appreci-
ably in most of the countries. The Czechoslovak plan specifies a negli-
gible rise in employment, in contrast to the 21-percent increase of
1955-59, and a considerably more rapid growth of labor productivity.
If labor productivity does not develop as expected, however, employment
probably can be increased as a compensating measure. Poland expects
both employment and labor productivity to rise a little more rapidly
than in 1955-59. The very high goal for labor productivity in East
Germany almost certainly will prove to be unattainable, and the strin-
gent labor situation probably will preclude offsetting increases in
employment.
Because construction employment was raised to an unnecessarily
high level in Hungary and Rumania in the early 1950's, these countries
were able to increase construction output significantly in 1955-59 with a
stable or declining number of workers. Under the new plans, however,
employment is supposed to rise by one-sixth in Hungary and one-third in
Rumania. The planned rates of growth for labor productivity in construc-
tion are smaller than those claimed for 1955-59, especially in Hungary,
but they will not neeessarily be easy to achieve now that the labor force
is being used more efficiently.
?
A large part of the planned improvement in output per worker
is supposed to come from an increase in the mechanization of building
operations, which has not advanced very far in the Satellites. The
scheduled increases in investments in the construction sector, which
consist mostly of machinery and equipment, are especially large in East
Germany and Rumania. An increase of 90 percent in Rumania is intended
to permit mechanization of 85 percent of the excavation work, 95 percent
* Table 8 follows on p. 43.
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Table 8
Six European Satellite Countries
Development of Construction
1955-59 and Plan for the Period Ending in 1965 2../
Percent
Average Annual Increase
in Gross Construction Output
Planned Total Increase
for the Period Ending in 1965
Gross
Construction Employment
Output in Construction
Output per Worker
in Construction
1955-59
Plan for the Period
Ending in 1965
Czechoslovakia
10.6
9.4
57
2
54
East Germany
lo 21
11.0
lo8
-6 2/
121
Hungary
9.0 211/
7.0
40
17 2/
20
Poland
5.9
7.9
46
11
32
Rumania
5.9
12
100
33
50
Albania
9.6 1/
9.9 5/
60 E/
24 E./
29 E/
a. The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the other countries.
Unless otherwise indicated, data are from the official statistical yearbooks and plan documents listed in
Appendix B. Planned increases in output per worker in East Germany and Hungary were derived from the goals
for output and employment. Planned increases in employment in the other countries were derived from the
goals for output and output per worker.
b. Estimated.
c. Estimate based on source 22/.
d. Net construction output.
e.
f. Increase from 1951-55 to 1956-60, as anticipated in October 1960.
g. Planned increase from 1956-60 to 1961-65.
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of the preparation of concrete, and 85 percent of the handling of aggre-
gate at the principal projects. Closely allied with plans for greater
mechanization are the demands of the regimes that industrial methods be
adopted more widely. This objective requires greater use of standardized
building designs and prefabricated elements as well as larger stocks of
construction equipment.
All of the plans call for production of cement to increase
considerably faster than the volume of construction, even though it is
supposed to be used more economically than in the past. This relation-
ship will permit concrete to be substituted increasingly for such mate-
rials as bricks, steel, and wood, which either cost more or require more
labor to put in place. The projected capacity of the cement industry
seems insufficient to meet the goals in some countries, but this defi,
ciency may be overcome through increased use of blast furnace slag to
stretch out the supply of regular portland cement. Use of slag is an
economical way of augmenting the cement supply, but the resulting prod-
uct is not entirely satisfactory for some uses, notably the manufacture
of precast concrete constructions for dwellings and other structures of
standardized design. Because such concrete takes longer to set, it
Slows down the manufacturing process and prevents full realization of
the economies of mass production.
On the whole, it appears that the weakness of the construc-
tion plans lies not so much in the plans for inputs as in the volume of
completed facilities expected from these inputs. Planners in the Satel-
lites tend to be overoptimistic about time schedules and possible econo-
mies in the use of labor and materials -- in part because ambitious norms
exert pressure on the industry to make progress. Problems in producing
or importing materials and equipment are difficult to foresee, and insuf-
ficient allowance is usually made for resulting delays. Lags in construc-
tion also stem from the tendency of planners to schedule too many proj-
ects at once, unduly dispersing construction capacity. This tendency is
strengthened by the desire of industrial managers to get a "foothold in
the plan," as a Polish official expressed it, by having w9rk begin as
soon as possible on their projects.
Most if not all of the plans are predicated on reductions in
construction periods -- some of them quite large. Czechoslovakia, for
example, hopes to speed up the commissioning of productive facilities by
a reduction of 4o percent from 1959 to 1965 in the average construction
period of centrally managed projects. In Rumania, the first unit of the
powerplant at Ploesti is supposed to be commissioned in 18 months com-
pared with the 30 months required for the first units of three other
powerplants constructed recently.
The regimes recognize that the capabilities of the construc-
tion sector have been spread too thin in the past and that a concentration
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of effort on a reasonable number of projects at one time is essential
in reducing the length of construction periods. However, the pressure
from industrial managers for new capacities is very strong, and there
is some evidence that rather large numbers of projects have been
scheduled. The Rumanian plan states, for example, that 180 new plants
and 300 additions to existing plants are to be undertaken for centrally
administered industry during 1960-65, compared with about 200 new plants
or additions in the producer goods industries, 20 plants or additions in
the footwear and textile industries, and an unspecified but probably
small number of plants or additions in other light industries in 1956-59.
Some improvement in the efficiency of construction work un-
doubtedly can be expected in the Satellites, if only because of the many
opportunities for it and the accumulation of experience. The fact re-
mains, however, that the planned increases in output are relatively large,
and it would be surprising if problems were not encountered in the effort
to achieve them. Hungary's construction goal is not especially high com-
pared with the increase during 1955-59, but output in construction de-
clined slightly in 1961, and the sector will have to make a considerable
effort during the remainder of the period in order to reach the 1965
goal.
Although official Czechoslovak data show a rate of growth
for construction output in 1955-59 higher than the rate planned for
1961-65, there is reason to believe that Satellite statistics on the
volume of construction generally have an upward bias and that the con-
struction sector in Czechoslovakia will have to improve somewhat on
its past performance to fulfill the plan. Familiar weaknesses in con-
struction activity continued to be evident in 1961, and the Czecho-
slovak regime has expressed its concern over the dispersal of construc-
tion capacity and the consequent failure to reach the planned volume
of construction and complete important projects on schedule.
In Poland, the trend in construction work in 1961 was more
favorable, but some question remains whether output can be raised an
average of 8 percent annually compared with the 6 percent or less
achieved in 1955-59. Even if the Polish objective for the volume of
construction is reached, some major projects are unlikely to be com-
pleted within the stipulated periods of time. In East Germany, a sub-
stantial underfulfillment of the construction and investment plans is
in prospect. The planned increase for labor productivity in construc-
tion is excessive, as the regime admitted by cutting the goal for 1961.
Work on some projects has been suspended, starts on others have been
postponed, and the housing program may well have to be scaled down. In
Rumania, however, construction activity proceeded favorably in 1960 and
1961, and if the rate of growth of these years is maintained, the 1965
goal will be exceeded. Nevertheless, the 1965 goal is very high, and
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Rumania has not been able to achieve an uninterrupted rise in construc-
tion output in the past.
c. Investment Costs in Industry
Apart from possible difficulties in fulfilling planned inves-
ment tasks in the key industrial sector, there is the question of whether
or not the investments provided in the plans would permit production goals
for 1965 to be reached. In other words, does the planned change in inves-
ment costs per unit of increase in output seem reasonable under the cir-
cumstances? The changes in investment costs implied by the plans can be
determined as a range of estimate for most of the countries, and some
information is available on the principal factors influencing these
costs. The effects of these factors, however, are difficult to ascer-
tain, even as to direction in some instances, and thus only the most
general impression can be formed of the adequacy of the investment pro-
grams.
Of the five countries for which the calculation can be made,
only Czechoslovakia has provided for an appreciable increase in invest-
ment costs per unit of increase in output in comparison with recent years
(see Table 9*). The Czechoslovak plan allows for an increase in costs of
the order of 20 percent if capital repairs are included and of 30 percent
if they are excluded, and even these figures represent a scaling down of
the rise implied by the investment and output goals in the draft plan of
1959.
The planned change in investment costs in East Germany con-
trasts sharply with that in Czechoslovakia, in that a significant decline
is indicated.** The reasonableness of this objective is difficult to ap-
praise even at this point in the plan period. Failure to reach scheduled
levels of industrial production and investment in 1960 apparently has led
to a downward revision of the original goals for 1965, but it is not known
whether the planners concluded that the original relationship of invest-
ment to output is unrealistic and therefore have reduced the production
goal proportionately more than the investment goal.
* Table 9 follows on p. 47.
** It must be emphasized that the changes in investment costs shown in
Table 9 are based on estimates of the growth of net industrial production
in 1955-59 (or similar period) and that they may differ considerably from
figures based on official indexes of the growth of net production or gross
production. This fact is well illustrated by the East German plan, which
implies a sizable rise rather than a decline in investment costs if the
official index of gross industrial production in recent years is used.
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Table 9
Five European Satellite Countries
Relation of Gross Fixed Investment and Growth of Output in Industry a/
Recent Five Year Period and Plan for the Period Ending in 1965 b/-
Recent Five Year Period
Flan for the Period Ending in 1965
Implicit Planned
Investment
Increase
Investment per Unit
Investment
Increase
Investment per Unit
Increase
(Billion Units
in Output
of Increase in Output
(Billion Units
in Output
of Increase in Output
in Investment per Unit
of National
Currencies)
(Index,
Points 1)
(Billion Units
of National Currencies)
of National
Currencies) 21
(Index
Points 1/)
(Billion Units
of National Currencies)
of Increase in Output
(Percent)
Czechoslovakia
Including capital repairs
71.7
33
2.14 to 2.20
146.6 2/
56
2.59 to 2.64
18 to 23
Excluding capital repairs
57.2
33
1.71 to 1.76
126.8
56
2.24 to 2.28
27 to 33
East Germany
26.9 f
34
0.78 to 0.80
60
88
0.67 to 0.69
-12 to -16
Hungary
55 g
31
1.73 to 1.82
83 to 85
48 to 50
1.67 to 1.76 hl
+2 to -8
Poland
167.62/
32
5.16 to 5.32
250.5
51.9
4.83
-6 to -9
Rumania
40.2 2/
41
0.97 to 0.99
100 to 106 11/
105 to 115 1/
0.91 to 0.96 h/
-1 to -8
a. The increases shown for output during a recent 5-year period are estimates. Unless otherwise indicated, other data are from the official statistical year-
books and plan documents listed in Appendix B. Certain figures are shown as ranges because of the imprecision of the underlying estimates and the rounding of
published data.
b. The recent 5-year period is 1955-59 for Czechoslovakia and Rumania and 1956-60 for the other countries, and the plan period is 1959-65 for East Germany,
1960-65 for Rumania, and 1961-65 for the other countries.
c. The coverage and price basis of these values are as described in Table 6, footnote "c," except that the East German data for 1956-60 are for state industry
only, at current prices.
d. An index point is defined as 1 percent of output in the year preceding the plan period.
e. Assuming that industry is scheduled to receive the same share of total capital repairs (44.8 percent) as in 1955-59.
f. 22i. This value includes a small amount of investment in the construction sector.
g. Based on estimated investment in 1956-57 in terms of 1959 prices and reported investment in 1958-60 in source 2.Y.
h. The upper and lower limits of the planned increase in output are considered to be related to the corresponding limits of the planned range of investment.
i.2/
j. Based on data for 1955-58 in source 12/ and data for 1959 in source 11/.
k. 12/
1. The plan states that industrial production in 1965 is scheduled to be about 2.1 times that of 1959. The planned increase is shown as 110 percent in
Table 12, but a range of 105 to 115 percent seems more appropriate for the present purpose.
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The first version of Poland's plan implied a substantial de-
crease in investment costs. In subsequent revisions of the plan, how-
ever, planned investment in industry was raised relative to the planned
increase in output, so that only a moderate decline is now implied. The
Hungarian and Rumanian plans apparently also provide for a small decrease
in investment costs. In all five countries, however, the extent of the
scheduled change is difficult to determine accurately because of the
crudeness of the data. Additional uncertainty is injected into the cal-
culations for Hungary, Poland, and Rumania by the lack of data for capital
repairs, which -- as the Czechoslovak example shows -- can make a signifi-
cant difference in the result. The importance of including data on capi-
tal repairs arises from the fact that a shift of emphasis from capital
repairs to new investments is planned in Czechoslovakia and no doubt in
at least some of the other countries -- apparently in connection with
the aim of modernizing the stock of industrial assets.
One development that may significantly affect investment
costs is a change in the relationship of investment expenditures to the
net increase in the stock of fixed assets. This relationship depends on
the value of productive facilities actually completed and put into use --
which is influenced by the number and timing of large projects, the con-
struction period for which is longer than the plan period, and by changes
in the average length of construction periods -- and by the rate of re-
tirement of old facilities. In the case of a large project, the increase
in output per unit of investment may be very small -- even zero -- during
a particular plan period because the project (or a particular section of
it) is not finished until later. Conversely, the increase in output per
unit of investment might be extremely large if the project were carried
over from the previous period and needed only a little more expenditure
to be completed.
How the varying phases of large numbers of projects combine
to affect the relationship of investment expenditures to investments
put into operation is difficult to determine, especially for a future
period. In the case of Czechoslovakia, at least, it seems clear that
one of the principal reasons for the planned increase in investment
costs in spite of the substantial reduction stipulated for construc-
tion periods is that several major projects will be in an early phase
of work during the plan period. Czechoslovak investment costs also
will tend to be increased by the accelerated rate of retirements as-
sociated with the modernization program.
The other countries have similar plans to modernize indus-
trial facilities, but they apparently hope to improve or at least to
maintain the recent relationship of investment expenditures to the
value of investments put into operation by shortening the average con-
struction period and avoiding a pronounced cycle for large, long-term
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projects. The relationship of investments put into operation to invest-
ment expenditures may be particularly favorable in Hungary during the
new Five Year Plan. In raising expenditures for industrial investment
by about 125 percent from 1957 to 1960 and substantially increasing the
volume of investment projects in progress, the country apparently has
begun a variety of industrial projects that will be completed and put
into operation during 1961-65. Such an interpretation also helps to
explain the moderate increase in industrial investment that is planned.
In most of the countries, investment costs will tend to be
increased by a rise in the share of investment allocated to the capital-
intensive industries -- predominantly those engaged in the extraction
and primary or intermediate processing of raw materials. In the East
German and Polish plans, larger shares for the electric power and chemi-
cal industries (including petroleum refining) more than offset the con-
siderably reduced shares for coal mining and processing. An especially
important factor underlying the de-emphasis of investment in coal mining
and processing in East Germany is the savings in investment costs ex-
pected from the shift from synthetic petroleum derived from brown coal
to crude petroleum imported from the USSR. In Czechoslovakia the planned
shift in investment favors fuel processing and metallurgy as well as
chemicals. Hungary also has earmarked a larger share of industrial in-
vestment for the capital-intensive industries, principally chemicals, and
the impact of this shift is planned to fall entirely on the metalworking
industries. No pronounced change of this sort, however, is evident in
the Rumanian plan. The proportion of industrial investment allocated to
chemicals is supposed to increase appreciably -- possibly to the extent
of doubling -- but the share of electric power and fuel extraction is
planned to decline.
A third factor affecting investment costs is the efficiency
of investment in specific lines of production. Technological advances
offer some opportunities for making investments that reduce investment .
costs per unit of productive capacity. The use of oxygen in steelmaking
and of large turbines in electric powerplants are two familiar examples
of such capital-saving investments. Also it seems possible that there
are some instances in these countries in which a shift to a larger scale
of operations -- either in the form of larger plants or combines of re-
lated plants -- would permit economies in investment. Most of the tech-
nological improvements, however, seem to be intended to save labor or
materials, as indicated in 4,* and may tend to raise investment costs.
Aside from the nature and maturation of investment projects,
investment costs per unit of increase in output will be affected by
various factors that determine how efficiently both old and new productive
* P. 61, below.
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facilities are used -- notably the amount and quality of labor; the
amount, quality, and regularity of supply of materials; the system
of wage rates and work norms; the degree of specialization of manu-
facture in particular plants; and the efficiency of management (dis-
cussed briefly in 5,*). All of the countries expect to make substan-
tial progresss along these lines, as noted previously, but these efforts
will tend to reduce investment costs only to the extent that the accom-
plishments of recent years can be improved. Such improvements appear
to be feasible in certain respects but not in others, and although some
net gain cannot be ruled out, it is unlikely to be sufficiently large
to permit investment costs to be reduced to the extent planned in East
Germany or to the limit of the ranges of estimate for Hungary, Poland,
and Rumania, as shown in Table 9.** The impact of such measures on
production obviously depends in no small way on the extent of unused
capacity in industrial enterprises. One reason for anticipating rather
moderate effects on the level of production and thus on investment costs
is the progressive exhaustion of the more easily exploited reserves of
productive capacity that is believed to have occurred in recent years.
Industrial employment in Hungary, Poland, and Rumania can
easily be increased at the same rate as in recent years if the regimes
so desire, although less rapid growth is now planned in the first two
countries. Industrial employment in Czechoslovakia may well grow more
rapidly than is now scheduled, but the rate of growth is likely to be
lower than during the preceding period. In East Germany, industrial
employment undoubtedly will grow much less than before. Provision of
more adequate supplies of materials -- resulting in large part from
Soviet willingness to expand its exports of such goods -- contributed
significantly to the achievement of high rates of industrial growth in
recent years, and it is unlikely that this advance can be bettered dur-
ing the current plans. The allocation and scheduling of supplies un-
doubtedly can be improved, to be sure, but the elimination of major
bottlenecks in supplies of material, which had such a stimulating effect
on production during the preceding period, cannot, by its very nature,
be repeated.
In Czechoslovakia, Poland, and Rumania, some of the most
glaring defects of the wage and norm systems were eliminated by the re-
forms of recent years. Further adjustments may be undertaken to keep
up the pressure on workers for higher output but probably without equiva-
lent effect. The potential economic gain from wage and norm revisions
may be somewhat greater in East Germany and Hungary, which have had no
thoroughgoing reforms. The East German regime has been especially
cautious about instituting such an unpopular program, and it remains to
* P. 64, below.
** P. 47, above.
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be seen whether it will continue to restrain itself to avoid stirring up
trouble or will decide that the closing of the border in Berlin permits
more forceful action.
Improvements in the efficiency of management and growing
specialization in production may have a more favorable effect on invest-
ment costs than in the recent past. Particularly promising, it would
seem, is the opportunity to raise output through greater product special-
ization in manufacturing plants. The essential step is a reduction in
the number of products -- or of types and models of a given product --
that are produced in a given plant, so that the economies of mass pro-
duction can be more fully realized. Such efforts are promoted by but are
not limited to international arrangements for specialization, which are
being developed rather slowly.
Although the countries have made different assumptions re-
garding the trend in the productivity of investment -- the reciprocal
measure of investment costs per unit of increase in output -- the plans
express a general expectation that the productivity of the total stock
of fixed industrial assets will continue to increase. In all four coun-
tries for which published data or estimates are available, industrial
production is scheduled to grow more rapidly than the stock of assets,
as shown in the following tabulation*:
Planned Increase
During the Period
Ending in 1965
(Percent)
Stock
of Fixed
Industrial
Assets
Industrial
Production
Increase
During the Comparable
Preceding Period
(Percent)
Stock
of Fixed
Industrial
Assets
Industrial
Production**
Czechoslovakia
46
56
39
55
East Germany
45 to 50
88
20 to 25
74
Poland
35 to 40
52
30 to 35
47
Rumania
100
110
65
67
* Because of differences among the countries in methods of valuing
fixed assets and in the coverage of the data, international comparisons
of increases in the stock of fixed assets are less meaningful than the
intertemporal comparisons.
** Estimated increases in net industrial production.
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The quality of the data rule out positive conclusions on this
aspect of the plans; nevertheless, the scheduled relationships -- although
ambitious, as they are intended to be -- do not seem to be particularly
unreasonable in view of past experience in these countries. The ratio of
industrial production to industrial assets apparently is planned to in-
crease somewhat less rapidly than during the preceding period in Czecho-
slovakia; considerably less rapidly in East Germany, but still to a
greater extent than in the other three countries; and at about the same
rate in Poland. Rumania plans a very large increase in the stock of
assets and some improvement in the ratio of production to assets in con-
trast to the preceding 6-year period, when little or no improvement in
this ratio is indicated.
3. Supply of Key Materials
Part of the rise in rates of industrial growth in these countries
in the late 1950's unquestionably can be attributed to improvements in
the supply of materials, as noted above. The new plans are predicated on
further progress in this respect. Some production goals for key materials
seem optimistic, however, and possible efficiencies in the utilization of
materials appear to have been overestimated in certain instances. Actual
supplies of materials thus are likely to be inadequate to support the
total volume of industrial production that is planned, although not by a
wide margin.
a. Electric Power and Fuels
Production and supply of primary sources of energy generally
are planned to grow more rapidly during the new plans than in 1955-59
and it is believed that the available supply of primary energy will grow
more rapidly than before in spite of some underfulfilIment of individual
goals. Recent and planned changes in production and supply of primary
sources of energy reveal two important trends. First, brown coal and
lignite have been increasing in importance relative to hard coal and
will continue to do so because of lower mining costs and progress in
using low-quality coal effectively. Even more pronounced is the grow-
ing role scheduled for crude oil and natural gas, the supply of which
is planned to more than double from 1959 to 1965. Associated with this
shift is a planned increase in net imports of crude oil, petroleum prod-
ucts, and natural gas from 1 million tons* of standard fuel in 1959 to
about 20 million tons in 1965. At the same time, net exports of coal
will be reduced further. A summary of production and supply of primary
sources of energy in the six European Satellite countries is shown in
the following tabulation:
* Tonnages throughout this report are given in metric tons.
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Million Metric Tons
of Standard Fuel*
1954
1 59
Plan
for 1965**
Production
215.0
256.2
327.9
Hard coal
100.0
109.8
129.3
Brown coal and lignite
87.3
108.6
137.9
Petroleum
17.0
20.0
24.9
Natural gas
9.6
15.5
30.8
Hydroelectric power
1.1
2.3
5.0
Net exports (-) or imports
(+)
-19.3
-6.5
+16.3
Coal and coke
-14.2
-7.5
-4.4
Petroleum, petroleum products,
and natural gas
Electric power
-5.1
Negl.
+1.0
Negl.
+20.5
+0.2
Net supply
195.7
249.7
344.2
Hard coal and imported coke
88.8
102.2
124.8
Brown coal and lignite
84.3
108.7
138.0
Petroleum and imported petro-
leum products
11.8
20.7
45.0
Natural gas
9.7
15.8
31.2
Hydroelectric and imported
power
1.1
2.3
5.2
The continuing shift to petroleum, natural gas, and (in cer-
tain countries) hydroelectric power has held down the need for costly
expansion of coal mining. Planned increases in coal output thus are
generally of modest size, although the key goals of the two largest
producers -- hard coal production in Poland and brown coal production
in East Germany -- call for rates of growth a little higher than in
1955-59. Poland probably has a better chance of overfulfilling its
goal for hard coal than of reaching its goal for brown coal, for there
* Standard fuel has a calorific value of 7,000 kilocalories per kilo-
gram. Data on p. 54, below, for production of coal and petroleum, refer
to actual tonnages rather than to tonnages expressed in terms of standard
fuel.
** Plan figures for net imports or exports, and thus for the net supply
of energy, are based in part on estimates.
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is some doubt that East Germany can provide the equipment that Poland
needs to achieve its goal for production of brown coal.
Prospects that East Germany can produce 278 million tons
of brown coal, as specified in its plan law, are not too bright, and
the goal apparently has been reduced. The amount originally planned
will not be needed, because the goal for industrial production in 1965
must be scaled down. Prospects that Czechoslovakia, Hungary, and
Rumania will be able to produce the planned amounts of coal are gen-
erally good. The goal for production of coking coal in Czechoslovakia
may prove to be beyond reach, however, and the hopes of the regime to
obtain favorable results from the underground gasification of brown
coal seem ill-founded in view of the experiments in the US and the
USSR.
The increase scheduled in consumption of petroleum rests
only to a small extent on domestic production. The planned increase
in output of petroleum in Rumania is rather small, and the much larger
one in Hungary would not raise output much above the level of 1955.
East Germany's aim of producing 1 million tons of petroleum by 1965
seems unrealistic, as intensive exploration has failed to reveal im-
portant resources. The plan of Albania to produce a similar amount
seems feasible if drilling equipment and technical assistance can be
obtained from other countries.
Each country plans relatively large increases in output of
electric power, relying both on sizable additions to plant capacity and
ambitious gains in the already intensive utilization of existing plants.
Any failure to complete scheduled projects on time thus will almost
certainly hold output of electric power below the level planned for
1965. Some reduction of construction periods seems probable, but past
experience suggests that additions to capacity by 1965 will be somewhat
smaller than planned in East Germany, Poland, Rumania, and possibly
Hungary, although not necessarily in Czechoslovakia. Aside from con-
struction problems, most of the countries face difficulties in manu-
facturing or importing on schedule the large 100-megawatt to 200-
megawatt turbines that they want to install in order to reduce both
capital costs and fuel costs per unit of output.
Whether or not the supplies of energy expected to be avail-
able to these countries in 1965 -- or even the somewhat larger supplies
that are planned -- are adequate to support the planned rates of indus-
trial growth is uncertain. Projection to 1965 of the relationship be-
tween increases in the supply of energy and estimated increases in net
industrial output in 1950-57 suggests that the prospective supply of
energy is insufficient to support the planned increase in industrial
production. The rate of increase in consumption of energy per unit of
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increase in industrial output has declined since 1957, however, and if
the relationship of 1958-60 is projected to 1965, little or no deficit
in the supply of energy is indicated.
Further improvements in the efficiency of utilizing energy
can be expected, although not necessarily to the extent planned. Con-
sumption of metallurgical coke per ton of pig iron, for example, is
scheduled to decline about 18 percent in the countries as a group. The
most optimistic goal is that of Czechoslovakia, where consumption of
coke is supposed to be reduced by 29 percent, or to less than the cur-
rent level in either the USSR or the US. Installation of large gen-
erators and boilers in electric powerplants is relied on to reduce fuel
inputs per unit of output, as mentioned above. In one country or another,
economies are also expected from increasing substitution of natural gas
for coke in blast furnaces, of natural gas for petroleum in various in-
dustrial uses, and of petroleum and electric power for coal in rail trans-
port.
b. Steel
Most of the goals for production of steel in 1965 seem to be
too high for fulfillment and inadequate to support the planned output
of the metalworking industries, even if they are reached. Output of
crude steel is scheduled to increase more rapidly under the new plans
than in 1955-59 in Czechoslovakia and in Hungary, where the level of
production before the uprising in 1956 was not regained until 1958; at
about the same rate in East Germany; and somewhat less rapidly in Poland
and Rumania. The countries considered most likely to reach their goals
for steel in 1965 are Hungary, Poland, and Rumania.
The objective for Czechoslovakia is particularly vulnerable
because it depends on the completion of a large integrated iron and steel
plant in Slovakia. This plant is scheduled to produce about 1 million
tons of steel by 1965, or about one-fourth of the total increase planned,
but it is doubtful that the plant will produce nearly that much steel by
then, for work on the project has barely begun. Work also is underway
in Rumania on an integrated plant with a planned annual capacity of 4
million tons of steel -- a larger plant than any other now found in the
Satellites or contemplated through 1975 -- but the regime is not count-
ing on a significant output from it in 1965.
Official expectations in the six countries that an increase
of 4 million tons in output of steel can be obtained through a 20-percent
increase in the utilization of existing facilities are optimistic, al-
though not clearly unreasonable. Following the lead of the USSR, the
regimes will rely mainly on increased mechanization and use of oxygen to
speed up steelmaking operations. Growing use of these techniques since
1953 permitted the. USSR to achieve a gain in the utilization of steel
capacity similar to that planned in the Satellites, and the Satellites
as a group are starting from a lower level of utilization.
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The additional capacity of 5.3 million tons of steel planned
at existing plants, most of which is already under construction, is also
expected to be largely but not completely successful. For example, lack
of experience with basic oxygen converters may cause some difficulties.
Installation of such facilities is planned at existing plants in Czecho-
slovakia, East Germany, and Poland, as well as at the new plant in
Rumania.
Reliance on imports of iron ore, which is already very great
in each country, is scheduled to increase further in Czechoslovakia, East
Germany, and Hungary. Total requirements of iron ore in 1961-65 are esti-
mated at 88 million tons in terms of iron content, and present plans call
for 21 percent of that quantity to be proauced domestically, 60 percent
to be imported from the USSR, and 8 percent to be imported from India.
About 10 million tons thus remain to be imported from other sources such
as Sweden, Brazil, Communist China, and certain countries in Africa.
The plans also call for large net imports of rolled products
from the USSR together with a growing exchange of such products among the
Satellites -- an exchange that has been promoted by the Council for Mutual
Economic Assistance (CEMA). There will also be an exchange of metallur-
gical equipment between the Satellites and the USSR. The USSR will supply
some equipment for the new plant in Czedhoslovakia, the next section of
the Lenin plant in Poland, and most of the rolling mills for the new plant
in Rumania and will receive a substantial amount of rolling mill equipment
from Czechoslovakia and East Germany.
One of the crucial suppositions in each plan is that the value
of production per ton of steel used in the metalworking industries can be
increased significantly -- in some countries, very considerably -- as
shown in the following tabulation:
Planned Increase
During the Period Ending in 1965
(Percent)
Production Value of Production
of the Metalworking per Ton
Industries of Steel Used
Czechoslovakia
76
15
East Germany*
123
34
Hungary
64
13**
Poland
76
36
Rumania
120***
30
* The data cover only centrally controlled state enterprises.
** Estimate obtained by prorating the planned increase announced in
1959 for 1959-65.
*** Machinery.and equipment only (that is, exclusive of metal products
and repair work).
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Citing data that imply a planned increase of 36 percent in the value of
metalworking production per ton of steel -- which are not entirely con-
sistent with figures in the plan law and may exaggerate the intended
increase -- Party Secretary Gomulka assured a group of Polish workers
in April 1961 that such progress is indeed possible. Like the other
countries, Poland hopes to save substantial amounts of steel by improv-
ing manufacturing practices and the design of products. Certain products
are much heavier than necessary or are manufactured by processes wasteful
of steel, leading Gomulka to characterize some plants as "shavings fac-
tories." Weielts of some products can be reduced by using stronger steels.
Also evident are intentions to increase the use of plastics
and other substitute materials and to concentrate more on production of
metalworking products that require less steel per unit of value. Under
East Germany's Seven Year Plan, for example, the planned increase in pro-
duction is 166 percent in the electrotechnical branches of industry com-
pared with 110 percent in the heavy machinery branches. Similarly, Poland
plans to double its production in the electrotechnical branches while
raising its production of machinery (other than transport equipment) and
steel constructions by less than one-half.
Granted that such measures will have some effect in the de-
sired direction, it nevertheless appears that in East Germany, Poland,
and Rumania at least, the plans reflect too sanguine a view of what can
be accomplished in only 5 to 7 years. Scattered information about recent
experience in these and other countries suggests what may be feasible,
althou& the data do not permit definite conclusions.* The increases in
metalworking production per ton of steel in Poland from 1955 to 1959 and
in Czechoslovakia from 1956 to 1960 appear to have been small, probably
less than 10 percent. Calculations for one or two recent 5-year periods
in Austria, Belgium-Luxembourg, Italy, and the UK also show rather small
increases in metalworking production per ton of steel in most instances.
It is possible that West Germany achieved gains during certain 5-year
periods in the 1950's that are comparable to those planned in East
Germany, Poland, and Rumania, but in general it seems likely that these
countries will be unable to reach their goals for metalworking production
because of steel shortages.
* Statistics on deliveries of finished steel to the metalworking indus-
tries are available for a number of European countries, but the data do
not include imports in most instances, and the ultimate users of part
of the steel supply often cannot be determined. The relationship of
metalworking production to steel consumption may be obscured by changes
in inventories. Also, there is the question of the accuracy of calcu-
lated indexes of metalworking production -- a very difficult component
of industrial production to measure.
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c. Nonferrous Materials
Most of the plans for major nonferrous metals and nonmetallic
minerals call for rather moderate increases in output in keeping with the
limitations of domestic resources, and these goals generally have good
prospects of being reached. Targets for some products, however -- typi-
cally the few national specialities in this field and certain refined
products in countries where new plants are to be built -- are quite am-
bitious, and their attainment in some instances is problematical. In
East Germany, for example, there is doubt that the plants that are ex-
pected to yield large increases in aluminum and magnesium output will be
completed by 1965. East German goals for potash and zinc are more likely
to be realized, although much depends on the amount of investment in these
industries during the remaining years of the plan.
Fulfillment of some objectives in Rumania also is dubious.
The regime has programed large percentage increases in the output of cop-
per, lead, and zinc and intends to start refining aluminum in a plant with
a projected annual capacity of 20,000 to 30,000 tons. Moreover, this
plant is supposed to rely on domestic supplies of bauxite, requiring sub-
stantial expenditures for mines and facilities for alumina production.
Hungary's production goals for bauxite, alumina, and aluminum
are not particularly high and probably can be achieved without difficulty.
Czechoslovak plans, which emphasize a considerable expansion of the output
of copper and aluminum, also seem reasonable. Like most of the other
countries, Czechoslovakia contemplates increasing substitution of aluminum
for copper in electrical equipment and for steel in certain types of ma-
chinery and equipment.
Aside from expanding and modernizing its important zinc and
lead industries, Poland plans to complete the first section of a new
aluminum plant and (with the help of Czechoslovakia) to continue the
development of the large deposits of sulfUr and copper that were dis-
covered recently. Construction of new copper mines is one of the prin-
cipal investments of the Five Year Plan, but this project will not boost
output until after 1965.
In spite of these plans, the adequacy of supplies of nonfer-
rous materials in these countries will continue to depend to a large ex-
tent on imports, chiefly from the USSR. Existing trade agreements commit
the USSR to deliver growing amounts of these materials, although not as
much as desired by some countries, notably East Germany. Soviet equipment
and technical aid also are involved in most of the investment projects
planned for this industry.
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d. Chemicals
The chemical industries are scheduled to become increasingly
important suppliers of materials to industry and agriculture in all of
the countries. Planned percentage increases in output are especially
high l in Rumania, Poland, and Czechoslovakia, althou& the planned ex-
pansion in East Germany is the most important in absolute terms. Also,
there is much similarity in the patterns of intended expansion, for the
plans show a strong emphasis on production of plastics and synthetic
fibers and rubber -- production that will be based increasingly on petro-
leum rather than coal. In addition, large increases are planned for agri-
cultural chemicals, especially fertilizers, and for the basic inorganic
chemicals such as sulfuric acid, ammonia, and chlorine that are needed for
the manufacture of fertilizers, synthetics, and a wide range of other prod-
ucts. In Albania, plans to expand the presently negligible output of
chemicals are confined largely to fertilizers, and these plans may al-
ready be obsolete because of the deterioration of economic relations
with Bloc countries. Czechoslovakia and the USSR had agreed to provide
Albania with two plants for production of nitrogen and phosphorous ferti-
lizers and related basic chemicals, but these credits now have been can-
celed.
Huge percentage gains are specified in the five largest coun-
tries for production of plastics, which are attractive substitutes for
nonferrous metals and other materials in some uses because of their lower
cost or special characteristics such as resistance to corrosion. Syn-
thetic fibers are being promoted because of their superior qualities and
substitutability for imported natural fibers. Production of synthetic
fibers still is small even in the more developed countries, which plan
to increase it much more rapidly than production of rayon and other fibers
made from cellulose.
Goals for agricultural production are based on the use of much
larger amounts of fertilizers and pesticides than in the past. During the
period ending in 1965, production of nitrogen and phosphorous fertilizers
is planned to rise about 47 percent in East Germany, 81 percent in Poland,
104 percent in Czechoslovakia, 172 percent in Hungary, and about 9 times
in Rumania. In addition, East Germany -- the only producer of potash --
plans to increase its output of this fertilizer (in terms of potassium
oxide) from 1.5 million tons in 1958 to 2.1 million tons in 1965. Sup-
plies of chemical fertilizers per hectare of agricultural land are sched-
uled to rise substantially, especially notable increases being planned
in the countries that are most backward in this respect (as diown in
Table 10*). In terms of kilograms per hectare of arable land, planned
supplies of fertilizer in East Germany and Czechoslovakia exceed the
* Table 10 follows on p. 60.
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Table 10
Five European Satellite Countries
Planned Growth of the Supply of Chemical Fertilizers
During the Period Ending in 1965 2/
Supply of Chemical Fertilizers
(Kilograms of Nutrient
Content per Hectare
of Agricultural Land)
Planned Growth
of the Supply
During the Period
Year Preceding
the Plan Period 12/
Plan ,
for 1965 2/
Ending in 1965
(Percent)
Czechoslovakia
68.0 1/
133.5
96
East Germany
146.8
212
44
Hungary
23.5 2/
59 1/
151
Poland
36.5 f/
61
67
Rumania
4.2 12/
34
710
a. The plan period is 1959-65 for East Germany, 1960-65 for Rumania,
and 1961-65 for the other countries. Unless otherwise indicated, data
are from the official statistical yearbooks and plan documents listed
in Appendix B or are calculated from information in these sources.
b. 1959/60 crop year rather than 1960 for Czechoslovakia and Poland.
c. Assuming no change during the plan period in the agricultural area
in Poland and Rumania and in the relationship of the agricultural area
to the area of arable land, orchards, and vineyards in Hungary.
d. 33/
e. Calculated from data in source
f. The nutrient content of the planned gross weight of the supply is
assumed to be the same as in 1960 (22.)4 percent).
g. 35/
h. Apparent supply, consisting of production plus imports. Imports
of apatite concentrates are not included, however, because they are
reflected in data for production of phosphorous fertilizer.
levels of 1959 in most Western European countries, althouel not in the
Netherlands, Belgium, or West Germany.
The goals for production of the chemical industries are to
be supported by large investment expenditures. A few large plants are
to be built in each country -- most of them integrated combines -- and
about 175 existing plants are scheduled to be enlarged or modernized,
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or both. There is a marked concentration of investment funds on the
large new projects, however. Mechanization of operations is to be
extended considerably, leading most of the regimes to set very high
goals for the growth of labor productivity. Both Hungary and Rumania
plan sizable increases in employment in the chemical industry, and all
of the countries will need increasing numbers of chemists, engineers,
and skilled workers to raise the technical level of the industry.
Although shortages of raw materials, electric power, and
labor may interfere with the achievement of goals for production of
chemicals, the central problem appears to be timely construction of
new plants and prompt deliveries of equipment for both new and old
plants. Chemical plants rarely have been completed on schedule in
the past, and some projects important to the success of the plans
apparently are lagging several months behind schedule. This delay
is attributable in part to shortcomings in construction work, but
technical support for these projects -- some of which involve new
products, complex new processes, or changes in the raw material
base -- also has been deficient. Domestic capabilities for such
work are inadequate, and foreign assistance seemingly has been less
complete and prompt than expected.
In this industry more than in any other, success depends
on the acquisition of planned amounts of equipment and substantial
technical assistance from foreign countries. Numerous arrangements
for economic cooperation have been made among the Satellites and with
the USSR, generally calling for the more advanced countries to help
the less advanced, and significant amounts of equipment and technology
are supposed to be obtained from Western European countries and the US.
Nevertheless, the transition from a plan to an efficiently functioning
plant holds many difficulties, and it seems likely that many goals for
production will not be reached -- some by a considerable margin.
4. Technological Progress
All of the plans are pervaded by the aim of raising the tech-
nical level of productive activity, and their results will depend in
no small way on how rapidly and efficiently this can be done. Tech-
nological progress has by no means been ignored in previous plans.
But growing concern with the quality and cost of products, declining
reserves of productive capacity, and'the prospect in some countries
of a less rapid growth of employment have given this task a new urgency.
Several aspects of these programs have already been mentioned, notably
the plans for (a) greater use of machinery and mass-production tech-
niques in construction work and more economic use of construction mate-
rials, (p) substantial gains in production of the metalworking indus-
tries per ton of steel consumed, which are representative of plans to
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economize on the use of various other materials, (c) a further shift in
fuel consumption in transportation from coal to petroleum and electric
power, and (d) much larger inputs of machinery, fertilizers, and pesti-
cides in agriculture -- to which increasing use of high-quality seed
and breeding stock might be added.
In this section, plans for technological progress in the metal-
working industries will be considered briefly as an example of what the
regimes hope to accomplish in their industrial sectors. The programs
that have been formulated for the metalworking industries are of special
interest because of the importance of the industries as suppliers of
capital equipment to other parts of the economies and (in the more de-
veloped countries) for export and because heavy reliance is placed on
technical improvements. Much of the excess capacity that developed in
these industries in most of the Satellites as a consequence of overin-
vestment in the early 1950's has disappeared with the improved utiliza-
tion of new plants. Nevertheless, many opportunities remain, for the
equipment and manufacturing processes in most metalworking plants in
these countries are far less productive than those in modern plants in
Western countries or even in the USSR. The effective exploitation of
these opportunities often requires technical improvements as well as
increased supplies of materials and labor.
The plans provide for much greater mechanization of several
aspects of operations in order to raise the productivity of these plants.
First, there is to be much greater use of automatic or semiautomatic
types of machinery -- especially metalcutting and metalforming machine
tools -- in preference to general-purpose machines that are less pro-
ductive even though they require moderately skilled workers. In some
instances, automatic features can be added to existing machines, greatly
increasing their capacity. In Czechoslovakia, nearly 30 percent of the
machine tools of enterprises under the Ministry of General Engineering
are supposed to have automatic features in 1965. East Germany plans to
install 22,000 automatic machine tools in manufacturing plants, raising
the proportion of such machines from 4 percent of the total in 1960 to
16 percent in 1965.
Mechanization also may take the form of more widespread use of
continuous production lines; Progress in this area is restricted in the
less advanced countries by the small scale of their operations, but East
Germany and Czechoslovakia plan a sizable effort, as illustrated by the
East German plan to increase the number of continuous production lines
in machinery plants from 385 in 1960 to 2,700 in 1965. Plans for several
of the countries give the impression that there is to be a significant
development of automation, but these plans apparently refer only to the
growing use of automatic machinery. Fully automated production lines
with automatic inspection and feedback will not be employed to any ap-
preciable extent in these industries until well after 1965, although
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automation of some processes in other industries -- notably chemicals
and metallurgy -- will be introduced or extended.
Large economies also are expected from greater mechanization
of warehousing, intraplant transportation, and similar auxiliary activi-
ties -- probably the least progressive aspects of machinery manufactur-
ing in these countries. The simple pallet system of handling materials,
for example, which has drastically reduced labor requirements in advanced
Western countries, scarcely exists in the Satellites. According to a
Czechoslovak periodical, more than one-half of the workers in machinery
plants are engaged in warehousing, handling of materials, and other aux-
iliary activities.
The benefits obtainable from increasing mechanization depend to
an important extent on the success of schemes for greater standardiza-
tion of products and greater specialization of output. Extensive use
of automatic machinery, consisting in some instances of single-purpose
machine tools, presupposes large-scale production. The domestic market
in each country is small, yet a wide range of types and models typically
is being manufactured in small, uneconomic batches. The variety of
product types found in these countries reflects both the largely inde-
pendent development of their machinery industries and the diverse sources
of present designs, which include prewar Western models that have been
modified in various ways, new Western models obtained during the 1950's,
Soviet models, and models developed in the countries themselves.
One example of the potential effects of standardization is the
East German plan to reduce the 1,148 basic types of textile machinery
being produced in 1959 to only 350 basic types in 1965 without lowering
the technical level of the textile industry. In addition to reducing
the number of final products, the countries plan greater standardization
of common parts and subassemblies such as bearings, gears, and small
electric motors, which are particularly suited for mass production.
The scope of large-scale production in this field can be broadened
also by greater specialization of production, both by country and by plant
within a country. International specialization of machinery production
has not progressed very far in these countries as yet, and a considerable
effort is being made under the auspices of CEMA to extend it. The plans
do not suggest that the degree of such specialization is to be increased
dramatically by 1965, but some progress clearly is envisioned.
Specialization of production in individual plants has been pro-
ceeding somewhat more rapidly, and many opportunities for it remain.
More often than not, manufacture of a given type of machinery or component
in these countries is dispersed among a sizable number of plants, few of
which are specializing in that product. The objectives of the regimes in
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this field are difficult to determine, but evidently they count on a con-
siderable advance to permit achievement of goals for production in 1965.
The potential for increasing production in the metalworking in-
dustries through the elimination of material shortages is also very
large. Interruption of operations in Satellite machinery plants because
of shortages of materials has not been unusual, most often happening
because of inadequate supplies of rolled steel (especially steel sheets),
high-quality alloy steels, and copper products. Avoidance of shortages
during the current plans depends primarily on the fulfillment of plans
for production and import of such materials, but reductions in the con-
sumption of materials per unit of output and improvements in fixing
norms for consumption, distributing available supplies, and controlling
inventories also could bring important gains. Potential savings of
steel are large, although the plans in East Germany, Poland, and Rumania
for increases of 30 percent or more in metaJworking output per ton of
steel probably exaggerate what can be accomplished during one plan period.
It is therefore likely that production will continue to be hampered by
inadequate supplies of steel.
Aside from technological improvements, economic efficiency also
can be increased by putting more plants on second and third shifts.
Most plants in the metalworking industries are being operated on only
one shift, and the introduction of a second shift could increase their
production considerably if adequate supplies of materials and labor
were available. As in most aspects of technical advance in these in-
dustries, Czechoslovakia and East Germany lead the other countries in
emphasizing this source of increased output. To some extent, these
two countries are counting on further mechanization of operations to
release the labor needed to expand the use of second shifts. Some ad-
vantage might be gained from wider use of second shifts even without
increases in employment. Czechoslovak technicians, for example, have
pointed out the desirability of transferring workers operating the less
efficient machinery during the first shift to the more efficient machinery
during the second shift.
5. Agricultural Organization and Other Institutional Changes
In each country other than Poland, the virtual completion of agri-
cultural collectivization has removed an element that disrupted previous
plans for agricultural growth. Sustained and costly efforts, however,
will be necessary -- and are planned -- to establish the recently formed
collective farms as efficient productive units and to improve the func-
tioning of the older collectives, the state farms, and the machine tractor
stations (MTS's). Progress will be gradual at best, but some advance in
agricultural production should be possible by 1965 if further upsetting
institutional changes are avoided.
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The regimes face a number of difficulties in attempting to
strengthen the collective farms. Many peasants who finally succumbed
to state pressure to join collective farms remain fundamentally opposed
to socialization of the land. Their apathy or passive resistance will
be an inhibiting factor in agricultural growth for many years, although
probably a progressively less important one. Collectivization has
created needs for experienced agricultural managers and technicians
that will take some time to satisfy, and the planned improvements in
technology necessitate widespread programs of education and training.
Hungary, for example, plans to train more than 5,000 specialists in
agricultural colleges during its Five Year Plan and give specific func-
tional training to 100,000 farm workers and 80,000 mechanics of the
MTS's. Agricultural employment in Czechoslovakia, East Germany, and
Hungary has been reduced recently by the final drives for collectiviza-
tion, by the attractions of employment in other parts of the economy,
and (in East Germany) by the high level of emigration. The performance
of collectives in these countries thus is likely to be hampered by labor
shortages for a time even though growing mechanization eventually will
permit a reduction of employment without adverse effects on output. The
recent expansion of the collectivized area also has created a sudden
need for farm equipment and buildings that cannot be satisfied fully at
once.
Most of the plans are vague about scheduled changes in agricul-
tural organization during the current period, but it seems likely that
earlier changes in the "most advanced" Bloc countries will be followed.
Some consolidation of collective farms probably will be carried out in
order to make the best use of available managerial and technical per-
sonnel and other resources. The role of the MTS's in East Germany and
Hungary is likely to be reduced -- possibly to the extent of distribut-
ing most equipment to the collectives and converting the MTS's into re-
pair centers, as in the USSR and Czechoslovakia. Attempts to transform
some of the looser types of collective farms (such as the agricultural
associations in Rumania and "Type I" collectives in East Germany) into
more advanced types also can be expected.
Czechoslovakia, the leader among the Satellites in the "socialist
transformation" of agriculture, appears to be considering other changes
that could have a marked effect on the success of its plan. Czechoslovak
officials recently have expressed strongopposition to the private plots
of collective farm members. The status of private plots has long been a
troublesome issue in the USSR, where their size is now severely limited
and the peasants are discouraged from spending a disproportionate amount
of time on them. Any major action by Czechoslovakia to reduce the size
of these plots or limit work on them by the collective farmer or members
of his family almost certainly would mean a substantial underfulfillment
of the planned output of livestock products, to which the private plots
make a large contribution. Czechoslovak officials also have discussed
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the desirability of so altering the system of remuneration on collective
farms that the bulk of a member's income would come from a minimum wage
plus bonuses scaled to the performance of the collective -- both being
paid largely in cash. Such a step obviously could weaken work incentives
at least temporarily.
In Poland the regime has indicated that the policy of voluntary
collectivization will be maintained, leaving the prospect that the con-
trast between agricultural institutions in Poland and in the other Satel-
lites will become still sharper. In the absence of pressure from the
state, it is doubtful that the socialist sector, which now holds 13 per-
cent of the agricultural land, will expand to any appreciable extent. As
an alternative, the regime apparently will continue to encourage the for-
mation of the independent cooperative associations called agricultural
circles and help them become more efficient. An important element in
this program is the agricultural development fund, through which the
state offers to finance a large share of the investments undertaken by
agricultural circles. The people's councils of the villages apparently
will be relied on increasingly for detailed agricultural planning, pro-
curement, and management of investment activity because of the large
number of productive units that must be dealt with.
So far the Polish program has not received the support from the
peasants that the regime had hoped for. The number of agricultural
circles did not increase very rapidly in 1960 and 1961. Only three-
fifths of the villages now have them, and only about one-fifth of the
farms are members. Moreover, the circles have taken comparatively
little advantage of the financial assistance offered through the agri-
cultural development fund. Of the 4.9 billion zlotys received by the
fund during its first 17 months (that is, throudi 1960), only 20 per-
cent was used. More than two-thirds of the circles failed to make any
use of the fund.
The failure of Polish peasants to respond more enthusiastically
to these programs does not necessarily mean that they will be discredited
by a serious underfulfillment of production goals and that the regime will
feel impelled to resume collectivization efforts. The aim of reaching
targets for output may be served best by retaining the present moderate
attitude toward institutional changes. Polish agricultural policy ap-
pears to have received a measure of Soviet approval at least temporarily
and has been strengthened by the good performance of agriculture in Poland
compared with that in the other Satellites. Even if agricultural perform-
ance is mediocre and pressure from other Bloc countries to collectivize
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agriculture in Poland mounts, the Gomulka regime seems less likely to
push collectivization than to experiment with different forms of coopera-
tive organization or manipulate prices and taxes to strengthen incentives.
In nonagricultural sectors, there is likely to be a further
socialization of private enterprise where it is still of some impor-
tance -- as in East German and Hungarian industry -- and further revision
of work norms and basic wage scales in some or all branches of industry
and possibly in construction. Less tangible but no less important are
the efforts that the regimes will make to achieve more effective planning,
organization, and management of the process of economic development. It
seems likely, however, that these endeavors will be confined to relatively
small changes in existing organizations and methods. Most of the plans
stress the importance of harnessing individual initiative, and the direc-
tives of 1959 for the Hungarian plan mention an "extension of the sphere
of activities of lower organs." In general, however, the plans do not
convey the impression that significant decentralization of decision-making
is contemplated.
There is considerable scope, nevertheless, for further efforts to
"perfect" economic planning and management. In at least some of the coun-
tries the current plans appear to be worked more carefully than earlier
ones, and further improvements (affecting the annual plans within the
period) should be possible. With growing experience in integrated plan-
ning, the regimes should be able to avoid some of the most wasteful mis-
takes of the past. Investment planning in particular may show noticeable
improvement as the regimes try to establish more rational criteria for
decisions in this field. Some benefits should accrue also from wider
use of improved planning techniques and, in some countries, from greater
use of electronic computers. The efficiency of management at the enter-
prise level should be influenced favorably by increasing emphasis on the
profitability of production, thus giving managers added incentive to
economize on labor and materials.
6. Foreign Trade and Economic Cooperation
The economic development of these countries will continue to be
promoted by a moderately rapid expansion of foreign trade and the grow-
ing scope of economic cooperation among them (except possibly Albania)
and the USSR. In Czechoslovakia and East Germany, where trade turnover
per capita has now caught up with that of France but remains much lower
than in West Germany and the UK, plans indicate a decline in the rate of
growth of foreign trade from more than 11 percent in 1955-59 to 8 per-
cent during the period ending in 1965. Some decline from the high rates
of recent years does seem likely, but its extent probably is exaggerated
by the announced figures, which are unavoidably tentative and incomplete
for these two countries as for the others.
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A considerably reduced rate of growth for trade turnover is im-
plied by the plan for Albania, and even the announced objective is un-
certain because of its strained economic relations with the USSR and
other Satellites. In Poland -- where turnover per capita is unusually
low -- and in Hungary, rates of growth are not planned to differ much
from the recent rate of 8 percent, as shown in Figure 4* and Table 15.**
In an announcement notably lacking in explanation and detail, the Rumanian
regime has indicated an intention of doubling the volume of foreign trade
during the Six Year Plan, requiring an average annual increase of 12 per-
cent compared with a sluggish 4 percent in 1956-59. Considerable progress
toward the fulfillment of this goal was made in 1960 and 1961. Although
the earlier tendency (except in Rumania) of rates of growth for foreign
trade to exceed those for national income generally is planned to con-
tinue, there is no difference in the planned rates for Poland, and the
margin between them is scheduled to be much smaller in CzechoslovRkia
and East Germany than in 1955-59.
Exports are scheduled to increase much faster than imports in
Czechoslovakia, East Germany, Hungary, and Poland, whereas the rates
were the same in Czechoslovakia and Hungary in 1955-59, and imports ran
ahead of exports in the other two countries, especially in Poland.
Czechoslovakia apparently intends to raise its export surplus from $114
million in 1960 to roughly $500 million in 1965. A substantial surplus
will be needed to cover the deficit on its services account and to im-
plement credits that have already been
underdeveloped countries in the West.
considerably larger than necessary for
ing that the regime has made provision
tional extensions of credit.
extended to other Satellites and
The planned surplus seems to be
these purposes, however, suggest-
in its plan for important addi-
The East German plan also has an ambitious goal for the export
surplus, which apparently was scheduled to rise from $210 million in
1958 to something like $800 million in 1965. This amount would be
sufficient to cover some additional extensions of credit as well as
scheduled payments on debts with the USSR; shipments under credits
previously granted to Poland, Bulgaria, Albania, and underdeveloped
countries in the West; and the prospective deficit for transportation
and other services. It is improbable that the Ulbricht regime still
expects to develop an export surplus of that magnitude, however, be-
cause of the lagging rate of industrial growth (which can be expected
to hamper the expansion of exports) and the additional credits that
the regime obtained from the USSR in 1961 and early 1962.*** Under
**
***
Following p. 68.
Appendix A, p. 88, below.
The exact nature and amount of the credit reported in 1961 and its
relation to the credit announced this year are still in question.
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SIX EUROPEAN SATELLITE COUNTRIES
Growth of Foreign Trade
195549* and Plan for the Period Ending in 1965 **
Figure 4
AVERAGE ANNUAL PERCENTAGE INCREASES
1955-59*
Total turnover n
Imports I-1
Exports ri
Plan for the period ending in 1965**
CZECHOSLOVAKIA
3.8
11.4
11.4
EAST GERMANY
11.6 ***
12.7
11.4 10.6 ***
9 4 t
10.0
?1 2.0
N.A.
N.A.
1 5.4
12
HUNGARY POLAND
RUMANIA ALBANIA
*1956-59 for Rumania.
**The plan period is 1959-65 for East Germany, 1960-65 for Rumanio, and 1961-65 for the other countries.
This figure exaggerates the actual increase because of the changing or incomplete coverage of the data.
tEstimated.
t Increase from 1956-60 to /961-65 (midpoint). The planned increase during 1961-65 is estimated at 8.5 percent.
36406 7-62
27
27
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the latest version of the Polish plan, which raised the goal for
exports, the import surplus of $169 million in 1960 would gradually
be converted into an export surplus of about $150 million by 1965, or
roughly the amount that it is believed will be due on foreign debts.
Receipt of additional credits from the US or Bloc countries may, of
course, lead to a trade balance in 1965 much different than that en-
visioned when the plan was drawn up.
The Hungarian regime has indicated that one of the primary
aims of the new Five Year Plan will be the establishment of an export
surplus, as the country will soon have to start repaying the loans re-
ceived after the revolt in 1956. If imports and exports develop as
planned, Hungary will have an export surplus of about $100 million in
1965 -- a sum that appears adequate to cover scheduled payments on
long-term debts and a sizable deficit on the services account. Rumania
has not revealed its plan for imports, exports, and the trade balance
in 1965, but it may be noted that Scheduled payments on earlier credits
from the USSR, East Germany, and Czechoslovakia will outweigh imports
financed by credits unless additional loans are obtained. Albania no
doubt will continue to have comparatively large import surpluses as it
draws on the important credits extended by China.
The Satellites (other than Albania) and the USSR will form an
even more closely knit economic community in 1965 than at present --
not only from the point of view of the importance of their exchanges in
the total volume of their foreign trade but also as regards the inter-
dependence of the economies. The share of Sino-Soviet Bloc countries
in total trade, which amounted to 63 to 80 percent in the five largest
countries and about 95 percent in Albania at the start of the current
plans, is scheduled to rise further in Czechoslovakia, East Germany,
and Poland and decline only slightly in Hungary, as shown in Table 11.*
The share of Sino-Soviet Bloc countries in Albanian trade has declined
somewhat since 1960 and may decline further, but much more significant
is the shift in trade from the USSR to Communist China. Trade with the
USSR apparently has ceased, and the share of total trade carried on with
China is scheduled to rise from 28 percent in 1961 to 59 percent in 1962.
In Rumania a substantial reduction in the Bloc's share of the
total trade seems to be contemplated, as shown in Table 11. This shift,
which would require that trade with non-Bloc countries increase about
20 percent annually, reflects plans to go outside the Bloc for needed
machinery and equipment, especially for metallurgical and chemical equip-
ment. A large step toward the planned shift in trade was taken in 1960,
when turnover with Western European countries rose about 90 percent com-
pared with an increase of 23 percent with Soviet Bloc countries. Further
* Table 11 follows on p. 70.
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Table 11
Five European Satellite Countries
Planned Changes in the Geographic Distribution of Foreign Trade
During the Period Ending in 1965
Planned Average Annual Increase in Trade (Percent) 12/
With With
Sino-Soviet With Non-Bloc
Total Bloc Countries 2/ the USSR Countries 2/
Czechoslovakia
8.0
9.4
10.3
4.2
East Germany
8.4 2/
9
N.A.
7
Hungary
7.9 g
8
N.A.
8
Poland
7.0
7.6
N.A.
6.0
Rumania
12
8.5 to
10
N.A.
20 to
23
Share of the USSR
in Total Trade (Percent)
Share of
Sino-Soviet Bloc Countries
in Total Trade (Percent)
Year Preceding
the Flan Period
Plan
for 1965
Year Preceding
the Plan Period
Plan
for 1965
Czechoslovakia
35 2/
38
71 2/
76
East Germany
43
N.A.
74
76
Hurigary
30 1/
N.A.
71 1/
70
Poland
30 f/
N.A.
63 f/
64 h/
Rumania
47
N.A.
80
65 to 70
a. The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and
1961-65 for the other countries. Unless otherwise indicated, data are from
the official statistical yearbooks and plan documents listed in Appendix B.
I. Except for Czechoslovakia, the planned increases shown for trade with
Sino-Soviet Bloc countries and non-Bloc countries are estimates based on
the planned share of Sino-Soviet Bloc countries in total trade in 1965.
c. Yugoslavia is included in data for Sino-Soviet Bloc countries.
d. Figure obtained as described in Table 15.
e.
f. 31/
g? 92/
h. .12/
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rapid growth of trade with non-Bloc countries in 1961 raised their share
of Rumanian trade to the minimum of 30 percent planned for 1965.
The pattern of Satellite trade with the USSR will continue to
be characterized, in broad terms, by an exchange of Soviet fuels and
raw materials for Satellite machinery and equipment. The Satellites
generally will remain heavily dependent on the USSR for supplies of
petroleum, iron ore, manganese ore, nonferrous metals, apatite con-
centrates, and cotton. Imports of Soviet foodstuffs also will con-
tinue to be important to certain Satellite countries. Although trade
with the USSR is scheduled to become a larger share of Czechoslovak
turnover, no increase appears to be planned in the Soviet share of
Hungarian turnover, and some decline is likely in the Soviet share of
East German and Rumanian turnover.
The USSR obviously has an important role in the economic pro-
grams of the Satellites -- as the leading trade partner of each coun-
try, providing materials and equipment not readily obtainable else-
where; as a supplier of advanced technology in some fields; and as a
source of economic assistance for certain countries -- but this role
will not necessarily place a significant burden on its own economic
program for 1959-65. Deliveries to the Satellites under existing
Soviet credits will be offset to some extent -- perhaps substantially
by repayments of earlier credits. The burden on the USSR also may be
held down by a further enlargement of the role of Czechoslovakia in
providing economic assistance for other Satellites and certain areas
outside the Bloc.
With the exception indicated for Rumania, the Satellites ap-
pear unwilling to seek large increases in trade with the industrialized
countries of the West because of weak markets or unfavorable terms of
trade for their exports (as in the case of Polish coal) and their desire
to minimize their dependence on such sources. This tendency is rein-
forced by the difficulties that they experience in selling their goods
(especially the machinery and equipment) in these countries because of
the low quality or other circumstances. Thus, both economic considera-
tions and the political aim of extending Communist influence make grow-
ing trade with the underdeveloped countries attractive, and such trade
generally is planned to become much more important.
Information on planned changes in the commodity composition of
trade is available only for four of the countries and is incomplete for
these, but it appears that in general the major trends of recent years
will continue. Trade in products of the metalworking industries will
be considerably expanded in conjunction with investment requirements in
the various countries, the developing specialization of production in
this field, and the expectation that underdeveloped countries will pro-
vide a growing market for such goods -- especially if they are offered
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on credit. As the following tabulation shows, the percentage share of
the products of the metalworking industries in total exports is planned
to increase in all four countries for which data are available, although
the change in East Germany is very small and would not restore the ratio
of 1955.
1955
1960
Plan for 1965
Czechoslovakia
44
45
54
East Germany*
60
57
58
Hungary
30
38
44**
Poland
13
28
38
The share of these products in total imports also is scheduled to rise
in at least three -- and possibly all four -- of these countries, con-
tinuing'the recent trend in each country except Poland.
Fuels and other industrial materials are scheduled to become
relatively less important in the exports of Poland (mainly because coal
exports are not planned to increase at all) and of East Germany, whereas
the share of such goods in imports at the beginning of the plan period
is to be maintained. How these relationships are expected to change in
the other countries is uncertain, but it is clear that the already large
import surplus of the Satellites in fuels and industrial materials is
planned to be even larger by 1965. Most of the countries probably hope
that advances in agricultural production will permit them either to raise
the share of food and foodstuffs in exports or reduce the share of such
products in imports in addition to providing moderate increases in the
domestic supply of food per capita. Each of the four countries has been
able to bring about one or the other of these shifts in the composition
of their trade since 1955, but there is some question whether or not
further shifts will be possible during the period ending in 1965.
The activities of CEMA and its subordinate bodies have not yet
given any extraordinary impetus to foreign trade and economic specializa-
tion and should not be expected to do so over short periods. Neverthe-
less, much work is being done to develop intra-Bloc trade and exploit
favorable opportunities for specialization, and its effect on the rate
of economic development -- although not measurable -- undoubtedly will
be significant. One of the most promising forms of economic coopera-
tion among the Satellites is the joint investment project, in which one
or more countries grant a credit to another Satellite to assist it in
* Based on data for total exports that exclude deliveries of uranium.
The figure for 1960 is an estimate.
** Plan for 1961-65.
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developing a particular industry. The agreement often provides that the
credit will be repaid from the resulting increase in output. A number
of joint investment projects will be in progress during the period ending
in 1965. East Germany, for example, is assisting Poland in expanding its
output of brown coal and in building the Polish section of the Soviet-
Satellite pipeline. Czechoslovakia is helping East Germany to develop
its potash mines and Poland to develop its hard coal mines and copper and
sulfur industries. Czechoslovakia also is assisting Rumania in the con-
struction of an electric powerplant fueled with natural gas and of plants
for the manufacture of plywood and panels made from wood chips. Finally,
Czechoslovakia, East Germany, and Poland are cooperating with Rumania in
the construction of a cellulose combine.
7. Transportation Service
To insure that economic development will not be restricted by
shortages of transportation service, the regimes intend to restrain the
growth of demand as well as to increase the capacity and efficiency of
the transportation system. Transportation requirements per unit of out-
put are supposed to be reduced by increased consumption of coal in power-
plants and other facilities located near the mines, growing substitution
for coal of fuels that are less costly to transport, processing of bulky
raw materials closer to their source, increased utilization of local re-
sources, and reduction of crosshauling and circuitous routing. The
scheduled shift in the structure of production toward products of hidl
value in relation to weight would also have this effect. On the other
hand, transportation needs per unit of output presumably will tend to
increase as a consequence of growing specialization in production, al-
though hardly to the extent of offsetting the reductions expected from
other measures.
Allocations of investment for the transportation and communica-
tions sector provide for substantial expansion and improvement of trans-
portation facilities. Sections of the rail systems having especially
heavy traffic are scheduled to be electrified by 1965, and roadways are
supposed to be improved by substitution of heavier rail, welded rail,
and reinforced concrete ties. Traffic control is to be improved by
means of more adequate communications equipment, and modern equipment
is to be used more extensively to make loading and unloading and yard
operations more efficient. The trend toward more efficient motive power
will also continue, for steam locomotives are scheduled to be replaced
to a significant extent by electric and diesel locomotives. Inventories
of freight cars will be expanded, with an increasing share of 4-axle
units. Such measures are expected to permit heavier loads per car and
per train, greater route densities, and shorter turnaround times. Ex-
pansion of inventories of electric locomotives to planned levels may
prove difficult, however, because present indications are that some of
the countries may not be able to fulfill their production plans.
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The regimes also expect to obtain some economies through greater.
use of motor and pipeline transportation. Plans call for improvement of
highways and substantially enlarged inventories of trucks, which are to
be used more widely for freight hauls of up to 50 kilometers. Pipeline
transportation -- now negligible -- will account for an estimated 2.6 per-
cent of the total ton-kilometers of freight traffic planned in 1965 as a
result of the completion of the pipeline that is being constructed from
the USSR to Poland, East Germany, Czechoslovakia, and Hungary. The sec-
tion of the pipeline serving Czechoslovakia is already in operation, and
work on the other sections generally is proceeding on schedule. Accord-
ing to a Polish source, this pipeline will reduce transport costs for
petroleum by 75 percent. Little expansion is envisioned in transporta-
tion on inland waterways, but the ocean transport fleet is supposed to
double (in terms of deadweight tons) during 1961-65, permitting these
countries to transport about one-third of their seaborne foreign trade
in domestic vessels.
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IV. Prospects and Implications
The overriding impression obtained in reviewing the current economic
plans of these countries is that they are too ambitious to be fulfilled
in most major respects. This conclusion is suggested by certain sta-
tistical comparisons and also -- perhaps more persuasively -- by the
profusion and boldness of programs for particular facets of the economic
development of the countries. Among other things, the plans call for
better planning, organization, and management; more effective mobilization,
training, and distribution of labor; strengthened work incentives; major
economies in the use of materials; expansion and modernization of the
stock of productive capital; greater product specialization and standardi-
zation; development of new products and processes; and technological
advances along a wide front, with special emphasis on the more widespread
use of mass production and automation techniques.
The planners seemingly have considered everything, but it does not
follow that their estimates of what is possible are invariably sound.
Furthermore, the plan goals in some of the countries reflect not so much
the expert judgment of planners and managers as an almost mystical ap-
praisal by leading Party officials of what should be possible under a
"socialist" system. In East Germany, for example, Party Secretary Ulbricht
frequently has raised the production goals proposed by specialists in the
various industries and sectors. Most problems of choice underlying the
present plans seem to have been resolved by adopting the more optimistic
assumption and the more challenging goal. Realization of economic ob-
jectives depends not only on impressive achievements in many specific
fields but also on a degree of perfection in meshing these elements that
has not been attained in practice.
Economic goals that are beyond the capacity of a country are not
necessarily poor goals, however, and the significance of failure to reach
them can easily be exaggerated. The plans themselves are an important
factor in the development of these economies, stimulating the search for
more efficient ways of doing things as well as specifying the desired
rate and composition of their growth. Ambitious goals may yield more
rapid rates of growth than goals that are clearly feasible, although
they also can have the opposite effect if they are extremely high or
inconsistent. What is to be avoided more than moderately high goals for
production is lack of balance in the allocation of resources, whereby
excessive attention to certain parts of the economy and neglect of others
prevents efficient use of the productive capacity as a whole. The allo-
cation of resources planned in these countries probably will not produce
the scheduled rates of growth, but it is not obvious that some other
allocation would be likely to yield better results.
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None of the six countries whose plans have been examined is believed
to have a good chance of reaching the planned level of national income
in 1965. Hungary probably will be able to achieve the rates of growth
scheduled for industry and agriculture during 1959-65 in the plan direc-
tives of 1959,* but the higher rates stipulated in the new Five Year Plan
appear to be beyond reach -- at least in the case of agricultural produc-
tion and national income. The new goal for agriculture implies a minimum
annual rate of growth of 5.5 percent, or about twice the rate previously
planned, and this rate is supposed to be achieved with less investment
than was formerly planned. Some progress in solving the problems of
organization and management of the collective farms should be possible
by 1965, and large increases are projected in yield-raising inputs, but
it is doubtful that agricultural production can be raised more than 3 or
3.5 percent annually with average weather in 1965. The upward revision
of the planned rate of growth for industry from 7.4 to 8.2 percent is
more reasonable, especially as planned industrial investment has been
boosted, and the prospects for reaching this goal seem favorable. This
accomplishment would require a rate of growth somewhat higher than that
estimated for 1955-59 but substantially lower than the average rate esti-
mated for 1958-60.
Czechoslovakia and Poland probably will be unable to achieve the
planned rates of growth of roughly 9 percent for industry, 4 percent for
agriculture, and 7 percent for national income, but rates about 1 to
1-1/2 percentage points lower than those planned would not be surprising.
For industry, this achievement would represent a continuation of the rate
estimated for Poland during 1956-60 but some decline from the rate of
9.5 percent estimated for Czechoslovakia during that period.
Czechoslovakia and Poland are unlikely to achieve an average annual
increase in gross agricultural production of more than 3 percent -- a
rate about the same as that in Czechoslovakia in 1955-59 but somewhat
lower than that in Poland during 1956-60. Labor difficulties in Czecho-
slovak agriculture easily could hold the rate of growth below 3 per-
cent, for the increase planned in the stock of agricultural machinery
may not compensate adequately for the decline of 19 percent in employment
that the regime desires and may well achieve. The rising average age of
agricultural workers and the widespread apathy among them also will con-
tinue to be problems.
Agricultural growth in Poland in 1956-60 was stimulated by several
measures that strengthened the incentives of the peasants, notably the
* The feasibility of the rate of growth originally planned for national
income is more uncertain, however, as it seems high compared with the
rates planned for industry and agriculture and has not been raised much
in the new plan for 1961-65 in spite of the upward revision of the rates
for these two sectors.
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relaxation of the collectivization effort, higher prices for farm prod-
ucts, and a reduction of compulsory deliveries. Comparable concessions
are hardly feasible during the new plan period, and their absence is a
major consideration underlying the judgment that agricultural growth will
be less rapid. There is also a strong possibility that private agri-
cultural investments will not increase to the extent planned.
East Germany's objective of increasing industrial production by
9.4 percent annually has already proved to be excessively high. The
goal for the growth of labor productivity was very ambitious to begin
with, and neither employment nor investment has developed as favorably
as planned. It now seems likely that industrial growth in 1959-65 will
average less than 7 percent annually. For 1961-65 alone, the rate is
expected to be about 6 percent compared with an estimated rate of 7 per-
cent in 1956-60.
Like Hungary, East Germany faces difficulties in making its many new
collective farms function effectively. Little progress is likely during
the next several years, but with steadily growing inputs and adoption of
improved farming methods, some advance in production should be possible
by 1965. It seems doubtful, however, that the rate of agricultural growth
will average more than 1 or 2 percent in contrast to the planned rate of
4.5 percent. Shortcomings in reaching goals for construction and most of
the remaining sectors also are expected, and the national income probably
will increase only by 4 to 5 percent annually rather than the 7.5 percent
specified in the plan.
Lack of realism in the agricultural plans presages a considerable
underfulfillment of scheduled rates of economic growth in both Rumania
and Albania. They may achieve the largest gains in agricultural produc-
tion of the countries under consideration, inasmuch as crop yields and
livestock productivity are rather low and agricultural production in
Albania in 1960 was below earlier levels, but they almost certainly will
fall short of their objectives for 1965 by a wider margin than the other
four countries. Average annual increases of 4 or 5 percent, or roughly
one-half the increases planned, probably should be regarded as the upper
limit of their capability in agriculture.
Prospects for industrial growth in Albania became rather uncertain
in 1961 with the worsening, and finally the rupture, of relations with
the USSR -- its principal source of assistance for the industrialization
programs of the last decade. Prompt Chinese Communist support has done
much, however, to make Albania's industrial plan meaningful again. The
planned industrial rate of growth of 9 percent is not unusually high for
a country at its stage of development and probably can be realized during
the latter part of the Five Year Plan. Nevertheless, there is some doubt
that the average rate of industrial growth during 1961-65 will reach the
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planned level. Assistance promised to Albania will be burdensome to the
Chinese economy, but the Chinese evidently consider it worth the cost,
for Albania's independent line weakens the position of the USSR in the
Soviet-Chinese ideological dispute.
Rumania probably will not be able to improve on recent rates of growth
of both employment and labor productivity in industry, as planned. The
rate of industrial growth may be the highest of the six countries under
consideration, but a range of 10 to 11 percent seems more reasonable than
the planned rate of 13 percent.
In terms of GNP, rates of growth of about 5.5 percent annually are
anticipated in Rumania and Poland compared with estimated rates of about
6 percent in 1955-59. Hungary may well be able to match the estimated
rate of growth of 5 percent in 1955-59 -- which was depressed somewhat
by the revolt in 1956 -- but previous rates of 6 and 5 percent in Czecho-
slovakia and East Germany, respectively, are expected to decline by about
1 percentage point. Although the expected rates of economic growth would
represent a creditable accomplishment, they are not unusually high com-
pared with recent rates in Western Europe.
It seems to be characteristic of these countries that investment pro-
grams are not carried out nearly as expeditiously as the regimes hoped and
that the effect of such shortcomings on the growth of production is less
serious than they might have feared. Comparatively rapid rates of indus-
trial growth were attained in the 1950's in spite of widespread failure
to complete new facilities on schedule, suggesting that industrial man-
agers showed some resourcefulness in expanding production with existing
facilities. Managers will encounter further challenges of this sort
under the current plans, for investment plans are considered unlikely
to be fulfilled completely even though investment no doubt will expand
faster than national income except possibly in Hungary and Albania.
Allocations of machinery and equipment for investment purposes are
not expected to reach planned levels -- mainly because of a tight supply
of materials and an inability to raise labor productivity to the desired
extent with relatively modest investment programs in the metalworking
industries. Moreover, construction costs and construction periods prob-
ably cannot be reduced to the extent planned, further widening the gap
between planned and actual additions to plant capacity by 1965. Never-
theless, the prospect is for substantial additions to the stock of in-
dustrial assets in each country and a more efficient utilization of
facilities in existence at the beginning of the plans.
If production goals for the metalworking industries and most other
branches of industry are underfulfilled, as anticipated, the regimes will
have little opportunity to use above-plan exports of industrial products
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to finance supplementary food imports and thus offset lagging domestic
production in agriculture. Adjustment of foreign trade plans in the
course of the period, however, should permit some of the most serious
bottlenecks in plant capacity or supplies of industrial materials to be
broken.
The significant question from the point of view of consumers in these
countries is how the regimes will react if rates of economic growth fall
below their expectations, as is believed likely. Where the plans of the
early 1950's were aimed at maximum rates of growth (subject, to be sure,
to important political and ideological constraints), subsequent programs
generally have combined the objectives of high rates of growth and mod-
erate improvements in living conditions. This change in policy apparently
seemed wise politically, and the economies could better afford it. It
seems doubtful that the countries would attempt to restore rates of growth
to planned levels by expanding investment programs. In East Germany, the
regime has already responded to lower rates of growth than were planned
by reducing rather than raising investment goals.
In general, however, the regimes probably will be reluctant to scale
down the present investment programs, and shortcomings experienced in
reaching planned levels of production consequently will be reflected pri-
marily in the growth of consumption. The prospective failure of the
countries to reach goals for agricultural production can be expected to
have a fairly direct effect on the planned expansion of food supplies.
Problems of structural readjustment are minimized by maintaining the con-
tinuity of investment activity, leaving consumption to absorb most of the
year-to-year fluctuations in rates of growth. Moreover, the regimes can
always argue that in safeguarding the investment programs that will pro-
vide the basis of future growth, they insure maximum gains in living con-
ditions during the period covered by two or three long-term plans.
Objectives for consumption of goods almost certainly will not be
reached, but significant increases in consumption nevertheless should be
possible during the period ending in 1965. The diet is expected to im-
prove gradually in each country in spite of underfulfillment of goals
for production of livestock products. The quality of the diet should
also be improved by larger supplies of vegetables and fruits and such
imported "luxuries" as coffee and cocoa. To provide moderate gains in
food consumption, Czechoslovakia and East Germany might well have to
import more food than planned, but such imports would not necessarily
have to rise faster than domestic production of food. Increases in per
capita supplies of foods of all kinds will continue to be held down in
Poland, Rumania, and especially Albania by rapid rates of population
growth. Even if production plans are not completely fulfilled, supplies
of consumer durables and clothing are likely to increase significantly,
accounting for a growing yet still comparatively small share of consumer
expenditures.
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Although the rates of economic growth anticipated in these countries
are moderately high and should not raise serious problems for the regimes,
underfulfillment of goals for national income will force the regimes to
reconsider the priorities expressed in the plan and may have substantial
effects on certain aspects of their plans. It is difficult to single out
any one part of these economies as having a particularly important influ-
ence on economic growth, but the degree of success achieved in construc-
tion activity clearly is one of the most decisive factors. Problems in
carrying out construction plans are almost certain to arise. The regimes
thus will have strong reason to review their investment allocations for
housing, which are one of the main elements of flexibility in the plans.
If these sizable sums are only a first step toward the provision of satis-
factory housing, it is equally true that the programs can be cut substan-
tially with little shortrun effect on housing conditions. Cutbacks in
state programs would augment directly the construction capacity and sup-
ply of materials available for productive facilities, which are often a
weak spot in the plans of these countries. The temptation to reduce the
planned allocation of funds for housing thus will be very great if di-
version of resources to industry or other productive sectors seems urgent.
Underfulfillment of production plans also may have significant reper-
cussions on certain aspects of the foreign economic relations of these
countries. Czechoslovakia's aim of greatly increasing its export surplus
in support of an expanded program of credit extensions obviously may be
thwarted if industry cannot provide the planned volume of goods for ex-
port or if serious deficiencies in agricultural performance must be partly
compensated by extra imports of foodstuffs. If the Satellites have diffi-
culty producing planned amounts of key types of investment goods, such as
metallurgical and chemical equipment, they may attempt to expand their
purchases of such goods in the West above planned levels. Production dif-
ficulties in industries that are important sources of goods for export
almost inevitably will have repercussions in the countries that were rely-
ing on deliveries of these goods.
Shortcomings in the realization of economic goals are not an unusual
occurrence in these countries, however, and the expected underfulfillment
of the new plans should not be allowed to obscure the progress being made.
By 1965, these economies generally will be not only appreciably larger
than at present but more industrialized, more diversified, more efficient,
and more interdependent -- capable of supporting a somewhat higher stand-
ard of living and extending Communist economic influence outside the Bloc
while laying the foundations for further economic growth. In spite of the
credits reportedly extended by the USSR to East Germany in 1961 and early
1962 to bolster its lagging but not really low rate of industrial growth,
there is no apparent Satellite need during 1961-65 for Soviet credits com-
parable to those extended in 1956-60, and new credits will be partly offset
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by payments on earlier ones. The prospect, rather, is that the countries
as a group will become less of a burden on the USSR and more an element
of economic strength in the Soviet Bloc.
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APPENDIX A
ST.ATISTICAL TABLES
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Table 12
Six European Satellite Countries
Growth of National Income and Industrial and Agricultural Production 2/
1955-59 and Plan for the Period Ending in 1965 12/
Percent
Reported Average
Annual Increase
1955-59
National income
(Communist concept)
Plan for the Period
Ending in 1965
Average Annual
Increase Total Increase
Czechoslovakia
East Germany
Hungary
Poland
Rumania
Albania
Gross industrial production
Czechoslovakia
East Germany
Hungary
Poland
Rumania
Albania
7.4
6 1/
6.4
6.7 f/
9.1
8.2
10.5
9.0
7.0
9.8 1/
10.5
16.7 h/
(9.5 fp
(6.5 g/)
(6.5 )
(8
(11 g/)
(12 d)
7.3
7.5 g
6.3
7.0
9.2 to 10.3
9.3
9.3
9.4
8.2 to 8.4
8.7
13
8.7
42
66
36
4o
70 to
56
56
88
48 to
52
110
52
j/2/
80
50
Gross agricultural production
Czechoslovakia
2.8
4.1 to 4.2
22 to 23 1/
East Germany
23/
4.5
36 j/
Hungary
4.5
5.4 to 5.7 hi
30 to 32 h/
Poland
3.8 1./
4.1
22
Rumania
4.2
9.2 to 10.3
70 to 80
Albania
1.3
11.5
72
a. Unless otherwise indicated, data are from the official statistical yearbooks and plan documents
listed in Appendix B.
b. The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the other coun-
tries.
c. 1956-60 for Poland and Albania.
d. Estimated plan.
e. The increase of 59 percent indicated in the plan is believed to refer to national income available
for domestic use.
f. 12:2/
g. Estimated increase (rounded to the nearest one-half percent) in net industrial production, which
is considered more suitable for comparison with the planned rate of growth than the official figure
for gross production. Although industrial goals in the Satellites refer to gross industrial produc-
tion, they are believed to be calculated in a manner that largely avoids the upward bias apparent in
most official indexes of gross industrial production in past years.
h. The increase from 1959 to 1960 is from source Lill/.
i. Increase above the level planned for 1960. The increase above the level actually reached in 1960
is 28 percent,/ but the previously planned percentage increase seems to have been retained.
j. 11V
k. Estimate based on the announced intention of raising the average production in 1961-65 from 22 to
23 percent above the average for 1956-60, assuming that the regime would expect a steady rate of
growth during the plan period in the absence of variations in weather.
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Table 13
Six European Satellite Countries
Growth of Investment and Consumption 2/
1955-59 and Plan for the Period Ending in 1965121
Plan for the Period Ending in 1965
Plan for 1965 12/
Value
Increase Above
Value
Increase
(Billion Units
the Comparable
(Billion Units
During the Plan
of National
Preceding Period
of National
Period
Currencies) EJ
(Percent)
Currencies) s..1
(Percent)
Czechoslovakia
322.4
6o
75.6
51
East Germany d/
142
N.A.
25 f/
103 f/
Hungary f/
192
49
46
28
Poland
624.1
53
142.7
46 51
Rumania
170 to 180
98 to 110 h/
31.9 to 36.2
83 to 107
Albania
69.5
51
15.7
36
a. The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65 for the
other countries. Unless otherwise indicated, data are from the official statistical year-
books and plan documents listed in Appendix B.
b. Data for Czechoslovakia and Albania are projections based on the assumption of a con-
stant rate of growth during the plan period. Data for Rumania are projections based on
actual investment in 1960-61 (estimated in terms of 1955 prices) and the assumption of
a constant rate of growth in subsequent years.
c. The values refer to total investment in Czechoslovakia (at 1959 prices), East Germany
(at 1958 prices), and Poland (at 1961 prices) and investment in the socialist sector in
Hungary (at 1959 prices), Rumania (probably at 1955 prices), and Albania (at 1961 prices),
except for the apparent exclusion of investment by collective farms from their own funds
in the last two countries. Capital repairs are included only for Czechoslovakia and East
Germany.
d. These figures presumably have been revised downward, for the plans for 1959 and 1960
were not fulfilled, and the original goal for 1961 has been reduced substantially.
e. Approximate figure, including construction, from source
f. 8/. According to this source, the planned value of investment of 180 billion forints
during 1961-65 that is mentioned in the plan law should be raised to about 192 billion
forints for comparison with official data for 1956-60. The planned value of investment
shown for 1965 appears to be consistent with a planned value of 192 billion forints for
1961-65.
g. 2/
h. Increase based on data for 1954-59 at 1955 prices in source 10/.
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Table 14
Six European Satellite Countries
Planned Growth of the Park of Agricultural Tractors
During the Period Ending in 1965
and Planned Amount of Arable Land per Tractor in 1965 2,./
Tractor Park
Thousand Units12/ Planned Amount
of Arable Land
Year Planned per Tractor12/
Preceding Plan for Increase in 1965
the Plan 1965 (Percent) (Hectares) 2/
Czechoslovakia
East Germany
Hungary
Poland
Rumania
Albania
94.3 1/
57.2
47.9 gd
76.2 12/
49.4
4.1
154 2/
110 1/
82 to 83
166 1/
150
9.0
63
92
71 to 73
118
204
118
33
45
64 to 65
96
68
57
a. The plan period is 1959-65 for East Germany, 1960-65 for Rumania,
and 1961-65 for the other countries. Unless otherwise indicated, data
are from the official statistical yearbooks and plan documents listed
in Appendix B. Tractors held by the small private sector of agri-
culture in each country other than Poland are excluded, as are the
small numbers of tractors held by collective farms in East Germany and
Rumania.
b. In 15-horsepower equivalents.
c. Assuming no change in the amount of arable land during the plan
period in East Germany, Hungary, and Poland.
d. 21.1/
e.
f. /0/
g./
h./
i. Assuming that the average horsepower of the planned park of 135,000
physical units is about the same as in 1960.
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Table 15
Six European Satellite Countries
Growth of Foreign Trade W
1955-59 and Plan for the Period Ending in 1965 12/
Average Annual Increase
Total turnover
Value in 1959
(Percent)
Total
(Million US
Per Capita
$) (us $)
1955-59 E./
Plan for the
Period Ending
in 1965
Czechoslovakia
3,329
246
11.4
8.0
East Germany
4,114
238
11.6 1/
8.4 2/
Hungary
1,562
157
8.3
7.9 2/
Poland
2,565
88
7.7
7.0
Rumania
1,024
56
3.8
12
Albania
119
76
27
10.9 1/
Imports
Czechoslovakia
1,602
118
11.4
6.7
East Germany
1,992
115
12.7
7.2 E./
Hungary
793
80
8.3
5.9
Poland
1,420
49
9.5
4.9
Rumania
502
28
2.0
N.A.
Albania
85
55
27
8.9 f/
Exports
Czechoslovakia
1,727
127
11.4
9.4
East Germany
2,121
123
10.6 1/
9.4 II/
Hungary
770
77
8.2
10.0
Poland
1,145
39
5.7
9.2
Rumania
522
29
5.4
N.A.
Albania
34
22
27
14.0 1/
a. Unless otherwise indicated, data are from the official statistical yearbooks
and plan documents listed in Appendix B. A subsequent announcement in Poland
indicates that the planned percentage increases in imports and exports during
the period ending in 1965 have been raised moderately. Because of rounding,
components may not add to the totals shown.
b. The plan period is 1959-65 for East Germany, 1960-65 for Rumania, and 1961-65
for the other countries.
c. 1956-59 for Rumania.
d. This figure is calculated from data in the official statistical yearbook. It
exaggerates the actual increase because (1) uranium exports are excluded from the
data for 1954 but included in the data for 1959 and (2) uncompensated exports,
which were substantial in 1954 but negligible in 1959, are excluded from the data
for both years.
e. Estimate derived from the planned increases in imports and exports.
f. Midpoint of the range announced for the increase from 1956-60 to 1961-65. The
planned increase during 1961-65 is estimated at 8.5 percent.
g. 22/
h. Estimate (including uranium exports) derived from source LC/.
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A. General Reference Works
1. Statistical Yearbooks
Albania, Statistical
(Statistical Yearbook of the
1960.
Albania, Statistical
(Statistical Yearbook of the
1958.
APPENDIX B
SOURCES
Board. Anuari statistikor
Albanian Peoples Republic,
Board. Anuari statistikor
Albanian Peoples Republic,
I R.P.Sh., 1960
1960), Tirana,
I R.P.Sh., 1958
1958), Tirana,
Czechoslovakia, State Statistical Office. Statisticka rocenka
ceskoslovenske socialisticke republiky, 1960 (Statistical Yearbook of
the Czechoslovak Socialist Republic, 1960), Prague, 1960.
East Germany, State Central Administration for Statistics.
Statistisches Jahrbuch der Deutschen Demokratischen Republik, 1959 (Sta-
tistical Yearbook of the German Democratic Republic, 1959), East Berlin,
1960.
Hungary, Central Statistical Office.
(Statistical Yearbook, 1959), Budapest, 1960.
Poland, Central Statistical Office.
(Statistical Yearbook, 1960), Warsaw, 1960.
Statisztikai evkonyv, 1959
Rocznik statystyczny, 1960
Rumania, Central Statistical Office. Anuarul statistic al R.P.R.,
1961 (Statistical Yearbook of the Rumanian Peoples Republic, 1961),
Bucharest, 1961.
2. Plan Documents
Albania
Draft directives of the Albanian Workers Party for the Third
Five Year Plan (1961-65): Albanian broadcast, Tirana, 11 Oct 60.
Report by Premier Shehu on the draft directives for the Third
Five Year Plan (1961-65): US Joint Publications Research Service,
JPRS 13239, 29 Mar 62, p. 1-91. Certain goals cited in this report
are higher than those in the draft directives of October 1960.
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Czechoslovakia
Resolution of the Czechoslovak Communist Party on the Third Five
Year Plan (1961-65): Rude pravo, 9 Jul 60.
Investment data: Czechoslovakia, State Planning Office, Planovane
hospodarstvi, no 12, 1960, P. 956.
Foreign trade data: US Joint Publications Research Service,
JPRS 9091, 21 Apr 61, p. 1-17.
East Germany
Law on the Seven Year Plan (1959-65): Neues Deutschland, 2 Oct 59,
Sonderbeilage.
Hungary
Law on the Second Five Year Plan (1961-65): US Joint Publica-
tions Research Service, JPRS 12235, 31 Jan 62, p. 72-104.
Discussion of the Second Five Year Plan (1961-65): US Joint
Publications Research Service, JPRS 12777, 2 Mar 62, p. 7-31.
Poland
Law on the Five Year Plan (1961-65): US Joint Publications Re-
search Service, JPRS 8700, 7 Aug 61, p. 13-126.
Rumania
Draft directives of the Rumanian Workers Party for the Six Year
Plan (1960-65): Scinteia, 19 May 60.
Report by Party Secretary Gheoreliu-Dej on the draft directives
for the Six Year Plan (1960-65): Rumanian broadcast, Bucharest, 20 Jun 60.
B. Source References
1. OEEC. General Statistics, pt II, Jul 61, P. 4, 13, 30.
2. Ibid., Sep 61, p. 13, 14, 17, 22, 23, 30, 31, 32, 33.
3. OEEC. Industrial Statistics, 1900-1959, Paris, 1960, p. 160,
167, 168, 169.
4. Czechoslovakia, Chamber of Commerce. Czechoslovak Foreign Trade,
no 3, 1960.
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5. Czechoslovakia, State Statistical Office. Statisticka rocenka
deskoslovenske socialisticke republiky, 1961 (Statistical Year-
book of the Czechoslovak Socialist Republic, 1961), Prague,
1961, p. 393.
6. Federation of Hungarian Architects. 1\12..E.E2_,ELET=LIb no 2,
1960, p. 12-13.
7. Ulbricht, Walter. Der Siebenjahrplan des Friedens, des Wohlstands
und des Gluecks des Volkes (The Seven Year Plan for t'ite Peace,
Well Being, and Happiness of the People), East Berlin, 1959,
p. 23.
8. US Joint Publications Research Service. JPRS 13868, 25 May 62,
p. 29-30.
9. Zycie gospodarcze, 19 Feb 61, p. 2.
10. Rumania, Central Statistical Office. Rumanian Statistical Pocket-
book, 1960, [Bucharest, 1960], p. 163.
11. Ulbricht, a. cit. (7, above), p. 23.
12. East Germany, State Central Administration for Statistics.
Statistische Praxis, Aug 60, unnumbered page (Statistische
Monatszahlen der DDR).
13. Grosse, Hermann. "Zu einigen Fragen des Nutzeffekts der Investi-
tionen" (Several Questions on the Effectiveness of Investment),
Einheit, no 11, 1959, p. 1487.
14. Riebe, Siegfried, and Hicke, Hans-Joachim. "Zur Perspektivplanung
der Investitionen unter Beruecksichtigung der Loesung der
oekonomisdhen Hauptaufgabe" (On the Long-Term Planning of Invest-
ment with Respect to the Solution of the Main Economic Task),
Wirtschaftswissenschaft, no 3, 1959, p. 378.
15. Ibid., p. 380.
16. East Germany, State Central Administration for Statistics.
Statistisches Jahrbuch der Deutschen Demokratischen Republik,
1960/61 (Statistical Yearbook of the German Democratic Republic,
1960/61), East Berlin, 1961, p. 385, 581.
17. Grosse, op, cit. (13, above).
18. Hungary, Central Statistical Office. Statisztikai havi kozle-
menyek, no 3, 1961, p. 15.
19. Nepszabadsag, 29 Sep 59.
20. Hungary, Central Statistical Office. Statisztikai havi kozle-
menyek, no 3, 1961, p. 15.
21. US Joint Publications Research Service. JPRS 13868, 25 May 62,
p. 4o. U.
22. Trybuna ludu, 24 Jun 60.
23. Poland, Central Statistical Office. Concise Statistical Yearbook
of Poland, 1962, Warsaw, 1962, p. 38.
24. US Joint Publications Research Service. JPRS 7750, 22 Feb 61,
P. 73.
25. Knauer, Arnold. Leitungstaetigkeit und Arbeitskraefte
(Management and the Labor Force ...), East Berlin, 1961, p. 49.
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26. US Joint Publications Research Service. JFRS 10554, 5 Oct 61
p. 20.
27. East Germany, State Central Administration for Statistics.
Statistisches Jahrbuch der Deutschen Demokratischen Republik,
1960/61 (Statistical Yearbook of the German Democratic Republic,
1960/61), East Berlin, 1961, p. 251.
28. Hungary, Central Statistical Office. Statisztikai havi
kozlemenyek, no 3, 1961, p. 15.
29. Poland, Central Statistical Office. Concise Statistical Yearbook
of Poland, 1962, Warsaw, 1962, p. 38.
30. Rumania, Central Statistical Office. Anuarul statistic al R.P.R.,
1959 (Statistical Yearbook of the Rumanian Peoples Republic,
1959), Bucharest, 1959, p. 208.
31. Rumania, Central Statistical Office. Rumanian Statistical Pocket-
book, 1960, [Bucharest, 1960], p. 164.
32. US Joint Publications Research Service. JPRS 7750, 22 Feb 61,
P. 73.
33. Czechoslovakia, State Statistical Office. Statisticka rocenka
ceskoslovenske socialisticke republiky, 1961 (Statistical Year-
book of the Czechoslovak Socialist Republic, 1961), Prague, 1961,
p. 281.
34, Hungary, Central Statistical Office. Statisztikai havi kozle-
menyek, no 10, 1961, p. 42, 44.
35. Poland, Central Statistical Office. Rocznik statystyczny, 1961
(Statistical Yearbook, 1961), Warsaw, 1961, p. 219.
36. Czechoslovakia, State Statistical Office. Statisticka rocenka
ceskoslovenske socialisticke republiky, 1961 (Statistical Year-
book of the Czechoslovak Socialist Republic, 1961), Prague,
1961, p. 374, 377.
37. Hungary, Central Statistical Office. Statisztikai evkonyv, 1960
(Statistical Yearbook, 1960), Budapest, 1961, p. 230, 231.
38. Poland, Central Statistical Office. Concise Statistical Year-
book of Poland, 1962, Warsaw, 1962, p. 135, 137.
39. Szybki i harmonijny rozwoj polski ludowej: Plan 5-letni na lata
1961-1965 (Rapid and Harmonious Development of Peoples Poland:
The Five Year Plan for the Period 1961-1965), Warsaw, 1961,
p. 15.
40. Poland, Central Statistical Office. Rocznik statystyczny, 1961
(Statistical Yearbook, 1961), Warsaw, 1961, p. 56, 81, 172.
41. Albanian broadcast, Tirana, 5 Feb 61.
42. Czechoslovak broadcast, Prague, 25 Mar 61.
43. Neues Deutschland, 1 Apr 60, p. 6.
44. Die Wirtschaft, 10 Jan 58, p. 1.
45. Ibid., 4 Feb 59, p. 7.
46. Ibid., 18 Feb 60, p. 3.
47. Neues Deutschland, 3 Feb 61, p. 3.
48. Ulbricht, 2E. cit. (7, above).
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49. US Joint Publications Research Service. JPRS 13868, 25 May 62,
p. 30.
50. Poland, Central Statistical Office. Rocznik statystyczny, 1961
(Statistical Yearbook, 1961), Warsaw, 1961, p. 56, 69.
51. Zycie gospodarcze, 19 Feb 61, p. 2.
52. Czechoslovak broadcast, Prague, 3 Jan 61.
53. East Germany, State Central Administration for Statistics.
Statistisches Jahrbuch der Deutschen Demokratischen Republik,
1960/61 (Statistical Yearbook of the German Democratic Republic,
1960/61), East Berlin, 1961, p. 184.
54. Czechoslovakia, State Statistical Office. Statisticka rocenka
ceskoslovenske socialisticke republiky, 1961 (Statistical Year-
book of the Czechoslovak Socialist Republic, 1961), Prague,
1961, p. 277.
55. Czechoslovak broadcast, Prague, 8 May 60.
56. US Joint Publications Research Service. JPRS 2530, 16 Apr 60,
p. 49.
57. Hungary, Central Statistical Office. Statisztikai evkonyv, 1960
(Statistical Yearbook, 1960), Budapest, 1961, p. 169.
58. Poland, Central Statistical Office. Rocznik statystyczny, 1961
(Statistical Yearbook, 1961), Warsaw, 1961, p. 217.
59. SED Central Committee, Party College "Karl Marx." Die Ausnutzung
der Ware-Geld-Beziehungen durch die Wirtschaftspolitik der DDR
(The Utilization of Commodity-Money Relationships in the Economic
Policy of the German Democratic Republic), East Berlin, 1961,
p. 214.
60. Informationsbuero West. NE Informations- und Archivdienst,
14 Oct 59, p. 10.
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