The study of the regional growth/sectoral structure relation
involved various techniques of shift-share analysis. In the standard
shift-share analysis, regional (economic) growth (in terms of various
indicators such as: GNP, employment, fixed assets) was broken down into
three parts: proportional hypothetical growth, structural shift and
differential (regional) shift.
The results of the shift-share analysis regarding employment,
classified according to a modified Boudeville typology,8 were interpreted from a purely
economic point of view, i.e. on the basis of an assumption of an
economic logic at work, which labour as a variable factor that
accurately reflects both business trends and qualitative and
quantitative changes in economic efficiency. According to this
assumption employment can be considered as a general indicator of
growth, structural changes, success or failure of the economy (whether
national, regional or sectoral). Employment, however, is not an
economic indicator only: it also reflects social, historical and
political aspects of growth. Therefore, the results of an analysis of
the components of regional changes in employment cannot be interpreted
purely in classical economic terms. Underdevelopment and a relatively
abundant supply of labour exerted a strong pressure on employment.
Because of the rising expectations of the latently unemployed rural
population, growth of employment is often accompanied by an increasing
rate of (registered) unemployment. The number of people employed was
constantly rising (with the exception of Vojvodina in the 1965-1970
subperiod) thanks to formal and informal channels of job procurement
(nepotism, corruption). A high correlation between non-productive
employment and development levels suggests that a considerable number
of workers were not employed for production purposes. The political
idea of creating a working class (by means of industrialization and
urbanization) as the social base for new ruling elites undoubtedly
affected the magnitude and the sectoral and regional dynamics of
employment in the social sector. Under soft budget constraints, which
characterized the business environment, the social function of
employment prevailed over the function of an efficient economy.
Thus, for example, according to the modified Boudeville typology of
regions, Montenegro, Kosovo-Metohia and Macedonia, respectively, were
the most successful. The least successful were Slovenia and Croatia,
with above average growth of employment in only one subperiod. However,
this does not mean that Montenegro was economically more successful
than Slovenia, but only that employment in the former grew more rapidly
than in the latter. If, by chance, both of these regions had applied
exclusively or predominantly economic criteria of employment, such a
result could have indicated that Montenegro grew at a higher rate than
Slovenia. Then it would have followed that one of the basic goals of
Yugoslav regional policy (rapid development of all accompanied by
faster development of underdeveloped regions) had been achieved. By
formal standards, it was achieved in terms of employment, the growth of
which was indeed more rapid in underdeveloped regions than in the
developed ones. However, since employment was strongly affected by
non-economic factors, it does not mean that the development of these
regions was in fact more rapid.
By pointing to non-economic determinants of employment we by no
means devalue the results of shift-share analysis: they do provide
accurate information about actual changes in employment. These other,
non-economic factors undoubtedly produced economic effects. The
analysis identifies the components of regional changes in employment
and the interpretation of its results should take into account both the
non-economic and the economic context of change.
Similarly, the results obtained by shift-share analysis of fixed
assets have to be interpreted in economic terms but without loosing
sight of the social and political contexts. In terms of economic theory
the change in fixed assets value is equivalent to the gross investment
during the defined subperiods. Increased investment, if efficient,
makes an economy successful. Under the conditions that prevailed in
Yugoslavia, however, the very problem lay in the efficiency of fixed
assets. First, the Yugoslav economy displayed all the characteristics
of a relatively underdeveloped economy (e.g. a relative abundance of
labour and a relative shortage of capital) and, second, it was a
socialist economy: labour was intended as the pivot around which the
system revolves, just as capitalism revolves around capital. In the
Yugoslav case, the price of capital was below the price suggested by
its relative availability, which under soft budget constraints
inevitably resulted in inefficient investment. Thus, more investment
did not mean a more successful economy.
When the results are reviewed in this specifically Yugoslav
context, it becomes clear why the relatively least developed regions
were by Boudeville's typology classified as the most successful ones:
the value of their fixed assets grew at the highest rate. Thus, just as
with employment, Montenegro, Kosovo-Metohia, and Macedonia were the
most successful regions, while the least successful were Croatia and
Slovenia. It should be stressed here as well that, despite the apparent
paradox, the results of the shift-share analysis precisely describe the
actual changes. They only show the effects of a regional policy reduced
to mere transfers of money to underdeveloped regions: such a policy may
(and did) secure an increase in the book value of fixed capital. Since
a status of underdevelopment automatically guaranteed a steady and
abundant inflow of cheap capital (through the Federal Fund for
Financing the Accelerated Development of the Underdeveloped Republics
and the Autonomous Province of Kosovo), there was a negative
correlation between the size of inflow and the efficiency of capital
use. Inefficient investment does not support economic development, but
prevents it.
Assuming an "organic growth,"i.e. the domination of the market as
the main factor of economic activity coordination, GNP can be
considered as the general indicator of growth, of structural changes,
the success or failure of an economy (whether national, regional, or
sectoral). When market forces are suppressed by various forms of
nonmarket coordination, and free enterprise by normative dirigisme and
by standardized agreement among "economic agents,"there is no organic
growth. Consequently, the growth rate of the GNP cannot be taken as a
definite indicator of the economic success of Yugoslav regions.
In general, results of the shift-share analysis of employment,
fixed assets and GNP, and, in particular, the results of a modified
Boudeville typology of regions clearly suggest the following
conclusions: (a) there is a negative correlation between the degree of
development of a region and its success (performance); (b) crucial to a
region's success is a differential shift, i.e. regional particularities
are the key to the differences in their success; (c) the structure of
regions is not a significant factor of the difference in their success,
from which it may be concluded that regional structures do not
significantly differ, i.e. that these differences are not so great as
to significantly influence the differences in regional success.
In order to make these conclusions more distinct, the regions were
ranked according to their success measured by the modified Boudeville
typology of regions with respect to all three indicators: employment,
fixed assets and GNP. The criterion for ranking was the number of
successful or unsuccessful subperiods. The results of the ranking show
that the observed interdependence is the most striking in employment, a
bit less marked in fixed assets, and least in the case of GNP.
Additionally, the differences between the most successful region and
the least successful region are the most striking in regard to
employment (the top regions have no unsuccessful subperiods, whereas
the lowest ranking regions are successful in only one subperiod). The
ranking of regions according to their performance in terms of
employment growth resulted in the largest number of groups -six.
Regional differences are narrower both in terms of fixed assets (there
are four groups) and success (top regions have only one unsuccessful
subperiod each, whereas the lowest ranking regions have two
unsuccessful subperiods each). The smallest interregional differences
were observed in regard to the GNP: there are three groups only, the
top group consisting of two regions with two unsuccessful subperiods
each and the lowest group consisting of four regions with three
unsuccessful subperiods each.
A rather strong connection between the success of a region and its
level of development in the case of employment and fixed assets (the
less developed a region, the greater the increase of the two
indicators) suggests that regional policy had a strong impact on the
growth of production factors in underdeveloped regions, but also that
it was primarily directed toward them. If we consider how important
employment is for keeping the social peace, which is one of the major
objectives of regional elites, it is obvious why this connection is the
most striking in the case of employment. With respect to the growth of
the GNP as an indicator of success, this connection is less noticeable.
On the one hand, Kosovo-Metohia and Macedonia, the least developed
regions, rank among the most successful ones, and Slovenia and Croatia,
the most developed regions, among the least successful ones, still, on
the other hand, the least successful regions also include
Bosnia-Herzegovina and Montenegro, while central Serbia ranks among the
more successful regions. This only shows that GNP growth is not merely
dependent on the factors of production growth but that it is determined
to a large degree by their usage upon which, in turn, the federal
regional policy had no influence whatsoever.