Volume 16 (1998)

The Regional Problem and the Break-Up of the State:
The Case of Yugoslavia
Časlav Ocić

The Nature and the Scope of the Regional Problem
Regional Policies and Changes in the Institutional Framework
Regional Development Levels: Grouping of Regions
Structural Change: Shift-Share Analysis
Efficiency: Shift-Share Analysis
Interregional Relations: Autarky
Some Other Results of the Regions' Development
Regional Development Costs: Ratios of Investment
Interregional Income (Re)distribution
Regional Convergence or Divergence?
Equality: The Failure of the Positive Discrimination Model
"The National Question" and Nationalism
Separatism: Economic and Political
A Long Journey from Utopia to Dystopia
Selected Bibliography
Data Sources & Documents
Appendix  (1)  (2)

Equality: The Failure of the Positive Discrimination Model

In principle, the Yugoslav system belonged to an egalitarian model, because it "generalized equality in production relations into a global principle of societal organization." In its initial stage, the state-administrative concept of equality was dominant: economic equality was seen as an expansion of state property. The introduction of self-management, of "socialist commodity production"and the growing importance of the national state were accompanied by shifts in emphasis regarding the attainment of egalitarian objectives. In addition, there was a change in the level of operationalization of these objectives, i.e. in their implementation.
At regional levels this implied a change in the conception of Yugoslav regional development. Until 1965 there had been several attempts to formulate Yugoslav regional policy. From 1965 Yugoslav regional development was seen almost exclusively as "the development of republics and provinces." Besides, on the federal level only less developed republics and provinces were the focus of attention. Somewhat later (after 1970, when more attention was being paid to territorial evenness within federal units) the same principle was applied on the intraregional level (as a rule, only underdeveloped municipalities /"communes"/ were given aid). Since policy was not conducted on the societal level, strictly speaking there was no socialist model of interregional equality. In East European countries and USSR all regions were covered by regional policy. On the contrary, in the developed countries of the West regional policy is focused on the so called "critical"(or "problem") regions. Thus, regional policy is only "a corrective"-it is not comprehensive as is the case with collectivist societies.
In the case of Yugoslavia, in regard to the regional issue, the existing model was a hybrid rather than a strictly egalitarian one. In addition to the case mentioned, its hybrid character is explicit in another important segment of the policy of regional equality. Namely, the equality of chances and conditions on the regional level implied an equalization of the "productive forces"of unevenly developed regions, i.e. a transfer of capital to underdeveloped regions and above average growth of (productive) employment there; equal participation in results, however, implied a reduction of regional disparities in terms of per capita GNP. The latter, "eclectic"feature of regional policy combined a "civil"concept of equality (as equality of conditions) with a Stalinist "naturalist"concept of development as a quantitative growth of all productive forces. In the USSR, at least conceptually (and in practice) the socialist concept of equality (as equal participation in results) was consistently pursued: people should have equal living standards in whatever region they lived. At the same time, productive forces could grow at different rates, which meant that, guided by economic logic, regions should make the best use of their comparative advantages and thus enable the optimum distribution of productive forces throughout the country.
Example of inconsistency in the conceptualization and the practice of Yugoslav regional development may also be illustrated by the applying of double standards in regional policy. Whereas interregionally the egalitarian principle was pursued, with constant requests for resources to help redress regional disparities, within regions, contrary to proclamations, the more developed parts (municipalities) were given priority while the less developed were marginalized.
The principle of evenness at first operationalized as "a rapid development of all accompanied by a faster development of underdeveloped regions"subsequently implies a quantification in the form of concrete (planned) targets. Since there was no institutional (before all, market) test of regional development efficiency and the underlying principle was the ("natural") dialectic that quantity (automatically) brings about quality, i.e. that growth generates development, the choice of quantitative representation of regional development objectives was understandable. In principle, the stronger political pressure there was for quick, direct, and tangible results of development, the more marked were the preferences for quantitative representations of development objectives. An illustrative example is the way in which development objectives of less developed regions were formulated in medium term federal plans: as a rule, the less developed a region was, the greater were its development aspirations. Under the circumstances, quantitative dimensions were the focus of attention because they were usually more visible. The more visible they were, the higher was their significance as symbols of development. Yugoslav regional (and global) development is a striking example of symbolic modernization. The way in which objectives were formulated also show that the policy of regional development was to a great extent symbolic instead of leading to actual (qualitative) changes. First to be financed were "prestige projects"and an illusion of "exuberant"growth was created, while behind that facade, in the absence of effective control, there usually flourished corruption and various sorts of theft. Elements of parasitism grew stronger, the social climate was redistributive (the welfare effect of investment came first) rather than productive (the productivity effect was neglected). Under the banner of equality pure and simple redistribution in favour of parasitic social strata took place, usually in the "grey zone,"outside public control, brokered by the regional nomenklaturas.
Mechanisms for transferring resources from developed to underdeveloped regions were also inconsistently conceived: the collection of transfer resources was centralized (through the Federal Fund), whereas the way in which these resources were used was decentralized (any control of their use was considered a violation of republican/provincial sovereignty!). This further reinforced the autarkic practice which was a logical consequence of the (Stalinist or Kardeljist) "metaeconomic"theory. Such a transfer mechanism, however, was the cause for dissatisfaction on both sides: among the donors as well as among the receivers of funds. The more developed regions objected to the high priority given to interregional redistribution, while the less developed regions defied the growing tendency towards the application of distributive criteria (particularly of profitability) in investment evaluation and fiercely opposed the very idea of control over the use of transferred resources.16
The model of "pooling labour and resources"(directly and through the Federal Fund) is a good illustration of how the illusion of regional development problem solving was produced. First, the illusion was created that there was harmony at micro and macro levels, while any arising conflict was suppressed by overregulation instead of being openly and clearly articulated and effectively resolved. Behind an apparent absence of conflicts, the inner conflict escalated to the extent that it had to be resolved in the Clausevitzian way -by violence. The violence, in turn, completely delegitimated the system and its nomenklatura.
Thus, in the end, the much praised quality (a peculiarity bordering on unparalleled originality, unique authenticity) of Yugoslav regional and global development proved to be only a fragile illusion which was dispelled quickly but not painlessly. This was preceded by the activation of built-in destabilizers so that it could plausibly be argued that the disintegration was a planned process. Namely, since its establishment Yugoslavia was constantly plagued, either disguisedly or openly, by various national strategies for the break-up of the federal state: for some of its nations Yugoslavia was a final solution, whereas others considered it only a transitory framework, a waiting-room in which they stuck to their own, separate solutions. Therefore, the policy of regional development was to a great extent a policy of investing in ethnicity and state sovereignty, i.e. in national independence which was often (naively) believed to be attainable through economic independence. While opting for economic isolation from the rest of the country, the separatist republics tended to open up politically, primarily by "appealing"to an international factor to take "democratic"control. The "xenofiles"with separatist inclinations tended to internationalize "their"cause, lacking the power to achieve their "thousand-year-old dream"of independence. On the other hand, the xenophobes that remained in the existing state ignored the importance of the international factor and therefore paid a much higher price in defending and safeguarding their vital interests.